Intermodal Success Story: BMW, SCPA and Norfolk Southern 2016 North American Rail Shippers Annual Meeting
Randy Bayles, Director International Intermodal
Discussion Topics
NS Overview
Market Drivers Impacting NS
Changes in World Shipping Routes to U.S.
East Coast Preparing for Volume Shifts
Short Haul Intermodal
South Carolina Inland Port
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NS Network
74% of U.S. population
55% of total energy consumption in U.S.
66% of U.S. manufacturing
Estimate 50M+ truck shipments over 550 miles touch our network
Extensive port access
Balanced Portfolio of Business
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% of 1Q16 NS Revenue
Agriculture 16%
MetCon 12%
Paper 8%
Chemicals 17%
Auto 11%
Intermodal 22%
Coal 14%
Market Drivers Impacting NS
• Opportunities for highway conversion
• Growth with strategic corridor projects
• Lingering effects of West Coast Port Disruption
• Strong growth in the automotive industry
• Increased consumer spending
• Improved construction activity
• Growth in ethanol and soybean exports
• High inventory levels
• Softening steel production
• Coal
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Global - U.S. Shipping Options Traditional West Coast centric routings have expanded to include other options
favoring East Coast ports.
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Global - U.S. Shipping Options Traditional West Coast centric routings have expanded to include other options favoring East Coast ports.
Bayonne Bridge
Navigation Clearance Expressrail Port
Jersey Opening
Timeline of Critical Events
Panama Canal
Expansion
2016 2017 2018 2019 2020
Charleston Navy
Yard Opening
Charleston Harbor
Deepening
Savannah Harbor
Deepening
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NIT South Expansion
Intermodal Terminals
On-Dock Access
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Harrisburg
Atlanta
Charlotte
Chicago
Columbus
Detroit
Savannah
Cincinnati
Inland Virginia
Norfolk
New Orleans
Memphis
Dallas
Huntsville
Jacksonville
Charleston
Georgetown
Kansas City
St Louis
Louisville
Baltimore
Greensboro
Toledo
Decatur
Greencastle
Cleveland
Pittsburgh
Boston Buffalo
Central Florida
New York / New Jersey
Bethlehem
Philadelphia
Birmingham
Greer
Rail Strategy: Achieving Above-GDP Growth Short-Haul Truck Competitive Markets
International Short Haul
At NS, much of our traditional market has been shorter hauls relative
to western carrier lengths of haul.
As more International freight is handled via East Coast ports, much
of that is destined to key markets and population centers less than
500 miles from the port
The factors that enable NS to launch successful short haul services
include:
• DENSE = Double-stack service is an absolute necessity
• DIRECT = Low rail mileage circuitry vs. highway miles
• SURPLUS = incremental capacity available on train and at terminal
• STRESS = Port drayage access and economics
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Perspective
2,778
2,016
1,792
1,436
715
681
356
248
0 500 1,000 1,500 2,000 2,500 3,000
Los Angeles - New York
Los Angeles - Chicago
Los Angeles - Memphis
Los Angeles - Dallas
Atlanta - Harrisburg
Memphis - Charleston
Chicago - Columbus
Savannah - Atlanta
Highway Miles
Extremely Short
Short
Traditional
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Shifts In The Market Require A Flexible Network More opportunity for Intermodal growth in the < 1200 mile LOH segment
NS International Traffic Mix by Length of Haul
NS Domestic* Traffic Mix by Length of Haul
Change in % share of total volumes from 2005 to 2015
-
+7
-7
10
+16 +10
-26
* Excludes Triple Crown
0%
25%
50%
75%
Up to 600 Miles 600-1200 Miles Over 1200 Miles
2005 2010 2015
0%
25%
50%
75%
Up to 600 Miles 600-1200 Miles Over 1200 Miles
2005 2010 2015
Front Royal
1989 212 mi
Savannah
Charleston
NY/NJ
Norfolk
Jacksonville
Harrisburg
1999 162 mi
Greensboro
2011 235 mi
Charlotte
1995 342 mi
Greer / SCIP
2013 236 mi Austell
1998 265 mi Miami
Developing New Shorthaul Services
Baltimore
South Carolina Inland Port
Idea Conceived: November 2011
Operational: November 2013
Goal: Convert Port of Charleston traffic moving OTR to rail
Customer base – BMW is the base customer
– Other importers / exporters in the area include: Adidas, Eastman Chemical, John Deere, Michelin
Future opportunities could include auto parts from Mexico and other NS locations
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• 236 Miles • 9 hour transit • 5 days per week
Summary
Global logistics trends continue to evolve. The dominant trends
over the past decade have consisted of port, coastal, and modal
diversification.
Traditional OTR models are under increasing pressure from organic
costs and new regulatory measures.
NS is “pushing the envelope” on shorthaul intermodal services.
NS has invested considerable capital into our network capabilities to
ensure that we are flexible, and fully capable of taking advantage of
these trends as they emerge.
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