Synergy Success: Aligning Customers, Class I s and Shortlines

Transcription

1 Synergy Success: Aligning Customers, Class I s and Shortlines Michael O. Miller Chief Commercial Officer SWARS Phoenix

2 Agenda 1. Overview of G&W 2. Update RailAmerica Integration 3. Aligning for Success 2

3 Genesee & Wyoming Operations The original Genesee & Wyoming Railroad 14 miles in upstate New York serving one customer 3

4 Genesee & Wyoming Operations 2013 Nine North American Regions 4

5 Summary of Combined Operations RailAmerica G&W North America G&W Australia / Europe Total G&W G&W Today Railroads States / Provinces 28 / 3 24 / / 3 / 4 39 / 3 / 4 Miles 7,500 5,400 2,200 7,600 15,100 Carloads 840, , , ,000 1,900,000 Employees 1,900 2, ,600 4,500 Locomotives / Cars 400 / 8, / 12, / 1, / 13,800 1,000 / 22, Revenue ($ in millions) $551 $543 $286 $829 $1,600 Largest Commodities Agriculture / Chemicals Coal / Metals Intermodal / Metallic Ores Intermodal / Coal Farm & Food / Metallic Ores 5

6 Revenue by Commodity & Geography Waste 2% Other 2% Metallic Ores 8% Intermodal 9% Coal & Coke 10% Ag Products (Australia) 4% Ag Products (U.S.) 7% Canada 10% Europe 1% Minerals & Stone 8% Ag Products (Canada) 1% Pulp & Paper 10% Australia 20% U.S. 69% (8 Regions) Food & Kindred Products 3% Lumber & Forest Products 8% Auto & Auto Parts 2% Chemicals & Plastics 11% Metals 11% Petroleum Products 5% 6

7 Our Core Purpose To be the safest and most respected rail service provider in the world. 7

8 Industry-Leading Safety Performance Injury Frequency Rate per 200,000 man-hours G&W through July; others through May

9 G&W Commitment to Service Industry Leading Customer Satisfaction 9

10 G&W Commitment to Long-Term Infrastructure Gross Capital Investment ($ millions) 10

11 RailAmerica Integration Update

12 Acquisition Timeline for Context Integration begins Jan G&W assumes control of RailAmerica railroads -- New Central Region created, based in Southlake, TX -- Systems and process cutover begins Consolidation (Phase 1) May Closed RailAmerica corporate HQ in Jacksonville -- Consolidate customer service and corporate functions -- Transitioned all financial reporting to GP Consolidation (Phase 2) Aug Completed enterprise-wide IT transition, purchasing, AP/AR and payroll conversion Service Optimization and Fine Tuning (next 6 months) -- Railroad level operating plan improvements (DGNO, SJVR, KRR and CFE) -- Optimal crew and power plans 12

13 Consistent Message: Manage to G&W Priorities 1. Safety Our No. 1 priority 2. Customer Service We exist to serve our customers 3. Local Accountability Make decisions closest to the facts 4. Commitment to Excellence Continuous improvement 5. People Put the best trained, best motivated people in the right place at the right time 6. Long-Term Partnerships Customers, Class Is, Communities 7. Long-Term Decision Making Stewards of vital infrastructure assets 13

14 Aligning for Success Class 1 s, Customers and Shortlines

15 Why is Alignment Important? Set-up 15 15

16 Why is Alignment Important? Execution 16 16

17 Why is Alignment Difficult? Interdependent and Complex 92% 93% 93% 94% 93% 95% Even if the component parts of the supply chain perform at a high level, the resulting aggregate performance can be poor (66%). 17

18 Why is Alignment Difficult? Balancing Act Shortlines Capacity Connectivity Capability Capital Customers Capacity Connectivity Capability Service Safety First Class 1 s Capacity Connectivity Capability Network Impact Communities Capacity Connectivity Capability Quality of Life 18

19 Key Drivers to Alignment Collaboration Customers and Supply Chain Partners Long-term View Rail is a strategic decision and 5 years time horizons should be the norm Win-win Approach Aim for a result that is fair and objective Commitment and Patience It takes work and it takes time 19

20 Case Study Aligning for Success GWI purchased the AZER in September 2011and it serves North America s largest copper producer Freeport-McMoRan (FMI): FMI investing over $1 billion to expand their mill and mining operations in Arizona and rail is critical to their success FMI and AZER entered into a winwin long-term commercial contract AZER and UP worked together to establish an operating plan to handle increased volumes and improve transit times 20

21 Case Study Aligning for Success AZER invested over $10 million to upgrade the rail line UP and AZER partnered to get the right locomotives in this service FMI and AZER partnered to introduce new equipment that was safer and more efficient 21

22 Results Aligning for Success, Driving Safety, Reliability and Growth These capital improvements and upgrades were very much needed because AZER s prior owner, was not in the position to make such improvements and upgrades. Freeport-McMoRan fully supports all of the improvements and upgrades that G&W is making and plans to make to AZER s rail lines. Eileen Mitchell, Director Global Supply Chain Better railcars pays off in safety, productivity and cost savings. Unloading rail cars will always be a hard day s work, but a new fleet of reconditioned cars at FMI s Miami Operations has made the job easier, faster and a lot safer. It has made the job a lot less stressful, said Smelter Operator Shareen Winslow. With the old cars, there was a lot more physical work and a lot more risk. 22

23 Results Aligning for Success, Driving Safety, Reliability and Growth Since late 2011 the average monthly carloads have increased by 5-9% based upon: Improved infrastructure Proper locomotive fleet More efficient and safer equipment Reliable operations Faster transit times Enhanced relationships across the supply chain 23

24 Synergy Success: Coordination, Communication and Commitment FMI Copper Mine Arizona AZER Shortline Interchange Lordsburg UPRR Linehaul Interchange Nogales Ferromex Linehaul Nogales to Guaymas Puerto de Guaymas Mexico The effectiveness of the overall freight network is not related to the independent pieces of the network, but the overall connectivity and fluidity across the system

25 Thank You 25