Third Quarter Earnings Presentation
Norfolk, VA – October 24, 2007

Questions and Answers

(Mr. Moorman) Good morning, Tom.

(Question) Let’s see. I’ve got I guess a couple of questions for you. On the yield side, you explained some of the mix factors, and I wonder if you could break down what came from price and what came from fuel and what came from mix. And on the coal side, is this just a one-quarter event, where coal yields are weaker on the mix issues, or is that something which is going to persist for a few more quarters?

(Mr. Seale) With respect to coal, it is all a matter of timing of repricing of contracts. We talked a little bit about that in the second quarter. We had very little activity on repricing during the third quarter. That will begin to transition, as we get into the fourth quarter, but most of that will be visible in the first quarter of ’08 moving forward. We do expect utility coal – which is higher rated than some of the river coal that we’re handling today – hopefully to pick up as stockpiles continue to be challenged by fairly good weather for coal burning in September and October, and coming out of the summer months.

(Question) Was there something unusual in the comparison quarter on the coal yield? Because it was just surprising to see yields look like they were actually down year-over-year. And that was a bit surprising to see.

(Mr. Seale) Well, as I mentioned with Central Appalachian utility tonnage down by 10% in the quarter and some of our very, very short haul traffic being up as strong as it was – as I mentioned, the Ohio river traffic, one of those moves, 26 miles in length, was up 21% – we pretty much had a perfect storm with respect to mix in coal. I don’t see that as being an indication of any change in yield going forward.

(Question) Okay.

(Mr. Seale) One other thing that I would mention, too, and this cuts across our entire book of business, particularly our merchandise and our coal, is that year-over-year with respect to fuel, our actual fuel surcharge for the aggregate was about a $3.90 per barrel less average cost of West Texas Intermediate Crude Oil this year versus last year. It was actually $72.10 in 2006 versus $68.36 in 2007, so we had an effective lower fuel cost in terms of West Texas Intermediate Crude. Also, our coverage, as I mentioned in the second quarter, is about 93%, and we will not see that continue to go up until we can get some legacy contracts expiring and they’re repriced with fuel surcharges.

(Question) So I might have missed this, but did you talk about, if you back out fuel and mix effect, any kind of pure price number in the quarter?

(Mr. Seale) I did not provide that, but I would direct you back to the first quarter when we looked at a 2% RPU gain, and we did back out the Katrina-related higher RPU traffic, which generated a net 4% RPU gain. There is a lot of similarity in the first and third quarters.

(Question) Okay. So 2% is that type of area for the pure price number?

(Mr. Seale) No. What I’m saying is that it is higher than that, Tom. The lower-rated RPU traffic washed out a higher actual effective price.

(Question) Okay. Yes, I mean my recollection was you had talked about kind of 4% effective price in prior quarters.

(Mr. Seale) That’s correct.

(Question) Okay. Great. And then one – I guess for Wick or for Steve. If we look at the other railroads’ results, we saw a meaningful reduction in head count on a year-over-year basis, something around 1%, a little bit more maybe for some of the other railroads, and your head count was actually up a little bit. Is there room for you to be more aggressive on head count reduction, and especially in light of some caution on the volume outlook? How should we think about that? Because it is a meaningful difference versus what we’re seeing from the other U.S. rails.

(Mr. Tobias) As Wick spoke to specifically, and both Jim and Don alluded to in their presentations this morning, we really do focus on the long-term here, rather than a quarter-by-quarter comparison per se. Are there opportunities down the road? Certainly. I would say that we are positioned to either increase our employment if the economy turns in the right direction and we determine that to be necessary, or take other steps if it goes the wrong way, as we have displayed in the past.

(Mr. Moorman) Let me add, to build on that, one of the things that we have looked very carefully at, Steve and his team, is furloughing employees. We have chosen not to do that at this time. Basically, because where we think we have those opportunities, we think that the employees that are furloughed will effectively be many of our newer hires – that we will lose them – and we’ve invested a fair amount in those employees, and we think that that’s an investment that we would rather hang on to.

Now, in the light of continued softness in the economy, as Steve indicated, we’ll take more aggressive steps if need be. I think what you’re seeing is, and we talked about this as you know, in the past couple of years, is that the way to bring head count down is to simply to reduce hiring – which we have done – and I think you will see our numbers continue to trend in the direction that you’re seeing them now.

