November 2003
RailAmerica buying Central MichiganRailAmerica announced November 26 that it has entered into an agreement to acquire the Central Michigan Railway (CMGN), which operates 100 miles of track between the Michigan cities of Midland and Durand. Owned by the Straits Corp., CMGN moved around 30,000 carloads and had revenues of approximately $12 million in 2002.
Ex-BN CEO Grinstein going to DeltaGerald Grinstein, who as CEO of Burlington Northern helped mastermind that railroad’s merger with Santa Fe, is coming out of retirement to head financially troubled Delta Air Lines. Grinstein was head of Western Airlines when it was bought by Delta in 1987. Grinstein and Santa Fe chief Robert D. Krebs were Railway Age’s 1996 Railroaders of the Year.
Bombardier Transportation chief steps downBombardier announced ON November 25 that Pierre Lortie was stepping down as president and COO of Bombardier Transportation "to pursue other interests," effective immediately. Bombardier President and CEO Paul M. Tellier will head the Management Committee of Bombardier Transportation until a new president is named. Tellier thanked Lortie for "his strong contribution to the integration of Adtranz and to the building of strong order book for Bombardier Transportation."
Seattle selects Japanese joint venture as LRV supplierSeattle’s Sound Transit has selected a Kinkisharyo International/Mitsui Co. joint venture as the preferred bidder on a contract to build 31 light rail vehicles for the new Link light rail system. The contract is worth $131.8 million and includes project management, design, testing, warranties, spare parts, and specialized tools and test equipment. The prototype vehicle is expected to be delivered by November 2006, with the order completed by September 2008. Manufacture of the vehicles is subject to federal Buy America requirements (60% U.S. content); final assembly is to take place within the Sound Transit District.
The 95-foot-long, double-articulated low-floor LRVs will be designed to carry 200 passengers, with 74 seated, and have a top speed of 55 mph. They will operate on a 1,500-volt d.c. traction system.
The Sound Transit board is expected to award the contract to the joint venture on Dec. 11.
Another veteran will depart CSXFrank E. Pursley, senior vice president-service design at CSX Transportation and a 37-year railroad industry veteran, will retire effective Dec. 31, 2003. He will be succeeded by Alan P. Blumenfeld, currently president of CSX Intermodal. CSXI will select a replacement for Blumenfeld next month.
Pursley began his railroad career in 1963 as a Seaboard Airline trainman. In 1969, he became a management trainee with the Louisville and Nashville and subsequently served in several senior operating and safety positions. Both railroads eventually became part of the CSXT system.
Previously, CSX Executive Vice President and Chief Commercial Officer P. Michael Giftos announced he will retire effective March 31, 2004. A 29-year railroad veteran, Giftos served as CSX’s chief legal officer for more than a decade before becoming chief commercial officer in April 2000. Clarence W. Gooden, the Class I’s senior vice president-Merchandise Service Group, will assume Giftos’s responsibilities. Gooden joined CSX in 1970.
BC Rail goes to CNThe government of British Columbia, Canada, after weeks of public speculation, today officially awarded CN a long-term operating lease for BC Rail Ltd. CN will pay the B.C. government $1 billion in cash to acquire the railroad’s outstanding shares and will also assuming responsibility for infrastructure maintenance. The term of the lease is 60 years, with an option for an additional 30 years. Integration of CN and BC Rail operations will be conducted over a three-year period.
The government will retain ownership of the infrastructure, including the Port Subdivision entering Deltaport and Roberts Bank Port, and other surplus real estate assets.
The transaction is subject to approval by Canada’s Competition Bureau and is expected to close in the first quarter of 2004. The B.C. government will enact legislation to effect the partnership with CN, which said it will finance the transaction with debt and expects it to be accretive to its earnings per share and free cash flow in the first year of BC Rail operation. CN also said it expects the combined CN/BC Rail networks "to generate revenue gains from market share captured from trucks, and to produce cost synergies from new operating efficiencies and greater asset utilization."
CN plans to reduce BC Rail’s 1,495-employee workforce to 950, including 115 employees who are already inactive. CN estimates that 250 BC Rail employees are eligible for early retirement, and that the remaining 180 job reductions will be accomplished by attrition or severance. Sixty employees will be relocated within CN’s system in Western Canada.
