1. 1 Houston Economic Club May 18, 2009 Matthew K. Rose Chairman, President and CEO Transportation for Tomorrow

2. 2 BNSF in Texas

3. 3 BNSF in Houston

4. 4 Running a railroad through recession to recovery – Volumes 20062007 2008 Percent change Year over Year 2009

5. U.S. infrastructure supports millions of supply chains Miles of Supply Chain: 46,837 miles of Interstate Highways 173,000+ miles of railroad tracks Daily Supply Chain Volume: 43 million tons of goods Valued at $29 billion 12 billion ton-miles Source: U.S. Chamber of Commerce, Let’s Rebuild America Class 1 Railroads Interstate Highways

6. And keeps the economy running

7. We know the future will bring more… 2030 Growth Projections Source: Global Insights, AASHTO, FHWA U.S. population expected to grow to 364 million VMT to grow by 150 percent Freight rail to increase by 92 percent

8. Capacity is shrinking Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007 and AAR

9. Year 600 Gap to Maintain = $50 Billion per year (through 2015) 100 200 300 400 500 200620092012201520182021202420272030 Year-of-Expenditure Dollars (in Billions) Gap to Improve = $107 Billion per year (through 2015) Revenue Cost to Maintain Cost to Improve Source: U.S. Chamber of Commerce We have a national funding gap for all surface transportation

10. 10 Railroad Spending on Way & Structures vs. State Highway Agency Spending Total (billions) 1.Texas$7.57 2. Florida$5.69 3. California$4.19 Union Pacific$4.17 BNSF Railway$3.89 4.New York$3.59 5.Pennsylvania$3.30 6.Illinois$3.30 CSX$2.62 7. Michigan$2.61 8. North Carolina$2.48 9.Ohio$2.14 Norfolk Southern$2.12 10. Georgia$1.88

11. 11 Sources: U.S. Census Bureau, AAR Capital Expenditures as % of Revenue: Avg. 1997-2006 Railroads: Far More Capital Intensive Than Other Industries

12. Capital CommitmentsCapital Commitments with ROIC $ Millions $2,258 $2,520 $2,265 $1,763 $1,608 $1,505 $1,726 $1,988 $2,179 $ Millions ROIC 6.2% 7.6% 9.6% 9.5% 9.7% 9.4% 7.2% 8.8% $2,670 $2,593 10.8% 10.0% $2,850 2002-2007: ROIC is restated to reflect the change in methodology for discounting operating leases. 10.7%

13. 13 Class I RR Cost of Capital vs. Return on Investment RR Cost of Capital RR Return on Investment Note: In 2006, the Surface Transportation Board significantly changed the method by which it calculates the rail industry cost of capital. Source: STB

14. 14 Rational regulation works

15. 15 *Average revenue per ton-mile, Class I railroads. Source: AAR Inflation-Adjusted RR Rates* Down 54% Since 1981 Railroads Keep Goods Affordable for America

16. 16 Freight Rail Works

17. 17 Railroads reduce highway congestion One BNSF intermodal train removes more than 280 long- haul trucks from our nation’s highways

18. 18 Rail is 2-5 times more fuel efficient than trucks *Based on a 1,500 mile truck haul 5.5x 4.3x 2.3x

19. 19 Rail emits a fraction of total U.S. greenhouse gas emissions Rail = 2.6% of GHG emissions Trucks = 21% of GHG emissions In 2008, BNSF moved 4.7 million containers and trailers, reducing GHG emissions by more than 7 million metric tons The rail industry moved 11.5 million containers and trailers, reducing GHG emissions by more than 17.2 million metric tons

20. 20 Call to action Achieve a state of “good repair” Mode neutral Increase funding from all sources - federal, local, state and private - to meet $225-$349 billion a year in needs Shippers, states, federal government, all transportation sources must work together to sustain our leadership in surface transportation