CN Rail Procurement & Supply Management Engineering

1. CN Rail Procurement & Supply Management Engineering Jim McLeod & Bill Mandelos February 1st 2019

2. Introduction Bill Mandelos Director Engineering Category Procurement & Supply Management Jim McLeod Chief Engineer Structures, Design & Construction Engineering

3. 2018 Recap

4. 2018 - $400M in Capacity Investments Prince Rupert Watson Island New Sdg Winnipeg-Edmonton 54 Miles DT $128M EncombeSdg Ext Rose Lake New Sdg Taverna-Prince Rupert 4 New Sdgs; 3 Sdg Ext $72M DewaySdg Ext Edmonton Prince George Guilford New Sdg Nichol Sdg Ext Taverna Loos New Sdg Tofield-Lindbrook8 Miles DT Kamloops Spruce Grove-Carvel 12 Miles DT Artland-Chauvin 12 Miles DT Toronto-Winnipeg 1 Sdg Ext $8M Saskatoon Wainwright-Fabryan8 Miles DT VavenbySdg Ext Melville Vancouver Hornepayne Welby-Spy Hill 8 Miles DT Waldron-Cana 10 Miles DT Winnipeg Edmonton-Vancouver 12 Miles DT; 1 Sdg Ext $60M LoureiroSdg Ext Van Lynn (Ranier) Sdg Ext Superior Hawthorne Hill 6 Miles DT (Phase 1) Siding Extension New Long Sidings Double Track (DT) Chicago-Winnipeg 6 Miles DT; 2 Sdg Ext $42M Sarnia Toronto Fond du Lac Nestle Sdg Ext Expanding and double tracking to address specific capacity pinch points Chicago Chicago-New Orleans 2 Sdg Ext $19M Ferryman & Livingston

5. 2018 - Yard Investments Scotford $17.7M Swan Landing $2.6M Melville $6M Walker $27M Ranier $5.1M Symington $26.7M Greater Toronto I/M $27.3M Blair $5.4M $104.3Mtotal investments Harvey/Joliet $8.5M Fulton $13.9M

6. 2019 outlook

7. Construct Track Design, Permit, Tender & Build the Grade Ballast & Surface Available Double Track Available Double Track Install Turnouts Install Signals

8. 2019 Major Capacity Projects Line Capacity Projects – 2019 – Major Corridors (Add’l Potential DT Grading Only) Kaien New Support Track Prince Rupert Entrance 6 Miles DT Biggar-M 6.2 6 Miles DT Clavet-Dufault 4 Miles DT Port Edward / Watson Island New Sdg Prince George Neola-Biggar 8 Miles DT Edmonton Tate-Booth 10 Miles DT Prince George West 4 Miles DT Taverna Saskatoon 5 Bailey-Fenwood 10 Miles DT 4 Leaman-Niton 13 Miles DT Kamloops Melville Jarrow-Kinsella 9 Miles DT Vancouver 2 3 1 Zelma-Allan 10 Miles DT Swift Sdg Ext M 131.2-Wainwright East 8 Miles DT Kitella-Xena 8 Miles DT Winnipeg Glendale New Sdg Zeneta-Atwater 10 Miles DT Deer-Exira 7 Miles DT Superior Winnipeg-Edmonton Other Potential DT Grading Only (58 miles) 1 – Rivers-Myra (8 miles) 2 – M 191.1-Wattsview (10 miles) 3 – Hubbard-Jasmin (14 miles) 4 – Winter-Artland (20 miles) 5 – Ardrossan-Bremner (5 miles) Hawthorne Hill 8 Miles DT (Phase 2) Toronto Sarnia Legend Siding Extension New Long Siding / Trk Double Track (DT) DT Grading Only Other Potential DT Grading Only Fond du Lac Chicago January 3, 2019 (v2) CN Network Planning, Edmonton

9. 2019 Plan Overview Mainline Basic Track Maintenance Capital Investments * TM=Track Miles Notes: Various Track = other track maintenance such as OTM, welding gauging, stabilization, de-stressing, S&C, poleline Other = grinding, crossing rehabilitation, work equipment, emergency OTM = other track materials (plates, spikes, anchors, lubricators) • 369 TM planned rail replacement in 2019 • 26% higher than 2015 when we first began our multi-year tangent rail program to avoid potential bow wave in 2020 • 0.95M planned tie replacement in 2019 • On a steady state basis, ideally looking to replace 2.1M ties overall annually, taking into account the higher traffic density • Delivering basic capital program productively is based on several key factors, in addition to assumed normal winter conditions • Continued efficiency in material logistics – early start of deliveries and lower Engineering rail car cycles • Work block compliance and reduced late starts for increased productivity and lower unit cost • Assuming same productivity as 2018 for the 2019 program

10. Service and Safety vs. Capital Investment • Capital investment increase leading to… • 63% decrease in all accidents since 2004 • 57% decrease in FRA accidents since 2004 • 74% decrease in non-FRA accidents since 2004

11. 2019 Business Outlook – Procurement & Supply Management Value Creation for CN Initiatives Expectations • Continued execution of category strategy • Implementing technology roadmap • Ariba, Fieldglass, and compliance tools to facilitate goals & objectives • Structured governance model with key partners • Focus on performance and quality management • KPIs and key metrics • More market intelligence and scanning international sourcing opportunities • Supplier consolidation efforts • Supporting Aboriginal affairs goals • Supplier agility/flexibility to meet changing needs • Moving from a transactional approach to partnership-based relationships • Proactive engagement • Continuous improvement efforts and added value • Moving away from traditional agreement frameworks towards more flexible risk sharing models