THE MEXICO CONNECTION - Transportation Technology …

1 THE MEXICO CONNECTION Frank Hernandez General Director Ops BNSF Railway June 17, 2015 1 2 Current Respective Gateway Operation Volumes by Gateway Border Process 3 Current Respective Gateway Operation C u r re n t G a te w a y O p e r a t i o n s Tucson Presidio 4 5 Brownsville / Matamoros Gateway (Rosita International bridge) 5 6 Current Gateway Operations 6 Tucson Presidio 7 Laredo / Nuevo Laredo Gateway 7 SOURCE: AMF Cancun ExpoRail 2015 Oscar Del Cuerto Cuevas KCSM. Investments in 2015 Continuation of Master Plan for the Sanchez Yard at the Nuevo Laredo border 8 KCSM Expansion Projects 8 SOURCE: AMF Cancun ExpoRail 2015 Oscar Del Cuerto Cuevas KCSM. MASTER PLAN FOR THE SANCHEZ YARD OPERATIONAL SUPPORT RAILS COMONFORT SIDING EXTENSION ESCOBEDO YARD CTC SIDING EXTENSION - 3 KM EXPANSION OF SANTA MARIA IN COAHUILA EXPANSION OF CAPACITY OF THE ESCOBEDO YARD SIDING EXTENSION FOR OJO SECO CONSTRUCTION OF THE Y IN THE AHORCADO YARD SIDING EXTENSION IN JACUARO -3KM COAHUILA NUEVO LEON TAMAULIPAS SAN LUIS POTOSI HIDALGO PUEBLA VERACRUZ JALISCO USA CAPITAL INVESTMENTS FOR 2015 9 Tie Projects 9 SOURCE: AMF Cancun ExpoRail 2015 Oscar Del Cuerto Cuevas KCSM NUEVO LAREDO LAMPAZOS 72,680 RAILROAD TIES LAMPAZOS LEAL 18,670 RAILROAD SLIDES SLP SALTILLO 23,000 RAILROAD TIES ACAMBARO CORONDIRO 17,000 RAILROAD TIES CORONDIRO LAZARO C.

2 5,000 RAILROAD TIES MONTERREY MATAMOROS 19,000 RAILROAD TIES SLP TAMPICO 28,000 RAILROAD TIES SLP AHORCADO 65,650 RAILROAD TIES AHORCADO HUEHUETOCA 4,000 RAILROAD TIES M. HERRERA ACAMBARO 25,000 RAILROAD TIES LAMPAZOS MONTERREY MATAMOROS SALTILLO TAMPICO SANTA FE MORELLA CELAYA AGUASCALLENTES PEROTE 10 Tucson Presidio Current Gateway Operations 10 PUENTE INTERNACIONAL MANTENIMIENTO TALLER DE A RAMOS ARIZPE 7 Bodega Rasini MESA GIRATORIA A EAGLE PASS 11 FXE Piedras Negras Yard V a 01 V a 02 V a 03 V a Auxiliar R-15+664 R-17+600 Espuela R-17+ R-17+978 R-17+656 R-17+912 R-20+910 R-20+964 R-21+094 R-15+510 R-17+838 NORTE R-18+ R-20+ R-20+ R-18+ V a limpieza 101 V a Limpieza 102 V a Extracci n Norte V a Extracci n sur V a 04 V a 05 CH-1 CH-2 CH-3 CH-4 CH-5 CH-6 CH-7 CH-8 CH-9 CH-11 CH-10 CH-12 CH-13 CH-14 CH-15 CH-16 CH-17 CH-18 CH-19 CH-20 R-18+ R-22+ R-21+ Cervecer a Modelo Via Principal Esta conexi n ya no

