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September 20, 2009 IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII SCORT 2009 Panel: Partnering – Freight Service Nate Asplund Director – Public Private Partnerships • BNSF Introduction • Nation’s Network • Investment • Successful Partnerships • Project Examples • Take Aways Discussion Topics 1 Serving 13 of the 19 fastest growing markets Connecting over 179 M consumers $30 Billion invested since 1997 Operate 32,000 miles Host Amtrak on 7,000 miles Host commuter operations in five Metro areas Connecting Communities and Markets 2 Fuel Efficiency Up 80% since 1980 Truck – 5.3 to 5.1 mpg Environment Scalability More than 60% less CO2 than long-haul truck Leverage chokepoint relief Constructability Less footprint, cost and time Sustainable Partnership Options Higher capacity, lower cost, lower impact 3 US Highway and Rail Networks System Miles and Volumes 210 200 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 1980 1985 Highway - VMT 1990 Highway - Lane-miles 1995 Rail - RTM 2000 2005 Rail - Track-miles National Network Trends Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007 and AAR 4 20% U.S. Logistics Costs as a Percent of GDP What Drove Logistics Costs Down from 1980 to 2004? Transportation deregulation Low fuel costs What’s Driving Recent Supply Chain Cost Trends? 10% $0.5T Congestion 5% Aging (legacy) infrastructure Inventory / Admin. Costs Higher fuel costs 10.1% of GDP ($1.4 Trillion) Excess capacity 2007 15% $0.9T Public policy Increasing U.S. labor costs Transportation Costs 0% 80 985 990 995 000 001 002 003 004 005 006 007 19 1 1 1 2 2 2 2 2 2 2 2 Supply chain costs are increasing 5 Source: Annual State of Logistics Report, Council of Supply Chain Management Professionals 5 Class 1 capital investments needed to meet 2035 freight volume demand $135 B Total Needed $39 B Shortfall $26 B Productivity $70 B Growth Sources of Capital Will the investment be enough? Source: National Rail Freight Infrastructure Capacity and Investment Study September 2007 $ Millions Capital Commitments with ROIC 2002-2007: ROIC is restated to reflect the change in methodology for discounting operating leases. Capital Commitments $30B Invested in the last 12 years 7 Public Impact and Concern Congestion Go-Alone: Public Investment in Highway Maintainability of current system Cost of adding thousands of new lane miles by 2020 Air Quality and CO2 Metro area right-of-way constraints Safety Funding and Toll-road concerns Economic Development Energy, environment & safety impacts Delays and Costs Partnership: Public Investment in Rail Energy Security Energy, environment & safety benefits Global Competitiveness More economical footprint for freight growth Cost of Highway Infrastructure Lower construction cost per GTM System leverage from fixing chokepoints Private maintenance after construction Funding Infrastructure Mobility Impacts Make Freight Rail PPP’s Economically and Politically Viable Public Partner Rail Partner Mandate Network Benefit Capacity Sponsor Sponsor Funding ROIC Process Resources Timing Timing Successful Partnerships Aligning Public and Private Objectives Recent Successes Tehachapi Trade Corridor Port of Vancouver USA Expansion Connect Oregon II Burlington Bridge Part I Active Projects Tehachapi Mountains - California Kansas City Intermodal Facility Tower 55 Hobart Truck Efficiency Project Burlington Bridge Part II BNSF Project Examples Strong Partnerships Work 10 Viable Partnership Opportunities Improve Capacity, Velocity, Feasibility Chokepoints Connectors Intermodal Carload PPP’s are Only a Part of Meeting the Investment Requirement Regulatory Environment for Long-Term Investment also Critical Passenger and Freight Common Ground Congestion Relief , Mobility Choices, Sustainability, Environment Take Aways 11