Meeting Future Demands

Dave GarinBNSF Vice President, Industrial Products

Southwest Association of Rail ShippersFebruary 19, 2015

1

GDP GROWTH VS. U.S. RAIL GROWTH(growth compared to previous year)

Source: Association of American Railroads (AAR) and IHS Economics

RAIL INDUSTRY

+4.4% CAGR

GDP +2.2% CAGR

0%

2%

4%

6%

8%

10%

12%

2010 2011 2012 2013 2014

U.S. GDP U.S. Rail

Rail Demand has Grown Faster than the Economy

Increasing Volumes Support Continued BNSF Growth

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

7,500

8,000

8,500

9,000

9,500

10,000

10,500

11,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Units RTMs

2014 Units= 10,275

2006 Units= 10,637

Thou

sand

sM

illions

3

Product Mix Has Changed

Source: BNSF internal data

(2009-2013)

2009 2010 2011 2012 2013 2014

Other IPBuilding ProductsConstruction ProductsPetroleum Products

(2009-2013)INDUSTRIAL PRODUCTS

2009 2010 2011 2012 2013 2014

Automotive

International Intermodal

Domestic Intermodal

CONSUMER PRODUCTS

+70% +29%

BNSF TOTAL UNITS 2014 (in thousands) & PERCENT CHANGE

FROM 2009

Consumer Products

5,040+29%

Coal 2,270-5%

Agricultural Products

974+3%

Industrial Products

1,991 +70%

4

Analyzing Capacity Demands

• AIM (Assess, Improve & Maximize)• Consideration of four key constraint areas:

• People• Equipment• Line• Terminal

• Evaluation of a variety of scenarios determines the ultimate solution:

• Operational changes• Capital expenditures• Combination of both

5

Assessing the Network:Opportunity Management

Timely review of new business opportunities in existing and new lanes, as well as coordinating growth of new facilities

New Business Review (NBR) Process is about understanding shipping needs and evaluating impact on the network

Resource Capacity- Line- Power- Train- Terminal- Equipment- Interline Connections

CapacityService Design

Operations

ED Projects- Site Plans- Track Agreements- Land Leases- ITA- Engineering Review

Site ReviewLane Review

6

NBR Process Best Practices

BNSF and customers working together:

• Permitting Strategies• Early Collaboration on Facility Design• Open Lines of Communication• Sufficient Lead Time and Accurate Information

7

Building a Facility

THEN NOW• Single commodity• Manifest shipments only• Single, manual thrown switch• Mainline switching• BNSF switched

• Multi – commodity• Manifest and unit capable

operations• Multiple power switches with

switch heaters• Sufficient landing track for

mainline clearance of entire train• Product storage options• Private switching & BNSF

Locomotive Use• Positive Train Control (PTC)

GOALS - YIELD & EFFICIENCY8

Maximizing the Network

PEOPLE

+7,000

LOCOMOTIVES

RAILCARS

CAPACITY

*includes long-term leases and acquisitions

Maintenance Capital:

$2,615M

Expansion Capital:

$1,028M

Investing for Growth in 2014

612$3,643M

RECORD $5.5B INVESTED

* Includes acquired and renewed

7,500*

DOUBLE TRACK

82MILES

10

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BNSF’s 2015 Capital Commitment $6B

$2.9 billionCore Network & Related Assets

$1.4 billionLoco, Freight Car,

& Other Equip

$1.5 billionExpansion &

Efficiency

$200 millionPTC

Another Record Investment in 2015 to Meet Capacity Demands

48%

25%

23%

4%

Core Network and Related Assets

Expansion and Efficiency

Locomotive, Freight Car, and Other Equip

PTC11

With Added Capacity Comes Improved Performance

Source: AAR through January 9th, 2014.

BNSF Train Speeds – (Indexed Miles per Hour to June 2014*)Percent

-10123456789

101112

Diff

eren

ce fr

om J

une

2014

-4

Wee

k M

AVG

* - 4-week average of 5/31/14 through 6/27/14

12

More Locomotives Reduces Trains Held for Power

0

20

40

60

80

100

120

140

160

180

Tota

l Tra

ins

Hol

ding

for P

ower

Source: BNSF Internal Data 13

Continuous Improvement in Safety and Reliability Through Maintenance

0

0.02

0.04

0.06

0.08

0.1

0.12

0

5

10

15

20

25

2008 2009 2010 2011 2012 2013 2014

Rail Joint Other Per MTM

BNSF’S RAIL-RELATED DERAILMENTS ARE AT ALL-TIME BEST LEVELS

30,133

25,94824,251 24,594

23,290 23,61821,308

2008 2009 2010 2011 2012 2013 2014*Includes Detected and Service Failed:Detail Fracture, Engine Burn Fracture, Transverse Fissure, Compound Fissure, Horizontal Split Head, Vertical Split Head, Crushed Head, Shelled/Spalled/Corrugated, Worn Rail, Piped Rail, Split Web, Broken Base, Welded Engine Burn Fracture, Boutet Weld, Orgotherm Weld, Boutet Wide-Gap, Orgotherm Wide-Gap, Thermite Weld, Pressure Gas Weld, Pressure Electric Weld & Ordinary Break.

DETECTION* OF RAIL AND WELD DEFECTS CONTINUE TO DECLINE

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Your business is important to BNSF.Our focus is serving you now

and in the future.

After safety, nothing is more important than returning service and velocity to our network.

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