(Question) So if we think about attrition, you might actually see year-over-year head counts start to go down? Is there just a little bit of a lag to the impact of the attrition, is that fair?

(Mr. Moorman) I think that’s a fair comment.

(Question) Okay. Great. Well, thank you for the time and the responses.

(Question) William Green, Morgan Stanley. Good morning. Just real quick on the casualty and other line, can you break out for us how much of that might have been one-time, or won’t repeat in future quarters?

(Mr. Squires) I think that we, as I said, have seen favorability, not only this quarter, but in the first two quarters of the year as well, in terms of the personal injury actuarial adjustments, and we think that that’s a reflection of our continuing commitment to safety. So we would expect and hope for continued favorability in that part of the casualties and other claims. There was also an insurance settlement in the quarter, that was $5 million of the $17 million favorable, and that is something that will occur sporadically, but certainly not on a continuing basis.

(Question) Okay. And then if I can just come back to coal for a second, with Don, if you look at the projects that you outlined here, and talk about sort of a 6 million increase, I presume there is also some facilities or changes that will occur in the business on your lines that may cause an offset to that. So if you think of kind of the net potential here, how much should it actually be?

(Mr.Seale) Actually, we’re talking about 6 million tons of additional sourcing with those four projects. I also mentioned the Buchanan and Pinnacle Creek mines. They have been down for the last several months. Pinnacle Creek is beginning to ramp back up this week, and we expect Buchanan to come back online within the next 60 days or so. Those two mines combined are 7.2 million tons. So we have those two mines coming back, plus this sourcing of the additional projects. We’re continuing to look very closely at coal sourcing not only in the Central Appalachian region, but also the Northern Appalachian region, as well as the Illinois Basin and the PRB. It is just part of our overall strategy to continue to look at coal sourcing as the markets change.

(Question) Right. But I presume we shouldn’t be adding in sort of all 13 million tons here? There’s got to be some puts and takes so what’s sort of the negative issues that are going on beyond sort of just utility stockpiles being high?

(Mr. Seale) Well, the market itself will drive the overall consumption. As this new production comes on, certainly some of it may go into the export market, some of it may go to the utility market, but we want that additional sourcing available as markets continue to change and evolve, and that’s the point here – as opposed to adding it in as all new business. This will be part of our sourcing to go to current markets and as markets change.

(Question) And then just one last question, on cap ex, you guys are pretty disciplined in terms of how you spend it each year so I wouldn’t expect it to be much different, but given the weakness that we’ve seen and that you suggested that can continue into the first half, any reason to think ’08 cap ex would drop?

(Mr. Moorman) You know, we haven’t finished working through the capital budget yet. We will be announcing that next month, and I really don’t want to foreshadow anything, because we really don’t know what the numbers are. Capital expenditures are, in general, as all of you know, the sum of two components. One is the money that we spend on the maintenance and renewal of our existing physical plant, and the other is for new capacity and new business. We’ll certainly look very hard at the business opportunities, but we look hard understanding that a lot of the capital that’s employed on the railroad is for projects that have a fairly long lead time, and so we will take that into account, not only looking at immediate business conditions, but where we think our business is going to go over the next few years.

(Question) Thanks for your help.

(Question) Ken Hoexter, Merrill Lynch. Great. Good morning. If we can switch over to intermodal for a second, I think, Don, you mentioned that there was strong demand in – particularly on the East Coast, yet some weak pricing – I think you noted that trailers were up pretty strong. Can you talk about the impact, or can you go over it again in detail of what we’re seeing, where you’re seeing the strength and weakness come in, just so as the trucking market continues to deteriorate, how much of an impact is that on your Eastern business?

(Mr. Seale) First with respect to trailers, as we discussed in the past, we are continuing to see a migration away from rail trailers in intermodal to containers. Our trailer traffic has been higher RPU – but not necessarily higher margin – intermodal traffic in the past. That business continued to transition downward in the third quarter, declining by 20%. So trailer traffic was down 20% in the quarter, and that impacted mix because it is higher RPU, but not necessarily higher profitability. In fact, we do better with double stack container traffic.

