BNSF Railway Presentation for Caltrans Planning Horizons March 12, 2001

U.S. Freight Rail System

BNSF’s Vision Our vision is to realize the tremendous potential of the Burlington Northern and Santa Fe Railway by providing transportation services that consistently meet our customers’ expectations.

 New Product Development »48-hour service from Chicago to San Bernardino »Guaranteed Intermodal Service »Guaranteed Carload Service  New Alliances and Partnerships »Mexi-Modal service with CN, CSX, TexMex and TFM »Ice Cold Express service with CSXT »Joint service with NS to East Coast BNSF Facts

 Premium Intermodal Service »Southern Cal to North East (NY/NJ) on NS day service »Southern Cal to Atlanta on CSX day service  Reliable Performance »1999 to 2002 on-time performance averaged 90% »During peak season between Thanksgiving and Christmas, BNSF ships more than 50 million packages for UPS--on time! BNSF Facts

 BNSF Revenues by % of Freight BNSF Facts Coal 23% Ag 17% Industrial 23% Intermodal 32% Auto 5%

Port Facilities listed in Red Rail served Intermodal ramps listed in Green IMX facilities in Grey Automotive Facilities shown with icon. BNSF Map of Facilities in California BNSF Tracks UP Tracks Trackage Rights On UP Other Railroads (i.e. ARZC) Port of San Diego Port of Wilmington (Watson) Port of Los Angeles Port of Long Beach Port of Richmond Port of Oakland San Diego Sacramento Stockton Richmond Fresno San Bernardino Barstow National City Los Angeles Modesto ARZC SDNR SCRA SDIY SCRA SUN SJVR CFNR SERA CFNR MCR SCRA

BNSF Facts Hobart, I-710 and Ports 710

To San Diego & Mexico Burbank LAX Airport Santa Fe Springs La Habra Brea Yorba Linda Placentia Fullerton Buena Park Anaheim Orange Huntington Beach Los Angeles Redondo Junction Irvine Ontario Disneyland John Wayne Airport Hobart Yard Port of Long Beach Port of Los Angeles To Eastern United States To Texas & Eastern US Alameda Corridor To Sacramento & San Francisco Container Traffic: 60% Union Pacific 40% BNSF Corridor North 20% of Alameda Corridor Traffic (Union Pacific) Alameda Corridor East 40% of Alameda Corridor Container Traffic (Union Pacific) Orange County Gateway 40% of Alameda Corridor Traffic (BNSF) Container Distribution Percentages

$250 billion in new International trade will flow through our ports in San Pedro Bay Ports Line thickness corresponds to Intermodal volume Source: Double Stack Container Systems: Implications for U.S. Railroads and Ports (US Dept. of Transportation, Washington DC, 1990 ) Intermodal Volume

BNSF Facts BNSF Southern California (LA & SB) Intermodal Intermodal Facility Lifts Southern California volume has grown by 73% since 1995 (over 600,000 total lifts). Average annual lift increase of nearly 12% (120,000 per year). Projected Southern California 2002 volume increase of approximately 150,000 units

BNSF Facts Hobart Lifts Current Capacity

BNSF Facts Port, Hobart & San Bernardino lifts

BNSF Facts International And Domestic Load Growth

 Critical resource »U. S. Railroads move 40% of the nation’s intercity freight  Insufficient returns »U. S. Railroads reap only 10% of the revenues »Since 1980, freight rail rates (adjusted for inflation) have dropped about 20%  Capital intensive »From 1995 to 2001, BNSF $12.5 billion to improve its infrastructure - rails, ties, ballast, bridges, tunnels, yards and facilities »Cost of Capital is in same range as Return on Invested Capital  Unsubsidized Private Sector Entity Freight Railroad Facts

“In my opinion, the equity markets are slowly losing their patience with railroads as an investment as they continue to wait for the promised land of adequate returns, and may eventually turn their backs on the industry.” -- James J. Valentine, Morgan Stanley Analyst

 Capacity: U.S. DOT says freight traffic will double in 20 years.  Service Quality: Rail customers to demand better service.  Highway Congestion: Continual pressure to reduce congestion, emissions, fuel use, and enhance safety.  Passenger: Increased demands for passenger use of freight-owned track. Pressures Will Continue

 Environmentally Sound »Rail is less polluting than other land transportation modes for all criteria pollutants »New technology is creating ever-cleaner locomotives Freight Railroad Facts

 Primarily for projects whose main purpose is to provide public benefits or meet public needs.  Opportunity for transportation planners and providers to meet vital needs efficiently and effectively.  Maintain budget “firewalls” and preserve existing funding frameworks.  Combines efficiency of private sector with the equity of public participation. Public-Private Partnerships to Solve the Infrastructure Dilemma

AAR Reauthorization Position

 155,000 public crossings nationwide.  Currently ~$155 million per year STP set-aside.  Has prevented 40,000 serious injuries, 10,000 fatalities since  RRs spend >$200 million per year on crossings. 1.Section 130: Increase Funding, Include Maintenance

 Funds variety of projects to reduce congestion and transportation-related emissions.  Currently a too-low ~$1.5 billion per year.  Has funded a few freight rail-related projects. 2.CMAQ: Increase Funding, Clarify Freight Rail Eligibility

 Funds projects that serve border regions and high priority corridors.  Current funding of ~$140 million per year is too low.  Clarify that E-W (not just N- S) traffic is eligible, and fund projects > 100 miles from a border if traffic is largely international. 3.Corridors and Borders: Increase Funding, Liberalize Eligibility

 Transportation projects are prioritized by state planning organizations or, for urban projects, by MPOs.  Existing planning focuses on highway and transit.  Too-little attention paid to freight mobility, particularly rail. 4.Encourage State and Local Transportation Planners to Consider Freight Issues

 Income tax exclusion on interest for debt used to fund investment in "Qualified Railroad Property" (QRP).  Expenditure for acquisition or maintenance of depreciable property (e.g., track, bridges, terminals).  Counterbalance to public subsidies provided heavy trucks and barges. 5.Tax-Exempt Rail Infrastructure Investment

 Intermodal is efficient, saves fuel, reduces congestion, and enhances safety.  Tax benefits available to all industries.  Recognizes huge societal benefits of intermodal. 6.Tax Incentives For Intermodal Investment

 Provides low-interest loans and loan guarantees for RR capital investments.  Raise loan balance from $3.5 billion to $35 billion.  Eliminate lender of last resort and collateral requirements.  Helps railroads of all sizes, especially short lines. 7.Expand RRIF Program, Remove Restrictive Requirements

 Daunting growth forecast.  Infrastructure is preeminent issue.  Tap public/private partnerships.  7 proposals for Reauthorization Summary