Rail – The Intermodal Connection Drew Glassman, AVP Intermodal Marketing CSX Transportation

Holistic focus on controlling supply chain costs Near-sourcing of manufacturing sites due to rising costs in Asia Simplification and rebalancing of supply chain network design Optimization software to improve efficiencies and streamline processes Use of alternate transportation modes, including intermodal Journal of Commerce industry reports 2012 + Gartner Supply Chain Top 25 for 2012

Truck capacity is imminent concern for future Surplus/(Shortage) Capacity Utilization Truck Capacity Utilization to Increase, Resulting in a Shortage Driver shortages are a threat with economic recovery U.S. Bureau of Labor Statistics reports driver supply is 185,000 below 2007 levels Turnover for Q1 2012 was 90%, the highest since 2008 Driver supply impacted by many macro-factors CSA, HOS and other proposed regulations Aging driver base Recovery of housing market Key regulations include CSA and HOS; one FTR study indicated that is all proposed regulations are passed, the driver supply would be reduced by 500,000 drivers in 2016 (includes HOS, CSA, Drug & Alcohol regulations, Training, etc.). U.S. Bureau of Labor Statistics (JOC Article “Can Trucking Solve Its Driver Problem?” 8/17/2012) The number of heavy-truck or tractor-trailer drivers employed in the U.S. fell 13.4 percent, or by 226,850, between 2007 and 2010, according to the latest data from the U.S. Bureau of Labor Statistics. About 42,000 truck drivers joined the payrolls last year, a 2.9 percent increase. However, that means almost 185,000 CDL-carrying truckers who earned a living on the road in 2007 have yet to return to the driver’s seat — more than twice the number of truckers in Perry’s estimated 90,000-driver shortage. Driver turnover at large truckload carriers — which exacerbates any shortage — surged to 90 percent on average in the first quarter, its highest point since 2008, according to the American Trucking Associations. 2012 Source: FTR

Intermodal provides scalable capacity Coast-to-coast intermodal network with global reach 14 million loads moved in 2011 Access to key markets, population centers Connectivity to major U.S. ports Access to a large, growing container fleet Rail and carrier-owned assets Intermodal scales to meet supply chain needs efficiently One train can move the load of 280 trucks You Can Go Here with Intermodal Animation

Intermodal industry volume has steadily grown Volume has increased more than four-fold 3.1M Source: Intermodal Association of North America

Intermodal offers sustainable savings Fuel efficiency and freight density drive cost savings Railroads are three times more fuel efficient than trucks One train can move the load of 280 trucks Higher fuel efficiency means lower greenhouse emissions Intermodal reduces carbon footprint Moving freight by rail, instead of truck, reduces emissions by 75% If 10% of long haul highway freight converted to rail… Annual fuel consumption would decrease by 12 billion gallons, and Annual greenhouse emissions would decrease by 12 million tons Source AAR http://www.aar.org/Environment.aspx Source: AAR

Intermodal conversion opportunity is substantial Highway-to-rail conversion still in early stages Over 9 million loads in east have conversion potential Intermodal conversion results in additional capacity and cost savings for shippers Union Pacific stated there are over 11M potential truckload opportunities in Western Market (550 miles+) – Wolfe Trahan “Double Stacked” Report 2012 Intermodal loads reflect year end 2011 (CSX 2.3 NS 3.2) based on 10-k Freight length of haul > 550 miles Sources: AAR CS-54 and Global Insight’s Transearch data

Shippers achieve the value of intermodal with CSX Company Overview Intermodal at CSX America’s first railroad Founded 1827, headquartered in Jacksonville, FL Largest rail network in east 21,000 route miles in 23 states, serving 70 ports Significant resources Over 4,000 locomotives, 80,000 freight cars, 30,000 employees Ranked 226 on Fortune 500 $11.7 billion of revenue in 2011 Far-reaching, dynamic network Hub and spoke design provides unique service capabilities Aggressive capital investment Terminal and infrastructure development, public-private projects Customer and service focus Minimizing variability in service, while meeting customer needs Highway-to-rail “H2R” strategy Conversion of over-the-road loads Together ,businesses and state/local agencies invested over $1.3B in rail-served facilities on the CSX network during 2011 $1.3B figure as reported by customers to CSX

The National Gateway is evolving the rail network Public-private investment of $850 million State, Federal, and CSX funded Support of 300+ public and private organizations and individuals Increases efficiency and reach of U.S. rail network Links Mid-Atlantic ports with Midwestern markets 61 clearance projects and 6 intermodal terminals, including Northwest Ohio Clearance projects are ~50% complete to date The National Gateway is $842M public-private partnership aimed at completing 61 clearance projects and 6 terminals. The clearance work as part of the Gateway is a key part of our broader strategy to double-stack clear key portions of our network and increase intermodal terminal capacity. CSX - $395M – 47% States - $189M – 23% Feds - $258 – 30% (1) The estimated cost of the National Gateway is now $842M – up $68M from previous estimates. (2) The cost estimates of the NG for CSX’s share has risen by $8M. CSX’s cost increases were driven by scope and cost increases in Northwest Ohio Intermodal Terminal, but largely offset deferred investments in Columbus and Charlotte. (3) The state share has declined by $4M – which was driven by our decision to defer further investments in Charlotte. (4) The federal share has increased by $64M – which was drive by updated cost estimates for the Virginia ave tunnel. (3) As you can see, the states’ share is $189 (or 23%); and the federal share is $258 (or 30%); and CSX’s share is $395 (or 47%) of which $225 million has already been spent. Keeping the cost share at about 50% has been a powerful sales tool as we have discussed this project with the public sector. It was important to us to maintain that attribute of the project. 9 9

Northwest Ohio Hub creates a more efficient network Bypass high traffic areas resulting in faster transit times Non-stop service to east and west coasts for more reliable service New lanes increase access to major population centers Effective connector, with 99% scheduled connectivity at NWOH Chicago run-through for Western interchange Hub and spoke network is a strategic differentiator

CSX focused on highway-to-rail (H2R) strategy Network Design NWOH – Hub & Spoke New England Florida Service Reliability Meeting customer commitments Minimizing variability in the service product Channel Strategy IMC Brokers Ocean carriers Truck BCO Education Dedicated National Accounts Team H2R Optimizer Animation

Highway-to-rail continues to drive industry growth Intermodal offers a transportation alternative with scalable capacity and sustainable savings advantages The value of intermodal rail only beginning to be realized; great potential remains CSX dedicated to understanding transportation needs and developing intermodal solutions

Appendix

Public-private investments continue to grow network Investment in the Rail Network In 2011, businesses and state and local agencies invested over $1.3B CSX also investing in new terminals and infrastructure throughout network Clearance projects enable double-stack capable network New England National Gateway $ 67M $ 3M $ 94M $ 10M $ 35M $ 70M $250M $ 44M $ 44M $ 1M $ 2M $ 37M $ 4M $ 46M $ 73M $ 53M $ 1M $ 74M $515M *D.C. $ 10M $117M $ 71M $ 2M $ 50M $ 1M $ 66M $385M $ 84M $ 70M $ 1M $ 90M $ 8M $ 70M $ 30M Private-Public Investment Rail –Served Facilities (2011) = Business/State & Local Agency Investment in New or Expanded rail-served facilities on CSX or its connecting regional and short lines ($M) as reported to CSX by customers. CSX does not disclose the break-down by customers due to confidentiality. $ 5M Terminal Expansions $105M $165M New Terminals CSX Investment in Rail Network (2011) Private-Public Investment Rail –Served Facilities (2011)