Now, with respect to what’s taking place at the ports, as I mentioned, we continue to see a shifting of vessel rotations to the East Coast, using all-water routes, via the Panama Canal and the Suez Canal. Our business through the East Coast ports in the quarter was up 16%, and we saw a decline, a corresponding decline, of about 17% in our transcontinental import traffic. I think that if you look at the numbers through some of the West Coast ports, for the first time we’re seeing actual year-over-year declines. Los Angeles being a case in point, was down about 7% in August, and I haven’t seen the number in September. So that’s the dynamic on the international business. On the domestic truckload business, we’re continuing to see a steady pace of conversion to intermodal in our local NS network. It was not strong enough to offset softness in the LTL market, as well as some of the domestic truckload traffic going back to the highway to protect current driver pools.

(Question) All right. That simplified it. Thank you. And then can you talk about the Meridian Speedway then? Is the traffic then slower over that corridor than you would have expected because of the drop in the West Coast traffic moving east?

(Mr. Seale) We’re seeing some slower patterns on international trade coming from the west, but we’re very encouraged with respect to the domestic freight that’s moving in that corridor. I mentioned the Blue Streak service. We are now running six westbound trains per week, and five eastbound trains per week, with service better than 95% on time. It’s a very attractive product, with fourth morning availability, in Atlanta, or back on the West Coast, and we feel very good about how we’re positioned with that service.

(Question) Okay. So just looking forward, you don’t expect – or I guess you do continue to expect some of that, on that last, you said the reverse to the highway, because of the truck pricing, I just want to get kind of a concept of how much you feel that it is really exposed to that trucking competition?

(Mr. Seale) It depends on which segment we’re talking about. Certainly long haul-freight is less susceptible to diversion than some of the shorter-haul intermodal traffic, although we’re continuing to see some of the truckload carriers, the large asset-based truckload carriers, do a good job of continuing to convert to intermodal, even in shorter-haul lanes. So we don’t see this pattern of excess trucking supply continuing longer term. While we’re seeing it today, in today’s economy, we certainly don’t see it extending out for a protracted period of time.

(Question) Can you give a concept of how much of that is short-haul versus long-haul traffic of the intermodal?

(Mr. Seale) As we convert transcontinental traffic as the steam ship lines make the decision to come to the East Coast, a good example of that is our increased business at the port of Savannah to Atlanta. That’s a shorter haul than Memphis to Atlanta. But, that’s a profitable lane. It’s a very heavy double stack lane, and that of course is in the working parts of mix when you look at RPU and what we’ve reported in the third quarter.

(Mr. Moorman) I think to some extent the answer to your question is, when you see shifts like we’ve seen third quarter over third quarter in West Coast versus East Coast – and this is a very dynamic market for us now – and the ratio of long haul to short haul, or what we even consider to be short haul, the definitions are changing fairly rapidly.

(Question) Okay. And the last question, if I can, just on the network. You had kind of started out your opening comments talking about the upgrade of the track, how much of it now is double-stack capable, particularly on that corridor that you were extending out?

(Mr. Moorman) The Heartland Corridor project, which is the opening up of the clearances on the shortest route between the port of Norfolk and the Midwest, aimed primarily at our new major intermodal terminal in Columbus, is just beginning. We have a healthy container business out of the port of Norfolk today that we move via double stack, but we move it in a more circuitous route, either up through Harrisburg, Pennsylvania, or over through Knoxville, Tennessee, and up through Cincinnati. So what this project does is take a day or more out of the transit time and really makes it a much more attractive transportation product for people who want to bring their goods in through the port of Norfolk – which is growing very rapidly – and then move them into the Midwest. The Heartland Corridor really is though, I would say, just about the last piece of the puzzle in terms of Norfolk Southern’s major routes in handling double-stacked traffic.

Our next challenge – and this goes also to your question of the intermodal growth – is that we’ve outlined initiatives like our Crescent Corridor, where we think there is a huge, to some extent, untapped long-haul intermodal franchise that we can develop, as we put in new train service, add capacity, and put more truck-like service in place, and we’re working very hard right now on trying to develop that corridor as well. One of the things that we look at in a time like this is: where are there new products? Where are there new services that we can start to introduce, because quite frankly, over the past three or four years, we had our hands full just handling the product in the lanes that we have, and I think we have some exciting new products that will be rolling out over the next year.

