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Norfolk Southern  Strategies for Short Lines

Norfolk Southern  Strategies for Short Lines. Based on remarks made during the 2Q08 earnings call July 23, 2008 . Moorman: Keep service levels high Adhere to ops plans, right connections, OT performance measure everything Asset focus: people, track space, equipment, information

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Norfolk Southern  Strategies for Short Lines

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  1. Norfolk Southern Strategies for Short Lines Based on remarks made during the 2Q08 earnings call July 23, 2008  From Roy Blanchard

  2. Moorman: Keep service levels high Adhere to ops plans, right connections, OT performance measure everything Asset focus: people, track space, equipment, information Corridor focus Seale: Fuel surcharge covers 94% of total revenue Timely place/pull at customer Measure ISA performance, report discrepancies to Atlanta Eliminate waste, variability, inflexibility Do you have parallel routes available for NS to use for slower merch traffic?  Are you getting your share? Which of your moves get FSC and which do not? NS Speaker                Short Line Action From Roy Blanchard

  3. Seale: Record RPU in all business segments but automotive Metals up -- pipe, plate coil steel. Ethanol up 20%, mainly in southeast; export corn and feed.  Lumber down, pulpboard up 2/3 business under contract, 3-year average; 1/3 of 2/3 expire every year Check yoy handling fee  increases against  NS  Quarterly  Report Examine customer list for fits. Look for oppties to replace weak commodity lines with strong ones. Follow customer contract dates, be in on renegotiation NS Speaker                Short Line Action From Roy Blanchard

  4. Further reductions in the Operating Ratio? Truck traffic returning to NS? Triple Crown growing beyond auto? Wick: "We have targets to take it down over the next few years." Don: "There is a tipping point in the range of diesel fuel prices that will drive them one way or another." Don: "Consciously repositioning TC away from auto, still  24+ % auto.  Wick: "We want to be careful where we expand.' Q&AQuestion                          Response                             From Roy Blanchard

  5. Last quarter you said you could increase prices 4% through 2009. Now it looks like you'll hit 9%. What changed? Any impact of the midwest floods? Any small rate case exposure like CSX and DuPont? Don: "The competitive environment has changed. The service product is very good and we can negotiate higher prices." Jim Squires: "Negligible." Wick: "Not now. We charge for the value of our service. We offer a superior alternative in the market place and we have strong relationships with most of the people we do business with." Q&AQuestion                          Response                             From Roy Blanchard

  6. Renegotiated coal rates? Will the rate of truck conversions change your capex outlook either in dollars or priorities? Wick: Average length of haul for export coal is 440 miles; for utilities 280 miles. Net 30% RPU increase.  Wick: "The shift to domestic IM is going to be one of the primary outcomes of this re-evaluation of the supply chain. We will continue to invest to strengthen the franchise." Q&AQuestion                          Response                             From Roy Blanchard

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