Making Room to GrowManaging Capacity at Norfolk Southern

Transportation Research Board84th Annual Meeting

Washington, D.C.January 10, 2005

Dan MazurAVP Strategic Planning

Key Components of Rail Capacity

Infrastructure Track Yards Terminals

Crews Locomotives Cars

Capacity Management Process

Develop lane specific medium and long term traffic forecasts (customer input)

Model traffic flows Develop infrastructure bottlenecks Develop crew requirements by location Develop locomotive and car

requirements

Infrastructure is the foundation of our network capacity process

Defines where we go and how well we get there Speed Reliability Capacity

NS has excellent infrastructure

Infrastructure

New Markets Change Traffic Mix

% of NS Revenue

1982 2004 % Coal 41.0% 28.1%% Automotive 7.0% 12.9%% Intermodal 5.0% 17.4%% IM and Auto 12.0% 30.2%% Merchandise 47.0% 46.2% (excl auto)

To Miami

Current NS

Customer Track Rehab Agreement

East Carolina Business Unit (ECBU)

Purchased

Abandoned/sold/leased

Mainline track downgrade

Trackage/haulage rights added

CR lines and rights to NS

CR or CR-related rights

Operating rights retained

* Since 6/1/82

Legend

Post NW/SR Consolidation Route Management Activity*

Strategic PlanningJanuary, 2005

Rouses PointTo Montreal

More Than Lines on Maps

A high-service, reliable system must include:

Adequate capacity, without any choke points Good terminals and yards at the right place

with the right capacity High levels of maintenance A robust operating plan Flawless execution

The NS Infrastructure Process

Guided by the Infrastructure Team:

Exec VP, VP, AVP level Field operations Network operations Commercial (Coal, Intermodal, Merchandise) Finance Planning (chair)

NS Infrastructure Goal

“The right capacity at the right place at the right

time.”

Managing the Process

Identify choke points From operations and marketing Metrics plus field interviews plus judgment Traffic forecasts

Prioritize and study Capacity models, Industrial Engineering studies,

financial analysis

Discuss, prioritize and implement

Capacity Improvements1999 to Present

Strategic PlanningJanuary, 2005

Planned Capacity Improvements

Strategic PlanningJanuary, 2005

Alternatives to Capital Investment

Scheduled railroad NS Thoroughbred Operating Plan

Improve operating efficiency Targeted marketing to use excess train

capacity Modify TOP to add trains where excess

network capacity exists Demarket specific markets to create capacity

Thank you for your time and attention