The Railcar Pooling Experts®

THE RAILCAR POOLING EXPERTS®

www.ttx.com

POOLING | ENGINEERING & MAINTENANCE | FLEET SERVICES | RESEARCH | LOGISTICS TTX: Who We Are / Industry Outlook

Frank Adcock, AVP Marketing

July 15, 2014 Today’s Agenda

» TTX Overview » Summary Economic Conditions » Intermodal, Automotive & Carload Outlook

TTX functions as the industry’s railcar cooperative, operating under pooling authority granted by the Surface Transportation Board

»$1.2 billion company, serves/owned by North America’s leading railroads

»The Company owns/maintains a national pool of over 200,000 railcars:

o Intermodal o Automotive o General Merchandise

»Owners enjoy financial/operational benefits matched to business needs:

o Empty mile reduction o Capital outlay elimination o Risk mitigation »Rail customers benefit from a consistent fleet of free-running cars

»TTX is not a leasing company

» TTX railcars are distributed by each railroad to shippers as if the cars were owned by the railroad » Pooled railcars flow from one railroad to another without requiring an empty back-haul to the originating railroad » Pooled assets allow triangulation to minimize network empty flows » Fungible assets make order fulfillment easier » TTX’s pool reduces unproductive storage and empty repositioning » Efficiency is promoted at each railroad and across the network » TTX’s members are free to pursue their own car supply strategies too – there is no obligation to use TTX equipment

» Potential TBOX flow . Newsprint to Los Angeles . Canned tomatoes to Vancouver . Plywood to Ohio . Scrap paper to Mexico . Beer to Chicago

Loaded Empty

» Capital avoidance . TTX owns the railcars so the railroads do not have to - $10 billion in assets . TTX maintains the fleet– spending over $500 million/yr. in maintenance

» Less cost . Pooled cars handle more loads with fewer railcars . The fleet saves railroads over $250 million/yr. in operational costs

» Shared risk . Pooled railcars will shift with shifting business needs across the network

» The STB has authority to approve pooling

» The STB, and its predecessor the ICC, repeatedly recognized TTX’s important public benefits . ICC approved the pool in 1974 . ICC reauthorized the pool in 1989 and again in 1994 . STB reauthorized the pool in 2004 and approved an interim review in 2009

» TTX is seeking renewal in 2014

» TTX received overwhelming support from more than 85 parties who submitted letters of support

TTX Cumulative Capital Expenditures (New Railcars)

$6,000

$5,000

$4,000

Millions $3,000

$2,000

$1,000

$0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Non-intermodal Intermodal

Source: TTX

TTX Company. Copyright 2014 © Confidential: Not for Distribution 10 TTX maintenance operations extend car life and lower operational costs » Shop Maintenance Operations . TTX-owned, repair shops: Florida, South Carolina, California & Michigan . Heavy-light repairs, modifications/conversions, reconditioning & fabrication . Contract repair network shops in every market . TTX regional quality inspectors perform audits at all locations

» Field Maintenance Operations . 48 Locations on 6 Class-1 railroads (handled over 700,000 cars in 2013) . Services are provided by extensively trained TTX mechanics

» Mobile Repair Network . Repair operations located on-site at shipper locations . Labor & materials furnished by TTX

» Frequent discussions with shippers, carriers and industry contacts » Trends are confirmed and demand forecasted » TTX’s capital plan is set to solve for growing/changing markets . Existing fleet utilization is modeled and forecasted . Capital plans are executed for fleet additions and modifications . Proactive coordination with railroads to re-purpose idle assets . Long-term planning for railcar development/innovation for new markets » Coordinate industry standards across all railroads and markets

10-15 Year Assets

50 Year Assets

• Some signs of recovery after Q1 decline: • Housing Starts • Job Growth • Institute for Supply Management (ISM) Survey • Durable Goods Orders • But not at a pace that will drive accelerating GDP growth • Dig deeper and some of the measures are not as promising • Single-family vs. multi-family starts • Growth in wages and hours worked • Gap between orders and inventories from ISM • Other indicators are not so positive • Retail Sales • Industrial Production

• …and global growth is slowing

Housing Starts, Seasonally Adjusted, Annualized Rate 1,200

1,000

800

600

400 Thousands of Startsof Thousands

200

0 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 May-08 May-09 May-10 May-11 May-12 May-13 May-14

Single-family Multi-family Source: U.S. Census Bureau

400 10%

350 9% 8%

300

7% 250 6% 200 5%

150 4% Net Job Creation Job Net

3% Rate Unemployment 100 2% 50 1% 0 0% Oct-11 Oct-12 Oct-13 Apr-11 Apr-12 Apr-13 Apr-14 Feb-11 Jun-11 Feb-12 Jun-12 Feb-13 Jun-13 Feb-14 Jun-14 Dec-11 Dec-12 Dec-13 Aug-11 Aug-12 Aug-13

