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

SCIP Traffic Mix

First 12 months of Operation

65%

35%

BMW Non BMW

2015

55% 45%

BMW Non-BMW

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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Thank You.

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