National Defense

Transportation Association

Railroad 101

Theresa LorinserBNSF RAILWAY

DIRECTOR, MARKETING - INDUSTRIAL PRODUCTS

OCTOBER 12, 2017

1830 - Baltimore & Ohio RR becomes the first common carrier railroad

1862 - President Lincoln inaugurates construction of the transcontinental railroad

1887 - Interstate Commerce Commission (ICC) is created by the Interstate Commerce Act, making railroads the 1st industry subject to comprehensive federal regulation.

1936 - Chicago Great Western RR moves several hundred truck trailers on flatcars. Marks the beginning of the intermodal concept as we know it today.

1961 - Missouri Pacific RR acquires the rail industry’s first solid-state computer; IBM 7070. Railroads become one of the earliest major users of computer technology.

1970-75 - Burdened by regulation and faced with subsidized competition, 9 major RRs, representing almost

25% of the industry's trackage, file for bankruptcy protection.

1980 - Congress passes the Staggers Rail Act, reducing the ICC’s regulatory authority over railroads and

sparking a complete restructuring of the industry.

Railroad History

American Association of Railroads (AAR)

Eight months after U.S. entered into WWI, President Woodrow Wilson announced the nationalization of

American railroads to support the war effort.

• Set industry standards

• Represent the railroad industry before Congress, regulatory agencies, etc.

• Collect and distribute statistical data

• Public affairs

• Research and evaluate new technologies (ex - Transportation Technological Center Inc.)

• Provide information technology services (ex - Rail Inc.)

Federal Rail Administration (FRA)

• Created by the DOT Act of 1966. It is 1 of 10 agencies within DOT concerned with intermodal

transportation. Promotes safe, environmentally sound, successful railroad transportation to meet the

needs.

Surface Transportation Board (STB)

• Independent adjudicatory and economic-regulatory agency charged by Congress with resolving railroad

rate and service disputes and reviewing proposed railroad mergers. The agency has authority to

investigate rail service matters of regional and national significance.

Governing Agencies

Source: Association of American Railroads (AAR)

Class I• There are 7 Class I freight railroads• Operate in 44 states

• Account for 90% of employees

• 69% of U.S. freight rail mileage

Class II and III (Short Line and Regional Railroads)• +500 short line and regional railroads

• Operate in every U.S. state except Hawaii.

• Account for 10% of employees

• 31% of U.S. freight rail mileage

Types of Railroads

2016 data. Source: Association of American Railroads (AAR)

U.S. Freight Rail Network

BNSFCN

CSX

NSUPShort Line/Regional

KCS

CP

Multiple Owners

Rail network based on the 2016 National Transportation Atlas Database,

published by the U.S. DOT, Bureau of Transportation Statistics.

© 2017, Association of American Railroads.

SLID

E 6

In the U.S., railroads account for

approximately 40%* of all freight

(more than any other transportation)

• Nearly 140,000 miles of track

• More than 180,000 employees

• Approx. 31,000 locomotives

• Approx. 1.6 million railcars

• Approx. $25.9 billion capital

– 2015 record year $30.3 billion

U.S. Railroads: Leaders in Freight Transportation

ASSOCIATION OF AMERICAN RAILROADS2016 data. Source: Association of American Railroads (AAR)

Recovery, Restoring, and Reliability

Galveston Yard – Aug. 29, 2017

Bridge damage by Tropical Storm Harvey

Replacing ballast – Houston, TX

National Defense

Transportation Association

Technology

Ryan SteinbachUNION PACIFIC

SENIOR DIRECTOR - INDUSTRIAL

OCTOBER 12, 2017

Positive Train

Control (PTC)

PTC: What it is and How it Works

Using GPS, PTC evaluates train’sDistance from end of authority limits

Warning given if engineerdoesn’t slow train

PTC triggers brakes in engineerdoesn’t brake to stop short of limits

PTC: Scope Challenges

Much of the

technology did not

exist before the

government mandate

Must be interoperable

across all railroads

Must relay critical

operational data

Must operate across

all terrain types and

calculate stopping

distances regardless

of weather conditions.

