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Feb.6, 2017

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Page 18 of 111 THE JOURNAL OF COMMERCE 19 5 Days a week 100% Steelwheel Streamlined cross-border customs 24/7 Visibility to shipments State-of-the-art security BNSF RAILWAY AND KANSAS CITY SOUTHERN A NEW SOLUTION FOR SHIPPING BETWEEN THE U.S. AND MEXICO BNSF KCS fourth quarter, specifi cally citing success winning domestic business through its highway-to-rail initiative and new service offerings. CSX executives have said that bounce back, on top of "positive momen- t um going into 2017," has reaf f irmed corporate conf idence in the railway 's strong pricing. Executives at Union Pacifi c Railroad, the largest rail operator in the United States, said that although the western rail- way had, without a doubt, lost some of its pricing power, it wasn't about to bow to the market. UP CEO Lance Fritz said his rail- road would not pursue cargo at any price to gain domestic market share. Rates must remain profi table: "If we can't fi nd that, we walk away from it." And the tactic worked: Although the railroad posted a 1 percent year-over-year decline in total volume in the fourth quarter, domestic volume managed to grow 2 percent in the quarter on stronger retail sales. UP investors and analysts on a fourth- quarter earnings conference call expressed confidence the pricing environment had "bottomed in the fourth quarter" and should incrementally improve for the rail- way throughout 2017. While UP leadership was not willing to go that far, they did say they expect pricing gains in the year ahead. "Take one message from us here, that while infl ation's rising, while we have some challenges in the marketplace as it relates to pricing, we are still committed to pric- ing at re-investable levels that are above the

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