STB UPDATE JANUARY 16, 2018

STB UPDATE

JANUARY 16, 2018

Network performance continues to improve Highlights ̶

̶

Velocity reaches new record of 18.7 mph, and is 24% improved from 2017 average velocity Dwell remains healthy at 10.8 hours, and is 4% improved from 2017 average dwell

 Velocity continues to rise; dwell, originations and arrivals all further improved this week

    

Right Car Right Train improved week-over-week Crew and power resource levels remain well matched to demand Hump yard performance steady Western terminals performing well Car fulfillment settled higher, averaging 93% since improved order fulfillment process began

 Local pull and place performance returned to prior levels after holiday-related impacts

 Customer problem logs remained at normal levels  Interchange volumes current and gateways fluid 2

All measures further improved this week, velocity reached record high

60%

60%

40%

40%

20%

20%

69%

76%

82%

86%

78%

73%

77%

80%

76%

80%

100% 70%

84%

86%

85%

82%

81%

84%

80%

83%

Weekly Average 100%

On Time Arrivals (%) 86%

On Time Originations (%)

On-Time +2 hrs On-Time

1

Jan. 06 – Jan. 12

2017

Weeks

1

Jan. 06 – Jan. 12

Weeks

11.5

10.0

6.0

10.0

1

Jan. 06 – Jan. 12

2017

1

Jan. 06 – Jan. 12

Weeks

Note: Dwell and velocity displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. 2017 dwell and velocity exclude the Hurricane Irma-impacted period for terminals that held cars and specific trains held through storm, respectively.

18.1

19.3

19.2

19.4

15.1

14.0 12.0

Weeks

3

16.0

8.0

2017

18.0

18.0 9.7

11.3

10.7

12.0

10.2

14.0

10.9

20.0 11.2

16.0 11.5

22.0

11.7

18.0

18.8

Velocity (mph) 17.8

Dwell (hours)

18.6

2017

+2 hrs

Right Car Right Train improved week-over-week  Right Car Right Train is no longer a measure that CSX uses to manage its operation

Right Car Right Train1 Weekly Average

― In scheduled railroading, if a car can be advanced on another train to speed transit or ensure its on-time arrival, there is not one “right train”

75%

77%

 Car priority is to move cars quickly, on next available train ― Asset utilization a key tenet of scheduled railroading

70% 65%

 Train priority is blocking integrity and departing all available, relevant cars from the yard

60% 55% 50%

2017

1

4

79%

76%

75%

74%

79%

74%

80%

76%

85%

80%

90%

1 Weeks

Jan. 06 – Jan. 12

― Blocking integrity certifies that a train is built correctly and shipments are headed to the correct location ― Managed through field supervision

‘Right Car Right Train’ is defined as the percentage of cars that departed from a yard in accordance with their car scheduling trip plan

Resourcing appropriately to meet business needs Train & Engine Headcount and Re-crew Rate1

Active Locomotives 3,800

3,400

9,800 9,400

3,368

12% 9,365

10%

9,000 3,025

3,000

8,760

2,979

8%

8,680

8,600 6% 8,200

2,600

4%

7,800 2,200

2%

7,400 1,800

0%

7,000 2017

1

2

3

4

5

6

2017

1

2

Locomotive level coming down in concert with network velocity improvement

4



5

6

Recent headcount decline driven by train staffing efficiency and adjustments to extra boards

Power and crew availability steady at approximately 99% and 95%, respectively 1

5

2018 Weeks

2018 Weeks



3

Re-crew rate is re-crew people starts as a percent of total measured people starts, and represents incidences of replacing a crew on the same train ID (generally due to hours of service)

Hump yard performance steady CSX Hump Terminal Overview



Key hump productivity and efficiency measures performing well



Total hump yard volumes back to normal levels after holiday, remain well below capacity of yards

Transitioned to flat-switching operations Hump terminals

Selkirk, NY Toledo, OH Avon, IN

Willard, OH

Dwell at Hump Terminals1

Cumberland, MD Cincinnati, OH

Weekly Average

Louisville, KY

18.0 14.0 10.0

Absolute number of humps not “good” or “bad”; goal is best mix of hump and flat yards for processing efficiency 1

6

6.0 2017

1 Weeks

Jan. 06 – Jan. 12

Dwell displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. 2017 dwell excludes the Hurricane Irma-impacted period for terminals that held cars through the storm.

20.1

19.6

19.4

20.9

17.8

22.0

Waycross, GA

19.9

26.0 18.6

Birmingham, AL

Atlanta, GA

18.2

Nashville, TN

20.8

30.0 Hamlet, NC

Western terminals performing well Western Corridor Key Terminals



Key terminal productivity and performance measures healthy, dwell remains well below 2017

Avon, IN

Nashville, TN

Dwell at Western Terminals1 Weekly Average

22.0 Birmingham, AL

6.0

Key Western terminals

1

7

2017

1 Weeks

Jan. 06 – Jan. 12

Dwell displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. 2017 dwell excludes the Hurricane Irma-impacted period for terminals that held cars through the storm.

