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Bank of America Merrill Lynch Bank of America Merrill Lynch - - PowerPoint PPT Presentation
Bank of America Merrill Lynch Bank of America Merrill Lynch - - PowerPoint PPT Presentation
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
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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
- bjectives 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.
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CSX Network CSX Network
Boston
- St. Louis
Memphis New Orleans
CSX Network is vital to America's economy CSX Network is vital to America's economy
- Strategic rail network east of the
Mississippi, serving over two- thirds of the U.S. population
- Network reach to major U.S. core
industries and infrastructure
- Access to key natural resources
- Safest, most efficient,
environmentally friendly mode of surface transportation
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Economy impacting volume levels Economy impacting volume levels
% of CSX Volume 35% 11% 11% 14% 29% Chemicals Metals Forest Products Emerging Markets Automotive Intermodal Agricultural Products Phosphates & Fertilizers Food & Consumer Coal CSX Commodity Groups First Quarter Second Quarter-to-date
Note: Second quarter data for 2009 is through week 23
Industrial Segment Housing Products Consumer Products Agriculture Segment Energy
Year-Over-Year Volume Change
(7%) (15%) (20%) (23%) (31%) (23%) (11%) (18%) (24%) (36%)
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Focused on service while rightsizing resources Focused on service while rightsizing resources
Year Year-
- over
- ver-
- Year Improvements:
Year Improvements: First Quarter First Quarter Second QTD Second QTD YTD YTD
Service Service Metrics Metrics
On-Time Originations 4.8% 7.4% 6.1% On-Time Arrivals 14.5% 20.3% 17.4% Velocity 3.8% 8.4% 5.3% Dwell (6.2%) (6.6%) (6.2%) Year Year-
- over
- ver-
- Year Reductions:
Year Reductions: First Quarter First Quarter Second QTD Second QTD YTD YTD
Resource Resource Levels Levels
Road Crew Starts 14.9% 20.8% 17.3% Active T&E Employees 10.1% 15.8% 12.4% Active Locomotives 9.2% 16.6% 12.2%
Improvements delivered in an environment centered around continued safety leadership Improvements delivered in an environment centered around continued safety leadership
Note: Service Metrics through week 23; Resource Levels through week 22
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CSX is preparing for changes in the economy CSX is preparing for changes in the economy
- Operating strategy: ONE Plan
- Long-term fundamentals
continue to favor rail:
— Efficiency of transport — Environmental friendliness — Infrastructure sustainability
- Pricing in early stages of
recovery
New York Jacksonville Boston New Orleans Florida Midwest Piedmont Atlantic Gulf Coast Northeast
U.S. Population Centers
and the CSX Network
U.S. Population Centers
and the CSX Network
Population
GT 6M 3-6M 1-3M LT 1M Source: World Trade Service
Chicago
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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
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Yard alignment drives productivity and efficiencies Yard alignment drives productivity and efficiencies
CSX Yards (13)
- 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 Yard Network CSX Yard Network
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CSX network structure adjusts to shifts in demand CSX network structure adjusts to shifts in demand
Buffalo Willard, OH Increased Traffic Decreased Traffic
- Downgrading Frontier Yard in
Buffalo creates operating efficiencies for CSX
— Reduces operating expenses — Allows for better use of capital
- Positions network for new
supply chains and provides capacity for long-term growth
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National Gateway enhances market reach National Gateway enhances market reach
- National Gateway delivers
competitive market access
- Leverages changes in global
supply chains
— Extends market reach from growing east coast ports
- Double-stack clearances
improve network economics
- Northwest Ohio hub will drive
density into secondary markets
National Gateway and Northwest Ohio National Gateway and Northwest Ohio
Terminal Completed Planned Construction NW Ohio Connectivity Gateway Clearances Wilmington Norfolk Charlotte Columbus Chambersburg Pittsburgh Baltimore
NW Ohio Transfer Yard
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Investment Required
Through 2035 in Billions
$148 $198 $5,000
Freight Rail Passenger Rail Highways
Rail remains America’s long-term freight solution Rail remains America’s long-term freight solution
- Infrastructure needs have
gained national attention
- 2009 American Recovery and
Reinvestment Act provides funding for rail
- Freight rails need to earn
adequate returns
Source: 2007 AAR/Cambridge Study and 2007 DOT Surface Transportation Study
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Freight rail delivers public benefits Freight rail delivers public benefits
A locomotive can haul a ton of freight more than 436 miles on one gallon of fuel Green Green Sustainable Sustainable Rail capital investment relies principally on private funds Efficient Efficient One Intermodal train can carry the load of 280 trucks Safe and Secure Safe and Secure Rail is one of the safest and most secure modes of surface transportation
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Competitive environment favorable Competitive environment favorable
- Trucking Industry
— Overall capacity is declining — Regulatory restrictions continue — Structural changes occurring — Highway congestion increasing
- Railroad Industry
— Service quality improving — Supply chains are expanding — Focus on “green” increasing — Balanced regulations likely
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Pricing remains in early stages of recovery Pricing remains in early stages of recovery
Source: Association of American Railroads
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During the first 23 years after the passage During the first 23 years after the passage
- f the Staggers Act, rail pricing declined by 60%
- f the Staggers Act, rail pricing declined by 60%
Pre-deregulation, rail pricing kept pace with inflation
Inflation-Adjusted Pricing Indexed: 1981 = $100
$51 $40 $100
1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007
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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
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