Donald W. Seale. & Chief Marketing Officer

Transcription

1 Donald W. Seale Executive Vice President & Chief Marketing Officer

2 Summary of current business levels l Recap of franchise & business results since Conrail acquisition Key growth drivers since 2000 Update on Corridor Strategy The Railroad ahead

3 Industrial Production at lowest level since 1994 Impact of global recession on international trade Declining coal demand for electricity and steel production Excess capacity & lower rates in trucking industry Threat of Re-regulation

4 Abs. vs % Chg. Agriculture (39,644) (15%) Lower fertilizer and export grain volume MetCon (129,652) (40%) Paper (45,932) (27%) Falling steel production & housing related construction ti losses Weakened lumber volume and conventional paper declines Lower plastics & basic chemicals production Continued restructuring of the auto industry Lower consumer spending and international trade Lower electricity demand & falling demand for domestic and international met coal Chemicals (38,694) (23%) Lower plastics & basic chemicals Automotive (93,920) (48%) Intermodal (243,777) (19%) Coal (134,709) (18%) Total (726,328) (23%) Actual volume through May 31

5 Tiger wins 8 times on the tour and wins his 2 nd major in 1999 Won his 65 th PGA Tour event in 2008 Oil price/barrel - $13 (Jan. 1999) to $145 (July 2008) to $41 (Dec. 2008) U.S. Unemployment 4.3% to 7.2% NS rail shipments grew by 1.4 million Return on investment from 5.2% to 12.1% NS Revenue $5.2 billion to $10.7 billion Re-regulation

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8 Strong global trade Imports Growth in utility and metallurgical coal New Intermodal terminals and products Resurgent steel industry Growth in ethanol and biofuels Industrial Development Strong service (Thoroughbred Operating Plan) and pricing gains Effective fuel recovery

9 Q4 NS Volume Low Tech IPI Truck Tonnage Other U.S. RR's less NS 25% 20% 15% 10% 1Q 2000 = 0 5% 0% Indexed to (5%) (10%) 2000Q1 2000Q2 2000Q3 2000Q4 2001Q1 2001Q2 2001Q3 2001Q4 2002Q1 2002Q2 2002Q3 2002Q4 2003Q1 2003Q2 2003Q3 2003Q4 2004Q1 2004Q2 2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 2005Q4 2006Q1 2006Q2 2006Q3 2006Q4 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 Sources: Global Insight, FTR Associates, AAR, NS Accrual

10 2000 Total Volume 6,847,099 Units % CAGR +0.9% 2008 Total Volume 7,349,450 Units Paper, 490,408, 7% Automotive, 692,151, 10% MetCon, 756,747, 11% Intermodal 2,242,151 32% Paper MetCon, 394,076742,375, 10% 5% Automotive, 412,197, 197 6% Agriculture, 612,427, 8% Intermodal 3,028,977 42% Agriculture, 525,269, 8% Chemicals 452,989 7% Coal, 1,687,384, 25% Chemicals, 393,678, 5% Coal, 1,765,720, 24%

11 % Change Ethanol 10,057 58, % Miscellaneous Wood 10,928 31, % International Intermodal 922,438 1,403,573 52% Military/Misc. Transportation 30,487 45,961 51% Domestic Intermodal 726,003 1,010,880 39% Soybeans 25,276 31,357 24% Scrap Metal 102, ,411 23% Aggregates 146, ,728 20% Triple Crown Services 272, ,664 16% Export Coal 194, ,169 15% Utility Coal 1,116,061 1,274,669 14%

12 % CAGR +6.2% $1,191 $1,095 $943 $980 $900 $931 $933 $1,242 $1,

13 % CAGR +7.1% In $ Millions $8,527 $9,407 $9,432 $10,661 $6,159 $6,170 $6,270 $6,468 $7, Intermodal Merchandise Coal

14 Summary Revenue Up $4.5 Billion +73% Units Up 503,000 +7% RPU Up $ % Major Revenue Growth Components Merchandise Industrial Development +$1.884 Billion Coal +$1.676 Billion Intermodal +$939 Million

15 Total - $1.247 Billion MetCon $336.6 Paper $170.4 Chemicals $166.1 Agriculture $371.5 Automotive $180.4 Distribution Services $22.5 Rev. $ Mill.

16 , , , , ,500 n $ Millions nits , ,500 95,000 Revenue i U 50 0 Revenue Carloads 87,500 80,000

17 North Manchester, IN Portland, IN

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26 2000 Total Volume 1,687,384 Units 2008 Total Volume 1,765,720 Units Industrial 120,253 7% Export Export 219, ,953 12% 12% Industrial 83,364 5% Metallurgical 264,322 16% Utility 1,107,856 66% Metallurgical 189,960 11% Utility 1,272,661 72%

27 Western Coal 2000 = 12.8 M 2008 = 39.7 M NS Coal Network 2000 vs N. App / Ohio 2000= 34.5 M 2008 = 48.8 M Illinois / Indiana 2000 = 12.0 M 2008 = 10.3 M Central Appalachia 2000= 105.2M 2008 = 80.1 M Imports 2000= = 1.1 M

