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
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BNSF in Texas
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BNSF in Houston
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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
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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
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And keeps the economy running
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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
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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
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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 $1.88
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Sources: U.S. Census Bureau, AAR
Capital Expenditures as % of Revenue: Avg. 1997-2006
Railroads: Far More Capital Intensive Than Other Industries
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Class I RRs All Mfrg. Nonmet.Min. Prod.
Computers Paper Plastics &Rubber
Chemicals WoodProducts
MotorVehicles
Petr. & CoalProd.
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1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Engineering Expansion Mechanical Other Locomotive
Capital CommitmentsCapital Commitments with ROIC$ 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
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