Bellevue Expansion. Jerry Hall Vice President Network & Service Management

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2 Bellevue Expansion Jerry Hall Vice President Network & Service Management

3 Freight Wants to Move through Bellevue

4 Bellevue Expansion Current Handling Philadelphia Area to BNSF Handling & Dwell Locations: Camden Conway Elkhart Chicago

5 Bellevue Expansion Handling after expansion Philadelphia Area to BNSF Handling & Dwell Locations: Camden Bellevue

6 Bellevue Expansion Current Handling Southeast to UP (Pacific Northwest) Handling & Dwell Locations: Chattanooga Elkhart Chicago

7 Bellevue Expansion Handling after expansion Southeast to UP (Pacific Northwest) Handling & Dwell Locations: Chattanooga Bellevue

8 Tools to Measure and Understand Traffic Flows ABC Algorithmic Blocking & Classification What does it do? For each waybill, it identifies the classification codes to generate the shortest shipment route based on minimum miles and handlings.

9 Tools to Measure and Understand Traffic Flows - OPD Operating Plan Developer What does it do? Enables NS to quantify the impact to car miles, train miles, circuitous miles, crew requirements, car handling, etc. of a proposed service plan before the plan is executed.

10 Norfolk Southern Production Yards Elkhart Conway Allentown Bellevue Enola Sheffield Knoxville Chattanooga Linwood Birmingham Macon

11 Future Operating Plan Train/Volume Changes Terminal Bellevue, OH Elkhart, IN Conway, PA Columbus, OH (Watkins) Trains Handled +/- Originating +13/+72% Terminating +12/+75% Originating -8/-36% Terminating -5/-26% Originating -7/-50% Terminating -9/-60% Originating -2/-50% Terminating -1/-33% Daily Terminal Volume Change +1,300/81% -607/-30% -607/-40% -93/-35%

12 TOP Trains By Line Segment Line Segment Current Trains Operated Future Trains Operated B1 - Toledo 12 16/ +33% B2- Sandusky 5 9/ +80% L3 Ft Wayne 23 26/ +13% L8 - Columbus 25 31/ +24% L2 - Cleveland 14 22/ +57%

13 Traffic Routing Change Example Moraine, OH to Kirk Yard, IN (CN) CURRENT PLAN KIRK YARD ELKHART BELLEVUE The new Bellevue Operating Plan reduces transit by one day and eliminates a handling at Elkhart. MORAINE

14 Traffic Routing Change Example Bellevue, OH to Detroit, MI CURRENT PLAN DETROIT ELKHART The new Bellevue Operating Plan reduces transit by 2.3 days and eliminates a handling at Elkhart. BELLEVUE

15 Block Swap of Union Pacific traffic at Elkhart, IN 35E (Enroute 6 Hours Later) UP Chicago, IL Elkhart, IN Chicago, IL At Elkhart, 33E will set off UP Chicago, IL cars that block swap to 35E saving a day of transit. Bellevue, OH 33E UP Chicago, IL UP North Platte, NE

16 Projected Savings Categories Chicago Area Railroad Savings Train Overhead Savings Yard Locomotive Savings Network Savings

17 Chicago Terminal Savings

18 Redundancy Reduce Overhead Train Savings Each winter a significant number of trains are re-routed as a result of weather in northern Indiana. When Bellevue opens in the fourth quarter, the need to overhead will be eliminated by newly created capacity at Bellevue, Conway, and Elkhart.

19 Network Savings The savings associated with the Bellevue expansion include: Car and Road Locomotive Savings Locomotive Maintenance and Ownership Savings Car Hire per Diem/Mileage Savings Mechanical Cost Savings Crew Cost Savings Terminal Cost Savings Total Engineering Expense

