2015 Emerald Coast Transportation Symposium Stephanie Lane, Director CSX Industrial Development November 13, 2015

About CSX What exactly is a freight railroad? Freight rail in the supply chain: the logistics long view Freight rail benefits and challenges 2

3 23 STATES District of Columbia and two Canadian provinces. Logistics include Door-to-door Intermodal Rail-truck transload Port-rail transload 21,000 MILES Connecting 240 shortlines, 70 ocean, river, and lake ports

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5 America’s Freight Railroads: Privately owned Will spend $29 Billion on its network in 2015 $79,000,000 a day Tax-Free Infrastructure Source: AAR

How Rail Works 6

7 How Rail (really) Works

And much more! If its in your life, its on our trains…

9 Railroads operate similar to a postal system:  Local routes feeding to….  Processing centers or hubs, forwarding to….  Final destination

10 How Rail Works

Freight rail in the supply chain: the logistics long view Important part of a balanced North American Freight System

Freight Transportation Mode Share Tons Ton-miles Trucks move more tons, mostly over short distances Freight Rail has the largest share of freight per ton-mile

Trucking provides important first mile-last mile delivery. Many locations and industries cannot be direct rail served, trucks provide a critical connection. Freight rail is optimized over distances – longer hauls, greater quantities, heavier loads. A balanced system needs strong integral components:

American logistics are complex and changing: Factors likely to shape transportation & logistics in the future Infrastructure Investment – or lack there of! Regulatory considerations Domestic energy revolution with global implications such as “Re-shoring”: Companies are now focusing on locating production closer to demand, in part because of cheap energy. Supply chain optimization: As American cities grow and demographics change, supply chains are re-optimizing around more densely populated areas, affecting transportation routing Studies indicate that even with fewer manufacturing jobs, transportation and logistics demand will grow thanks to automation, 3-D printing, near- shoring, et cetera

Summary: Demand for transportation is growing with population and economic activity Congestion on roadways is getting worse Infrastructure funding is facing crisis levels Trucking industry facing greater challenges

Benefits of Freight Rail: Economy and Environment 16 Trains can move a ton of freight 483 miles on a single gallon of fuel One train can carry the load equivalent of 280 trucks Lower emissions = cleaner air Less freeway congestion = safer freeways Reduced public costs

High capital costs and limited existing rail infrastructure Increasing freight volume Passenger service integration Freight Railroad Challenges

Identify and protect freight rail corridors 18 Environmental benefits Road safety improvements Congestion reduction Economic driver for business and job creation The Future:

19  Create inventories of industrial sites to attract freight rail uses  Many areas are challenged by topography which limits the number and size of sites which can be served with rail within a reasonable cost - so guard those sites FIERCELY.  Use long term comprehensive planning opportunities to enhance potential rail served locations for job-creating developments  Understand your regions business environment to attract rail users

20 CSX Shovel-Ready Rail-Served Sites  Qualify rail-served sites attractive to manufacturers from a variety of industries  Encourage attractive, well-located rail sites to be retained for rail opportunities  Maintain strict, high standard of certification (Best in class)

Stephanie Lane Director CSX Regional Development