Growing the Franchise Eric Butler, EVP ing & Sales 1 Growing Opportunity of a Unique Franchise Excellent Network Strategic Terminal Locations Broad Port Access Border and change Coverage Business Mix Jan Sep 2014 Revenue Intmdl 20% Ag 17% Autos 9% Automotive Distribution Centers Terminals Manifest Terminals Ports IP 20% Coal 18% Chem 16% Border Crossings, Gateways and changes 2
Strengthening g Our Franchise Seattle Bulk Eastport Portland Trans load Bulk / Crude Bulk Oakland Crude Shale SLC Shale Rock Denver Twin Cities Omaha Duluth KC St. Louis Chicago New and Expanded Facilities Broad Geographic Coverage LA Trans load Calexico Nogales Dallas Bio- Mass Memphis New Orleans Diverse Commodities and s Eagle Pass Laredo Steel Coils Plastics Brownsville Houston 3 Population Provides Foundation Seattle/ Tacoma Portland Oakland/ San Francisco Los Angeles Las Vegas Salt Lake City Phoenix Denver Twin Cities Kansas City Chicago St. Louis Dallas/Ft. Worth Population Provides Base Demand Creates Potential in All Business Groups Well Positioned to Serve Growing Population Top 10 States Major Population Centers Austin San Antonio Houston Source: U.S. Census Bureau 4
Strengthening U.S. Adds Potential 2.9% 3.9% 3.1% 2.8% 2.9% 3.6% 3.4% 2.8% 2.5% 2.2% 2.3% 2.7% & Industrial 100 10% 90 8% 6% 80 4% 70 2% 60 0% 2011 2012 Housing Starts Light Vehicle Sales (millions) (millions) 1.36 1.49 1.52 15.5 1.19 0.93 16.4 17.0 16.7 17.3 17.1 Gross Domestic Product Expected to Continue to Strengthen 0.99 Improving and Encouraging and Population Create Strong Foundation IHS Global Insight: October 2014 Forecast 5 Global Trade Expands Reach Softening Ocean Carrier Alliances Uncertain Economies Strengthening Mexico Energy Reform Global Automotive Trends Indonesian Coal Reform 6 Auto 14% Intmdl 64% Strengthening New Ethanol Mandate Ag 9% World 74% Political Unrest Ebola Uncertainty Softening national Trade Volume Jan Sept 2014: 2.8 MM Carloads Mexico 26% Growing World Population Chem 7% Energy 2% IP 4% Drives national Mexico Manufacturing Expansion and Energy Reform World Food Demand
Shale Energy Continues Manufacturing Expansions Primary ry Shale s Drill (C 2 H 4 ) n H 2 Polyethylene Expansions Crude-by-Rail Fertilizer UP Carloads (000) 500 400 300 200 Crude-by-Rail 100 Below 0 2010 2011 2012 2013 2014E Potential Strongest Franchise for Construction Complementary s Refined Petroleum Potential in for Drilling and lines Crude-by-Rail Flows Uncertain line Construction Other s Benefit Long Term 7 Potential From Mexico s Energy Reform Calexico Nogales Mexico s Energy Reform Transforms Sector Hermosillo Sabinas - Burgos Eagle Pass Laredo Brownsville New Gas lines are Nearer Term Opportunities Longer Term Potential for Other Drilling Materials Torreón Saltillo Monterrey Lower Electricity Prices Oil pipeline Gas pipeline Oil & Gas production region Aguascalientes Guadalajara Lázaro Cárdenas San Luis Potosí Querétaro Mexico City Toluca Puebla Chicontepec Deep water Shallow water 8
Highway Conversion a Long-Term Trend OTR Conversion Opportunity Mix* 5% Dry Van Reefer Flat Bed 22% 73% Highway Conversion Opportunities in All Business Groups Truck Capacity Constraints Long-term Highway Congestion *Transearch, Company Analysis 9 Value Proposition Pulls It All Together Franchise Provides Opportunity Population and are Favorable Strong Relationships Diverse Opportunities Regulatory Uncertainty Focus on Business Development Price to the Value We Provide Excellent Service Strategic Investments The Best Franchise Innovative 10