STB UPDATE NOVEMBER 28, 2017

STB UPDATE

NOVEMBER 28, 2017

Network performance stable through holiday week       

Dwell and velocity levels consistent Right Car Right Train up slightly Crew and power resource levels remain well matched to demand Hump yard performance steady, four humps remaining Western terminals performing well Car ordering and fulfillment process updated, order levels and fulfillment lower due to holiday Local pull and place performance lower as measure does not account for holiday-related local train plan adjustments or customer closures

 Customer problem logs lower than normal, typical for holiday week  Interchange volumes current and gateways fluid

2

Dwell and velocity steady through holiday week On Time Originations (%)

On Time Arrivals (%) Weekly Average

60%

60%

40%

40%

20%

20%

67%

64%63%63%67%67%65%

On-Time 64%

60%

69%

70% 64%

64%

68%

60%

80%

62%

81%

59%

75%

75%

71%

80%

69%

74% 74% 73% 74% 73% 77% 77% 74%

76%

100%

88%

64%

84% 81%

69%

100%

+2 hrs On-Time +2 hrs

46

2016 Q1 Q2 Q3 40 41 42 43 44 45 46

Nov. 18 – Nov. 24

Weeks

2017

2017

Weeks

Dwell (hours)

Velocity (mph)

10.7 11.0 10.5 10.4 10.5 10.6 10.6

10.0

16.2 16.0 14.9

14.2

15.7 15.4

16.0 16.4 14.9 14.9 14.9

14.0

14.0 12.0

8.0

10.0

6.0 2016 Q1 Q2 Q3

2017

3

11.1

10.8

10.2

12.1

9.7

11.2 11.6

11.3

18.0

11.1

14.0

11.4

20.0

10.3

16.0

12.0

Nov. 18 – Nov. 24

40

41

42

43

Weeks

44

45

46

Nov. 18 – Nov. 24

2016 Q1 Q2 Q3

2017

40

41

42

43

44

45

46

Nov. 18 – Nov. 24

Weeks

Note: Dwell and velocity displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. Q3 dwell and velocity exclude the Hurricane Irma-impacted period for terminals that held cars and specific trains held through storm, respectively.

16.1

45

16.5

44

17.1

43

16.0

42

15.2

41

16.4

40

16.7

2016 Q1 Q2 Q3

Right Car Right Train up slightly; less relevant in PSR  Right Car Right Train is no longer a measure that CSX uses to manage its operation

Right Car Right Train1 Weekly Average

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

90% 86% 86% 85%

73%

72%

70%

77%

75%

74%

70%

73%

69%

75%

77%

72%

75% 76% 76%

75%

80%

77%

82%

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

65%

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

60% 55% 50%

2016 Q1 Q2 Q3 40 41 42 43 44 45 46

2017

1

4

Weeks

Nov. 18 – Nov. 24

― 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 4,000

10,000

12%

3,763 3,673

9,800

3,600 3,376

9,771

9,600 3,200 3,182 3,184 3,162 3,165 3,174 3,180 3,192 3,200

3,200

10%

9,690

9,400

9,278 9,264 9,247 9,225 9,204 9,189

9,223

9,200

2,800

8%

9,445

6% 9,081 9,049

9,000 2,400 2,000 2016 Q1



Q2 Q3 2017

40

41

42

43 44 Weeks

45

46

8,800

2%

8,600

0%

47

Locomotive level stable; engines to come down in light of weak grain harvest season

2016 Q1



Q2 Q3 2017

40

41

42

43 44 Weeks

45

5

46

47

Recent headcount reduction driven by seasonal vacation increase and adjustments to extra boards

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

4%

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



Total hump yard volumes remain in a consistent band week-over-week, well below capacity of yards



Key hump productivity and efficiency measures performing well, four humps remaining

Transitioned to flat-switching operations Hump terminals

Selkirk, NY Toledo, OH Willard, OH Cumberland, MD Cincinnati, OH

18.0

19.8 17.2

17.7

18.8 18.7

21.5 20.6 20.8 20.1

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 2016 Q1 Q2 Q3

2017

40

41

42

43

44

45

46

Nov. 18 – Nov. 24

Weeks

Dwell displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. Q3 dwell excludes the Hurricane Irma-impacted period for terminals that held cars through the storm.

