THE MEXICO

CONNECTION

Frank Hernandez

General Director U.S./Mexico Ops

BNSF Railway

June 17, 2015

1

2

Current

Respective

Gateway

Operation

Volumes

by

Gateway

Border

Process

3

Current

Respective

Gateway

Operation

Current Gateway Operations

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.

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

Vía 01

Vía 02

Vía 03

Vía Auxiliar

R-1

5+

664

R-1

7+

600

Espuela

R-1

7+

806

.30

R-1

7+

978

R-1

7+

656

R-1

7+

912

R-2

0+

910

R-2

0+

964

R-2

1+

094

R-1

5+

510

R-1

7+

838

NORTE

R-1

8+

432

.4

R-2

0+

927

.8

R-2

0+

842

.7

R-1

8+

512

.4

Vía limpieza 101

Vía Limpieza 102

Vía Extracción Norte

Vía Extracción sur

Vía 04

Vía 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-1

8+

220

.394

R-2

2+

197

.866

R-2

1+

077

.866

Cervecería Modelo

Via Principal

Esta conexión ya no 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

0.00 KILOMETERS WITH CAPACITY

OF 130 TONS IN 1999

5,743 KILOMETERS WITH CAPACITY

OF 130 TONS IN 2014

0

100

200

300

400

500

600

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Infrasturcure and Capacity Equipment Telecommunications Other18

FXE / FERROSUR Infrastructure Investments

Accumulated 1998-2014: 3,434

Millions of dollars

Millio

ns

in U

SD

67.5

241.6

155.0

78.4 79.3 85.5

137.0 136.9

311.8 323.8

199.8

165.9 174.3

347.5

255.1

398.8

276.5

411.4

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*

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2012 2013 2014

NORTH SOUTH

49%

47%

48%

51% 53%

52%

*BNSF units only 25

Tucson Volumes

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2010 2011 2012 2013 2014

Nogales Volumes

NORTH SOUTH

50%

49% 50%

49%

50%

51% 50% 50% 51% 50%

Volume for all railroads 26

El Paso Volumes

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2010 2011 2012 2013 2014

NORTH SOUTH

48% 48% 45% 46%

47%

55%

54%

53% 52% 52%

Volume for all railroads 27

Brownsville Volumes

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2010 2011 2012 2013 2014

NORTH SOUTH

55% 49%

52%

54% 53%

46% 47% 45% 51%

48%

Volume for all railroads 28

Eagle Pass vs Laredo Volumes

Volume for all railroads

0

100,000

200,000

300,000

400,000

500,000

600,000

2010 2011 2012 2013 2014

LAREDO EAGLE PASS

29

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

• U.S. 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. 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

TOTAL IM

36

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

TOTAL IM

37

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

1. Haulage agreement with Union Pacific Railroad (UPRR) from Algoa to

Brownsville. 2. Mexican interchange railroad at Matamoros is Kansas City Southern de

Mexico (KCSM). KCSM is wholly owned by KCS. 3. Current 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 4. KCSM network improvements include: New international railroad bridge at Rosita.

41

5A) Laredo / Nuevo Laredo Gateway

41

1. Trackage rights on UPRR to Robstown and delivery of our trains to KCS at

this location. Haulage Agreement with KCS between Robstown to Laredo.

2. Mexican interchange railroad at Nuevo Laredo is KCSM.

3. This Gateway has historically been the # 1 U.S./Mexico Gateway, as it

relates to total volumes interchanged. Eagle Pass / Piedras Negras

Gateway is now vying for that title.

4. Current 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

5. 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

1. Trackage rights to Eagle Pass Gateway.

2. Mexican interchange railroad at Piedras Negras is Ferrocarril Mexicano (FXE).

3. FXE is owned by Grupo Mexico and UPRR. It has also merged with Ferrocarril

Sureste (FERROSUR).

4. This Gateway has been challenging the LAREDO / NUEVO LAREDO Gateway

for total volumes interchanged.

5. Current 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

6. UP Eagle Pass Sub improvements include: CTC from Spofford to MP 25.6,

double track segments, new classification yard at Spofford / Laughlin.

7. FXE 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.

Bridge sustained fire damage February 29, 2008 and has been OOS since that

date.

44

13A) El Paso / Cd. Juarez Gateway

44

1. Mexican interchange railroad at Cd. Juarez is FXE.

2. FXE is owned by Grupo Mexico and UPRR. It has also merged with

Ferrocarril Sureste (FERROSUR).

3. Current 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.

4. BNSF Eagle Pass Sub improvements include: New “Y” at Belen, NM.

5. FXE network improvements include: Meseta yard, siding extensions,

spring switches, double track segments, CTC islands, intermodal

yards.

18A) Tucson / Nogales Gateway

1. Current hours of operation at the TUCSON / NOGALES Gateway: 0900 – 1700hrs Monday thought Sunday (8hrs per day, no directional

windows). This Gateway and interchange hours are shared by UPRR and FXE.

45

46

19A) San Diego / Tijuana Gateway

46

1. Interchange with the San Diego Imperial Valley Railroad (SDIY) at San Diego,

who then interchanges with the Baja California Railroad (BJRR) at the San Isidro

yard at the border.

2. Mexican interchange railroad at Tijuana is BJRR.

3. BJRR is owned by the Mexican government, but has granted concession rights

to BJRR.

4. Current hours of operation at the SAN DIEGO / TIJUANA Gateway: 0900 – 1200hrs Monday through Friday.

5. BJJR network improvements include: 6 new storage tracks at Tijuana, transload

facility, cold storage warehouse, and team tracks.

47

28A) Eagle Pass vs Laredo

47

• I have purposefully placed the EAGLE PASS & LAREDO Gateway volumes

on the same slide, in order to allow you to see the impressive growth that

has taken place at the EAGLE PASS Gateway.

• In recent years, have seen 21% growth in volumes year after year at the

EAGLE PASS Gateway. If this trend continues, this Gateway will probably

take over 1st place, as being the Gateway with the highest volume of

railway interchanges. This could happen as early as this year and has

sporadically occurred on a monthly basis, several times during past three

years.

• In recent years, while still busy, we have seen much less growth at Laredo

gateway. As a matter of fact, there was basically “ZERO” growth during

2014, as more and more rail traffic either shifted toward the EAGLE PASS

Gateway or new business began using EAGLE PASS.

• That concludes my presentation. I thank you for your time and will be glad

to attempt to answer any questions you might have, as time permits.