(Question) Great, thanks for the time.

(Question) Hi, guys. Jason Seidl, Credit Suisse. A couple of quick questions. You talked a little bit about some of the changes in revenue per unit and alluded to where you might be on price excluding some of the puts and takes via Tom’s comments. Where are you weakest in terms of the pricing market? Is it in the housing related and truck competitive business?

(Mr. Seale) Jason, good morning. With our RPU message here this morning, there are three components to it. The first is timing of repricing, particularly in intermodal, as well as coal. This is all about having the price instruments, contracts, quotes, etc., available for repricing. That’s a timing issue. The second thing is reduced fuel surcharge in the quarter. As I pointed out earlier, we actually had an effective lower WTI average in the quarter. Plus last year, we were still ramping up fuel surcharge coverage, now we’re at 93% and we’re pretty much flat with respect to gaining any additional leverage in fuel until we have contracts roll over.

Then the third factor is the mix, and we continue to have a lot of change in mix. We mentioned the mix in intermodal: the shifting of port traffic, etc. A lot of change in mix on coal for the quarter: river coal versus long-haul, Central Appalachian to the South coal, as well as I mentioned in the comments the Chesapeake Energy plant in Chesapeake, Virginia, which is about 1.9 million tons on an annual basis, converted from Central App coal to imported coal from Venezuela. That is having an impact on our RPU as well. I also mentioned that import coal, in one of the first slides I showed, is actually down in the quarter for us as well. That impacted RPU.

(Question) In relation to the fuel surcharge, one of your competitors out there said it takes about two months to recover on a lag. Are you guys on a two-month lag as well?

(Mr. Seale) We have a 60-day lag in our program to allow customers to adjust their databases for it.

(Question) Okay. Great. And one last question, can you give us an update on the Maersk port and when we should start seeing volumes flow into your network?

(Mr. Seale) The new Maersk terminal in Portsmouth, Virginia, at the Port of Hampton Roads, opened officially in September. They are beginning to rotate vessels through that facility. We’re beginning to handle traffic through it. It’s in the process of ramping up.

(Question) Okay. Gentlemen, thank you for the time as always.

(Question) Scott Flower, Bank of America Securities. Good morning, all. Just a couple of questions. One is, and I know that you all have been very clear over time that about half of your book rolls every year, but how much in the way as we look toward ’08 will actually be legacy contracts or contracts that really haven’t seen the light of day for several years?

(Mr. Seale) Scott, as we’ve explained I think in the previous quarters, we are getting down to the point where we have very few so-called legacy contracts left that have not been treated within the last three to five years. We have been moving toward a shorter duration of contracts for a number of years. But, we still do have several large contracts like one in the automotive sector, another one or two in coal, and then a couple in merchandise that are longer-term in nature that will take some time to get through. It does not represent the majority of our business. It represents the minority of it.

(Question) But will any of those occur in ’08? Or are those further out?

(Mr. Seale) They’re further out.

(Question) Okay. One other thing on the marketing side, you noted, and this is just a note, but you mentioned it, obviously you talked about the peak days and generation, and then you talked about coal generation being at a lower percentage, are you actually seeing any fuel shifting or why would coal generation be at a lower rate than electricity generation growth in your territory? I’m just curious about that.

(Mr. Seale) When you look back over what has taken place this year in the weather patterns for utility coal, for utility and electrical generation, we’ve seen a lot of spikes in cold weather. When you look at the first quarter, we experienced a very mild January and February, and then about the middle of March, we had a cold spell – a spike-up in cold weather. It lasted for about four or five weeks, and then back down into more modest weather. With the price of natural gas running between $4.50 and $5.50, we’ve seen gas used at peaking plants to take up the slack with respect to peaks in demand for electrical generation. So we’ve seen some gas competition during that time.

(Question) Okay. And then two other quick questions, one for you, Don, and I guess one for Jim. You talked a little bit about obviously some of the shifting dynamics in the import/export market. Are you indifferent from a contribution standpoint of whether import/export boxes, primarily imports, come to you from western gateways versus eastern gateways? Because obviously you mentioned that Savannah is picking up versus where you may have seen in Memphis and there is a length-of-haul delta. And I’m just trying to get a sense from a different standpoint – is it indifference or is there favorability one way or another from a contribution standpoint?

