Bank of America – Merrill Lynch Bank of America – Merrill Lynch Global Transportation Conference Global Transportation Conference June 2009 June 2009 1 1
Forward-Looking Disclosure Forward-Looking Disclosure This information and other statements by the company contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, cost-savings, expenses, or other financial items; statements of management’s plans, strategies and objectives for future operation, and management’s expectations as to future performance and operations and the time by which objectives will be achieved; statements concerning proposed new products and services; and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “project,” “estimate” and similar expressions. Forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise any forward-looking statement. If the company does update any forward-looking statement, no inference should be drawn that the company will make additional updates with respect to that statement or any other forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, among others: (i) the company’s success in implementing its financial and operational initiatives; (ii) changes in domestic or international economic or business conditions, including those affecting the rail industry (such as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; and (v) the outcome of claims and litigation involving or affecting the company. Other important assumptions and factors that could cause actual results to differ materially from those in the forward- looking statements are specified in the company’s SEC reports, accessible on the SEC’s website at www.sec.gov and the company’s website at: www.investors.csx.com. 2 2
CSX Network is vital to America's economy CSX Network is vital to America's economy CSX Network CSX Network � Strategic rail network east of the Mississippi, serving over two- Boston thirds of the U.S. population Chicago � Network reach to major U.S. core New York industries and infrastructure St. Louis � Access to key natural resources Memphis � Safest, most efficient, environmentally friendly mode of surface transportation New Orleans Florida 3 3
Economy impacting volume levels Economy impacting volume levels Year-Over-Year Volume Change First Quarter Second Quarter-to-date % of CSX Commodity Groups CSX Volume � Chemicals (36%) Industrial 11% � Metals Segment (31%) � Forest Products (24%) Housing 11% � Emerging Markets Products (23%) � Automotive (18%) Consumer 35% � Intermodal Products (20%) � Agricultural Products (11%) Agriculture � Phosphates & Fertilizers 14% Segment (15%) � Food & Consumer (23%) � Coal Energy 29% (7%) Note: Second quarter data for 2009 is through week 23 4 4
Focused on service while rightsizing resources Focused on service while rightsizing resources First Quarter Second QTD YTD Year- -over over- -Year Improvements: Year Improvements: First Quarter Second QTD YTD Year On-Time Originations 4.8% 7.4% 6.1% On-Time Arrivals 14.5% 20.3% 17.4% Service Service Metrics Metrics Velocity 3.8% 8.4% 5.3% Dwell (6.2%) (6.6%) (6.2%) Year- -over over- -Year Reductions: Year Reductions: First Quarter First Quarter Second QTD Second QTD YTD YTD Year Road Crew Starts 14.9% 20.8% 17.3% Resource Resource Active T&E Employees 10.1% 15.8% 12.4% Levels Levels Active Locomotives 9.2% 16.6% 12.2% Improvements delivered in an environment centered Improvements delivered in an environment centered around continued safety leadership around continued safety leadership Note: Service Metrics through week 23; Resource Levels through week 22 5 5
CSX is preparing for changes in the economy CSX is preparing for changes in the economy U.S. Population Centers U.S. Population Centers � and the CSX Network Operating strategy: ONE Plan and the CSX Network Northeast Midwest Boston � Long-term fundamentals continue to favor rail: Chicago New York — Efficiency of transport — Environmental friendliness — Infrastructure sustainability Piedmont Atlantic � Pricing in early stages of recovery Population Jacksonville GT 6M LT 1M Gulf Coast 3-6M 1-3M New Orleans Florida Source: World Trade Service 6 6
ONE Plan is CSX’s operational strategy foundation ONE Plan is CSX’s operational strategy foundation � ONE Plan is the platform for a scheduled network � Focus remains on maximizing service and efficiency � Advanced technology and simulation tools are applied to Operation Planning Merchandise Traffic Automotive Traffic 7 7
Yard alignment drives productivity and efficiencies Yard alignment drives productivity and efficiencies CSX Yard Network CSX Yard Network � Yards are the processing centers for railroads � Locations need to support traffic flows � Infrastructure is capital intensive � Adjustments in yard network variabilizes cost structure CSX Yards (13) 8 8
CSX network structure adjusts to shifts in demand CSX network structure adjusts to shifts in demand � Downgrading Frontier Yard in Buffalo creates operating Buffalo efficiencies for CSX — Reduces operating expenses Willard, OH — Allows for better use of capital � Positions network for new supply chains and provides capacity for long-term growth Increased Traffic Decreased Traffic 9 9 9 9
National Gateway enhances market reach National Gateway enhances market reach National Gateway National Gateway � National Gateway delivers and Northwest Ohio and Northwest Ohio competitive market access � Chambersburg Leverages changes in global NW Ohio Transfer Yard supply chains Pittsburgh — Extends market reach from growing east coast ports Baltimore Columbus � Double-stack clearances Norfolk Charlotte improve network economics Wilmington � Northwest Ohio hub will drive Terminal Completed density into secondary markets Planned Construction NW Ohio Connectivity Gateway Clearances 10 10 10 10
Rail remains America’s long-term freight solution Rail remains America’s long-term freight solution Investment Required � Infrastructure needs have Through 2035 in Billions gained national attention $5,000 � 2009 American Recovery and Reinvestment Act provides funding for rail � Freight rails need to earn adequate returns $198 $148 Freight Rail Passenger Highways Rail Source: 2007 AAR/Cambridge Study and 2007 DOT Surface Transportation Study 11 11 11 11
Freight rail delivers public benefits Freight rail delivers public benefits Rail is one of the safest and most secure modes of surface Safe and Secure Safe and Secure transportation One Intermodal train can carry the Efficient Efficient load of 280 trucks A locomotive can haul a ton of freight more than 436 miles on one Green Green gallon of fuel Rail capital investment relies Sustainable Sustainable principally on private funds 12 12 12 12
Competitive environment favorable Competitive environment favorable � � Trucking Industry Railroad Industry — Overall capacity is declining — Service quality improving — Regulatory restrictions continue — Supply chains are expanding — Structural changes occurring — Focus on “green” increasing — Highway congestion increasing — Balanced regulations likely 13 13 13 13
Pricing remains in early stages of recovery Pricing remains in early stages of recovery Inflation-Adjusted Pricing Indexed: 1981 = $100 2 R 2 R Pre-deregulation, rail pricing During the first 23 years after the passage During the first 23 years after the passage kept pace with inflation of the Staggers Act, rail pricing declined by 60% of the Staggers Act, rail pricing declined by 60% $100 $51 $40 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 Source: Association of American Railroads 14 14 14 14
In summary . . . In summary . . . � Rightsizing and cost efficiency focus continues � CSX is vital to America’s economic recovery � Long term fundamentals remain favorable � Reshaping Network for short and long-term advantage 15 15 15 15
Bank of America – Merrill Lynch Bank of America – Merrill Lynch Global Transportation Conference Global Transportation Conference June 2009 June 2009 16 16 16 16
Recommend
More recommend
