AusRail Plus Future of Short Haul Rail Operating Concepts from the U.S. Mark W. Hastings Genesee & Wyoming. Genesee & Wyoming Inc.

Transcription

1 AusRail Plus 2013 Future of Short Haul Rail Operating Concepts from the U.S. Mark W. Hastings Genesee & Wyoming November 11,

2 Forward-Looking Statements This presentation contains forward-looking statements regarding future events and the future performance of that involve risks and uncertainties that could cause actual results to differ materially from those expressed or forecasted, including, but not limited to, economic conditions, customer demand, increased competition in the relevant market, the integration of RailAmerica railroads, and others, many of which are beyond our control. The Company refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as the Company s Forms 10-Q and 10-K, which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements discussed during this presentation. Forward-looking statements speak only as of the date of this presentation or the date they were made. Genesee & Wyoming Inc. does not undertake, and expressly disclaims, any duty to update any forwardlooking statement contained in this presentation whether as a result of new information, future events or otherwise, except as required by law. 2

3 Agenda 1. Overview of Genesee & Wyoming 2. Overview of G&W Australia 3. Comparison of Freight Railroad Business Models - Australia and U.S. 4. What are Short Lines? 5. Examples of Short Line Operating Solutions Interchange of Freight Shale Gas Industry Intermodal Freight Services 3

4 G&W Overview Listed on New York Stock Exchange ( GWR ) with market value of ~$5.1 billion Run rate annual turnover of $1.7 billion Operate over 24,000 kilometers of track with 4,600 employees, ~1,050 locomotives and 22,000 wagons Provide rail service in the U.S., Canada, Australia, the Netherlands and Belgium Own 111 short line and regional railroads, many involving heavy-haul unit trains of coal, grain, ore or other bulk commodities Provide contract rail operations to industrial facilities, mine-owned railroads and municipal-owned ports 4

5 Genesee & Wyoming

6 Genesee & Wyoming Australia 3,500+ km of owned track (2,200 km Tarcoola to Darwin) Accredited rail operator in six states (all but Tasmania) 450+ employees 100 locomotives and 1,000 wagons 40+ daily train starts across South Australia, the Northern Territory and Victoria Key Customers / Commodities Arrium / Iron Ore Viterra / Grain Gypsum Resources / Gypsum Territory Resources / Iron Ore OM Holdings / Manganese OZ Minerals / Copper Adelaide-Darwin / Intermodal six services round trip each week 6

7 Comparison: Australian to U.S. Railroad Model Operating Criteria Australia Original owner/builder Beginning private later State Governments then privatized U.S. Access Open Generally Closed Private corporations (with government land grants in some cases) Operating model Source to destination Interchange freight to other carriers One train/one commodity Tonnage based Mixed freight and unit train operations Wagon load based Track ownership Generally below operator Vertically integrated Track Gauge Narrow, Standard, Broad Standard Axle loading Rollingstock ownership Number of Freight Railroad Companies tonne (outside Pilbara) Generally above rail operator or shipper Major 4 Other 6+ Pilbara 3 30 to 32 tonne Rail Operator/Shipper/ Third Party Operating Lessor Major (Class I) 7 Shortline/Regional 561 7

8 Concept of Short Lines Operation of 50 to 400 kilometers Generally one or two major customers Own and maintain track, rollingstock Generally wagons interchanged with other railroads, not locomotives Concept much like are regional airline feeding passengers to central city hub 8

9 Concept of Short Lines History Always some short line railroads Staggers Act (1980) deregulated railroads and allowed for larger railroads to sell of unprofitable sections New companies were formed to service lines that potentially were to be abandoned 9

10 Concept of Short Lines Why could short lines succeed when large companies could not? Lower cost of operations Maintenance fit for purpose Local wage rates Lower overhead Customer focus Smaller companies were interested in serving smaller customers 10

11 Example of Interchange of Freight 11

12 G&W and Class 1s 12

13 Benefits of Interchange of Freight Crews often can remain local, limiting accommodation expense and time away from home Efficient use of rolling stock Reduced need for multiple terminal facilities Broader geographic reach, expansion of customer markets 13

14 G&W Lines and U.S. Shale Geography 14

15 Marcellus Shale Facilities Existing Sand Facilities Bradford, PA Superior Well Service Bradford, PA D&I Silica Sheffield, PA D&I Silica Clarendon, PA Reliant Well Services Ridgway, PA D&I Silica Dubois, PA EOG Resources Driftwood, PA D&I Silica Punxsutawney, PA Unimin Kittanning, PA Frac Sand Sales Kittanning, PA D&I Silica Butler, PA CSX TransFlo Existing Pipe Facilities Dubois, PA Fort Worth Pipe Existing Gas Facilities Worthington, PA DuFour Petroleum Falls Creek, PA SPSI 15

16 Shale to Rail What Does It Mean? Inputs ~30+ railcars per well: 4-6 railcars of OCTG (pipe) railcars of sand 1 railcar of calcium chloride ½ railcar of cement NGL Outputs ~ 10+ railcars per well: 4-6 railcars of drill cuttings 2-3+ railcars of liquid gases Brine water Crude Outputs: Currently handling 2 to 3 crude unit trains per week 108 cars per train) 16

17 Container Port Operations Provide rail service between port and connecting railroads Reduces traffic congestion at port Trains loaded for different ultimate carriers Provide timely local service Tariff rates to connecting carriers Improvement in safety and performance from prior port operations 17

18 Savannah Port Terminal Railroad 30 kilometers of track leased from State of Georgia Railroad interchanges trains to CSX and NS We serve 10 other North American ports in a similar fashion Model is widely used in the US including the Ports of Los Angles and Long Beach 18

19 Expansion of Services Contract Coal Loading G&W s Rail Link subsidiary loads the majority of the coal in the Powder River Basin (PRB); approximately 300 million tons annually G&W directs all train movements in and out for long-haul trains (70 daily) loading at 12 mine sites; maintains offices inside BNSF for 24/7 coordination on BNSF and UP railcar movements Coal-spraying joint venture enables mining customers to meet dust-suppression requirements 19

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