Dr. Rob Martínez Vice President Business Development January 2015
NS 2014 Business Portfolio Agriculture 13% MetCon 13% Paper 7% Intermodal 22% Chemicals 16% Coal 20% Automotive 9% $11.6 Billion in Revenue
Major Drivers of Our Business Energy Manufacturing Intermodal Agriculture
Shale Gas Production Source: EIA
trillion kilowatt hours U.S. Electricity Generation by Source 6 2012 1994 History Projection 5 4 Natural gas 3 2 14% 10% 20% 30% 12% 19% Renewables Nuclear 1 4% 52% Petroleum liquids & other 37% Coal 1% 0 1990 2000 2010 2020 2030 2040 Source: EIA Annual Energy Outlook 2014
Petroleum and Coal Products Exports and Imports in Billions of Dollars $140 $120 2013 Trade Surplus: $28.5 Billion $100 $80 $60 $40 $20 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Exports Imports Source: National Association of Manufacturers; Bureau of Economic Analysis
Source: Boston Consulting Group
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Labor Costs in the Manufacturing Sector Source: Area Development Online
Manufacturing Production Manufacturing Production/ Capacity Utilization % 105 100 95 90 85 80 75 70 65 60 2007 2008 2009 2010 2011 2012 2013 2014 Manufacturing Production Capacity Utilization Source: National Association of Manufacturers; Federal Reserve Board
ISM Manufacturing Index 70 60 December 2014: 55.5 50 Expansion Contraction 40 30 2003 2005 2007 2009 2011 2013 2015 Source: Institute for Supply Management
Vehicle Production and Sales Annual North American Light Vehicle Production (in millions) North American Light Vehicle Production expected to continue growing steadily to 18.1 million vehicles in 2017 15.8 16.5 17.3 17.4 17.9 18.1 U.S. Light Vehicle Sales projected to grow to over 17.0 million vehicles by 2016 13.5 12.2 2010 2011 2012 2013 2014 2015 2016 2017 Source: WardsAuto, January 2015
U.S.-Manufactured Goods Exports, 2000-2013 Billions of Dollars, Seasonally Adjusted $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Durable Goods Manufactured Goods Nondurable Goods Source: National Association of Manufacturers; U.S. Department of Commerce
Manufacturing Employment Growth December 2007 = 100 105 100 95 90 85 80 75 2008 2009 2010 2011 2012 2013 2014 Nonfarm Payrolls Manufacturing Durable Goods Nondurable Goods Source: National Association of Manufacturers; Bureau of Labor Statistics
Growth in Foreign Domestic Investment (FDI) in Manufacturing Since 2005 FDI in manufacturing grew by $399.1 billion from 2005 to 2012, increasing by nearly 80 percent. Source: National Association of Manufacturing; Bureau of Economic Analysis
U.S. Dollar Versus Major Currencies Trade Weighted Index March 1973 = 100 89.0 87.0 85.0 83.0 81.0 79.0 77.0 75.0 Basket (EUR, CAD, JPY, GBP, CHF, AUD, SEK) Source: Federal Reserve Bank of St Louis
Scratching the Surface Significant opportunity for growth remains 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Scratching the Surface Significant opportunity Over 550 Miles for growth remains 25,000,000 Total US Truck and IM Moves Drivers of highway conversion Highway congestion 20,000,000 15,000,000 10,000,000 5,000,000 Driver wages Regulatory action Environmental 0 Fuel cost Domestic Intermodal Shipments Long-Haul Truckloads Source: TTX; IANA 20
Intermodal Volume: 2003-2014 4,500,000 Intermodal Volume Business Segments: 2014 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 Premium 9% IMC 12% Truckload 46% 1,500,000 1,000,000 Int'l 33% 500,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 DOMESTIC INTERNATIONAL PREMIUM TRIPLE CROWN
Intermodal Market Drivers For Ship Lines: Increased deployment of Suez services utilizing post-panamax ships at East Coast ports. Streamlined, efficient rail interchanges from West Coast gateways to heartland markets. For Ports: Increasing use of rail inland distribution points to maximize capacity and efficiency of marine terminals. For BCO shippers: Sustainable capacity and cost-savings vs. OTR in key short haul markets. Risks: Global economic conditions Image: martinprosperity.org/
Norfolk Southern Port Services Chicago Detroit Cleveland Harrisburg NY/NJ Kansas City Decatur Cincinnati Pittsburgh Columbus Front Royal Baltimore St. Louis Louisville Norfolk Greensboro Memphis Huntsville Greer Charlotte Dallas Birmingham Atlanta Savannah Charleston New Orleans Jacksonville CONFIDENTIAL
International Volume 2010-2014 1,400,000 1,200,000 Volume Volume Distribution* Other 4% 1,000,000 800,000 WC 35% 600,000 400,000 EC 61% 200,000 0 2010 2011 2012 2013 2014 *Volume distribution for 1Q-3Q 2014 only
International Trade Characteristics NS East Coast vs. West Coast Market Share NS International Length of Haul 100% 60% 90% 80% 50% -22 70% 60% 50% 40% 30% +12 +10 40% 20% 30% 20% 10% 10% 0% 2006 2008 2010 2012 2014* East Coast West Coast 0% Up to 600 Miles (965 km) 600-1200 Miles (966-1930 km) 2006 2008 2010 2012 2014* Over 1200 Miles (1930 km) Share growth in points from 2006 to 2014 Note: * 2014 through November
US Import/Export Container Volume Growth January October 2014 vs. 2013 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 8.2% 7.5% 5.5% 4.9% 4.3% 2.6% US EC US WC Total Imports Exports Source: Port Websites; WC: LAX, LGB, OAK, PDX, SEA, TAC; EC: NYC, BAL, ORF, CHS, SAV
Global Changes Increase Opportunity NY/NJ Norfolk Savannah Charleston Jacksonville Miami
Where is the Opportunity? With improvements in service and facilities, intermodal is becoming more competitive in shorter distances, absorbing more of the projected growth in freight. Source: FRA s National Rail Plan; Hub Group
Norfolk Southern s Intermodal Network Buffalo Ayer Albany Detroit Chicago Livernois 47th Street Delray Toledo Landers NY/NJ Taylor 63rd Street Calumet Ashland Ave Cleveland Harrisburg/ Rutherford Pittsburgh Bethlehem Erail Elizabeth Marine Terminal NYCT PNCT Morrisville/Navy Yard Baltimore Columbus Decatur Croxton Front Royal Cincinnati Gest Street Kansas City Sharonville St Louis Louisville Norfolk Georgetown Norfolk Int l Terminal Buechel Appliance Park Portsmouth Marine Terminal Oct 2013 July 2012 Newport News Marine Terminal Greensboro Huntsville Greer APM Terminal Charlotte Memphis Atlanta Dallas Austell Birmingham November 2012 Shreveport Meridian Dec 2013 Inman Charleston/ Marine Terminal Savannah Mason ICTF Completion Dates NS Intermodal Network Premier 1995 Network Intermodal MSLLC Haulage 2011 Extensions Port Wentworth Jacksonville Heartland New Orleans Titusville PanAm Southern Crescent Ph I Ft Lauderdale Miami Intermodal Terminals 2011 On-Dock Access 2012 Interchange Gateways 2012
Toronto Buffalo Ayer Miami
Record Corn and Soybean Crops Source: USDA, National Agricultural Statistics Service
Agriculture is also a driver
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