Net Job Gains Job Growth Required to Bring Down the Unemployment Rate Unemployment Rate

Sources: U.S. Bureau of Labor Statistics, Moody’s Analytics

7% 6% 5% % % Change

/ 4% Yr 3% 2% 1% 0% Jul-11 Jul-12 Jul-13 Jan-12 Jan-13 Jan-14 Mar-12 Mar-13 Mar-14 Sep-11 Sep-12 Sep-13 Nov-11 Nov-12 Nov-13 May-11 May-12 May-13 May-14

Total Excluding Automobiles Source: U.S. Census Bureau

GDP Growth and Level 5% $17,000 4% 3.8% 3.4% $16,000 2.8% 2.8% 3% 2.7% 2.5%

1.8% 1.8% 1.8% 1.9% $15,000 2% 2.0% 0.9% 1% $14,000 Vs. Last Year LastVs. 0% $13,000 Billions 2009$Billions -1% -0.3% $12,000 -2% $11,000 -3% -2.8% -4% $10,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F GDP Growth GDP Level

Sources: Bureau of Economic Analysis, Moody’s Analytics

Economic Indicator Actual Plan Full Forecast Full Year Year 2014 Full Year 2013 2014 1 GDP 1.9% 1.7% 2.0% 1 Consumption 2.0% 2.0% 2.7% 1 Investment 5.4% 4.3% 2.8% 2 Retail Sales 4.2% 2.8% 3.2% 3 Housing Starts 0.93 1.11 1.09 (000) US Vehicle Prod. 10,856 11,476 11,377 (000) US Vehicle Sales 15,585 16,175 16,100 2 Industrial Prod. 2.9% 0.6% 3.0% 1 Mexico GDP 1.3% 3.9% 3.1% 1 Canada GDP 2.0% 2.5% 2.6% Sources: Bureau of Economic Analysis, Moody’s Analytics, Autocast 1: SAAR, real % change 2: Year-over-Year %Change 3: Millions, annualized rate

AAR Industry Velocity Performance Index 114

109

104

2004 Average = 100 Average 2004 94

84 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 2010 2011 2012 2013 2014

Sources: Association of American Railroads, Licensed Material; TTX

» Imports (GDP and consumer spending) » Fuel prices and competition from trucking » Transloads » Port choices / Panama Canal expansion » Railroad initiatives / Service offerings » Origin region and “near-shoring” developments » Exports

13.8% 15% 12.6% 18 10.2% 10% 7.1% 16 5% 2.7% 2.9% 3.6% 1.8% 0% 14 -0.5% vs. Yearvs. Last -5% TEUs of Millions 12 -10% -7.6% 10 -15% -15.3% -20% 8 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2014 Imports Growth Base ( L ) Imports Volume ( R )

Sources: PIERS, TTX

U.S. Container Imports by Origin Routes to the U.S. from Asia Region

10% 10% 50% 14%

16%

China Other East Asia Europe Latin America Other

Source: PIERS

Transpacific Imports Entering Through East Coast Ports 35%

30%

25%

20%

15%

10% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2014 Sources: PIERS, TTX TTX Company. Copyright 2014 © Confidential: Not for Distribution 25 The impact of 0.1% sulfur requirement on all-water service may change the game

Per the TSA Eastbound Bunker Fuel Charge Fact Sheet: » West Coast – Average sailing time within the 200 mile limit, 2.698 days » East coast – Average sailing time within the 200 mile limit, 4.220 days » TTX preliminary cost estimate $20 - $35 per TEU (for the incremental costs associated with an AWS routing versus Transpacific)

20% 17.3% 12 16% 10.7% 12% 9.2% 11.1% 8.1% 8.2% 10 8%

4.1% 4% 1.7% 2.2% 2.7% Moves 0% -0.4% 8 -4% -2.2% vs. Last Year vs. Last

-8% of Millions -7.1% -12% 6 -16%

-20% -18.7% -24% 4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2014

Growth Base ( L ) Volume Base ( R ) Sources: IANA, Association of American Railroads, Licensed Materials, TTX

» GDP and consumer spending » Fuel prices » Production shifts / near-shoring » Import-related transloading » Truck equipment capacity and driver supply » Domestic container fleet capacity » Rail service levels » Short-haul growth » Green initiatives

25,000 Units 20,000 # of of #

15,000 Replacement

10,000

5,000

0 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Feb-08 Jun-08 Feb-09 Jun-09 Feb-10 Jun-10 Feb-11 Jun-11 Feb-12 Jun-12 Feb-13 Jun-13 Feb-14 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13

