Nate Asplund

Director – Public Private Partnerships

September 20, 2009

SCORT 2009

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII

Panel: Partnering – Freight Service

2

Discussion Topics

•BNSF IntroductionBNSF Introduction

•Nation’s NetworkNation’s Network

• InvestmentInvestment

•Successful PartnershipsSuccessful Partnerships

•Project ExamplesProject Examples

•Take AwaysTake Aways

3

Serving 13 of the 19 fastest Serving 13 of the 19 fastest growing marketsgrowing markets

Connecting over 179 M Connecting over 179 M consumersconsumers

$30 Billion invested since 1997$30 Billion invested since 1997

Operate 32,000 miles Operate 32,000 miles

Host Amtrak on 7,000 milesHost Amtrak on 7,000 miles

Host commuter operations in Host commuter operations in five Metro areasfive Metro areas

Connecting Communities and Markets

4

Sustainable Partnership OptionsHigher capacity, lower cost, lower impact

Fuel Efficiency Up 80% since 1980 Truck – 5.3 to 5.1 mpg

Environment More than 60% less CO2

than long-haul truck

Scalability Leverage chokepoint relief

Constructability Less footprint, cost and

time

5

National Network Trends

US Highway and Rail Networks System Miles and Volumes

5060708090

100110120130140150160170180190200210

1980 1985 1990 1995 2000 2005

Highway - VMT Highway - Lane-miles Rail - RTM Rail - Track-miles

Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007 and AAR

6

6

0%

5%

10%

15%

20%

Source: Annual State of Logistics Report, Council of Supply Chain Management Professionals

200710.1% of GDP ($1.4 Trillion)

Transportation Costs

Inventory / Admin. Costs

U.S. Logistics Costs as a Percent of GDP

Supply chain costs are increasing

What Drove Logistics Costs Down from 1980 to 2004?

Transportation deregulation Excess capacity Low fuel costs

What Drove Logistics Costs Down from 1980 to 2004?

Transportation deregulation Excess capacity Low fuel costs

What’s Driving Recent Supply Chain Cost Trends? Higher fuel costs

Congestion Aging (legacy) infrastructure

Public policy Increasing U.S. labor costs

What’s Driving Recent Supply Chain Cost Trends? Higher fuel costs

Congestion Aging (legacy) infrastructure

Public policy Increasing U.S. labor costs

$0.9T

$0.5T

Will the investment be enough?

Total Needed Sources of Capital

$135 B

Growth

Productivity

Shortfall

$70 B

$26 B

$39 B

Class 1 capital investments needed to meet 2035 freight volume demand

Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007

8

Capital Commitments$30B Invested in the last 12 years

2002-2007: ROIC is restated to reflect the change in methodology for discounting operating leases.

$ M

illi

on

s

Capital Commitments with ROIC

Funding Infrastructure Mobility Impacts Make Freight Rail PPP’s Economically and Politically Viable

Public Impact and ConcernPublic Impact and Concern

CongestionCongestion

Air Quality and COAir Quality and CO22

SafetySafety

Economic DevelopmentEconomic Development

Delays and CostsDelays and Costs

Energy SecurityEnergy Security

Global CompetitivenessGlobal Competitiveness

Cost of Highway InfrastructureCost of Highway Infrastructure

Go-Alone:Go-Alone: Public Investment in Highway Public Investment in Highway

Maintainability of current system Maintainability of current system

Cost of adding thousands of new lane miles Cost of adding thousands of new lane miles by 2020by 2020

Metro area right-of-way constraintsMetro area right-of-way constraints

Funding and Toll-road concernsFunding and Toll-road concerns

Energy, environment & safety impactsEnergy, environment & safety impacts

PartnershipPartnership: Public Investment in Rail: Public Investment in Rail

Energy, environment & safety benefitsEnergy, environment & safety benefits

More economical footprint for freight growthMore economical footprint for freight growth

Lower construction cost per GTMLower construction cost per GTM

System leverage from fixing chokepointsSystem leverage from fixing chokepoints

Private maintenance after constructionPrivate maintenance after construction

Rail PartnerRail Partner

NetworkNetwork

CapacityCapacity

SponsorSponsor

ROICROIC

ResourcesResources

TimingTiming

Public PartnerPublic Partner

MandateMandate

BenefitBenefit

SponsorSponsor

FundingFunding

ProcessProcess

TimingTiming

Successful PartnershipsAligning Public and Private Objectives

11

BNSF Project Examples Strong Partnerships Work

Recent Successes Tehachapi Trade Corridor Port of Vancouver USA Expansion Connect Oregon II Burlington Bridge Part I

Active Projects Kansas City Intermodal Facility Tower 55 Hobart Truck Efficiency Project Burlington Bridge Part II

Tehachapi Mountains - California

12

Take Aways

Viable Partnership Opportunities

Improve Capacity, Velocity, Feasibility

Chokepoints

Connectors

Intermodal

Carload

PPP’s are Only a Part of Meeting the Investment Requirement

Regulatory Environment for Long-Term Investment also Critical

Passenger and Freight Common Ground

Congestion Relief , Mobility Choices, Sustainability, Environment