3 Existe. 12 FXE Rio Escondido Yard 13 Current Gateway Operations 13 Tucson Presidio 14 Current Gateway Operations 14 Tucson Presidio 15 Ciudad Juarez Yard 16 Meseta Yard 17 Rail Relay Projects Modernization of the Infrastructure FXE/FSRR have rehabilitated 60% of their network FXE/FSRR s basic network has a capacity for 130 tons per car CAPACITY ON THE NETWORK IN 1999 CAPACITY ON THE NETWORK IN 2014 SYMBOLS (FOUR AXIS POINTS) 130 TONS OF CARGO CAPACITY 123 TONS OF CARGO CAPACITY 120 TONS OF CARGO CAPACITY 110 TONS OF CARGO CAPACITY KILOMETERS WITH CAPACITY OF 130 TONS IN 1999 5,743 KILOMETERS WITH CAPACITY OF 130 TONS IN 2014 0100200300400500600199819992000200120022 0032004200520062007200820092010201120122 01320142015 Infrasturcure and CapacityEquipmentTelecommunicationsOther 18 FXE / FERROSUR Infrastructure Investments Accumulated 1998-2014.

4 3,434 Millions of dollars Millions in USD Investment Program for FXE/FSRR from 1998-2015 (Millions of dollars) 19 Current Gateway Operations 19 Tucson Presidio Tucson Presidio 20 Current Gateway Operations 20 21 San Diego / Tijuana Gateway 22 San Diego / Tijuana Gateway 23 San Diego / Tijuana Gateway 24 Volumes by Gateways 24 San Diego Volumes* 01,0002,0003,0004,0005,0006,0007,0008,00 09,000201220132014 NORTHSOUTH49% 47% 48% 51% 53% 52% *BNSF units only 25 Tucson Volumes 020,00040,00060,00080,000100,000120,0001 40,000160,00020102011201220132014 Nogales Volumes NORTHSOUTH50% 49% 50% 49% 50% 51% 50% 50% 51% 50% Volume for all railroads 26 El Paso Volumes 020,00040,00060,00080,000100,000120,0001 40,000160,000180,000200,0002010201120122 0132014 NORTHSOUTH48% 48% 45% 46% 47% 55% 54% 53% 52% 52% Volume for all railroads 27 Brownsville Volumes 020,00040,00060,00080,000100,000120,0001 40.

5 00020102011201220132014 NORTHSOUTH55% 49% 52% 54% 53% 46% 47% 45% 51% 48% Volume for all railroads 28 Eagle Pass vs Laredo Volumes Volume for all railroads 0100,000200,000300,000400,000500,000600, 00020102011201220132014 LAREDOEAGLE PASS29 Current Border Process 30 MEXICO Overview 31 MEXICO Volume 2014 BNSF moves a broad array of products to and from MEXICO 31 32 BNSF International Gateways CANADA USA MEXICO Tucson Nogales Presidio Ojinaga 33 International Border Support Interaction, support, and liaison for the following internal business units, ensuring seamless and transparent transborder shipments : INTERNAL PARTNERSHIPS Transportation /Operations MEXICO and Canada Marketing Sales Mechanical Service Design Equipment Distribution Ag/Grain Desk Unit Train Desk Customer Support 34 International Border Support EXTERNAL PARTNERSHIP S AAR Transborder Committee Set business standards for all Class I railroads, including MEXICO and Canada, for international transborder business Customs-CBP Other PGA s Canadian Customs-CBSA MEXICO Customs - Aduana Sagarpa Connecting Rail Carriers Domestic Foreign Quarterly/bi-monthly meetings at each BNSF gateway U.

6 S. Brokers Canadian Brokers MEXICO Brokers Freight Forwarders International Customers 35 Eagle Pass Set Out Traffic at Car Level Year Total Cars for Delivery to FXE Total IM Cars Set Out Percentage of Cars S/O 2013 42,116 3 .00007% 2014 50,324 4 .00008% YTD 2015 26,491 4 .00002% 118,931 11 TOTALIM36 El Paso Set Out Traffic at Car Level Year Total Cars for Delivery to FXE Total IM Cars Set Out Percentage of Cars S/O 2013 47,658 149 .003% 2014 46,061 194 .004% YTD 2015 11,660 189 .002% 105,379 532 TOTALIM37 Challenges Southern Border Ventanilla Unica de Comercio Exterior Mexicano VUCEM Implemented November 17, 2014 38 39 TALKING POINTS All remaining slides are TALKING POINTS and will not be visible to the audience. 40 3A) Brownsville / Matamoros Gateway (Rosita International bridge) 40 agreement with Union Pacific Railroad (UPRR) from Algoa to Brownsville.