(Mr. Seale) Half of our business now is East Coast. Of our international container business including exports, half is East Coast and half is West Coast, and we certainly are indifferent. Others make decisions with respect to which ports are used.

(Question) Last question is, Jim, obviously things are a little bit uneven in the economy, and you all are very long-term in nature, but yet obviously, the stock is decent in the quarter but still probably not to the levels we’ve seen in the last few years, and are you de-levering? I’m just wondering whether you had any thoughts about the share repurchase program, and obviously, as you’re generating cash, whether you might be more aggressive with that? I know that you mentioned on your analyst day over the next several years you would contemplate perhaps adding more leverage. I’m just trying to get a sense of how you think about that.

(Mr. Squires) Sure. As we outlined at our investor day in June, we do think that there is room for meaningful additional leverage while maintaining our strong investment grade status. So over the next few years, yes, I think you will see a net addition to leverage in our capital structure and that is likely to go toward share repurchases. We’ve been pretty aggressive with the program and we’ve tried to be opportunistic, and have targeted periods when we think that we can add the most shareholder value through share repurchases; we’ll continue to pursue that approach for the next couple of years.

(Question) Thanks all very much.

(Question) Edward Wolfe, Bear Stearns. Good morning. I know this has been asked but I don’t think it’s really has been answered, the 2.5% yield, can you break that down by price mix and fuel?

(Mr. Seale) We do not break it out that way, and we haven’t in the past. I will reiterate that flat fuel, or a slight decline in fuel, heavy mix impact with respect to coal and metals and construction, in particular, and some in intermodal as well, and then a quarter with relatively few opportunities for repricing because of the timing of contracts, all impacted RRU.

(Question) Okay, but outside of repricing, same-stores kind of sales, you had talked about being in that 4% range, I thought in prior quarters. Where are you relative to that? It feels like it is a little less good, probably. Is that fair?

(Mr. Seale) I would be comfortable saying that we’re in that range.

(Question) Okay. You just mentioned, Don, that East and West was about half of your business. Is that revenue or volume?

(Mr. Seale) The East/West revenue split is what we’re talking about.

(Question) And as far as you’re concerned, the profitability on a move is fairly similar?

(Mr. Seale) We are indifferent as to coasts and ports. The steam ship lines are making those decisions, Ed, with respect to vessel rotations and vessel utilization. Being partners with that industry, we work with them to support them.

(Question) Okay. You mentioned that you talked about a change in the coal business toward shorter haul, what is driving that?

(Mr. Seale) Well, I think part of that volumes are up under certain contracts. The Ohio River coal certainly is very active. Scrubber installation may be coming into play for some of this as well. Stockpiles in the south generally have been higher over the past 12 months – a little lower in the North – so our utility coal in the North from the Pittsburgh 8 seam actually is looking pretty good, and it was up in the quarter, while our utility coal from Central App to the South was down 10%. That’s a big spread and a big hit on RPU with respect to mix effect.

(Question) That’s good color. Thank you. The head count again, up 0.4 year-over-year. I would think by attrition, now that you have three quarters of negative 4% volume under your belt, if you wanted to by attrition, how quickly could you go from positive 0.4 to negative 4.

(Mr. Moorman) I don’t know how fast you go to a particular negative number, but I think that as I mentioned earlier the fact that we have slowed down our hiring is going to continue to take our numbers down as we look at attrition. As I talked about before, we have a work force in general where the demographics are such that all we have to do is take our hand off the hiring lever a little bit, and it doesn’t take too long before our numbers start to come down. And that’s what you’re seeing, and I think that’s what you will continue to see.

(Question) 4% would be about 1,200 jobs. I’m guessing that doesn’t take too many quarters, does it?

(Mr. Moorman) You know, it just depends on how much, if any, we continue to hire. It also depends on business conditions and where we need people. One place that we have continued, I will point out – and this is part of the numbers you see and another challenge that we talked about – looking at our demographics, our head count, and our plans, and have not slacked off, is in trying to bring people into our supervisory work force, particularly at entry levels. We have a big demographic shift coming up in this company in the next five years, and we think to not get ready for that and keep the pump primed with new training and new entry level supervisors would be an imprudent thing to do.

