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THE FREIGHT RAIL INFRASTRUCTURE CHALLENGE

2009 AASHTO SCORT Conference – Oklahoma City, OK September 20 – 23, 2009

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Benefits of Freight Railroads

• One Intermodal Train Can Take 280 Trucks off the Highway

• Rail Is the Safest Mode of Ground Freight Transportation

• Rail Transportation Is Three Times More Fuel Efficient Than Trucks

• On Average, UP Hauls One Ton 790 Miles on One Gallon of Diesel Fuel

• Trains Are Three Times Cleaner than Trucks on a Ton-mile Basis

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U.S. DOT projection

Billions of Tons of Freight Transported in the U.S.

Long-Term Demand for Freight Transportation Will Skyrocket

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Today

2035 without improvements

Below capacity

Near capacity

At capacity

Above capacity

Expected Traffic vs. Capacity

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Capital Expenditures As % of Revenue

Source: U.S. Census Bureau; EEI, AAR, Average 1997-2006 (Note: Utilities are 1999-2006)

0%

5%

10%

15%

20%

RR's Electr.Utilities

Minerals Paper Chem. Fabr. Mtl Wood Mach. Vehicles& Parts

Pet. &Coal

Food

16.9%

12.6%

5.3%

2.5%

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Class I Railroad Spending* on Infrastructure vs. State Highway Agency Spending* - 2006

Railroads Already Spend More Than Most State Highway Agencies!

*Capital outlays plus maintenance expenses.

Sources: FHWA Highway Statistics Table SF-12; AAR

1. Texas $7.572. Florida $5.693. California $4.19

Union Pacific $4.17BNSF $3.89

4. New York $3.595. Pennsylvania $3.306. Illinois $3.30

CSX $2.627. Michigan $2.618. North Carolina $2.489. Ohio $2.14

Norfolk Southern $2.1210. Georgia $1.88

$ in Billions

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Rio Valley Switching Company RehabConceptual - TBD

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Y

Port Port LaredoLaredo

LaredoLaredo

RG

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40

44

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Y

N

Laredo – Construct 2nd Main Track to Replace RG Capability

Project Description: • Construct 2nd Main Track in 2 phases and place in

active service in anticipation of possible RG track closure

• Construct 2nd main line beside existing main between Laredo Yard and bridge over Interstate 35 (MP 405.6)

• Convert current end of the RG run-around into a universal crossover between new and existing main lines

• Install CTC along both mains between Laredo Yard and I-35

• Retire RG Run-around

Benefits:• Eliminate 26 at-grade street crossings on the RG• Reduce emissions from idling vehicle waiting to

cross RG track• Provides replacement capacity to offset

approximately 4 miles double track immediately north of border crossing on the RG track

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Eagle Pass Grade Separation – FM 1021

Construct road-over-railroad grade separation at FM 1021 to eliminate conflicts at-grade

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Nogales – Rio Rico, Extend Setout Track

Project Description: » Extend Track 126 to the South and tie into mainline» Construct pad adjacent to Track 126 to

accommodate piggy packer to permit intermodal loaded shipments over Nogales gateway

Benefits• Eliminate need for time-consuming delays for

inspections at Tucson• Accommodate inspections for intermodal

shipments

Extend Track 128 and connect to Main at approx MP 57

Lease property for container inspection area

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Project Description: » The proposed westward connection from the

Nogales subdivision at Tucson enhances overall progress towards the goal of seamless operation of NAFTA traffic between the United States and Mexico. This connection will provide a direct connection to Sunset Route allowing expedited movement of goods from Mexico to Phoenix, the Los Angeles Basin and Northern California destinations. By improving operations to and from Nogales, and especially through the elimination of time consuming additional car handling at Tucson, the new westward connection supports existing and future US investment in Mexico by ensuring fast and reliable freight transport of finished goods returning to the US.

Benefits• Support growth in auto, grain and chemicals

over the Nogales gateway.• Provide access to the Nogales sub from the

west.• Avoids unnecessary congestion in Tucson yard.

Existing connection

New west-leg connection

CP SP985

Tucson Wye Connection