7 Interchange railroad at Matamoros is Kansas City Southern de MEXICO (KCSM). KCSM is wholly owned by KCS. hours of operation at the BROWNSVILLE / MATAMOROS Gateway: 0800 2000hrs, Monday thru Saturday (12hrs per day, no directional windows) 1000 1400hrs, Sunday This Gateway and interchange hours are used solely by UPRR and KCSM network improvements include: New international railroad bridge at Rosita. 41 5A) Laredo / Nuevo Laredo Gateway 41 rights on UPRR to Robstown and delivery of our trains to KCS at this location. Haulage Agreement with KCS between Robstown to Laredo. interchange railroad at Nuevo Laredo is KCSM. Gateway has historically been the # 1 Gateway, as it relates to total volumes interchanged. Eagle Pass / Piedras Negras Gateway is now vying for that title.

8 Hours of operation at at the LAREDO / NUEVO LAREDO Gateway is 24/7, as follows: 0200 0800hrs Northbound Export Window (NEW) 0800 1400hrs Southbound Export Window (SEW) 1400 2000hrs NEW 2000 0200hrs SEW This Gateway and interchange hours are shared by KCS, UPRR, and KCSM network improvements include: Sanchez yard, siding extensions, spring switches, double tack along 30% of Laredo to MEXICO city corridor, CTC from Laredo to MEXICO city, intermodal yards. 42 9A) Eagle Pass / Piedras Negras Gateway 42 rights to Eagle Pass Gateway. interchange railroad at Piedras Negras is Ferrocarril Mexicano (FXE). is owned by Grupo MEXICO and UPRR. It has also merged with Ferrocarril Sureste (FERROSUR). Gateway has been challenging the LAREDO / NUEVO LAREDO Gateway for total volumes interchanged.

9 Hours of operation at at the EAGLE PASS / PIEDRAS NEGRAS Gateway is 24/7, as follows: 0000 0600hrs SEW 0600 1200hrs NEW 1200 1800hrs SEW 1800 0000hrs SEW This Gateway and interchange hours are shared by BNSF, UPRR, and FXE Eagle Pass Sub improvements include: CTC from Spofford to MP , double track segments, new classification yard at Spofford / Laughlin. network improvements include: Rio Escondido yard (in fourth of 7 phases of development), siding extensions, spring switches, double track segments, CTC islands, intermodal yards. 43 12A) Presidio / Ojinaga Gateway 43 On the Mexican side of the border, forms part of the FXE network. On the USA side, it forms part of the Texas Pacifico. Both FXE & Texas Pacifico form part of Grupo MEXICO . Bridge is owned by the Mexican Government & the State of Texas.

10 Bridge sustained fire damage February 29, 2008 and has been OOS since that date. 44 13A) El Paso / Cd. Juarez Gateway 44 interchange railroad at Cd. Juarez is FXE. is owned by Grupo MEXICO and UPRR. It has also merged with Ferrocarril Sureste (FERROSUR). hours of operation at the EL PASO / CD. JUAREZ Gateway: 1600 0700hrs (15hrs per day, no directional windows). This Gateway and interchange hours are shared by BNSF, UPRR, and FXE. Eagle Pass Sub improvements include: New Y at Belen, NM. network improvements include: Meseta yard, siding extensions, spring switches, double track segments, CTC islands, intermodal yards. 18A) Tucson / Nogales Gateway hours of operation at the TUCSON / NOGALES Gateway: 0900 1700hrs Monday thought Sunday (8hrs per day, no directional windows).