Source: FTR Associates

-200

-400

-600

Thousands of Drivers Thousands -800

-1,000

-1,200 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 CSA Immigration Effects EOBR Total HOS Drug & Alcohol Database Other Source: FTR Associates

1% share change = approximately 250,000 moves quarterly

3% 01Q1 01Q3 02Q1 02Q3 03Q1 03Q3 04Q1 04Q3 05Q1 05Q3 06Q1 06Q3 07Q1 07Q3 08Q1 08Q3 09Q1 09Q3 10Q1 10Q3 11Q3 12Q1 12Q3 13Q1 13Q3 14Q1 11Q1

Sources: FTR, IANA, TTX

14% 8 12.7% 12% 11.4% 10.9% 7

10% 9.1% 9.0% 6

8% 7.5% 7.5% 6.9% 5 5.8% 6% 5.3% 5.6% vs. Yearvs. Last 4.6% 4.2%

4 Loads of Millions 4%

2% 3 0.1% 0% 2 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2014 Growth Base ( L ) Volume Base ( R )

Sources: IANA, Association of American Railroads, Licensed Materials, TTX

North American Vehicle Sales

15 Millions of Autos of Millions

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 U.S. Canada Mexico

Source: Monthly Autocast

North American Vehicle Production

Millions of Autos of Millions 10

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 U.S. Canada Mexico Source: Monthly Autocast

50 & 60-ft Boxcars 73-ft Centerbeams

Boxcar Commodities: Centerbeam Commodities: Plywood/OSB, pulpboard, food products, Lumber, wallboard, plywood/OSB woodpulp, particleboard, newsprint, tin, shingles, printing paper, aluminum etc. Marks: TTZX

Marks: TBOX, FBOX, RBOX, ABOX

Source: TTX

U.S. Housing Starts 2.5

2.0 0.35 0.35 0.35 0.34 0.35 1.5 0.33 0.31 1.0 1.72 0.39 1.60 0.31 Millions of Housing Starts Housing of Millions 1.51 1.47 0.28 1.27 1.36 0.25 0.5 1.04 0.11 0.11 0.18 0.62 0.62 0.74 0.44 0.47 0.43 0.54 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2014 Single Family Multi Family

Sources: Bureau of Census, Moody’s Analytics, TTX

20 Thousands of Cars of Thousands 15

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F Current North American Centerbeam Fleet Size Estimated Centerbeam Cars Required Source: TTX Association of American Railroads, Licensed Material

Average Seasonal Factors for Rail Lumber Shipments 1995-2012 110%

105%

100%

95%

90%

100 = Shipments in a Average Month Average Shipmentsin a100= 85%

80%

75% Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Source: TTX, Public Use Waybill File

50%

45%

40%

35%

30%

25%

20%

15%

10% Jul-10 Jul-11 Jul-12 Jul-13 Jan-11 Jan-12 Jan-13 Jan-14 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Sep-10 Sep-11 Sep-12 Sep-13 Nov-10 Nov-11 Nov-12 Nov-13 May-10 May-11 May-12 May-13 May-14

Source: Association of American Railroads, Licensed Material

225,000 203,495 194,268 200,000 190,339 186,041 187,545 185,261 179,777

175,000 162,745 150,479 150,000 136,533 126,717 122,292 125,000 117,515 115,553

100,000

75,000

50,000

25,000

0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Umler

66 & 52-ft Gondolas 68-ft Bulkhead Flatcars 89-ft Pipe Flatcars

Gondola Commodities: Bulkhead Commodities: Pipe Flatcar Commodities: Steel scrap, bars/rods, Plate, pipe, beams, bars/rods, Pipe, plate, track, beams, etc. beams, pipe, slabs, ingots, particleboard, etc. Marks: PTTX, XTTX rail, etc. Marks: TTPX Marks: GNTX, GONX

Source: TTX

TTX Company. Copyright 2014 © Confidential: Not for Distribution 44 Metals and machinery output follows industrial production, which has grown slowly post-recession U.S. Industrial Production 5% 105 4% 3% 100 2%

95 1% 0% 90 -1% -2% Yr/Yr % Yr/Yr% Change 85 Index,2007=100 -3% -4% 80 -5% -6% 75 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2014

Total Industrial Production Growth (L) Manufacturing (R) Total Industrial Production (R) Sources: Bureau of Economic Analysis, Moody’s Analytics

10% $2,200 7.1% 7.6% 7.3% 5.2% 7.0% 5.9% 5% 3.8% $2,000 2.7% 1.9% 2.5%

-0.7% $1,800 0% $1,600 -2.4% -5%

Vs. Last Year LastVs. $1,400 -6.9% 2005$Billions -10% $1,200

-15% $1,000 -15.6% -20% $800 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2014 Non-residential Fixed Investment Growth Non-residential Fixed Investment

Sources: Bureau of Economic Analysis, Moody’s Analytics