20 Bellevue Construction Mark Dewberry Chief Engineer Design & Construction

21 LINWOOD, NC HUMP CONSTRUCTION

22

23

24 New Track Miles Turnouts Buildings (3) 11,340 sq ft Service Roads 10.4 Miles Power Switches 162 Hump Control System

25 Receiving Tracks GENERATORS

26 Hump

27 Class Tracks

28 Pullback Tracks

29 Westbound Forwarding Tracks Eastbound Forwarding Tracks

30

31 New Track Miles Turnouts Buildings (3) 11,340 sq ft Service Roads 10.4 Miles Power Switches 162 Hump Control System

32 MINI-PLANT

33 MINI-PLANT

34 1967 AERIAL IMAGE

35 CLASS YARD

36 4 CONDUIT INSTALLATION GROUP 8 SKATE RETARDER

37 GROUP 10 SKATE RETARDER

38 DRAINAGE WORK

39 CUTTING IN ADMIN BUILDING E4 MAIN

40 ELECTRICAL CONDUIT HIGH MAST TOWERS

41 NEW RANGER TOWER

42

43

44 SOIL NAIL BENCH 3 SHOTCRETE

45 SOIL NAIL WALL

46 ACCESS TUNNEL UNDER TRACKS

47 ACCESS TUNNEL

48 PEDESTRIAN TUNNEL

49 TUNNEL HOUSE (CREW CHANGE)

50 WALL REINFORCEMENT PVC FOR FRONT FACE WALL POUR

51 TYING STEEL FOR WALERS

52 INSTALLING ROCK ANCHOR

53 DRILLED SHAFT FORWARD ABUTMENT FOOTING

54 DRILLED SHAFTS

55 UNDER CAR SHOP ACCESS ROAD BRIDGE

56 CAR SHOP ACCESS ROAD & BRIDGE

57 CAR SHOP ACCESS ROAD & BRIDGE

58 CLASS YARD MAY 2013

59 Bellevue NEW RANGER TOWER

60 CLASS YARD JULY 2013

61 CLASS YARD AUGUST 2013

62 CLASS YARD SEPTEMBER 2013

63 CLASS YARD OCTOBER 2013

64 CLASS YARD NOVEMBER 2013

65 CLASS YARD DECEMBER 2013

66 CLASS YARD JULY 2014

67 CLASS YARD JULY 2014

68 DIAMOND CROSSOVER

69 DIAMOND CROSSOVER

70 DIAMOND CROSSOVER

71 Switch Heaters Switch heaters and Pole Lights Switch heaters and Pole Lights Pole Lights Ranger Tower, Lighting Control Panel, NX Plant Bungalow New switch heaters Air compressors and C&S computers Hump Retarders and Lights New switch heaters High-mast lights, new switch heaters, new master retarder and group retarders Locomotive Shop Equip. Building Admin Building and Communications Room Admin Building and Hump Tower CLASS YARD GENERATORS

72 CUMMINS COMMISSIONING DG88-3

73 CLASS YARD LAP TURNOUT

74 RETARDER

75 SETTING RECEIVING END GROUP 6 (LOOKING EAST)

76 MASTER RETARDER (LOOKING WEST)

77 RETARDERS

78 RETARDERS

79 RETARDERS

80 RETARDERS

81 RETARDERS

82 RETARDERS

83

84 LINWOOD, NORTH CAROLINA

85 CLASS YARD

86 Process Improvements for Operations Donald D. Graab Vice President - Mechanical

87 Process Improvements Continue Crew Redistricting Movement Planner- UTCS LEADER (Locomotive Engineer And Display Event Recorder) NGauge Terminal Improvement Project 24 Terminals Complete to Date NSight Car and Locomotive Shops

88 Mechanical Department s Lean Program

89 People Process

90 People Side of Lean Respect for Employees Consensus Decision Making Developing Employee Engagement Trust Shared Goals Coming off a 3 Year Behavioral Leadership Initiative Ideal Foundation for Advancing Lean Principles Better Way to Manage

91 How Do We Adapt Principles Developed on an Automobile Assembly Line to a Locomotive Shop?

92 Begin By Teaching the Seven Wastes Waiting Overproduction Excess Inventory Unnecessary Transport Unnecessary Movement Over Processing Defects

93 Five (Lean) Principles 5S (Sort, Straighten, Shine, Standardize, Sustain) Level the Load Standardize the Work Reduce Set Up Time Visual Management

94 Level the Load Car Maintenance Stabilize the flow of cars to the repair tracks Regular Predictable Switching Sort Cars for Shop Efficiencies Adjust headcount for >median - not the peak Balance the workforce Seven Days per Week Operation

95 Car Maintenance Personnel

96 Cars Out of Service for Maintenance $1.5 Million Reduction in Car Hire

97 People Process Problem Solving

98 - A Problem Solving Environment No One knows the Work Better than the Employees engages Employees in the Work Place The Eighth Waste Unused Employee Creativity

99 In Closing NGauge Terminals - Shops

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