CSX and SFPA: Moving Tomorrow Together Michael Rutherford 1 - - PowerPoint PPT Presentation
CSX and SFPA: Moving Tomorrow Together Michael Rutherford 1 - - PowerPoint PPT Presentation
CSX and SFPA: Moving Tomorrow Together Michael Rutherford 1 October 6, 2014 Forward-Looking Statements This information and other statements by the company may contain forward-looking statements within the meaning of the Private Securities
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Forward-Looking Statements
This information and other statements by the company may 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, margins, volumes, rates, cost-savings, expenses, taxes, liquidity, capital expenditures, dividends, share repurchases or other financial items, statements of management’s plans, strategies and objectives for future
- perations, and management’s expectations as to future performance and operations and the time by which objectives
will be achieved, statements concerning proposed new services, and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “will,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” 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 updates 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 any forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by any 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, political or business conditions, including those affecting the transportation 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; (v) the outcome of claims and litigation involving or affecting the company; (vi) natural events such as severe weather conditions or pandemic health crises; and (vii) the inherent uncertainty associated with projecting economic and business conditions. 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.csx.com.
Network well positioned for eastern U.S. growth
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New Orleans Memphis
Florida Piedm ont Atlantic Gulf Coast Midw est
St Louis Chicago New York Boston Norfolk Jacksonville Miami
Northeast
Savannah Wilmington Tampa Mobile Baltimore Philadelphia Charleston Montreal
Connects all five eastern mega-regions Serves nearly two-thirds of the nation’s population Ports connect U.S. resources and manufacturing globally Superior market reach into Northeast and Florida Network reach is foundation for business diversity
CSX-served Ports Population Density GT 6M 3-6M 1-3M LT 1M
8% 7% 4% 6% 5% 1% 5% 4% 2% 40% 12% 6%
Network/diverse portfolio drive sustainable growth
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2013 Volume by Market
6.5 Million Units
Intermodal Chemicals Automotive Metals Agriculture Phosphates Food & Consumer Forest Products Minerals Waste & Equipment Export Coal Domestic coal
2006 2013
Merchandise Intermodal Coal
CSX Volume and Portfolio Mix
18% 42% 40% 26% 45% 29%
6.5M 7.4M
Near-term volume growth expected to continue
4% (1%) 3% 5% 7% (16%) 3% 5% 8% 11% 7% 15% (12%) 8% 9% 7% 14% 6% 15% (11%) 8%
Agricultural Sector Construction Sector Industrial Sector Intermodal Domestic Coal Export Coal Total
Year-Over-Year Change in Volume
First Quarter Second Quarter Q3 To Date
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Note: Third quarter volume data is through week 35, ending August 29, 2014
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Long-term trends are also favorable for CSX
Source: USDOT FHWA Freight Analysis Framework, Peak Period Congestion on National Highway System: 2040 Estimate
CSX Territory
Eastern U.S. highway congestion favors rail transportation long-term
Freight demand in the U.S. projected to grow more than 60% by 2040 Reindustrialization of America driving secular growth above GDP Highway system already congested, especially in eastern United States Challenges for other modes generate growth opportunities for rail industry
Trucking is particularly challenged today
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BB&T Capital estimates that winter may have removed 2-3% of TL capacity ATRI study highlights the negative impacts of HOS rule change
— Reduced TL productivity by 1-2% — Eroded quality of life for 83% of drivers, including lower wages for 67%
The current dearth of 30K drivers is expected to hit almost 240K by 2020
Source: Logistics Management; FleetOwner; JOC; ATA.
Service levels stable; gradual recovery expected
80 90 100 110 120 130 140 150 160 10 12 14 16 18 20 22 24 26 28 30
1 3 5 7 9 11131517192123252729313335
2014 Weekly Velocity versus Volume
Velocity (mph) Carloads (in 000s)
Service levels have fallen below expectations
— Severe winter trailed by strong volume growth has strained resources
Resources being added as fast as possible to speed recovery
— Hiring crews; adding locomotives; accelerating network capacity projects
Network to recover as new resources become available
— High demand is expected to extend recovery into 2015
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Up 16% Sequentially Note: Third quarter volume data is through week 35, ending August 29, 2014
53% 16% 18% 13%
Capital Investment $2.3 billion
Infrastructure Equipment Strategic PTC
Core investment remains at 16% – 17% of revenue for 2014
— Infrastructure spend maintains a safe and reliable network — Locomotive, car investment driven by commercial demand — Strategic investments support growth and productivity
PTC investment of $300 million targeted for this year
— About $500 million of investment will still be required beyond 2014
Note: Capital investment excludes investments related to public-private reimbursable projects
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CSX is targeting $2.3 billion in capital investment
Capacity additions underway across network
10 River Line / Trenton Sub
Adds 11 miles of double track for efficient movement from Chicago to NY Supports growth in crude oil, intermodal, and automotive markets
Chicago Area Projects
Elsdon Sub acquisition adds capacity and flexibility to the network New north-south connection helps expedite interchange traffic
Southeast (SE) Corridor
New Casky Yard investment will support Illinois Basin coal shift New sidings add capacity for business growth
Northwest Ohio
Project to extend terminal processing should finish by the end of 2014 Adding 18,400 feet of processing track and increasing lift capacity by 300,000 New Jersey Syracuse Tampa Chicago Worcester Baltimore East St. Louis Elsdon SE Corridor Jacksonville NW Ohio River Line
CSX is also investing in equipment to support growth
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500 1000 1500 2000 2500 3000 3500 4000 4500 50 100 150 200 250 300 350 400 450 500 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 60' HI CUBE 50' HIGH CUBE 50' STANDARD Additions
Annual Fleet Additions Cumulative Fleet Additions
CSX Boxcar Fleet Expansion
Source: CSX.