(Question) What do you think the timing is for volumes to be better than the minus 4 range that we are still in through last week at this point? Do you think, you look out a couple of quarters, and you expect them to flatten out at some point? What’s your timing?

(Mr. Moorman) At a certain point, you get to the point where you’re looking at your comps, but I have learned that every time I think I have a clear insight on where volumes are going, I’m wrong. So we just try not to make predictions on that. I think that we, along with everything else that you read, thinks that this economy has been impacted by the housing slowdown, and that that’s something that is going to continue. The housing market has an impact on transportation volumes in this country; all of the rails and the trucking industry as well.

(Question) Okay. Thanks guys, for the time. I appreciate it.

(Question) David Feinberg, Goldman Sachs. Good morning, gentlemen. Two questions. One housekeeping. Just want to confirm, the other income and the tax benefit that you get from synthetic fuel, that disappears in 2008, the fourth quarter is the last quarter we should see that, correct?

(Mr. Squires) Yes, that’s correct.

(Question) And then your comments regarding shipper vessel rotation, in terms of going in all-water passage through the East Coast, do you view that as a secular change or a temporary change based solely on the weak demand environment, and if and when the economy heats back up, the shippers will look to turn their assets quicker and go back to higher mix of West Coast ports relative to East Coast?

(Mr. Seale) We see it as an indication, a manifestation most likely of a trend that will continue. Maersk was mentioned earlier. They have made a rather substantial financial investment in a private terminal at the Port of Hampton Roads, and that terminal can accommodate very large vessels, the largest vessel that they operate. So I would fully expect them to continue to use the East Coast. I am not saying that the West Coast ports will not continue to be high volume; they will. But I think both coasts are going to be used to optimize vessel rotations and to optimize supply chains.

(Question) Thank you.

(Question) John Larkin, Stifel Nicolaus & Company. Good morning, gentlemen. I’m fascinated by the traffic growth you’ve seen in the Savannah-to- Atlanta market, especially with maybe some excess trucks available in this sloppy market. It is about a 250-mile length of haul. Historically intermodal economics begin to break down somewhere around 500 miles. Can you talk a little about what has made that particular traffic lane profitable? I think you said it was rather profitable. I would just like to understand the economics a little better if possible.

(Mr. Seale) It is all about double stack capability and running dense traffic and getting good utilization in the lane and we’re seeing both of those.

(Question) Can you apply that same kind of operating philosophy to markets like say Charleston to Charlotte and other such short-haul markets? Do you think that theory is applicable to other markets?

(Mr. Seale) One of the things that we’re looking at very closely – Wick mentioned the Crescent Corridor, but of course there are longer-haul segments in this corridor, and then there are shorter haul segments as well – is that we think the goal posts are moving with respect to length-of-haul assumptions that used to be out there. I think they’ll continue to evolve and change over time, as highway congestion, highway costs, driver availability, and all of the things we generally look at continue to evolve and change. So double-stack technology brings a very efficient mode of transportation to a market, but it’s all about creating velocity in that lane, and running full heavy trains Savannah-to-Atlanta certainly reflects.

(Question) Good answer. Thank you very much. Turning the page a bit to export coal, up very nicely in the quarter, dollar looks like it is getting weaker. The Chinese continue to sap some of coal supplies from elsewhere in the world. Is this the time when the export coal market can kind of return to its heyday of 10 and 20 years ago?

(Mr. Moorman) Let me say before Don says anything, we would enjoy that.

(Question) I’m sure that’s right.

(Mr. Seale) We certainly would, but we don’t see the world market today being anywhere near the same as it was in the early ’80s or even the early ’90s, and we don’t see a return to the level of U.S. coals certainly in Asia, because the Australians still have that market (the proximity advantage). But in Europe, U.S. coals are more than competitive in the face of a weaker dollar, and we’re seeing the Australians have a much more difficult time from a cost standpoint, with higher bulk vessel costs from Australia to Europe, as well as port congestion, and just being able to meet overall demand. So U.S. coals with the weaker dollar in Europe are certainly well-positioned, and our volumes reflect that.

