Robert E. Martínez Norfolk Southern Corporation Indiana Logistics Summit Indianapolis November 14, 2006

Markets, Transportation Markets, Market Change and Transportation Policy; and The Economics of Rail

Railroads are Highly Capital Intensive Source: JPMorgan Estimates and Company Reports.

Capex/Revenue in Industrial Sectors Source: JPMorgan Estimates and Company Reports.

The railroad industry has not been earning its cost of capital

NS Principles on Public/Private Partnerships  No safety degradation  Voluntary on both sides  Public sector pays for public or societal benefits  Norfolk Southern pays for railroad benefits  Benefits, costs and risks are shared proportionately

NS Principles on Public/Private Partnerships (cont’d)  NS commits to performance standards in return for public participation  Planning must be coordinated among all stakeholders to ensure prudent investments  Planning must be executed in a manner consistent with rail regulatory requirements, ownership rights, and market conditions  The project must produce a more balanced transportation policy

NS Business Mix by Revenue Q3 05 – Q2 06 Revenue: $9.107 Billion

Long Term Conventional Intermodal Volume Growth Y-T-D 2006 vs. Y-T-D 2005

33 NS Terminals 19 Private / Port Terminals 8,300 Route Miles Chicago -Ashland Ave. Hub Atlanta-Austell Hub Harrisburg - Rutherford Hub Intermodal Network

33 NS Terminals 19 Private / Port Terminals 8,300 Route Miles Hub and Spoke Network – how it works - (From So-Cal) (From PNW)

Charlotte Charleston Savannah Jacksonville Miami New York Baltimore Norfolk Philadelphia Oakland/ Richmond, CA Los Angeles, San Bernardino, Ports Ports of Seattle and Tacoma Atlanta Huntsville Boston Albany Clovis, NM Chicago Union Pacific Burlington Northern Santa Fe Norfolk Southern Kansas City Southern Norfolk Southern Intermodal Transcon Network El Paso Dallas Memphis Buffalo Columbus Cleveland Detroit Louisville Cincinnati Pittsburgh

Panama Canal

Suez Canal

Charlotte Norfolk / Ports of Hampton Roads East Coast Port Services Columbus Cincinnati Louisville Detroit Toronto Montrea l Dallas Huntsville Memphis Birmingham New Orleans Pittsburgh Cleveland St. Louis Kansas City Chicago Atlanta Jacksonville Savannah Charleston Miami Elizabeth Marine Terminal

The Norfolk Southern Intermodal System Map Doublestack Clearances

Central Corridor Double-Stack Project: The current clearance envelope through western Virginia, West Virginia and Kentucky only accommodates railcars up to 19’1” multi-levels. No double-stack cars can be accommodated due to the height, as well as the square profile of the conveyance.

Columbus The Port of Virginia Harrisburg Kenova Prichard Roanoke ChicagoCleveland Heartland Corridor

The Heartland Corridor Portsmouth Norfolk CIDMMA PMT NITNIT APM CRMSRP Project (Median Rail) CIMT (Proposed) Columbus Rickenbacker Ashville Huntington Kenova Prichard Williamson Welch Bluefield Roanoke Petersburg Richmond Washington, DC Christiansburg Portsmouth To Chicago, Detroit, & Points West VA OH WV KY Portsmouth COMPONENT LEGEN D Central Corridor Double-Stack Initiative Prichard Intermodal Terminal Roanoke Region Intermodal Terminal Rickenbacker Intermodal Terminal Commonwealth Railway Mainline Safety Relocation Project (CRMSRP)