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Houston Economic Club May 18, 2009

Transportation for Tomorrow. Houston Economic Club May 18, 2009 . Matthew K. Rose Chairman, President and CEO. BNSF in Texas. 2. BNSF in Houston. 3. Running a railroad through recession to recovery – Volumes. Percent change Year over Year. 2008. 2009. 2006. 2007. 4.

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Houston Economic Club May 18, 2009

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  1. Transportation for Tomorrow Houston Economic Club May 18, 2009 Matthew K. Rose Chairman, President and CEO

  2. BNSF in Texas 2

  3. BNSF in Houston 3

  4. Running a railroad through recession to recovery – Volumes Percent change Year over Year 2008 2009 2006 2007 4

  5. U.S. infrastructure supports millions of supply chains Class 1 Railroads Interstate Highways Miles of Supply Chain: • 46,837 miles of Interstate Highways • 173,000+ miles of railroad tracks Daily Supply Chain Volume: • 43 million tons of goods • Valued at $29 billion • 12 billion ton-miles Source: U.S. Chamber of Commerce, Let’s Rebuild America

  6. And keeps the economy running

  7. We know the future will bring more… 2030 Growth Projections U.S. population expected to grow to 364 million VMT to grow by 150 percent Freight rail to increase by 92 percent Source: Global Insights, AASHTO, FHWA

  8. Capacity is shrinking Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007 and AAR

  9. We have a national funding gap for all surface transportation 600 Cost toImprove 500 Cost toMaintain Revenue 400 Year-of-Expenditure Dollars (in Billions) Gap to Improve = $107 Billion per year(through 2015) Gap to Maintain = $50 Billion per year(through 2015) 300 200 100 2006 2009 2012 2015 2018 2021 2024 2027 2030 Year Source: U.S. Chamber of Commerce

  10. Railroad Spending on Way & Structures vs. State Highway Agency Spending

  11. Railroads: Far More Capital Intensive Than Other Industries Capital Expenditures as % of Revenue: Avg. 1997-2006 Sources: U.S. Census Bureau, AAR

  12. Capital Commitments Capital Commitments with ROIC $ Millions $ Millions 10.8% 10.7% ROIC 10.0% 9.7% 9.6% 9.5% $2,850 9.4% 8.8% $2,670 $2,593 $2,520 7.6% 7.2% $2,265 $2,258 $2,179 6.2% 6.2% $1,988 $1,763 $1,726 $1,608 $1,505 2002-2007: ROIC is restated to reflect the change in methodology for discounting operating leases.

  13. Class I RR Cost of Capital vs. Return on Investment RR Cost of Capital RR Return on Investment Note: In 2006, the Surface Transportation Board significantly changed the method by which it calculates the rail industry cost of capital. Source: STB

  14. Rational regulation works

  15. Railroads Keep Goods Affordable for America Inflation-Adjusted RR Rates* Down 54% Since 1981 *Average revenue per ton-mile, Class I railroads. Source: AAR

  16. Freight Rail Works

  17. Railroads reduce highway congestion One BNSF intermodal train removes more than 280 long-haul trucks from our nation’s highways

  18. Rail is 2-5 times more fuel efficient than trucks 2.3x 4.3x 5.5x *Based on a 1,500 mile truck haul

  19. Rail emits a fraction of total U.S. greenhouse gas emissions Trucks = 21% of GHG emissions Rail = 2.6% of GHG emissions In 2008, BNSF moved 4.7 million containers and trailers, reducing GHG emissions by more than 7 million metric tons The rail industry moved 11.5 million containers and trailers, reducing GHG emissions by more than 17.2 million metric tons

  20. Call to action • Achieve a state of “good repair” • Mode neutral • Increase funding from all sources - federal, local, state and private - to meet $225-$349 billion a year in needs • Shippers, states, federal government, all transportation sources must work together to sustain our leadership in surface transportation

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