9 th Annual Norfolk Southern Short Line Marketing Meeting

Transcription

1 9 th Annual Norfolk Southern Short Line Marketing Meeting July 12, 2010 Donald W. Seale Executive Vice President and Chief Marketing Officer

2 Economic Overview (AKA) Hopes Wishes Aspirations Guesses

3 The ISM index indicates the economy is still expanding, but at a more moderate pace than recent months Production indicates expansion showing increases in plastics, printing, computers, and chemicals New Orders and Supplier Deliveries were down this month, but they are still in expansion mode Prices Paid fell in June with metals and plastics showing price increases Source: Institute for Supply Management

4 Auto production is forecasted to increase for year, despite recent downturn 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , ,922,326 8,558,226 11,741,232 12,977, % +11% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Source: Wards Auto Forecast

5 1/2/2010 1/16/2010 1/30/2010 2/13/2010 2/27/2010 3/13/2010 3/27/2010 4/10/2010 4/24/2010 5/8/2010 5/22/2010 6/5/2010 6/19/2010 7/3/2010 7/17/2010 7/31/2010 8/14/2010 8/28/2010 9/11/2010 9/25/ /9/ /23/ /6/ /20/ /4/ /18/2010 1,468 1,525 1,564 1,587 1,595 1,605 1,645 1,660 1,668 1,683 1,715 1,720 1,734 1,712 1,731 1,755 1,764 1,754 1,776 1,797 1,787 1,766 1,785 1,803 1,808 1,763 1, Steel demand has been increasing as the world has been recovering from the recession Weekly U.S. Domestic Raw Steel Production (000) Tons 2,400 2,200 Adjusted YTD Production thru 7/3/2010: M tons YTD Production\Consumption Rate : 70.6%, up 64.5% vs. Last Year % Capacity , , ,600 IHS Global Insight 2010 forecast as of May 10: 89.9 M Tons 60 1,400 1,200 1, Capacity Source: Global Insight, American Iron and Steel Institute

6 Housing starts plunge in wake of expiration of homebuyers tax credit 1,400 1,200 1, Source: Census.gov

7 Thousands Percent Employment data continues to be discouraging % 10% 8% 6% 4% 2% 0% Nonfarm Payrolls Unemployment Source: BLS

8 Percent GDP YOY % Change Key indicators indicate second-half moderation, as seen in the GDP forecasts 8% 6% 4% 2% 0% -2% -4% -6% -8% Real GDP Y-O-Y % Change 2% 1% 0% -1% -2% -3% -4% -5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Source: Wells Fargo Economic Forecast

9 YOY % Change Rail volumes have outpaced truck tonnage in the economic recovery 30% 20% NS 10% 0% -10% -20% -30% -40% May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Truck tonnage Rail carloadings + intermodal units NS Volume Source: ATA MTTR and AAR Weekly Marketshare

10 Norfolk Southern Carload Percentage Changes for Second Quarter and Year-to-Date 2010 Total Carloads Metals & Construction 15% 22% 32% 50% Chemicals 26% 32% Intermodal 16% 20% Automotive 17% 19% Coal 6% 19% Paper & Forest 10% 15% Agriculture 13% 17% Second Quarter Year-to-Date Source NS Accrual

11 2010 Year-Over-Year Volume Changes 25% 20% 15% 10% 5% Year-to-Date Merchandise +21% Intermodal +16% Coal + 6% Total NS +15% 0% Source: Carload Data from June 2010 Accounting Accrual

12 Merchandise Volume First Quarter 2007 Second Quarter ,000 Merchandise Carloads 700, , % 500, , , , , Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2010

13 2010 Year-Over-Year Volume Changes 25% 20% 15% 10% 5% Year-to-Date Merchandise +21% Intermodal +16% Coal + 6% Total NS +15% 0% Source: Carload Data from June 2010 Accounting Accrual

14 NS Volume 2009 vs Coal 24% Imdl 43% Ag 9% Metcon 8% Paper 5% Chem 6% Auto 5% Coal 26% Imdl 32% Ag 8% Metcon 11% Auto 9% Paper 7% Chem 7% Total Volume 5,957,257 Units Total Volume 6,624,966 Units

15 Outlook Business Portfolio Chemicals Agriculture Domestic Intermodal International Intermodal & Export Coal Domestic Met Coal & Steel Utility Coal Automotive Manufacturing recovery & project growth Build out of ethanol network Truckload conversions Improving imports/exports Recovery in global steel production Falling stockpiles and increased electricity generation Impact of Ford vehicle network redesign Forest Products Uncertainty in housing, but improving paper markets

16 Outlook Summary 1Q Q 2010 Units 1,455,567 1,412,342 1,522,215 1,567,133 1,582,861 1,719,809 Gradual growth in core markets Strong project growth and new business Continued pricing improvement 1Q Q Q Q Q Q 2010 Healthy capital budget supports service & growth Source: NS Accounting

17 Capital Expenditures ($ Millions) $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $ budget

18 2010 Capital Improvement Budget Replacement/Core vs. Growth/Productivity 25% Total Spending = $1.442 billion 75% Replacement/Core Growth/Productivity

19 2010 Capital Improvement Budget ($ Millions) $221 Total Spending = $1.442 billion $110 $81 $140 $706 Roadway Facilities/Terminals Technology Infrastructure Rolling Stock Other Projects $184

20 Our Short Line Partners

21 U.S. Short Line route miles have seen continued growth since Staggers Miles have grown from approximately 8,800 to over 51,584 in 2009 Growth of more than 486% Account for nearly 30% of the nation s total rail mileage 172 Short Lines created (31% increase) Currently 572 short lines in 49 states Short Lines employ nearly 20,000 people Serve over 13,000 facilities Haul over 14 million carloads per year Routes are typically 500 miles or less NS connects with 258 Short Lines Source: ASLRRA

22 Number of Shortlines Over 300 Short Line Railroads have more than one Class I connection Number of Class I Connections Short Lines pick up and deliver one out of every four rail cars moving on the national rail network Source: ASLRRA

23 Rail Industry Carloads Class I s Short Line Traffic Only Variance BNSF 1,247,000 1,060, % CN 518, , % CSX 955, , % KCS 202, , % NS 983, , % UP 986, , % Source: ASLRRA

24 Norfolk Southern Short Line Carloadings are up 25% YTD in ,200,000 1,000, , , , , Y-T-D goal is an increase of 54,670 carloads (6.3% increase) to a total of 866,379 carloads Source: NS Short Line Department

25 Short Line Successes BPRR, RJCP Export coal INRD Utility coal AVR, BPRR, RBMN, LRWY, LVRR, OHRY, WCOR, WSOR, WW Marcellus Shale GFRR, RJCP Corn/Ethanol ACW, FEC, ESPN, LS, LVRR, MNBR, NPB, WE Ethanol CUOH, NYA, NJRC Municipal Solid Waste BPRR, LRWY, NBER, RBMN, RSR, VTR, WNYP, YRC Salt

26 Marketing Agenda with Short Lines Growth opportunities in key markets Emphasis on projects Continued emphasis on Industrial Development Realize the value of our product Market reach multiplier WORK TOGETHER AS A TEAM

27 THANK YOU