• All railroads are implementing PTC under

the guidelines prescribed by the Rail

Safety Improvement Act (RISA) of 2008

• RSIA requires:

• Implementation date of December 31, 2018

• Defines territory and operating

requirements where PTC must be installed

– All railroads are committed to meet the

mandated implementation date and

operating requirements on time

Positive Train Control UpdateIndustry Installation

Cyber Security

• Rail Information Security Committee

(RISC) established 1999

• North American railroads working to

eliminate potential threats

• Industry initiative that provides:– Mechanism for consistent communications

– Development of best practices

– Effective coordination and communication

Rail Information Security Committee

Cyber Security

• Railroads conduct comprehensive

security assessments

• Threat scenarios drawn from

intelligence analyses and past

experiences

• RISC evaluates efforts and practices

against International standards and

the Cyber Security Framework

Cyber SecurityRail Information Security Committee

• Cyber threat intelligence sharing:

– Maintain industry shared repository

– Define and periodically review

government agencies in US and Canada

– Participate in classified presentations

– Share information on actual threats or

suspected illicit activity

Cyber SecurityRail Information Security Committee

• Preparedness

– Cyber security training and dedicated experts

– Regular security exercises

– Industry wide safe guards implemented

– Tools and protective measures designed to:

• Limit access and activity on networks

• Implement multifactor authentication

• Provide sustainability under adverse operating conditions

Cyber SecurityRail Information Security Committee

National Defense

Transportation Association

Open Top Loading

Lindy PopeNORFOLK SOUTHERN CORP.

MANAGER - LOADING & SECUREMENT SOLUTIONS

OCTOBER 12, 2017

The OTLRs covers minimum North American rail industry requirements for securing commodities that are loaded on open top railcars, trailers, and containers for safe and reliable rail transport.

OTLRs consists of 7 Sections:

• Section 1: General Rules for All Loading Commodities

• Section 2: Metal Products, Including Pipe

• Section 3: Machinery and Heavy Components, and Miscellaneous Commodities

• Section 4: Archived Figures

• Section 5: Forest Products and Miscellaneous Building Materials

• Section 6: Military Equipment and Materiel

• Section 7: Open Top Trailers and Containers For Rail Transport

NOTE: TEA also provides Modal Instruction (MI) 19 – Tiedown Instruction for Rail Movements, 7th Edition as a field guide to assist rail loaders comply with the OTLRs.

AAR Open Top Loading Rules (OTLRs)

The OTLR Committee's mission is to provide rules that ensure the safe, uniform, and economical securement of commodities transported on open-top railcars for the benefit of the rail industry, their shipping customers, and the general public.

AAR Member Railroads

• BNSF (Chair)

• NS (Vice Chair)

• CN

• CP

• CSX

• FEC

• KCS

• NOGC

• RAC

• UP

• PAR

Associate Members

• Trinity

• TTX

AAR Member Railroads

Contains general rules and guidelines applicable to all commodities shipped on open top

railcars in interchange service. This includes procedures for open top load testing and

rule changes, party responsibilities, minimum requirements, and guidance on setting up

multicar and dimensional load shipments. Also included are lists of various approved tie-

down and securement materials as well as specifications, performance standards, and

test procedures for gaining product approval. This section is to be used in conjunction

with Sections 2 through 7.

Section 1: General Rules Governing Loading of Commodities on Open Top Cars

Key Sections of the OTLR

Contains approved loading figures (load patterns) with securement specifications for

military vehicles, equipment, and materiel. This includes armored tanks and similar

vehicles, trucks, artillery, pontoons, cranes, road building and materiel handling

equipment such as forklifts. This section is to be used in conjunction with Section 1.

Section 6: Rules Governing Loading of Military Vehicles and Materiel on Open

Top Cars

Key Sections of the OTLR

Contains approved loading figures (load patterns) with securement specifications for

flat bed truck trailers loaded with a variety of commodities and equipment, that are

loaded onto Trailer-on-Flatcar (TOFC) service open top cars. It also contains a

section with figures of open top containers loaded with a variety of commodities, that

are loaded onto open top flat cars known as Container-on-Flatcar (COFC) Service.

This section is to be used in conjunction with Section 1.

Section 7: Rules Governing Loading of Commodities on Open Top Trailers

and Containers for Rail Transport

Key Sections of the OTLR

Website:

http://aarpublications.com/media/catalog/product/cache/1/small_imag

e/210x/9df78eab33525d08d6e5fb8d27136e95/o/t/otlrm-all_1.jpg

The full manual is available for purchase or you can buy individual

sections that fit your specific requirements.

