RailTrends. UP Volume. November 21, Brad Thrasher, VP & General Manager Industrial Products thru October vs YTD Carloadings

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1 RailTrends November 21, 2014 Brad Thrasher, VP & General Manager Industrial Products 1 UP Volume 2014 thru October 2014 vs YTD Carloadings 7-Day Carloadings Agricultural 13% Industrial 11% Intermodal Autos 9% 4% Coal 4% Chemicals 1% 140 J F M A M J J A S O N D TOTAL 7% 2

2 Strengthening U.S. Economy Adds Potential* *Source: IHS Global Insight: October 2014 Forecast Key Insights Economy expected to continue to strengthen Improving unemployment and consumer sentiment encouraging Economy and population create strong growth foundation 3 North American Manufacturers Becoming More Competitive Globally* U.S Total manufacturing cost indexed against U.S. = 100 Germany France Japan UK Canada Russia China Thailand Mexico 80 *Source: Boston Consulting Group

3 Industrial Production Growing share of GDP* IP Lagged GDP Growth IP Leads GDP Growth IP vs. GDP IP GDP *Source: IHS Global Insight: November 2014 Forecast 5 Shale Market Impacts (C 2 H 4 ) n H 2 Polyethylene Expansions Manufacturing Expansions Primary ry Shale Markets Fertilizer Production Frac Sand Crude-by-Rail Drill Pipe Construction Products Complementary Markets Refined Petroleum Products Pipeline Construction 6

4 Supporting Rebirth of Manufacturing in North America Shale Revolution Low Feedstock Costs Low Energy Costs Demand for Durable Goods Steel, Pipe, Rock, Trucks Industrial Expansion 7 Global Competitiveness Low Feedstocks Low Energy Costs *Source: Waterborne Energy, Inc. Data in $US/MM Btu Includes information and data supplied by IHS Global Inc. *Source: IHS, Platts, McKinsey Analysis 8

5 Fertilizer Demand Phosphates / Nitrogen Strong Domestic Access Low Natural Gas Prices Displacement of Imports Global Fertilizer Demand* (Million Tons) Potash Phosphates Nitrogen 0 North American Nitrogen Expansions* Spiritwood, ND *Source: IFA, June 2014 Rock Springs, WY Port Neal, IA E Dubuque, IL Lima, OH Wever, IA Greene County, TN Enid, OK Borger, TX El Dorado, AR * Publicly announced Freeport, TX Donaldsonville, LA Waggeman, LA 9 North American Expansions* Plastic Resin Montreal, PQ Badlands NGL LLC North Dakota Sarnia, ON Joffre, AB Monaca, PA Baytown, TX Lake Charles, LA Freeport, TX Lake Charles, LA Parkersburg, WV Sweeny, TX La Porte, TX Odessa, TX Decatur, AL Plaquemine, LA La Porte, TX La Porte, TX Expansions under construction *Publicly announced expansions Coatzacoalcos, VL Plaquemine, LA Point Comfort, TX Corpus Christi, TX 10

6 North American Expansions Steel Seattle Portland Eastport Duluth Twin Cities Chicago Oakland SLC Denver KC St. Louis LA Calexico Nogales El Paso Dallas Memphis New Orleans Eagle Pass Laredo Houston Brownsville 11 Foreign Direct Investment in Mexico Important FDI Announcements 12 *Source: Company public announcements

7 Rail is Critical to America s Supply Chain Iron Ore Scrap FACILITY 13 Increasing Demand for Rail Bulk Seattle Portland Trans load Bulk / Crude Bulk Inter modal Oakland Crude Shale Eastport SLC Shale Rock Denver Twin Cities Omaha Duluth Frac Sand KC Potential New and Expanded Facilities Frac Sand St. Louis Chicago YTD Nov 2014 YTD Nov 2013 Var Construction New Facility Facility Expansion UP Short Line LA Inter modal Trans load Calexico Nogales Inter modal El Paso Pipe Frac Sand Frac Sand Dallas Inter modal Bio- Mass Memphis New Orleans Eagle Pass Laredo Steel Coils Plastics Pipe Houston Brownsville 14

8 Growing Opportunity of a Unique Franchise Excellent Network Strategic Terminal Locations Broad Port Access Border and Interchange Coverage Automotive Distribution Centers Intermodal Terminals Manifest Terminals Ports Border Crossings, Gateways and Interchanges 15 Value Proposition Pulls It All Together Franchise provides opportunity Population and economy are favorable Diverse market opportunities Focus on business development Generate value for our customers and shareholders Excellent Service Strategic Investments Strong Relationships The Best Franchise Innovative Products 16

9 RailTrends November 21, 2014 Brad Thrasher, VP & General Manager Industrial Products 17