Nate Asplund Director – Public Private Partnerships September 20, 2009 SCORT 2009 IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII Panel: Partnering – Freight Service

1 Discussion Topics BNSF Introduction BNSF Introduction Nation’s Network Nation’s Network Investment Investment Successful Partnerships Successful Partnerships Project Examples Project Examples Take Aways Take Aways

2 Serving 13 of the 19 fastest growing markets Serving 13 of the 19 fastest growing markets Connecting over 179 M consumers Connecting over 179 M consumers $30 Billion invested since 1997 $30 Billion invested since 1997 Operate 32,000 miles Operate 32,000 miles Host Amtrak on 7,000 miles Host Amtrak on 7,000 miles Host commuter operations in five Metro areas Host commuter operations in five Metro areas Connecting Communities and Markets

3 Sustainable Partnership Options Higher capacity, lower cost, lower impact Fuel Efficiency Up 80% since 1980 Truck – 5.3 to 5.1 mpg Environment More than 60% less CO2 than long-haul truck Scalability Leverage chokepoint relief Constructability Less footprint, cost and time

4 National Network Trends Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007 and AAR

5 5 Source: Annual State of Logistics Report, Council of Supply Chain Management Professionals % of GDP ($1.4 Trillion) Transportation Costs Inventory / Admin. Costs U.S. Logistics Costs as a Percent of GDP Supply chain costs are increasing What Drove Logistics Costs Down from 1980 to 2004? Transportation deregulation Excess capacity Low fuel costs What Drove Logistics Costs Down from 1980 to 2004? Transportation deregulation Excess capacity Low fuel costs What’s Driving Recent Supply Chain Cost Trends? Higher fuel costs Congestion Aging (legacy) infrastructure Public policy Increasing U.S. labor costs What’s Driving Recent Supply Chain Cost Trends? Higher fuel costs Congestion Aging (legacy) infrastructure Public policy Increasing U.S. labor costs $0.9T $0.5T

Will the investment be enough? $135 B Growth Productivity Shortfall $70 B $26 B $39 B Class 1 capital investments needed to meet 2035 freight volume demand Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007

7 Capital Commitments $30B Invested in the last 12 years : ROIC is restated to reflect the change in methodology for discounting operating leases. $ Millions Capital Commitments with ROIC

Funding Infrastructure Mobility Impacts Make Freight Rail PPP’s Economically and Politically Viable Public Impact and Concern Congestion Air Quality and CO 2 Safety Economic Development Delays and Costs Energy Security Global Competitiveness Cost of Highway Infrastructure Go-Alone: Public Investment in Highway Maintainability of current system Cost of adding thousands of new lane miles by 2020 Metro area right-of-way constraints Funding and Toll-road concerns Energy, environment & safety impacts Partnership: Public Investment in Rail Energy, environment & safety benefits More economical footprint for freight growth Lower construction cost per GTM System leverage from fixing chokepoints Private maintenance after construction

Rail Partner NetworkCapacitySponsorROICResourcesTiming Public Partner MandateBenefitSponsorFundingProcessTiming Successful Partnerships Aligning Public and Private Objectives

10 BNSF Project Examples Strong Partnerships Work Recent Successes Tehachapi Trade Corridor Port of Vancouver USA Expansion Connect Oregon II Burlington Bridge Part I Active Projects Kansas City Intermodal Facility Tower 55 Hobart Truck Efficiency Project Burlington Bridge Part II Tehachapi Mountains - California

11 Take Aways Viable Partnership Opportunities Improve Capacity, Velocity, Feasibility Chokepoints Connectors Intermodal Carload PPP’s are Only a Part of Meeting the Investment Requirement Regulatory Environment for Long-Term Investment also Critical Passenger and Freight Common Ground Congestion Relief, Mobility Choices, Sustainability, Environment