Robert E. MartínezVice President Business Development

Norfolk Southern Corporation

FHWA: Talking Freight Seminar

March 2004

NS 2003 RevenuesTotal: $6.5 billion

Chemicals12%

Paper10%

Intermodal19%

Automotive14%Coal

23%

Agriculture11%

Metals & Construction

11%

Intermodal is growing fast.

It’s been growing very fast in the United States.

It’s been the single, fastest-growing “commodity” group at Norfolk Southern.

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Trailers Containers Total

Intermodal Growth Year over Year

(US and Canada)

What do we mean by “Intermodal”?

In railroad parlance it means something very specific.

COFC: Container on Flatcar

TOFC: Trailer on Flatcar

14-Year Equipment Trends

0%10%20%30%40%50%60%70%80%

1988* 1994 2001 2002

TrailersContainers

*First year measured

UNITS: 5.7 million 8.1 million 10 million 11.4 million

Source: AAR

Note: Intermodal is point-to-point service, unlike

traditional carload businesses.

For profitability, the intermodal network must not be balkanized.

You need sufficient volumes, few train blocks [segments].

You need carefully to analyze and work the capture region of a given facility.

The Norfolk Southern Intermodal System

Fully C le ared D o uble S tackR o ute s on N S

Fully C le ared D o uble S tackR o ute s on C o nnecting R a ilroa d s

In term od al R ou tes w ith R estriction sto S ing le S tack on C onn ectin gR a ilroads

In term od al R ou tes w ith R estrictionto S ing le S tack

W ill B e C lea re d for 1 9’3” (D oub le S tackIn one H igh -C ub e & O ne Low -C u beC o nfig ura tion

Term ina ls

Canada

New Orleans

Charleston

Savannah

Jacksonville

Miami

Atlanta

Columbus

Greensboro

FrontRoyal

Buffalo

Detroit

Louisville

Cincinnati

Memphis

KansasCity

St. Louis

Charlotte

Pittsburgh

New York/New Jersey

Philadelphia/Morrisville

Baltimore

Cleveland Harrisburg

Norfolk/Hampton Roads

Huntsville

Peoria

Toledo

Georgetown

Boston/Ayer

Taylor

Bethlehem

Dallas

AlexandriaDecatur

Toronto

Montreal

Waterville

Minneapolis

Binghamton

Meridian

Albany

Chicago

NS Intermodal growth has been driven by:

Steady and fairly intense investment in infrastructure and facilities

New “product” development

New Products have been driving NS Intermodal

growthClevelandGPA ICTF in SavannahGuaranteed services Transcon with

UP (Blue Streak) and with BNSFHurricane with FECDockside to CanadaExpedited service to Mexico with UP

Intermodal market share:

Chicago – Los Angeles 84%

New York – Chicago 38%

Northeast – Southeast 5%

Interline Operating Relationships are Critical for the

Intermodal Product

39%

61%

InterlineLocal

Connection NS IM Share BNSF 28.5%

BNSF/KCS 6.7%

UP 15.6%

CP/D&H 1.5%

D&H/GTI 3%

KCS 2%

FEC 2%

NYSW 2%

Charlotte, 6TH A.M.

Charleston, 6TH P.M.

Savannah, 6TH A.M.

Jacksonville, 7TH A.M.

Miami, 8th A.M.

Alliance(Dallas)

Atlanta/Austell5TH A.M.

Chicago Erail, 5TH A.M.

Harrisburg, 5TH A.M.

Croxton, 6TH A.M.

Baltimore, 6TH A.M.

Norfolk, 7TH A.M.

Ameriport/Morrisville, 6TH A.M.

Port of Long Beach

BNSF Hobart

Oakland/Richmond

San Bernardino

Port of Los Angeles

Clovis, NM

NS-BNSF Transcon ServicesNS-BNSF Transcon Services

Columbus,5TH A.M.

NS-UP Improved ConnectionsNS-UP Improved Connections

El Paso

Dallas

Charlotte, 7TH P.M.

Savannah, 7TH A.M.

Jacksonville, 6TH P.M.

Miami, 7TH A.M.

Atlanta/Austell5TH P.M.

Cleveland, 5TH, A.M.

Columbus,5TH A.M.

Ayer, 7TH A.M.

Baltimore, 6TH A.M.

Erail, 6TH A.M.

Norfolk, 8TH A.M.

Ameriport/Morrisville, 6TH A.M.

Port of SeattlePort of Tacoma

Granger

Fremont

Chicago

Port of Long Beach

Oakland

Port of Los Angeles

UP ICTF

Harrisburg, 5TH A.M.

Memphis

We are pursuing opportunities to

add value in other commodity and

product areas as well.

Metals & Construction

SNDG10%

MCON17%

CMT5%

BRICK 2%

MACH3%

SCPM11%

IRST18%

COIL27%

OREA3%

ALUM4%

In the paper and forest products sector

Paper Mill

Paper Mill

Paper Mill

Certified Distribution Center(s)

Paper Receiver

Paper Receiver

Paper Receiver

Paper Receiver

New Products and Services: Thoroughbred EXTRA

For chemicals and agricultural

commodities:

Thoroughbred Bulk Transfer Facilities

“TBT’s”

TOP: The ThoroughbredOperation Plan

Operating PhilosophyPre-TOP

– Tonnage-Based Operations– Optimize Operations Within Separate

Operating Divisions

Post-TOP– Scheduled Operating Plan– Optimize Operations Across Entire Railroad

•Minimize Blocking Complexity•Eliminate Handlings•Minimize Circuity

TOP DevelopmentRunning a Scheduled Railroad

Objectives– Improve service reliability and system

velocity– Eliminate transit variation– Reduced railcar handling through the use

of optimized blocking plan– Improve asset utilization– Improve Customer Satisfaction

The intent is not necessarily always to reduce transit time.

It is to provide consistent reliability.

15

17

19

21

23

25

27Ja

n

Feb

Mar Apr

May Ju

n

Jul

Aug

Sep Oct

Nov

Dec

week ending

mph

1999 2000 2001 2002 2003 2004

System Average Train Speed

175,000180,000185,000190,000195,000200,000205,000210,000215,000220,000225,000230,000235,000240,000245,000250,000

Jan

Feb

Mar Apr

May Ju

n

Jul

Aug

Sep Oct

Nov

Dec

date

Car

s on

Lin

e

1999 2000 2001 2002 2003 2004

Cars On Line

20

22

24

26

28

30

32

34

36Ja

n

Feb

Mar Apr

May Ju

n

Jul

Aug

Sep Oct

Nov

Dec

week ending

hour

s

1999 2000 2001 2002 2003 2004

System Average Terminal Dwell

82

.2%

82.6

%

86.8

%

83.5

%

84.9

% 91.6

%

83.2

%

76.2

% 84.3

%

54.1

%

57.2

%

51.3

%

79.9

%

57.4

%

48.5

%

70.7

%

71.8

%

73.3

%81.3

%

65.7

%

90.8

%

86.0

%

84.6

%

83.6

%

72.6

%84.6

% 91.2

%

86.3

%

0%10%20%30%40%50%60%70%80%90%

100%

On

time

%

2000 2001 2002 2003

Train Performance

The End