28 Coal Sourcing Strategy Powder River Basin Haverhill River Docks Wheelersburg NAPP Illinois Basin Import Coal

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32 NS Intermodal Network Pre Conrail Detroit Buffalo Albany Ayer Chicago Cleveland Taylor Resources (NY/NJ) Peoria Columbus Decatur Cincinnati Front Royal Alexandria Kansas City St Louis Louisville Georgetown Norfolk Greensboro Memphis Huntsville Charlotte Atlanta Savannah Charleston Intermodal System Terminals Haulage Extensions Jacksonville New Orleans Miami

33 Buffalo Ayer Detroit Albany Chicago Taylor Toledo Maple Heights Harrisburg Rutherford Columbus Pittsburgh Rickenbacker Bethlehem NY/NJ Philadelphia/Morrisville Baltimore Kansas City Decatur Cincinnati Sharonville Front Royal St Louis Louisville Appliance Park Georgetown Norfolk Greensboro Memphis Huntsville Charlotte Dallas Birmingham Atlanta Austell Charleston Intermodal System Terminals Shreveport Savannah Savannah ICTF Haulage Extensions New since 1999 New Orleans Jacksonville Future Expansions Titusvilleill Ft Lauderdale Miami

34 Within our service territory: 74% of the 2009 US population Over half of the states with high projected population growth One study suggests that t at least 30 million truck shipments over 550 miles touch our service territory

35 By 2020, Traffic on Many Congested Interstate Highways Will Consist of Over 30% Trucks

36 Mechanicville Crescent Corridor Shreveport

37 The Most Comprehensive Public Private Partnership for Improving Rail in the East 300+ miles of passing tracks and double track 13 new or expanded terminals Potential $2.5 billion in new investment More Options for Shippers 2,500 mile rail network parallel to Interstate highways Linking Northeast t Southeast t Southwest t (I-78, 81, 75, 40, 59, 85) U.S. East Coast Ports will have improved access to existing and new inland markets Improved Train Services Provide an Environmental Boost Trains will attract 1 million trucks/year from interstates Carbon emissions will be reduced by 1 million tons/year 100 million gallons of fuel will be saved annually

38 Crescent Corridor Parallel Rail-Highway Infrastructure Interstate Hwy. NS Rail Line 38

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40 Mechanicville Ayer/Boston Chicago Columbus Harrisburg So. Central Pennsylvania Allentown North Jersey Philadelphia Western Maryland Cincinnati Kansas City St Louis Louisville Roanoke Region East Tennessee Memphis Charlotte Dallas Birmingham Atlanta New Orleans

41 Pan Am Southern Mechanicville Crescent Corridor Shreveport

42 New Facility at Mechanicville, NY Intermodal facility with over 50,000 units of capacity Automotive facility Significant expansion capability Ayer Intermodal Expanded and improved intermodal facility Over 75,000 units of immediate capacity Expandable up to 175,000+ units Sanvel Automotive 800 parking spaces Significant ifi expansion capability

43 Mechanicville Break Ground: August, 2009 Complete: 3 rd Qtr Ayer Intermodal Improvements Incremental through 2009 and 2011 Sanvel (Ayer) Automotive Break Ground: April, 2009 Complete: 4 th Qtr. 2009

44 Pan Am Southern Mechanicville MidAmerica Corridor Crescent Corridor Shreveport

45 Under development with the CN and WTNN Railroad Shorter/Faster routes between Midwest and Southeast New coal route Illinois Basin to Southeast Longer term potential as Intermodal route from Chicago to Florida

46 Pan Am Southern Mechanicville MidAmerica Corridor Crescent Corridor Shreveport Meridian Speedway

47 NS has contributed $283 million to be used for capital improvements Improvements from Speedway Investments Entire Route is CTC signaled 80% of route will be 60 mph, 90% will be 50 mph or higher Extended multiple tracks Higher Speed Services Created NS & UP have created shortest-fastest route between California and Southeast - Service is now faster than single driver OTR BMW multilevel traffic routed over Speedway had 2-3 days of transit time removed from routing UPS service between Los Angeles and Atlanta reduced from 80 hours in 2006 to 66 hours, 45 minutes currently

48 Pan Am Southern Mechanicville MidAmerica Corridor Heartland Corridor Crescent Corridor Shreveport Meridian Speedway

49 Public Private Partnership 28 Tunnels being cleared Work is 75% completed Mid 2010 completion date New Rickenbacker Logistics Center Columbus, Ohio opened March 2008

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54 Complexity - multiple markets, channels, and shifting industrial production/global trade patterns Motor carrier costs will continue to rise and capacity will decline or remain static Approximately 80% of intercity freight tonnage originates or terminates within the NS service area Highway conversions and continued yield management will be key drivers Environmental advantages of rail shipping will become more prominent

55 Domestic Intermodal New Intermodal corridors, terminals and market extensions Decreasing truck supply & higher costs Growth in utility and metallurgical coal Continued growth in biofuels Recovery in steel market Industrial Development Continued service & pricing improvement

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57 Congestion is everywhere. and getting worse!

58 The remedy for congestion!