Intermodal Success Story: BMW, SCPA and Norfolk Southern

Transcription

1 Intermodal Success Story: BMW, SCPA and Norfolk Southern 2016 North American Rail Shippers Annual Meeting Randy Bayles, Director International Intermodal

2 Discussion Topics NS Overview Market Drivers Impacting NS Changes in World Shipping Routes to U.S. East Coast Preparing for Volume Shifts Short Haul Intermodal South Carolina Inland Port 2

3 Balanced Portfolio of Business NS Network 74% of U.S. population % of 1Q16 NS Revenue 55% of total energy consumption in U.S. 66% of U.S. manufacturing Estimate 50M+ truck shipments over 550 miles touch our network Extensive port access Intermodal 22% Coal 14% Auto 11% Agriculture 16% Chemicals 17% MetCon 12% Paper 8% 3

4 Market Drivers Impacting NS Opportunities for highway conversion Growth with strategic corridor projects Lingering effects of West Coast Port Disruption Strong growth in the automotive industry Increased consumer spending Improved construction activity Growth in ethanol and soybean exports High inventory levels Softening steel production Coal 4

5 5 Global - U.S. Shipping Options Traditional West Coast centric routings have expanded to include other options favoring East Coast ports.

6 Global - U.S. Shipping Options Timeline of Critical Events Traditional West Coast centric routings have expanded to include other options favoring East Coast ports. Expressrail Port Jersey Opening Bayonne Bridge Navigation Clearance NIT South Expansion Panama Canal Expansion Charleston Navy Yard Opening Charleston Harbor Deepening Savannah Harbor Deepening

7 Rail Strategy: Achieving Above-GDP Growth Short-Haul Truck Competitive Markets Detroit Buffalo Boston Chicago Cleveland Harrisburg Bethlehem New York / New Jersey Decatur Cincinnati Toledo Pittsburgh Columbus Greencastle Philadelphia Baltimore Kansas City Inland Virginia St Louis Louisville Georgetown Norfolk Greensboro Huntsville Greer Charlotte Memphis Atlanta Dallas Birmingham Savannah Charleston New Orleans Jacksonville Central Florida Intermodal Terminals On-Dock Access

8 International Short Haul At NS, much of our traditional market has been shorter hauls relative to western carrier lengths of haul. As more International freight is handled via East Coast ports, much of that is destined to key markets and population centers less than 500 miles from the port The factors that enable NS to launch successful short haul services include: DENSE = Double-stack service is an absolute necessity DIRECT = Low rail mileage circuitry vs. highway miles SURPLUS = incremental capacity available on train and at terminal STRESS = Port drayage access and economics 8

9 Perspective Highway Miles Savannah - Atlanta Chicago - Columbus Extremely Short Memphis - Charleston Atlanta - Harrisburg Short Los Angeles - Dallas 1,436 Los Angeles - Memphis Los Angeles - Chicago 1,792 2,016 Traditional Los Angeles - New York 2, ,000 1,500 2,000 2,500 3,000 9

10 Shifts In The Market Require A Flexible Network More opportunity for Intermodal growth in the < 1200 mile LOH segment NS International Traffic Mix by Length of Haul NS Domestic* Traffic Mix by Length of Haul 75% 75% % % -7 25% 25% - 0% 0% Up to 600 Miles Miles Over 1200 Miles Up to 600 Miles Miles Over 1200 Miles Change in % share of total volumes from 2005 to * Excludes Triple Crown

11 Developing New Shorthaul Services NY/NJ Baltimore Harrisburg mi Norfolk Front Royal mi Greensboro mi Savannah Charleston Charlotte mi Austell mi Jacksonville Miami Greer / SCIP mi

12 South Carolina Inland Port Idea Conceived: November 2011 Operational: November 2013 Goal: Convert Port of Charleston traffic moving OTR to rail Customer base BMW is the base customer Other importers / exporters in the area include: Adidas, Eastman Chemical, John Deere, Michelin 236 Miles 9 hour transit 5 days per week Future opportunities could include auto parts from Mexico and other NS locations 12

13 SCIP Traffic Mix First 12 months of Operation % 65% 45% 55% BMW Non BMW BMW Non-BMW

14 Summary Global logistics trends continue to evolve. The dominant trends over the past decade have consisted of port, coastal, and modal diversification. Traditional OTR models are under increasing pressure from organic costs and new regulatory measures. NS is pushing the envelope on shorthaul intermodal services. NS has invested considerable capital into our network capabilities to ensure that we are flexible, and fully capable of taking advantage of these trends as they emerge. 14

15 15 Thank You.