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To: BNSF Industrial Products Customers

Network Update for Friday, June 17, 2016

Operational Performance
The operation generated solid performance this week with good fluidity across the network. Average velocity for cars, trains and locomotives were each relatively steady with the prior week, and all remain well above the levels recorded in June of last year. The number of trains held was reduced by nearly 20 percent as the service disruptions experienced due to flooding issues have largely abated.

While most of Texas has experienced much needed dry weather this week, heavy rainfall last weekend from storms east of Waco forced the closure on Monday of our DFW Subdivision, which runs between Dallas and Houston. Nearly nine inches of rain fell in some locations in less than 24 hours, which caused multiple washouts and extensive track damage. Following aggressive repair efforts by our BNSF crews, the subdivision reopened early Thursday and traffic flows through the area have since normalized.

We also experienced some significant train delays last weekend in Los Angeles due to a gas leak that occurred near our intermodal facility. As we reported to affected customers, the incident impacted inbound trains into the facility, and several trains were rerouted to minimize service disruption. Utility crews completed repairs quickly and service on all three main lines was restored by Sunday evening.

Addressing Safety Concerns Regarding Crude-by-Rail
The June 3 derailment of a Union Pacific oil train near Mosier, Oregon generated extensive media coverage and brought renewed focus in the Pacific Northwest on our industry's safety practices pertaining to crude-by-rail. In addition to offering our assistance to UP crews and first responders in response to this event, BNSF has been in frequent communication with local, state and tribal officials in the region to reiterate that nothing is more important to our railroad than operating safely. We continue to invest heavily in new technology, additional resources and equipment to reduce the risk of an accident as much as possible.

We have also implemented several specific actions on our own in the past two years to reduce the safety risks involving crude trains, such as increasing rail detection frequencies along critical waterways, including the Columbia River, from two to 2.5 times FRA frequencies. We have put in place more restrictive operating procedures for crude trains, including lower speed limits, more stringent rules for trackside warning device notifications, and specialized securement and tracking processes. As crude-by-rail remains the subject of significant public discussion, BNSF will continue to share and explain with interested groups our strong safety program and emphasize our commitment to the safe and efficient movement of crude oil trains on the network.

Service Expectations for the Week Ahead
As we begin the first week of summer, no significant outbreaks of severe storms are expected across much of the network. However, extreme heat will remain in place across the desert Southwest, as some locations could hit all-time record high temperatures of near 125 degrees. Intense heat causes metal to expand, which can lead to a track misalignment. We are monitoring these conditions closely and conducting more frequent inspections to ensure safety. Additional procedures, including temporary speed restrictions, will also be imposed as necessary on our Southern Transcon.

Below is a look at the key operational performance categories for the week ending June 16:
(Note: In our effort to provide the most current view possible into our operational performance, the following information (except for total volume) will now reflect the averages as measured from the prior Friday through yesterday (Thursday) rather than the Wednesday-Tuesday measured week as previously provided.)

Total trains held for the week decreased by 17 percent to an average of 28.3 trains held versus 34.1 trains during the prior week.

    Versus the June 2015 average: better by 51.8%

Total trains on the system was up by nearly three percent with an average of 1,277 trains on the system versus 1,244 trains during the prior week.

Locomotive velocity, measured in miles per day (MPD), was 309.4, which is up by more than two percent from the 303.1 MPD recorded the prior week.
    Versus the June 2015 average: better by 14.8%

Car velocity was down by nearly one percent at 228.9 MPD versus 230.2 MPD recorded the prior week.
    Versus the June 2015 average: better by 6.7%

Train velocity, measured in miles per hour (MPH), was down by less than one percent from the prior week at 20.9 MPH.
    Versus the June 2015 average: better by 16.8%

Total volume was up by more than two percent with 184,643 units moved in Week 23 (ending June 11) versus 165,589 units in Week 22 (ending June 4), which included the Memorial Day holiday.

Terminal dwell increased by more than three percent at 23.7 hours versus 22.9 hours recorded the prior week.
    Versus the June 2015 average: better by 2.5%

As always, we thank you for your business and appreciate the opportunity to serve as your transportation service provider. We welcome your feedback and questions.

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