(Question) Okay. Then just one final question, on operations, the last one railroad that had the best improvement in operating ratio I believe reduced train starts by about 5% on a 1% increase in volume. Clearly your volume is not quite that strong in a tough environment, but are there operational tweaks to the operating plan that could begin to achieve the kind of benefits that the particular western railroad I’m talking about achieved through reducing train starts?

(Mr. Tobias) There’s a bit of difference in comparing east and west, of course, but in general, as Wick spoke to a number of different product opportunities, which we are working on and have worked on, our opportunity to work both with origin destination point pairs and even within commodity groups, to reduce cycle time, reduce costs and improve our opportunities across the spectrum of the sales packages that we offer and products that we offer to our customer base, is an ongoing, living, every-day exercise. And yes, there are opportunities for us to continue to reduce those cycle times, take costs out, improve our equipment flows and better serve our customers.

(Question) That’s all I had. Thank you, Steve.

(Question) John Barnes, BB&T Capital Markets. Good morning, guys. Don, and Steve, I guess, to your answers on this East Coast versus West Coast intermodal lane, if this is a more permanent shift, Don, you can give us an idea of two or three year out, what is the revenue mix going to look like? If it’s 50/50 today, does it become more heavily weighted towards East Coast revenue generation from the intermodal? And then I guess towards Steve, how that shift, how does it change your cap ex outlook for your intermodal franchise? Is there some more opportunity for Heartland Corridor-type investment, or is it just kind of continuing to invest where have you been investing?

(Mr. Seale) Well, the crystal ball is a little bit cloudy in terms of how it’s going to continually evolve and whether that 50/50 percentage will continue to change. I think you will see – with the advent of the Heartland Corridor and the opening of our Rickenbacker logistics center – our mix of that traffic coming through the East Coast ports continue to change. Norfolk up to the Columbus, Ohio Valley, Detroit, and back to Chicago, is very good, long-haul traffic, and already we have the rail infrastructure in place. Once we clear these tunnels, we can tap that additional capacity and provide overnight service from Norfolk to Chicago and the Ohio Valley, which will enhance asset turns, asset utilization, and provide better customer service. And that’s just one example. We will also see traffic from the Southeastern ports possibly go back to the gateways. So there are a lot of moving parts to this, a lot of it is still not totally visible, but as we visit with the Asian steamship lines, they clearly outline to us their long-term plans to use both coasts in a prudent manner to optimize their overall service.

(Mr. Tobias) Much like the capacity we’re adding in the Heartland Corridor and in the Crescent Corridor concepts, as opportunity presents itself at the ports, I can assure you that we are presently adding and will add capacity if the business case justifies it.

(Question) Okay. Very good.

(Mr. Tobias) And in the Savannah-to-Atlanta corridor, we have several initiatives ongoing both in the city of Savannah and on the Atlanta road to improve capacity and improve and increase throughput.

(Question) And Steve, the facilities being built in the Southeast, I was recently in Charleston, they were talking about the development of an intermodal facility in Orangeburg, South Carolina, still a lot of discussion about the joint facility on the Savannah river in Jasper county, and as you look at those two facilities, are those going to be jointly served by both Eastern rails, or are those facilities being built on one particular rail or the other?

(Mr. Tobias) John, in reference to the previous question, I looked in my crystal ball and it is now becoming cloudy. There is an unknown element here that I really can’t speak to, but to the extent that we can participate where we would not normally have an opportunity to, we would certainly be willing to entertain it.

(Question) Okay. All right. And the last question, for you, on equipment. There’s been some discussion this quarter about various levels of equipment currently in storage, both locomotives and cars, given your current traffic level – could you give us an idea, do you have any equipment stored, mothballed, that kind of thing?

(Mr. Tobias) We do in fact have some rolling stock cars in storage. I don’t have very many locomotives in storage.

(Question) Can you give us magnitude of cars?

(Mr. Tobias) 6,000 to 7,000.

(Question) Very good. Thank you, guys.

(Mr. Moorman) In conclusion, thanks very much for your time. As always, we appreciate the chance to talk with you, and as I mentioned earlier, let us know what you think of this format. We look forward to talking to you again. Thanks.

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