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3Rd Quarter 2020

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3Rd Quarter 2020 3RD QUARTER 2020 INSIDE Relocation of Conrail’s Corporate Offices THIS ISSUE ROB WINEGRAD | Senior Director Real Estate Since 2008, Conrail’s Philadelphia Dispatch, Engineering, Finance, Human Corporate Office consisted of its’ Corporate Relations, Labor Relations, and Real Development, Law, Human Resources, Estate Departments. Similar to the lease Labor Relations and Finance Department in Philadelphia, the lease was set to expire Working Together in a called Three Logan Square home. In April in September 2020. Conrail saw this as 2 Challenging Year 2020 when the current lease expired, another opportunity to relocate into a Well-Deserved Recognition rather than renew, Conrail reduced the facility that was more conducive to today’s departments from five down to just the Law operations. The railroad industry like all Department. The office was moved across others has evolved dramatically in the last Detroit Line 3 Meet the Crew FL35 the street to Two Logan Square in a smaller 20 years and so has the technology and footprint which includes four offices, four resources necessary to run it. The new work stations, two conference rooms, with office is more than 25% smaller than the old Hump Article 4 a complete law library. Although there office however; it accommodates all of the Meet the #1 North Jersey Engineer were many challenges completing the same departments in a functional layout office relocation during Covid-19, the move with updated furniture and an efficient Bellmawr Facility was successful and the new office is fully floor plan. It also allowed us to reduce the 5 FP11 (BS3) operational. overall leased space and move the data center out of the office to a building owned Conrail’s New Jersey Corporate Office and Injury Free by Conrail. 6 Operations Center has been located at 1000 Howard Boulevard since 1999. The We look forward to our future and continued Spencer/Butcher Logistics Operations Center consisted of employees success in our new office. 7 IWS from the Transportation, Customer Service, Exxon Mobil 8 Jocelyn Hill Receives Top Honors PHILADELPHIAL MOUNT LAUREL Two Logan Square 330 fellowship Road, Suite 300 100 N. 18th Street, Suite 825 Mount Laurel, NJ 08054 Philadelphia, PA 190103 Working Together in a Challenging Year As we continue to recover from the effects that COVID-19 has began to reopen. For the full year 2020, we can now project had on our industry and the economy as a whole, understand that our car handlings will be off by nearly 15%. Accordingly, that this is a journey that will not be over as soon as we would adjustments had to be made to our Business Plan, which like. Our railroad first and foremost is a people business, and our unfortunately resulted in some workforce reductions, business and economic recovery in general depends on a stable temporary furloughs during the April through July period, and and healthy workforce; we need to take care of ourselves so postponement of many capital project investments this year. that we can take care of our customers and our families. We are optimistic that the economy is continuing to strengthen, “COVID fatigue” is a term that we hear often, and it’s very real. but the impact of the pandemic on our business will continue People are tired of being cooped up, tired of being separated, into 2021. and tired of the uncertainty of a pandemic. However, if we want 2020 has not been a typical year. Not unlike other businesses, to avoid seeing a spike in COVID-19 cases, we can’t let ourselves many of the things we do with our employees and families become lax. Recently, Conrail has reposted CDC guidelines and – summer picnics, holiday parties, field visits at Conrail signage for mask compliance in all our facilities to reinforce all headquarters, and face-to-face meetings – have been the necessary requirements that will continue to get us through suspended in compliance with state directives and in order this pandemic: maintain social distancing, wear a mask when to minimize social interaction in the workplace. However, by in close contact with others, wash your hands, stay home if you working together and communicating effectively, listening to feel sick, hold your social activities outside whenever possible, each other, and following the recommended CDC guidelines, and keep our facilities and equipment clean. Through strict we will be able to get back together in the near future for the adherence to these guidelines, we can control an increase in the activities that we have enjoyed in the past. number of cases, helping us to maintain our business needs and As 2020 comes to a close, I would like to thank you for what eventually getting us back to doing the things we enjoy. you do each and every day to keep our business and customers Additionally, senior management hosts weekly conference calls