RailTrends November 21, 2014 Brad Thrasher, VP & General Manager Industrial Products 1 UP Volume 2014 thru October 2014 vs. 2013 YTD Carloadings 7-Day Carloadings Agricultural 13% 210 200 Industrial 11% 190 180 170 2014 2006 2007 2011 2013 2012 2010 Intermodal Autos 9% 4% 160 2009 Coal 4% 150 2008 Chemicals 1% 140 J F M A M J J A S O N D TOTAL 7% 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* 120 115 110 105 U.S. 100 95 90 85 Total manufacturing cost indexed against U.S. = 100 Germany France Japan UK Canada Russia China Thailand Mexico 80 *Source: Boston Consulting Group 2003 2008 2013 4
Industrial Production Growing share of GDP* 8.0 6.0 4.0 2.0 0.0-2.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018-4.0-6.0-8.0-10.0-12.0-14.0 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
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
Fertilizer Demand Phosphates / Nitrogen Strong Domestic Access Low Natural Gas Prices Displacement of Imports 200 150 100 50 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
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
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 505 423 82 New Facility 268 225 43 Facility Expansion 209 184 25 UP Short Line 28 14 14 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
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
RailTrends November 21, 2014 Brad Thrasher, VP & General Manager Industrial Products 17