11.4

11.5 9.2

10.0

11.7

11.5

10.0

14.0 Mobile, AL

10.7

14.9

Montgomery, AL

12.4

18.0

Car order fulfillment averages 93% following process improvement Weekly Car Orders, Customer Empty Idles, and Fill Rate1 Order Fill Rates

Cars Ordered/Idle 6,000

100%

5,000

90%

4,000

80%

3,000

70%

2,000

60%

1,000

50% 40%

0 2017

1

2

3

4

5

6

2018 Weeks Weekly Orders

Customer Empty Idles (> 24 hours)

2017 Blended Fill %

Order Fill %

1

8

 Car orders now remain open for 2 weeks for fulfillment; order fill will settle over a 2-week period ― Accordingly, the current reported week’s fill rate will be adjusted in the following week for orders filled

 Nearly 300 orders filled in week 2 against week 1 open orders, increasing fill to 91% ― Car flows recovering as customers resume operations following holiday

 Empty car dwell remains elevated at customer locations ― Empty idle cars at a given customer held >24 hours considered available to fill that customer’s orders

2017 orders and fill rate normalized for Weeks 14-44 against historical/expected order levels (Q1 2017), as orders were disconnected with demand; starting week 45, improved process leaves orders open for two weeks, counts empty idle cars > 24 hours at a customer location as a filled order for that day

Last mile performance measure recovered after holiday week  Holiday-related local train plan adjustments and customer closures impacted week 1

Local Service Measurement1

 Local Service Measurement (LSM) is not a primary metric that CSX uses to manage its operation

100% 90%

87%

80%

86% 74%

70%

― In scheduled railroading, focus on end-to-end transit and customer expectations

60% 50% 40%

 However, reliable pull and place expected as part of service to customers

30% 20% 10% 0%

2017

1

9

1

2

3 4 2018 Weeks

5

6

‘Local Service Measurement’ is defined as the percentage of cars that were pulled or placed at a customer location based upon daily customer request, the local service plan and available inventory at the local serving yard

Customer problem logs remained at normal levels  Customer logs returned to normal levels following holiday week

Customer Inquiries Daily Average Log Volume

570 Total Logs in Week 30 2017 at height of service challenges

284

 Improved communication allowing for faster, more local resolution ― Accountability for resolution of customer issues resides with field responsibility ― Escalating and resolving critical issues with senior leadership

271 223

2017

1

2

Delayed Cars

10

3 4 2018 Weeks Bad Order

5

Switching Issues

6

Interchanges current and performing to expectations Chicago

East St. Louis 800

Daily Average Interchange Volume


2,000 1,600

600

1,200

400

800 200

400

0

0 2017

1

2

3

4

5

6

2017

1

2

2018 Weeks

5

6

Memphis



300

400

200

200

100

0

0 2017

1

2

3

4

2018 Weeks

11

4

2018 Weeks

New Orleans 600

3

5

6

2017

1

2

3

4

2018 Weeks

5

6

Scheduled railroading producing service improvement Service Improvements & Productivity Improvements

Operational Focus Balanced Train Plan

Improved Frequency

Better Reliability

Rolling Stock Utilization

People Efficiency

Terminal Fluidity

Faster Transit

Quicker Turnaround

Fuel Optimization

Train Density

Improve Service

Operate Safely

Control Costs

Drive Asset Utilization

Develop People

 Accomplishments in 2017: realigned service frequency, balanced train plan, improved terminal efficiency

 Improved execution on this foundation to drive long-term service and productivity improvements

12

APPENDIX

CSX has changed methodology on some metrics reported publicly Velocity

Dwell Former

Car time at terminal, excluding cars on the same train ID

Current

All car time with a terminal work event, including through cars on same train ID (e.g. crew change)

Change Reason

Includes full trip of a train and ability to diagnose overall speed profile (in support of improvement in asset cycle)

Effect on Metric

Reported velocity will be lower

Former

Line of road miles per hour

Current

Total miles traveled per hour, including intermediate dwell of the train

Cars Online Former

All cars on CSX, as determined by RailInc

Current

RailInc cars on CSX, excluding cars stored, under repair, sold, and private cars ex online inventory

Change Reason

Includes all dwell with ability to diagnose all events impacting car movement (in support of improvement in asset cycle)

Change Reason

More accurate measurement of active cars on line, i.e. cars for which CSX is focused on realtime, efficient movement

Effect on Metric

Reported dwell will be lower

Effect on Metric

Reported cars online will be lower

Restated historical data in new methodology available on csx.com/servicemetrics

14