18.6

19.9 20.6

17.5

Waycross, GA

22.0

18.7

Atlanta, GA

26.0

19.7

Birmingham, AL

Hamlet, NC

23.3

Nashville, TN

Weekly Average

30.0

21.2

Louisville, KY

Dwell at Hump Terminals1 21.9

Avon, IN

Western terminals performing well Western Corridor Key Terminals

Avon, IN



Key terminal productivity and performance measures recovered in former “trouble” spots



Train plan changes at Evansville have resulted in very few cars processed, no longer a key terminal ― Evansville dwell removed for Week 47 and forward

Evansville, IN

Dwell at Western Terminals1

Nashville, TN

12.6

12.1

Mobile, AL

11.4

12.3 12.5 12.4

10.0

6.0

Key Western terminals

2016 Q1 Q2 Q3

2017 1

7

40

41

42

43

44

45

46

Nov. 18 – Nov. 24

Weeks

Dwell displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. Q3 dwell excludes the Hurricane Irma-impacted period for terminals that held cars through the storm.

14.3

14.4

11.7

13.6 13.4

12.7

14.0

13.0

13.6

15.6

Montgomery, AL

12.6

18.0

14.2

Birmingham, AL

15.4

Weekly Average

22.0

Car orders and fulfillment lower due to holiday Weekly Car Orders, Customer Empty Idles, and Fill Rate1 Order Fill Rates

Cars Ordered/Idle 7,000

100%

6,000

90%

5,000

80%

4,000 70% 3,000 60%

2,000

 Holiday-related local train plan adjustments and customer closures impacted measures

 Car ordering and fulfillment process updated as of Week 45 ― Car orders now remain open for 2 weeks for fulfillment; order fill will settle over a 2-week period ― Accordingly, the current week fill rate will be adjusted in the following week for orders filled

1,000

50%

 Empty car dwell remains elevated at

0

40%

customer locations, impacts order fill

2016

Q1

Q2 2017

40

41

42

43

44

45

46

47

Weeks

Weekly Orders

Customer Empty Idles (> 24 hours)

Order Fill %

Order Fill % ex. Customer Empty Idles

1

8

Q3

― Empty idle cars at a given customer held >24 hours considered available to fill that customer’s orders ― Week 46 order fill settled at 92%, Week 47 currently at 81% when idles are removed from total weekly orders

2017 fill rate has been normalized through Week 44 against historical/expected order levels (Q1 2017), as order levels disconnected with demand beginning in Q2 2017; 2016 orders and fulfillment and 2017 Week 45 and beyond do not warrant normalizing

Last mile performance measure lower due to holiday week  Holiday-related local train plan adjustments and customer closures impacted measures

Local Service Measurement1 100%

94% 95%

90%

90%

84% 83% 85% 85% 85% 84% 85% 81%

80%

77%

 Local Service Measurement (LSM) is no longer a metric that CSX uses to manage its operation ― In precision scheduled railroading (PSR), focus on endto-end transit and customer expectations

70% 60% 50%

 Accordingly, LSM as a reported metric was discontinued upon start of PSR implementation

40% 30%

― At request of STB, last mile tracking reinstated to monitor through implementation period

20% 10% 0%

2016

Q1

1

9

Q2 Q3 2017

40

41

42

43 44 Weeks

45

46

47

 Reliable pull and place expected as part of service to customers

‘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 lower  Customer logs largely back in normal range after network challenges as fluidity has returned

Customer Inquiries Daily Average Log Volume

― Week 47 also experienced typical lower volume of logs due to holiday

570 Total Logs in Week 30 at height of service challenges

416

 Lower level of logs, improved communication allowing faster, more comprehensive resolution

318 269

265

278

247

253

42

43

254

266 213

201

Q1

Q2

Q3

40

41

2017

Delayed Cars

10

44

45

Weeks

Bad Order

Switching Issues

46

47

― Escalating and resolving critical issues with field leadership, some targeted resource additions as needed

Interchanges current and performing to expectations From

East St. Louis 800

Daily Average Interchange Volume

Chicago

To

2,000


1,600

600

1,200

400

800 200

400

0

0 2016 Q1

Q2 Q3 2017

40

41

42

43 44 Weeks

45

46

47

2016 Q1 Q2 Q3 2017

New Orleans 600

41

42

43 44 Weeks

45

46

47

46

47

Memphis


300

400

200

200

100

0


0 2016 Q1

11

40

Q2 Q3 2017

40

41

42

43 44 Weeks

45

46

47

2016 Q1 Q2 Q3 2017

40

41

42

43 44 Weeks

45

Precision 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

    12

Operate Safely

Control Costs

Drive Asset Utilization

Develop People

Realigned service frequency in second quarter Set the groundwork of a balanced train plan in early July Terminals’ improved efficiency and traffic flow adjustments have recovered service Improved execution on this foundation to drive long-term service and productivity improvements

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