Rail in Mexico: Innovative Solutions for a Vibrant and ...

1 Kansas City SouthernRail in Mexico: InnovativeSolutionsfora Vibrantand GrowingMexicanEconomyJos ZozayaPresident, General Manager and Executive RepresentativeKansas City Southern de M xico Kansas City SouthernGeneral Overview of KCSM2 Kansas City SouthernTransportedProducts3 Kansas City Southern4 Movementsbybusinessunits11%12%12%3%15%48 % Agriculture & MineralProducts Automotive Chemicals & PetroleumProducts Energy Industrial & ConsumerProducts IntermodalCarloadsbyCargo Type18%16%24%2%20%19%Total Freight Revenue*Data of September, 2017 Kansas City SouthernSecurity Points of Presence1,068 Agents593 Guard Points117 Patrol Vehicles5K-9 Units24x7 Security Desk5 Kansas City SouthernImportanceof Mexicoin NAFTA quadrupledtrade in 20 yearsIncreased the competitivenessof the three countries in the global important?Is the 2nd largest export market for the US, and its 3rd largest trading US and Mexico trade more than half a trillion dollars in goods and services every year, this means.

2 40 cents of every dollarspent on Mexican products support jobs in the US3,000 kilometers of border and million Mexicansliving in the US6 Kansas City SouthernNAFTA srenegotiationquadrupledtrade in 20 yearsIncreased the competitivenessof the three countries in the global processestelecommunications agriculturee-commercesecurityenergy7 Kansas City SouthernNAFTA sobjectivesquadrupledtrade in 20 yearsIncreased the competitivenessof the three countries in the global investment opportunities and establishes effective processes for the national production stimulation and healthy cooperation among member countries, eliminates barriers that reduce trade between its members and promotes the conditions for a fair adequate intellectual property protection rights and offers a solution to represents25% of theWorld sGDPS ource: Kansas City SouthernNAFTA ssuccessquadrupledtrade in 20 yearsIncreased the competitivenessof the three countries in the global American economy has a combined output of US$ trillionFDI more than businesses invested $452 billion in Mexico and Canada.

3 Those two countries invested $ billion in the US. Quadrupled trade in 20 years. Trade increased to $ trillion in exports to Canada and Mexico support more than 5 million American jobsBoosted economic growth in all three the competitivenessof the three countries in the global marketplace9 Kansas City SouthernNAFTA and therailtransportSource: US Department of Transportation10 Kansas City SouthernImportance in the Mexican industrial (allocations,servicecontracts,forprofito rsharedproduction,permits) ,storage,distributionandgasoline,diesel, REFORM:11 Kansas City SouthernBenefits of transporting energy by railAccess to MarketFlexibilityLess Capital RequiredCrude Quality Management Short delivery time by train Fast construction rail is in place Lower permitting hurdles Increased market coverage Flexibility to deliver to key markets, direct to refinery, or to move where the production occurs Bi-directional movement Lower investment horizon Economyin scales Neat BarrelQuality In=Quality Out High security indexes12 Kansas City SouthernRailroadsas Rolling Pipelines Railroads emerge as Rolling Pipelines More opportunities for rail transportation in the energy sector13 Kansas City SouthernNew gasoline, diesel& LPG Terminal in Mexico sindustrial heartTruckDistribution Public and private tankage available Landreserved85 HAS (210 Acres) TrackLengthof Kms( Miles) Neutral Operator(WATCO) 300+ railcarcapacity.

4 Free TradeZone Differenttanksforeveryproduct. 24 securitypatrolonsite. Samplingand labonsite. Connectivityto Kansas City SouthernPipeline ConnectivityStrategicLocation15 Kansas City SouthernCapacity Strategy -Mexico Key Focus Areas16 Cross Border / SanchezPhase I andII work & EscobedoCelaya by-pass project in place alleviate congested area PhaseIII in progressRelocation of work from Nuevo Laredo to Sanchez planned for 2017 Coordination with UPon service designSan Luis Potos 2017 expansion Project of double main and support yard Kansas City SouthernCAR REPAIR SHOPTO MONTERREYTO NUEVO LAREDOB-1273B-1274B-1275B-1276B-1272 ENGINE READYTRACKSENGINE READYTRACKSCLASSIFICATION (70 TRACKS)EXISTING TRACKSRECEIVING (8 TRACKS)WYE TRACKCUSTOM AREADEPARTURE (12 TRACKS)MULTIPLE AREALOCOMOTIVE REPAIRFUELING FACILITYLOCOMOTIVE SERVICEENGINE READYTRACKSENGINE READYTRACKSCOYOTE CHANNELPERIMETRAL CHANNELCIRCULATION TRACKS anchez Yard Master PlanINVESTMENTPLAN ESTIMATEDCOSTS20152016201720182019-2025$ 20,000,000 USD$ 20,000,000 USD$ 20,000,000 USD$ 10,000,000 USD$ 130,000,000 USDLEGENDE xistingTracksFutureRoadsChannelsEXISTING Kansas City SouthernCelaya Bypass Overview LaredoHoustonDallasShreveportEast St.

5 LouisSpringfieldKansas CityBirminghamMeridianNew OrleansJackson18 New OrleansMonterreyLecheriaSaltilloCelayaDo a CeciliaAguascalientesLaredoVeracruzThe Celaya Bypass is the most important government led Rail Infrastructure Project in Mexico today Kansas City SouthernBackgroundCelaya BypassImprove ConnectivityImprove CapacityReduce VandalismGreater competitiveness of the rail sector in Mexico19 Kansas City Southern$0 $242 $430 200820102012201420162018 Celaya Bypass TimelineMMFelipe Calderon announces the projectKCS and FXE working to finish the projectMMMM+Enrique Pena Nieto President of Mexico 2012-2018 Term SCT governed the project20 Kansas City SouthernCelaya Bypass Overview 21 Kansas City SouthernWhat s aheadAt least 1 year of construction remaining, earliest completion date would be estimated late 2018 Land still needs to be acquiredKCSM has sent a proposal to the SCTKCSM will continue to work with the SCT on financial alternatives to complete the project22 Kansas City Southern ThankYou!