31 October 2017 Railroads Canadian Rails In addition to yield, mix, and cost considerations, overall network fluidity also impacts profitability. To this point we note that the major railroads report performance measures weekly such as average train speed and terminal dwell. SpeedNelocity: Train speed measures the linehaul movement between terminals. The average speed is calculated by dividing train-miles by total hours operated. In general the higher the average train speed the better the network is being run, with high frequency and stop duration translating to lower average speeds and in turn less efficiency (all else equal). • Dwell: Terminal dwell is the average time a car resides at the specified terminal location expressed in hours. Dwell has averaged 24.5 hours YTD industry-wide, which is slightly above historical levels (23.9 hours in 2014). The underlying geographical characteristics of a rail footprint can have a major impact on the aforementioned profitability and service elements. Both CNI and CP are transcontinental railroads accounting for 75% of Canada's railway tracks, while the United States railroad system is more fragmented, with over 610 total freight railroads operating across roughly 140,000 miles of track. The U.S. is also more densely populated on the East Coast with seven of the largest metropolitan areas located east of the Mississippi River. This not only results in a shorter length of haul for both NSC and CSX, but introduces truck as an intermodal competitor as well. Conversely, Canada has a lower population density (4 people per square kilometer vs. 35 in the United States according the world bank) and major population centers that are more spread out on both the east and west CO&St. While the distance between major population hubs may improve length of haul for certain commodities for the Canadian rails, there are certain other geographical challenges imposed by the unique terrain and climate of Canada co