CSX and SFPA: Moving Tomorrow Together Michael Rutherford 1 October 6, 2014
Forward-Looking Statements This information and other statements by the company may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, margins, volumes, rates, cost-savings, expenses, taxes, liquidity, capital expenditures, dividends, share repurchases or other financial items, statements of management’s plans, strategies and objectives for future operations, and management’s expectations as to future performance and operations and the time by which objectives will be achieved, statements concerning proposed new services, and statements regarding future economic, industry or market conditions or performance. Forward-looking statements are typically identified by words or phrases such as “will,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate,” “preliminary” and similar expressions. Forward- looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise any forward-looking statement. If the company updates any forward-looking statement, no inference should be drawn that the company will make additional updates with respect to that statement or any other forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, and actual performance or results could differ materially from that anticipated by any forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by any forward-looking statements include, among others; (i) the company’s success in implementing its financial and operational initiatives; (ii) changes in domestic or international economic, political or business conditions, including those affecting the transportation industry (such as the impact of industry competition, conditions, performance and consolidation); (iii) legislative or regulatory changes; (iv) the inherent business risks associated with safety and security; (v) the outcome of claims and litigation involving or affecting the company; (vi) natural events such as severe weather conditions or pandemic health crises; and (vii) the inherent uncertainty associated with projecting economic and business conditions. Other important assumptions and factors that could cause actual results to differ materially from those in the forward- looking statements are specified in the company’s SEC reports, accessible on the SEC’s website at www.sec.gov and the company’s website at www.csx.com. 2
Network well positioned for eastern U.S. growth Connects all five eastern Montreal mega-regions Northeast Boston Midw est Serves nearly two-thirds of Chicago the nation’s population New York Philadelphia Baltimore Ports connect U.S. resources and manufacturing globally St Louis Norfolk Piedm ont Superior market reach into Atlantic Memphis Wilmington Northeast and Florida Charleston Savannah Network reach is foundation Gulf Coast Jacksonville for business diversity Mobile CSX-served Ports Florida New Orleans Tampa Population Density Miami GT 6M 1-3M 3-6M LT 1M 3
Network/diverse portfolio drive sustainable growth 2013 Volume by Market CSX Volume and Portfolio Mix 6.5 Million Units Merchandise Intermodal Coal Intermodal Chemicals Automotive Metals 7.4M Agriculture Phosphates Food & Consumer Forest Products Minerals Waste & Equipment 6.5M 26% Domestic coal Export Coal 18% 8% 7% 4% 29% 6% 40% 40% 5% 1% 5% 45% 42% 4% 2% 6% 12% 2006 2013 4
Near-term volume growth expected to continue Year-Over-Year Change in Volume First Quarter Second Quarter Q3 To Date 15% 15% 14% 11% 9% 8% 8% 8% 7% 7% 7% 6% 5% 5% 4% 3% 3% (1%) (11%) (12%) (16%) Agricultural Construction Industrial Intermodal Domestic Export Total Sector Sector Sector Coal Coal Note: Third quarter volume data is through week 35, ending August 29, 2014 5
Long-term trends are also favorable for CSX Eastern U.S. highway congestion Freight demand in the U.S. projected favors rail transportation long-term to grow more than 60% by 2040 Reindustrialization of America driving secular growth above GDP Highway system already congested, especially in eastern United States CSX Challenges for other modes generate Territory growth opportunities for rail industry Source: USDOT FHWA Freight Analysis Framework, Peak Period Congestion on National Highway System: 2040 Estimate 6
Trucking is particularly challenged today BB&T Capital estimates that winter may have removed 2-3% of TL capacity ATRI study highlights the negative impacts of HOS rule change — Reduced TL productivity by 1-2% — Eroded quality of life for 83% of drivers, including lower wages for 67% The current dearth of 30K drivers is expected to hit almost 240K by 2020 Source: Logistics Management; FleetOwner; JOC; ATA. 7
Service levels stable; gradual recovery expected 2014 Weekly Service levels have fallen below Velocity versus Volume expectations Velocity (mph) Carloads (in 000s) — Severe winter trailed by strong volume 30 160 growth has strained resources 28 150 26 Resources being added as fast as 140 24 possible to speed recovery Up 16% 130 22 — Hiring crews; adding locomotives; Sequentially accelerating network capacity projects 20 120 18 110 Network to recover as new 16 100 resources become available 14 — High demand is expected to extend 90 12 recovery into 2015 10 80 1 3 5 7 9 11131517192123252729313335 Note: Third quarter volume data is through week 35, ending August 29, 2014 8
CSX is targeting $2.3 billion in capital investment Core investment remains at Capital Investment 16% – 17% of revenue for 2014 $2.3 billion — Infrastructure spend maintains a Infrastructure Equipment safe and reliable network Strategic PTC — Locomotive, car investment driven by commercial demand 16% — Strategic investments support growth and productivity 18% 53% PTC investment of $300 million targeted for this year 13% — About $500 million of investment will still be required beyond 2014 Note: Capital investment excludes investments related to public-private reimbursable projects 9
Capacity additions underway across network Adds 11 miles of double track for efficient movement from Chicago to NY River Line / Trenton Sub Supports growth in crude oil, River Line NW Ohio intermodal, and automotive markets Elsdon Worcester Elsdon Sub acquisition adds capacity Syracuse Chicago Chicago and flexibility to the network New Jersey Area New north-south connection helps Projects Baltimore expedite interchange traffic East St. Louis Project to extend terminal processing should finish by the end of 2014 Northwest Ohio Adding 18,400 feet of processing track and increasing lift capacity by 300,000 SE Corridor Jacksonville New Casky Yard investment will support Illinois Basin coal shift Southeast Tampa (SE) Corridor New sidings add capacity for business growth 10
CSX is also investing in equipment to support growth CSX Boxcar Fleet Expansion 500 4500 450 4000 400 3500 Cumulative Fleet Additions Annual Fleet Additions 350 3000 300 2500 250 2000 200 1500 150 1000 100 500 50 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 60' HI CUBE 50' HIGH CUBE 50' STANDARD Additions Source: CSX. 11 11
Customers can help by sharing anticipated demand Help us to improve overall planning and asset availability — Turn assets at origin and destination to help improve equipment velocity — Do not over-order when order fill rates are below expectation Please, always communicate service issues through the appropriate channels at CSX so we can better assist you — Bilateral communication between CSX and our customers will help improve the overall service levels, especially on the local service level Prepare accordingly for future demand needs — Evaluate the opportunity to forward position inventory CSX is committed to growing with you. CSX will continue relentless efforts to restore service. CSX will invest to deliver long-term Service Excellence. 12
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