Automotive Logistics Mexico Conference

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1 Automotive Logistics Mexico Conference Multimodal Mexico Panel Carlos J Velez VP Business Solutions & Marketing, KCS Hotel Marquis Reforma, Mexico City: Jan 28,

2 Mexico Rail Overview: Multimodal Panel Automotive Plant Complexes in Mexico Auto Production Growth Projections Finished Vehicle Distribution Pattern Rail Capacity How do we measure it? What is needed? Mexico Rail Infrastructure Spend Celaya Bypass Why is it needed? Status Our role 2

3 Mexico Rail Overview: Multimodal Panel Automotive Plant Complexes in Mexico Auto Production Growth Projections Finished Vehicle Distribution Pattern 3

PLANT TIJUANA PLANT HERMOSILLO PLANT CHIHUAHUA PLANT MOTORS

ARIZPE PLANT PESQUERIA 2016 PLANT AGUASCALIENTES PLANT CIVAC

4 PLANT TIJUANA PLANT HERMOSILLO PLANT CHIHUAHUA PLANT MOTORS RAMOA ARIZPE PLANT SALTILLO PLANT SALTILLO 2013 PLANT RAMOS ARIZPE PLANT PESQUERIA 2016 PLANT AGUASCALIENTES PLANT CIVAC PLANT PUEBLA PLANT 2 AGUASCALIENTES 2014 PLANTS AGUASCALIENTES 2017 PLANT EL SALTO PLANTS S.L.P PLANT S.L.P 2019 PLANT SAN JOSE CHIAPA 2016 PLANT SALAMANCA 2014 PLANT APASEO EL GRANDE 2019 PLANT CELAYA 2014 PLANT SILAO PLANT MOTORS Kansas City Southern PLANT TOLUCA PLANT TOLUCA PLANT CUATITLAN

Mexico s Auto Production Growth (units in millions), Actual 2000-2015, forecast thereafter 6.0 2020 vs 2015 +56% 5.08 5.30 5.0 4.

1 2.90 2.90 2.4 2.4 3.20 3.41 2.6 2.8 3.62 3.0 3.7 3.9 4.2 4.

5 Mexico s Auto Production Growth (units in millions), Actual , forecast thereafter vs % Export Market Domestic Market Mx Production Source: AMIA Data & KCS Projections

Demand for Finished Vehicles from Mexico Exports to US and Canada 81% of vehicles produced in Mexico are for Export 19% for Intra-Mexico market 86% Move X-Border to US & Canada Of the 81% for

6 Demand for Finished Vehicles from Mexico Exports to US and Canada 81% of vehicles produced in Mexico are for Export 19% for Intra-Mexico market 86% Move X-Border to US & Canada Of the 81% for Exports: 83% are destined for US/CAN 17% for Rest of the World 14% Veracruz, Lazaro and Altamira To US/CAN Source: AMIA Data / KCS Market Research All Exports by Sea Ex Mexico: Veracruz exports 70% Lazaro Cardenas 13% Altamira 10% Others Ports 7%

7 Mexico Rail Overview: Multimodal Panel Rail Capacity How do we measure it? What is needed? 7

8 How Much Rail Capacity will be required?.2 MM incremental export production growth in %, or.172 MM vins are destined for the US-Can. If 100% of the volume were to be moved by Rail Northbound..172 MM annual vins for Export. 14,333 carloads per 12 vins per railcar 211 trains per 68 railcars per train.88 trains per 240 operating days avg. per year

9 Required Train Starts to Meet New Plant Production 5 year Projected Scenario for Rail Exports to the US/Can Year Increase in Export Production (MM vins) Carloads Annual Trains Trains/day 50/50 Bis-Tris MM 14, MM 78,833 1, MM 121,833 1,

10 Mexico Rail Overview: Multimodal Panel Mexico Rail Infrastructure Spend 10

11 Mexico Rail Infrastructure Mexico railroads are keenly aware of the incremental volume & preparations continue to focus on expanding infrastructure. In 2016 there are at least 32 projects undertaken by the railroads to improve and expand their infrastructure including: Sections of mainline double tracking New Sidings & Extensions Bridges Yards 11

Key 2016 Mexico Rail Infrastructure Projects 16 15 1) Sanchez yard 2) Salinas Victoria 3) Monterrey Yard 4) Ruben Jaramillo 5) San Luis

La Costura siding 14 1 13 6 12 19 2 1 7/10 2 4 3 3/11 17 8 18 5 5 6 20 7 4 8 12 9 10 11 9 Mainline Sidings - Yards 1. Cd.

