Automotive Logistics Mexico Conference Multimodal Mexico Panel Carlos J Velez VP Business Solutions & Marketing, KCS Hotel Marquis Reforma, Mexico City: Jan 28, 2016 1
Mexico Rail Overview: Multimodal Panel Automotive Plant Complexes in Mexico Auto Production Growth Projections 2016-2020 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
Mexico Rail Overview: Multimodal Panel Automotive Plant Complexes in Mexico Auto Production Growth Projections 2016-2020 Finished Vehicle Distribution Pattern 3
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 2013 2016 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 4.44 4.75 4.0 3.0 2.0 1.0 1.90 1.80 1.80 1.4 1.4 1.3 1.50 1.50 1.60 1.2 1.1 1.2 2.00 2.00 2.10 1.5 1.6 1.7 1.50 1.2 2.30 1.9 2.60 2.1 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 4.5-2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Export Market Domestic Market Mx Production Source: AMIA Data 2000-2015 & KCS Projections 2016-2020 5
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%
Mexico Rail Overview: Multimodal Panel Rail Capacity How do we measure it? What is needed? 7
How Much Rail Capacity will be required?.2 MM incremental export production growth in 2016 86%, 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 year @ 12 vins per railcar 211 trains per year @ 68 railcars per train.88 trains per day @ 240 operating days avg. per year
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 2016.172 MM 14,333 211.88 2018.946 MM 78,833 1,159 4.83 2020 1.462 MM 121,833 1,792 7.47 9
Mexico Rail Overview: Multimodal Panel Mexico Rail Infrastructure Spend 10
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 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 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. 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 2015 12 Source: Combined KCSM & Ferromex data from MUAR Meeting Jan. 21, 2016
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 2016 23% 43% 34% Equipment $189 infraestructure $239 Business Development $131 Source: Combined KCSM & Ferromex data from MUAR Meeting Jan. 21, 2016 13
Mexico Rail Overview: Multimodal Panel Celaya Bypass Why is it needed? Status Our role 14
All Roads Lead to Celaya The Celaya Bypass is the most important Rail Infrastructure Project in Mexico Today! CIVAC 15
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
KCSM NB Line Where exactly is the Celaya Bypass? 17
Bypass Construction Progress: KCS Line (NBA) 17+220 to 22+000 100% Construction Completed Km 13+310 to 17+220 (Viaduct) 100% Construction Completed 8+700 to 13+310 68% progress Phase 1 @ 100% Phase 2 @ 0% (Lack of Budget) 5+330 to 8+700 0% advance Right of Way Issues 0+000 to 5+330 58% Progress Right of Way Issues NBA Line (KCSM) 45.82% as of Aug 20, 2014 vs 69.47% currently FXE / KCSM 2016
Bypass Construction Progress: FXE Line (AM) 0 to 5 100% Construction Completed. 5+000 to 8+440 0% Construction not started. Right of Way Issues Línea AM 8+440 to 11+320 100% Construction Completed 11+320 to 14+500 0% Construction not started ROW under Negotiation KM 15+500 24+300 100% Construction Completed. PSV Km AM 24+680 (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
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 2016. 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
THANK YOU! / QUESTIONS? The Kansas City Southern Railway Carlos J. Velez VP Business Solutions & Marketing Tels: MEX.: +52.55.9178.5609 U.S.: +1.816.983.1416 Email: cvelez@kcsouthern.com Twitter: @vlzcrls 21