The Global Impact of Intermodal

1
Nate Asplund - AVP Mexico
The Global Impact of Intermodal
May 14, 2012
1
2
Todays Discussion

• Why Intermodal
• Globalization of Intermodal
• Value and role of rail in Intermodal
• Growing importance of Latin America
• BNSF offices in China, Japan and Mexico
• Key takeaways

3
BNSF Overview

• 32,000 route miles in 28 states and two
  provinces
• Approximately 7,000 locomotives and 220,000
  freight cars
• Employs approximately 40,000 people
• Operates an average of 1,400 freight trains per
  day
• Moves one fourth of the nations rail freight
• Serves all major ports on the West Coast and
  Gulf of Mexico
• Leads rail industry in technological innovation
• North Americas leading intermodal railroad

4
Why Intermodal?

• High-capacity, asset-intensive form of
  transportation
• Ideal for time-sensitive freight moving more than
  500 miles
• Seamlessly integrates road, rail and water
  transportation for truckload quantities
• Works best in markets with large concentrated
  volumes not as efficient in lower-volume
  markets
• Service is equivalent to or better than
  single-driver truck, averaging 450-620 miles per
  day

5
Access to Major U.S. Markets
Seattle International Gateway
Logistics Park Chicago
Oakland International Gateway
Hobart/Port of LA
Logistics Park Kansas City
Southern California International Gateway
Alliance Intermodal Facility
Memphis Intermodal Facility
6
Extending Market Reach Drayage and Rail
Interchange
6
7
Globalization of Intermodal
Source Maritime Administration
8
Alignment with West Coast Ports
Seattle 897K
TEU CAPACITY

• Over 110 weekly container vessel calls to the six
  major US West Coast ports
• Over 300 eastbound intermodal train departures
  per week aligned with the vessel calls

Tacoma 477K
WEST COAST
71
Portland 85K
EAST COAST
29
Oakland 803K
San Pedro Bay (LA and Long Beach) 7,102K
BNSF Intermodal Hubs BNSF Intermodal Network 2010
BNSF Volume Density
9
BNSF Flagship
10
Next Generation Intermodal
A collaborative approach to find the right truck
and rail service combination to maximize customer
value
11
A New Way of Thinking
GEN 1
Next Gen
Offer one level of intermodal service slower than
truck
Consider comprehensive service solutions truck
and rail
Just pick the closest rail hub to your destination
Consider service frequency
Expedited shipping is a truck-only solution
Leverage speed of BNSFs expedited intermodal
service
12
Components of Next Generation Intermodal
Next Generation Intermodal does not exist unless
you have the following three components

1. Collaboration between Shipper, Carrier and
   Railway
2. A railway that can provide multiple rail speeds
   in the same lane
3. An asset-based carrier that is a holistic supply
   chain solutions provider

13
Summary of Next Generation Options
Kansas City
St. Louis
BETTER SERVICE
MAXIMUM SAVINGS
BETTER SERVICE
Memphis
1
Service Description Truck Miles Rail Miles Transit Frequency Savings
1. Truck to St. Louis , BNSF to LA 115 miles 1,982 miles 5th day 3 days/ week 15
2a. Truck to KC, BNSF to LA 225 miles 1,685 miles 4th day 5 days/week 10-15
2b. Truck to KC, BNSF Expedited to LA 225 miles 1,685 miles 3rd day 7 days/week 5-10
3a. Truck to Memphis, BNSF to LA 175 miles 2,090 miles 4th day 6 days/week 10-15
3b. Truck to Memphis, BNSF Expedited to LA 175 miles 2,090 miles 4th day 5 days/week 5-10
14
Collaborative Successes!
Through collaborative efforts, shippers have
saved millions and tapped into new capacity by
converting over 50,000 OTR loads to intermodal.
Savings Based on 15 months of OTR Conversions
15
Transpacific and Latin America Trade Routes will
move 63 of U.S. seaborne exports by 2025
546 M
Transpacific exports will increase 140, while
Latin America exports will increase 58
138 M
2025 SHORT TONS (M)
TRANSPACIFIC
LATIN AMERICA
15
Source Global Insight, December 2011
16
Mexico Manufacturing Drivers

• Cost Structure
• Hedge against anticipated increase in Chinese
  labor costs
• China has no cost advantage for materials vs.
  North America
• Manufacturing for Multiple Markets
• Flexible manufacturing base for the Americas and
  other regions
• NAFTA tariff advantages
• Cheaper production vs. Brazil
• Economies of size for emerging South America
  markets

• Currency / Inflation Stability
• Favorable long-term exchange rates vs. China,
  Canada, Brazil and Japan
• Mexico CPI has averaged 4.4 over last 10 years
• Logistics/Workforce
• Mexicos close proximity to regional markets
• Engineering/technical footprint
• Work force stability for plants in interior
• Ease of integrating with other North American
  plants

17
BNSF International Presence

• BNSF offices in China, Japan and Mexico
• Strengthening existing partnerships with key
  stakeholders
• Developing new growth opportunities
• Providing direct customer service
• Connecting international customer growth strategy
  with North American markets

18
Key Takeaways

• Containerization has advanced global trade
• Fits intermodal as a high-capacity,
  asset-intensive transportation that connects
  major markets
• Rail benefits in productivity/resource priority
  environment
• Fuel Efficiency
• Highway Gridlock Reduction
• Cost Efficiency
• Environmental Friendliness
• Transpacific and Latin Trade Growth driving
  future flows

19
(No Transcript)