Ciudad Frontera 8. Victor Rosales Bridges 9. Linares 10. Ciudad Frontera 11. Paredón 12. Bachimba 13. Moctezuma 14. Temoris 15.

12 Key 2016 Mexico Rail Infrastructure Projects ) Sanchez yard 2) Salinas Victoria 3) Monterrey Yard 4) Ruben Jaramillo 5) San Luis Potosi 6) Escobedo yard 7) Ojo Seco siding 8) Salvatierra Siding 9) Quirio siding 10) Jacuaro siding 11) Puerto de Lazaro Cardenas 12) La Costura siding / / Mainline Sidings - Yards 1. Cd. Juárez Meseta 2. Piedras Negras Rio Escondido 3. Amargos (Paredón) 4. Irapuato 5. San Francisco de los Romo. 6. Tabalaopa 7. Ciudad Frontera 8. Victor Rosales Bridges 9. Linares 10. Ciudad Frontera 11. Paredón 12. Bachimba 13. Moctezuma 14. Temoris 15. Nogales 16. Empalme 17. Camacho 18. Zacatecas 19. Tepic 20. La Barca Kansas City Southern Source: Combined KCSM & Ferromex data from MUAR Meeting Jan. 21, 2016

13 Estimated Rail CAPEX for FXE & KCSM 2015 & 2016 (Million USD) Summary of Est. CAPEX for FXE & KCSM Year 2015 Total CAPEX (KCSM $290) (FXE 292) $582 Year 2016 Total CAPEX (KCSM $154) (FXE 405) $559 Equipment $189 Infrastructure and Track $239 Business Development and others $131 Total Rail Capex in Mexico % 43% 34% Equipment $189 infraestructure $239 Business Development $131 Source: Combined KCSM & Ferromex data from MUAR Meeting Jan. 21,

14 Mexico Rail Overview: Multimodal Panel Celaya Bypass Why is it needed? Status Our role 14

15 All Roads Lead to Celaya The Celaya Bypass is the most important Rail Infrastructure Project in Mexico Today! CIVAC 15

16 Why is a Bypass Needed in Celaya? Interchange Tracks Celaya Yard (FXE) KCSM delivers to FXE 300 & 301 Tracks (KCSM) FXE delivers to KCSM 16

17 KCSM NB Line Where exactly is the Celaya Bypass? 17

18 Bypass Construction Progress: KCS Line (NBA) to % Construction Completed Km to (Viaduct) 100% Construction Completed to % progress Phase 100% Phase 0% (Lack of Budget) to % advance Right of Way Issues to % Progress Right of Way Issues NBA Line (KCSM) 45.82% as of Aug 20, 2014 vs 69.47% currently FXE / KCSM 2016

19 Bypass Construction Progress: FXE Line (AM) 0 to 5 100% Construction Completed to % Construction not started. Right of Way Issues Línea AM to % Construction Completed to % Construction not started ROW under Negotiation KM % Construction Completed. PSV Km AM (Entronque Aeropuerto) 33.6% progress (ROW & some industry issues) AM Line (FXE) 69.80% as of Aug 20, 2014 vs 70.59% currently FXE / KCSM 2016

20 The Celaya By-pass: In Summary Intent: Seeks to create a safe corridor for rail Will increase safety for the community Will increase rail speed Will streamline the operation for both rail operators in a fast growing region (Bajio Area) Issues: Slow land acquisition process caused land to escalate continues to escalate. Budget Reduction in 2015 delayed the project. No Federal budget assigned to this project in The SCT has indicated that the construction of the Celaya Bypass should be completed by December 2017 (in two years) because it is a Presidential commitment. Our Role: Stay engaged with different levels of government to express importance of completing the by-pass. OEM s should voice their support of the by-pass and engage with their government relations departments to push to speed up completion. FXE and KCSM are working with the SCT on potential alternatives to accelerate the project. 20

21 THANK YOU! / QUESTIONS? The Kansas City Southern Railway Carlos J. Velez VP Business Solutions & Marketing Tels: MEX.: U.S.: cvelez@kcsouthern.com 21

Kansas City Southern. Mexico Rail. June 16, Denver, Colorado

Kansas City Southern. Mexico Rail. June 16, Denver, Colorado Kansas City Southern Mexico Rail June 16, 2015 Denver, Colorado 1 Top Industries for Mexico Nearshoring Opportunities Automotive Furniture Appliances & Electronics Aerospace Machinery Construction Equipment