operating. With winter approaching and the upcoming holiday focused on adhering to COVID-19 best practices, engaging in season, please stay focused on performing your job tasks safely discussions regarding compliance in the workplace, ensuring and following the CDC guidelines to ensure the health of our adequate supplies are on hand, and monitoring the cleaning of families and fellow employees. facilities and equipment so as to keep our management team Stay focused, stay informed, and be safe. focused in this evolving COVID-19 environment. The economic impact on Conrail’s business from the COVID-19 pandemic has been significant starting with an economic Timothy C. Tierney shutdown in late March through early July when businesses President and Chief Operating Officer Well-Deserved Recognition KORY JOHNSON | Terminal Superintendent On September 29, 2020, Conrail’s Detroit District was audited by the Federal Railway Administration (FRA) and was found to be 100% compliant with securing rail equipment, leaving no cars left in the foul, and all hand-operated switches were found to be properly lined and secured. The result of this audit is a positive reflection on all the T&E crews, Mechanical forces, and supervision in the Sterling Heights area. I would like to take this opportunity to recognize all involved for making Conrail a safe place to work. Thank you for a job well done! “I would like to recognize all the employees involved for their excellent performance in providing safe and reliable operations for our employees and our customers.” –Joe Soto, Superintendent Field Operations “Outstanding achievement by our team in Detroit.” –Tim Tierney, President and Chief Operating Officer 2 Detroit Line Safety/Service ADAM BAGINSKI | Manager of Engineering Services Measures When it comes to rail, many people know that there is a clear difference between train Maintaining a safe workplace is our # 1 Goal. rides on long, smooth ribbons of Continuously Welded Rail (CWR) and the clickety- Overall, safety performance has improved in 2020. clackety ride quality of jointed rail, also known as “stick rail”. Over the years, Conrail 16 21 has implemented significant programs of rail replacement and flash-butt welding to 10.00 transform sections of jointed rail to CWR. This has provided Conrail a large benefit in 10 terms of train ride quality, reduced maintenance needs, and reduction in risk associated 8.00 with broken joint bars and bolts. Today, the overwhelming majority of rail on Conrail’s 6.00 7 main track is CWR, the result of decades of smart investment in the physical plant. 6 4.00 5 5 While many people are familiar with the difference between CWR and jointed rail, 4 Reported Injuries Reported 2.00 what is less commonly known is that there are many different types of rail, regardless of whether it is CWR or jointed rail. Rail comes in different shapes and sizes, reflective 0.00 System Detroit North South of over 100 years of engineering and metallurgical improvement. The different shapes Jersey Jersey and sizes are called different rail “sections”, and on Conrail we have over 20 different rail September 2020 YTD September 2019 YTD sections installed in track on our railroad! SYSTEM 24% Improvement 2020 vs. 2019 Today, the standard rail section that Conrail and most other major freight railroads DETROIT 0% Improvement 2020 vs. 2019 install in main track is 136RE. The “136” in 136RE represents that every three feet of new NORTH JERSEY 30% Improvement 2020 vs. 2019 rail weighs 136 pounds. The “RE” in 136RE represents that the head, web, and base of SOUTH JERSEY 33% Improvement 2020 vs. 2019 the rail are rolled to American Railway Engineering and Maintenance of Way Association (AREMA) specifications. For any section of rail that exists on our railroad, this naming The cost of Train Accidents has increased in 2020 pattern is the same. There is a weight per yard of rail, followed by initials which specify the design specifications. Every part of the rail structure, from plates to joint bars, is $1.4M dependent on getting the rail section right, so it is important for our maintenance forces to be able to identify the correct rail section through this nomenclature. $1.2M Along with being different sizes, different rail sections also have different levels of $1M strength and durability, which are largely dependent on the unique dimensions of the $800K rail sections and the metallurgical processes under which the rail was manufactured. As $600K $1,681,332 we continue to invest in and improve Conrail’s physical plant, we look for opportunities (Excluding Contractor Costs) Contractor (Excluding $400K $710,922 to remove older, heavily worn rail sections which are at the end of their lives and highly Accidents Cost Train of $375,929 prone to defects. $880,353 $200K $795,578 $366,474 $174,832 $137,950 Nowhere is Conrail currently investing more in rail than on the Detroit Line.
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