houston economic club may 18, 2009
DESCRIPTION
Transportation for Tomorrow. Houston Economic Club May 18, 2009 . Matthew K. Rose Chairman, President and CEO. BNSF in Texas. 2. BNSF in Houston. 3. Running a railroad through recession to recovery – Volumes. Percent change Year over Year. 2008. 2009. 2006. 2007. 4. - PowerPoint PPT PresentationTRANSCRIPT
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Houston Economic ClubMay 18, 2009
Matthew K. RoseChairman, President and CEO
Transportation for Tomorrow
2
BNSF in Texas
3
BNSF in Houston
4
Running a railroad through recession to recovery – Volumes
2006 2007 2008
Percent change Year over Year
0.9%
3.5% 3.3%
0.9%
-2.9% -3.6% -3.3%-2.2% -2.2% -2.4% -2.5%
-8.9%
-14.4%-16.0%
-14.0%-12.0%
-10.0%
-8.0%
-6.0%-4.0%
-2.0%
0.0%
2.0%4.0%
6.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2009
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 RailroadsInterstate Highways
And keeps the economy running
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
Capacity is shrinking
US Highway and Rail Networks System Miles and Volumes
5060708090
100110120130140150160170180190200210
1980 1985 1990 1995 2000 2005Highway - VMT Highway - Lane-miles Rail - RTM Rail - Track-miles
Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007 and AAR
Year
600
Gap to Maintain = $50 Billion per year (through 2015)
100
200
300
400
500
2006 2009 2012 2015 2018 2021 2024 2027 2030
Year
-of-E
xpen
ditu
re D
olla
rs (i
n B
illio
ns)
Gap to Improve = $107 Billion per year (through 2015)Revenue
Cost toMaintain
Cost toImprove
Source: U.S. Chamber of Commerce
We have a national funding gap for all surface transportation
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Railroad Spending on Way & Structures vs. State Highway Agency Spending
Total (billions)1. Texas $7.572. Florida $5.693. California $4.19 Union Pacific $4.17
BNSF Railway $3.894. New York $3.595. Pennsylvania $3.306. Illinois $3.30
CSX $2.627. Michigan $2.618. North Carolina $2.489. Ohio $2.14
Norfolk Southern $2.1210. Georgia $1.88
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Sources: U.S. Census Bureau, AAR
Capital Expenditures as % of Revenue: Avg. 1997-2006
Railroads: Far More Capital Intensive Than Other Industries
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Class I RRs All Mfrg. Nonmet.Min. Prod.
Computers Paper Plastics &Rubber
Chemicals WoodProducts
MotorVehicles
Petr. & CoalProd.
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Engineering Expansion Mechanical Other Locomotive
Capital CommitmentsCapital Commitments with ROIC$ Millions
$2,258
$2,520$2,265
$1,763$1,608 $1,505
$1,726
$1,988$2,179
$ Millions
ROIC
6.2% 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%
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Class I RR Cost of Capital vs. Return on Investment
0%2%4%6%8%
10%12%14%16%18%20%
'81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07
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
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Rational regulation works
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2¢
3¢
4¢
5¢
6¢
7¢
'81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07*Average revenue per ton-mile, Class I railroads. Source: AAR
Inflation-Adjusted RR Rates* Down 54% Since 1981
Railroads Keep Goods Affordable for America
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Freight Rail Works
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Railroads reduce highway congestion
One BNSF intermodal train removes more than 280 long-haul trucks from our nation’s highways
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Rail is 2-5 times more fuel efficient than trucks
Ag
Indust. Prod.
Intermodal
*Based on a 1,500 mile truck haul
5.5x
4.3x
2.3x
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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
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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