D R A

F T

1

Coal ComparisonsThird Quarter 2012 vs. 2011

FREIGHT RAIL SYSTEM

1

• Dates back to late 1820’s• Today, more than 560

freight railroads operate in the U.S.

• 140,000 mile system• Seven largest (Class I)

railroads account for 67% of total mileage

• Almost entirely privately owned and operated

• Funded by private capitalSource: Association of American Railroads

GENERAL CHARACTERISTICS OF U.S. FREIGHT RAILROADS

2

• Vast majority privately-owned, tax-paying firms

• Same company usually owns the track and operates trains over it

• No automatic access to another’s tracks

• Little government funding• Don’t carry passengers• Regulation not as onerous as

it once was, but still substantial (FRA for safety; STB for rates, service, etc.)

Source: Association of American Railroads

ENVIRONMENTAL STEWARD

3

• Moves a ton of freight 469 miles per gallon.

• One train = hundreds of trucks.

• 4 times more fuel efficient than trucks.

• Reduces greenhouse gases by 75% compared with trucks.

• Diverting 10% of long-distance truck traffic to rail would be like taking 2 million cars off the road or planting 280 million trees.

Source: Association of American Railroads

HIGHWAY CONGESTION

4

Forecasted Daily Freight Truck Volume

2012 2035

Source: U.S. DOT

KEY FACTORS FAVORABLE TO RAIL

5

• Highway congestion• Fuel efficiency• Driver availability and turnover, and aging

truck fleet• Increasing cost structure for trucking• Focus on sustainability

NORFOLK SOUTHERN SYSTEM MAP

6

7

Coal ComparisonsThird Quarter 2012 vs. 2011

7

• Class I railroad

• Safest railroad in North America• Winner of the E.H. Harriman Memorial

Gold Medal Award for 23 consecutive years

• Originator of more finished vehicles shipments than any other North American railroad

• Largest Intermodal franchise in the eastern U.S.

• Largest metals franchise of any Class I railroad

• Annual Capital Investment $2 Billion

NORFOLK SOUTHERN

NS BUSINESS MIX IN 2012

8

Agriculture8% MetCon

9% Paper4%

Chemi-cals5%

Au-to

mo-tive5%Coal

20%

In-ter

modal

47%

Agricul-ture13%

MetCon12% Pa

per7%

Chemi-cals14%

Au-to

mo-tive8%

Coal26%

In-ter

modal

20%

Volume Revenue

$11.0 Billion in Revenue 7.1 Million Units

9

Coal ComparisonsThird Quarter 2012 vs. 2011

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• Sites and Buildings

• Appropriate Infrastructure• Utility – Electric, Gas, Water, Sewer,

Telecomm• Transportation – Highway, Rail, Port

• Labor Force

• Community Support

• Tax Environment

• Speed to Market

ECONOMIC DEVELOPMENT 101

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Coal ComparisonsThird Quarter 2012 vs. 2011

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• Warehouse Logistics Parks• Intermodal Logistics

• Private Sector Site Development

• Foreign Direct Investment

• Port Related Development

• Energy Related Development• Ethanol• Shale Gas & Shale Oil• Coal

• Petrochemical Projects

TRENDS