Transportation Strategy SCMN 4780 Railroad Industry Rail Industry.

Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780

Railroad Industry Railroad Industry

Rail Industry Rail Industry

Transportation Strategy Transportation Strategy SCMN 4780SCMN 47802Rail Industry Rail Industry

2010 US Shipments (TONS)

Truck 12,490 68%

Rail 1,776 10%

Pipeline 1,494 8%

Intermodal 1,380 8%

Water 860 5%

Air 12 0%

Other 302 2%

Total 18,313

RAILTRUCK

Railroad Share of US Transportation MarketRailroad Share of US Transportation Market


Truck / Rail / Inland Water Freight RoutingTruck / Rail / Inland Water Freight Routing


Truck / Rail Activity vs. US EconomyTruck / Rail Activity vs. US Economy


• 1940s: WW-II brings railroads the highest ridership in American history. • 1950s and 1960s: Drastic decline US railroad travel due to growth in use of motor

vehicles and airplanes. Due to financial issues, railroads respond through downsizing and mergers. ICC (regulatory body) prevents railroads to shut down lanes.

• 1970s: Congress creates Amtrak to retain passenger service option. Conrail, a freight railroad, founded from remains of Penn Central and other bankrupt railroads in NE.

• 1980s: Railroads deregulated. • 1990s: ICC is abolished and replaced by Surface Transportation Board to assume the

remaining regulatory functions. Major railroads continued to merge to remain viable. Conrail sells its assets to Norfolk Southern and CSX.

Recent History of US RailroadsRecent History of US Railroads


Railroad Traffic 2008 2009 2010

Carloads Originated (M) 30.6 26.0 29.2

Intermodal Units (M):Containers 9.0 8.2 9.6Trailers 2.5 1.6 1.7Total 11.5 9.8 11.3

Tons Originated (B) 1.93 1.67 1.85

Rail Freight Statistics Rail Freight Statistics


US Rail Activity vs. GDPUS Rail Activity vs. GDP


US Rail Activity Recent Growth US Rail Activity Recent Growth


US Rail Activity Trend US Rail Activity Trend


• CLASS I – large railroads with annual revenue > $350 million. They comprise 1% total number of freight railroads but account for 67% of industry’s mileage, 90% of employees, 93% of freight revenue.

• REGIONAL – line haul railroads with > 350 miles and/or revenue between $40 million and $350 million. There are ~30 regional railroads with most employing between 75 and 500 people.

• LOCAL – line haul railroads operating < 350 miles and earning < $40 million per year (average ~ $5 million). There are ~300 local railroads. They perform point-to-point service over short distances.

• SWITCHING & TERMINAL – railroads that provide switching and/or terminal services, regardless of revenue. They perform pick up and delivery services within a certain geographic area.

Types of (Freight) RailroadsTypes of (Freight) Railroads



BNSF Burlington Northern & Santa Fe CN * Canadian National CP * Canadian PacificCSX CSX TransportationFXE * Ferrocarril Mexicano (aka Ferromex)KCS Kansas City Southern RailwayNS Norfolk SouthernKCSM * Kansas City Southern de MéxicoUP Union Pacific

* non-US ownership

Current NA Major RailroadsCurrent NA Major Railroads


2010 Railroad Operating Revenue ($B) 2010 Railroad Operating Revenue ($B)

16.9

16.9

10.2

9.5

1.1 1.8

UP

BNSF

CSX

NS

KCS

All Other


Class 1 - US Railroad Track Network Class 1 - US Railroad Track Network


Major Railroad Track NetworkMajor Railroad Track Network



US Rail Freight Activity US Rail Freight Activity


Where is Rail Freight Service Mostly Used? Where is Rail Freight Service Mostly Used?

extraction

conversion

manufacture

assembly

distribution

retail

consumption

order

delivery

DOWNSTREAM

UPSTREAM

Rail FreightRail Freight


Commodity Group Tons (M) Portion Coal 814 44.0% Chemicals 187 10.1% Farm Products 159 8.6% Non-metallic Minerals 123 6.6% Misc. Shipments 110 5.9% Food 109 5.9% Metal Ores 71 3.9% Metal Products 54 2.4% Waste & Scrap Materials 48 2.3% Petroleum & Coke 42 2.3% Stone, Clay & Glass Products 40 2.2% Pulp & Paper 31 1.7% Lumber & Wood Products 25 1.3% Motor Vehicles & Equipment 21 1.2% All Other Commodities 31 1.7% Total 1,851

US Rail Freight Carried - Year 2010US Rail Freight Carried - Year 2010


Freight Moved by Rail Freight Moved by Rail


2010 Freight Cars in Service, Railroad 683K 2010 Freight Cars in Service, All Owners 1,565K


Rail Car Activity by Commodity Rail Car Activity by Commodity


Rail Service Transit Times from St. LouisRail Service Transit Times from St. Louis

Service Performance Characteristics?


Rail SafetyRail Safety


Rail Incident Videos Rail Incident Videos

TRAIN CRASH COMPILATION TRAINS CRASHING INTO CARS, TRUCKS, PEOPLE, DERAILMENTS! - YouTube.url

Train Explosion - YouTube.url


Rail Industry Safety (HazMat)Rail Industry Safety (HazMat)

TRANSCAER® - Transportation Community Awareness and Emergency Response is a voluntary national outreach effort that focuses on assisting communities to prepare for and to respond to a possible hazardous materials transportation incident. TRANSCAER® members consist of volunteer representatives from the chemical manufacturing, transportation, distributor, and emergency response industries, as well as the federal and local governments.

Whistle Stop Tours


Railcar Safety (HazMat)Railcar Safety (HazMat)Phosphorus - Phosphorus is essential for life. The vast majority of phosphorus compounds are consumed as fertilizers. Other applications based on phosphorus compounds are detergents, pesticides, nerve agents, explosives and matches. It is surface mined typically in a 90 / 10 ratio of earth to phosphorus mineral.

The majority of phosphorus-containing compounds are produced for use in fertilizers after phosphate-containing minerals are converted to phosphoric acid. In higher value applications, white phosphorus is oxidized to acid and is subsequently neutralized with base to give phosphate salts. Phosphoric acid obtained in this manner is relatively pure and is the main source of phosphates used in detergents and other non-fertilizer applications .

The allotrope white phosphorus should be kept under water at all times, as it presents a significant fire hazard due to its extreme reactivity with atmospheric oxygen.

Mining operations

Conversion plant


Current Rail Industry Outlook Current Rail Industry Outlook •Carload volume yet to reach pre-recession level •US industrial production expected to grow in 2012•Growing global demand for US agriculture products •Opportunities:

1. Discretionary pricing power 2. Rail transport more fuel efficient (cheaper) vs. truck 3. Rail network improvements ahead of other transport modes 4. Financially, railroads generally stable

•Threats: 1. Increasing governmental regulations2. Required capital intensity of the business 3. Threats from unionized labor

Transportation Strategy SCMN 4780 Railroad Industry Rail Industry.

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