Intermodal Todd Strever GENERAL DIRECTOR, CONSUMER PRODUCTS - PowerPoint PPT Presentation

BNSF Intermodal Todd Strever GENERAL DIRECTOR, CONSUMER PRODUCTS OCTOBER 10, 2017

BNSF’s Intermodal Solutions Team Northwest Jace Thompson Northeast - North Jeremy Young Central Chad Schuirmann Ohio Valley Northeast - South Riley Simpson Kevin Ghassemi Southwest Alissa Murray Central Caleb Maki Southeast Jenni Bergeland South Central Bryon Arita Todd Strever: General Director David Clark: West Director (Northwest/Southwest/Central/North Central/South Central) Ben Banks: East Director (Northeast North/Northeast South/Ohio Valley/Southeast

Growth Between 1990 and 2016 +30% +30% +229% +229% Source: U.S. Census and AAR

Consumer Products is Half of BNSF’s Volume More intermodal shipments Consumer Products represents 50 percent of BNSF’s business portfolio than any Class I railroad BNSF VOLUME 2016 2016 INTERMODAL VOLUMES HANDLED BY 9,758 (THOUSANDS) U.S. CLASS I RAILROADS (THOUSANDS) 4,945 3,863 3,683 Consumer Products – 52% Coal – 19% 2,758 Industrial Products – 18% Ag – 11% 455 BNSF NS UP CSXT KCS Source: AAR and BNSF Internal Data

BNSF Volume – YTD 2017 through Q2 Total units and % change from 2016 In Thousands 565 Ag +7.8% 912 YTD 2017 2,654 Coal +19.5% TOTAL VOLUME 5,009 Consumer Products +7.6% +5.7% 878 Industrial Products +2.3%

The Culture of Consumerism is Changing

Retail Leaders – Here’s What They’re Saying “ FREE “ FOCUS ON 85M 85M MILLENNIALS SHIPPING …there are 85 million is now the standard” of them” “Companies have to remove the “ Retail is not dead weakest link in their supply chains …. disruption is necessary but mediocre retail experiences are dead” in order to innovate” “ 1/3 of retail shoppers “ Americans have lost 1/3 of their attention span in the last decade. would rather wash dishes than It is now just 8.25 seconds and physically go to a store” going down”

Poll Question: When evaluating opportunities to • Value • Speed convert freight from over-the- • Consistency road to intermodal, which of • Transparency these factors is the most (*choose top 2) important to your business...

Poll Results TOP 2 OTR TO INTERMODAL CONVERSION FACTORS Value 35% Speed 19% Consistency 41% Transparency 5%

Innovation Around Our Product

Southern Transcon Investments 99.8% $3B 2,200 mile route double track investment

Expansion in the Northern Corridor +$5B in Maintenance & Capital Expansion 2014-2017 +1,000 miles of CTC +135 miles of double-track 13 new sidings added 15 sidings extended

New PNW-Texas Service Seattle 1 day Portland faster (PNW to Texas) 5 days per week service Dallas/Fort Worth

New Joint Service with KCS to/from Mexico 5 days per week service BNSF KCS Ferromex

Innovation in the Supply Chain

Increasing Supply Information Location Chain Efficiency Transparency

Integrated Service Plan is Improving Consistency Seattle Chicago 90% of Denver participating loads are meeting our customers’ need Pacific Southwest Memphis date (between PSW Dallas/Fort Worth and Chicago)

Better Supply Chain Visibility with ETN

RailPASS Technology Provides Efficiency >27K users >7K CA users 3x faster gate 5x fewer exceptions

How far along is BNSF with installation? As of August 18, 2017

Co-Location Cost Savings EXAMPLE Site A: Logistics Park BNSF Site B: 20 miles away BNSF Intermodal Based on a hypothetical scenario with 5,000 annual inbound intermodal Facility shipments: Site A RESULTS WITH SITE A By Locating at Logistics Park BNSF You’ll Save: • $117 in drayage costs per unit Site B • $585,000 total annually on inbound shipments to your distribution center • $1.17 in annual rent savings per SF for a 500,000 SF distribution center facility

Industry Facing Headwinds Crumbling Driver Permitting Infrastructure Shortages Increased Industry Regulations Consolidation