AAR Open Top Loading Rules Manual

National Defense

Transportation Association

Railcars

Michael RutherfordCSX

VICE PRESIDENT

OCTOBER 12, 2017

Two Car Types Support Most Military Moves

82%

10%

6% 1% 1%

89-ft Chain Flats Loadings

Military Motor Vehicles Tractors

Railway Cars All Others

30%

21%

9%

5%5%

2% 1%

60-ft Chain Flat Loadings

Tractors PlateMilitary HarvestersWind Turbines OtherTelephone Poles Motor Vehicles

27%

Source: TTX – Full-year 2016 data

The 89-ft Chain Tie-Down Fleet Key for

Impedimenta

ITTX70-ton wood or steel deck3/8-inch or 1/2-inch chains

TTDX70-ton steel deck1/2-inch chains

TPDX89-ft flatcar

70 & 100-tonwith universal chains

The cars feature

• 286,000# GWOR capacity

• Pop-up container pedestals (flush when retracted)

• EOCC gag plate capability

• Fungibility with RR XTTX fleets

• 40 universal chain assemblies

850 New 100-Ton 89’ Chain Flatcars Thru 3Q’18

CONFIDENTIAL

1/2-inch chain assemblies with movable anchors will be installed in the deck channels

4 Recessed Channels Like DODX 42000-series

CONFIDENTIAL

• Combines 3/8-inch and 1/2-inch chain functionalities and capabilities into one assembly

• Features a newly redesigned telescoping load binder and heavy-duty swivel anchor

• Turnbuckle style tightening similar to current 1/2-inch chain assembly; no special tool requirements

• Ability to route chain through tighter areas similar to current 3/8-inch chain assembly, but able to

handle the greater load capacity of the 1/2-inch assembly

• Will be equipped on new 89-ft flats and phased into existing 89/60-ft fleets

“Universal” Chain Test Shipments Were a Success

Increases the Fleet to Over 1,500 Cars Near-Term

0

500

1,000

1,500

2,000

2,500

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*20

17

2018

2019

2020

2021

Ca

rsTTX 89-ft Chain Flatcar Fleet

Average Fleet in Service History Fleet Size Planned Minimum Fleet Size Peak Month

Source: TTX *2017, Combination of actual and forecast

Utilization Concerns May Worsen Near-Term

20

22

20

23

20

24

20

25

20

26

20

27

975

• Planned minimum fleet size (PMFS) has been set at 1,500 cars

• Average fleet in service has trended well below PMFS for several years, inclusive of peak demands

• 850 car addition will push fleet size back over the PMFS threshold, but trend back to 1,500 cars by 2021

• TTX fleet will begin to fall below PMFS in 2022 to under 1,000 in 2027

• Demands on Commercial 89’ fleet should increase at a time when serviceable fleet

is decreasing

– Truck conversions

– Stationing (DODX vs. Commercial fleet)

– Power Projection strategy

– Potential mobilizations

• 850 car fleet addition will help address incremental demand

due to shift from sustainment to power projection strategy

• Better turns on existing equipment will increase fleet capacity, which will be required

on a projected smaller fleet

Utilization Initiatives Key to Sustaining

PMFS Levels

Equipment Turn

times >5 6 7 8 9 10

Annual load

capacity5,000 6,000 7,000 8,000 9,000

10,00

0

Hypothetical 1000 car fleet:

• Rail value versus truck

– Cost savings in truck competitive lanes

• Asset Utilization

– Current fleet is turning at ~5 times per year, but target 8-10 turns per year

– Better utilization will provide justification for future fleet reinvestments

– Improved utilization will increase fleet availabiltiy for potential mobilization

– Some installations still order all ½” chain flats even if not necessary

• Stationing

– Commercial fleets not intended for pre-positioning at military facilities

– Commercial fleets should be primary choice for shipping, especially with design benefits of new

850 cars

– If Commercial cars appear unavailable, please consult with TTX or CSXT prior to using DODX

pre-positioned fleet

Improved Utilization Provides Mutual Benefits

60-ft Fleet Serves Machinery Shippers and

Military

OTTX70-ton wood deck

3/8-inch chains

HTTX70-ton wood deck

1/2-inch chains

TPAX70-ton wood deck

with universal chains

Source: TTX *2017, Combination of actual and forecast

0

500

1,000

1,500

2,000

2,500

3,000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*20

17

2018

2019

2020

2021

Ca

rs

TTX 60-ft Chain Flatcar Fleet

Average Fleet in Service History Fleet Size Planned Minimum Fleet Size

Life-Extensions Secure 60’ Capacity for the

Future

THANK YOU!