As part of the transaction, CN said it will:
o Invest $1 million in a new wheel shop at BC Rail’s Prince George Shop Complex and in-source CN freight car and locomotive work there.
o Make Prince George home to a new B.C. North Division office and "inject new work into the city’s BC Rail shops." The new office will oversee B.C. North operations and house a customer-support unit for the forest products industry. "With 75% of B.C. forest products shippers located within 200 miles of Prince George, the new office will improve responsiveness to forest products shippers," CN said.
o Work with the Port of Prince Rupert on a potential new container terminal to move traffic from Asia to Eastern Canada and Chicago. CN said it is prepared to invest up to $15 million in rail infrastructure improvements to accommodate double-stack container trains on its new BC North line. It also said it plans to start operating a new "Chicago Express" train originating in Prince George with a schedule of fewer than four days for the forest products industry, and acquire 600 new centerbeam cars and upgrade 1,500 boxcars to accommodate anticipated truck-share gains in forest products.
o Reopen the link between Dawson Creek and Hythe to facilitate grain movements from the Peace Region.
o Support the introduction of new tourist trains operated by third parties between Vancouver, Whistler, and the B.C. North line. CN and BC Rail plan to issue a request for proposals to operate these trains.
o Work with the B.C. government to facilitate the upgrading of the Sea-to-Sky Highway "and ensure rail alternatives for a successful 2010 Winter Olympics."
"We firmly believe our plan for BC Rail will best serve the province’s forest products industry, northern communities, and vital tourism trade," said CN President and CEO E. Hunter Harrison. "The rail combination will offer BC Rail shippers unparalleled routes to major NAFTA and international markets – a new network of routes that will strengthen the competitiveness of the B.C. economy. Our partnership with B.C. also reflects CN’s commitment to promote open and fair competition and to share the transaction’s synergies with shippers. We will offer BC Rail’s shippers the ‘best of both worlds’ – the efficiencies and route advantages of CN’s single line-service to key markets, and the option of routing traffic to other railways at the Vancouver gateway at lower average rates than those now charged by BC Rail." He said CN is the only railroad connecting directly with BC Rail at Prince George and North Vancouver.
CN sending new CEO to Britain’s EWSBritain’s troubled English, Welsh, & Scottish freight railway is due for another management switch. CN, which has a 40% stake in the British carrier, is sending Keith L. Heller to replace Philip Mengel as CEO of EWS. The change becomes effective when Heller retires Jan. 1 as senior vice president of CN’s Eastern Canada Region. "We will miss Keith’s shrewd analysis and take-charge management style, but these strengths will go far at EWS," said CN President and CEO E. Hunter Harrison. (According to The Guardian, Mengel is resigning "after a long battle with the government over lack of financial support" for rail freight service.)
AAR supporting Smithsonian’s "America on the Move"The Association of American Railroads is one of the primary sponsors of "America on the Move," the updated, expanded transportation exhibition opening Nov. 22 at the Smithsonian Institution National Museum of American History in Washington, D.C.
America on the Move, billed as the museum’s largest exhibition ever, "underscores the importance of railroads in building America," according to a statement released by the AAR. "It allows visitors the opportunity to travel back in time and experience transportation as it shaped American lives and landscapes. "
The exhibition features 19 sections organized chronologically, and its "largest and most spectacular sections" involve U.S. railroads, according to the AAR. It opens with Union Pacific’s 1876 "Jupiter" locomotive, restored to its original condition and set in the town of Santa Cruz, Calif. The setting "is designed to immerse visitors in the atmosphere of hope that Santa Cruz experiences when it became part of the rail network.," says AAR. "An article from the May 13, 1876 edition of the Santa Cruz Sentinel conveys the excitement: ‘At last our enterprising young city is in full connection with the rest of mankind, and at last she is free from the rule of the sleepy stagecoach.’ At the other end of the rail line was Watsonville, Calif., where the introduction of the railroad and the refrigerated boxcar allowed a relatively small town to become an industrialized agricultural center. The exhibition features a boxcar and farm wagon, showing how the agricultural goods were transported from the field to the dinner table."
The largest section of the exhibit features Southern Railway’s bright green, 199-ton, 92-foot-long "1401" steam locomotive, which in its heyday pulled the Southern Crescent passenger train. A mainstay of the museum’s predecessor railroad display, the 1401 is now located outside a replica of the Salisbury, N.C., rail depot, circa 1927. "Visitors will be able to see how the railroads shaped the lives of 1.7 million railroad workers and the economies of towns serviced by the railroads in the 1920s," says AAR. "Towns like Salisbury and nearby Spencer, N.C., flourished with the addition of more than 2,500 railway machinists, foundry workers, boilermakers, and carpenters working on the Southern Railway." Also included is a hands-on section that allows visitors "to see first hand how vital railroads were to the creation and success of the mail order catalog business, with a display that gives visitors the opportunity to order a shipment and follow it to its destination."
In the final area of the exhibit, "Going Global," visitors are treated to a multi-media presentation centered on the Port of Los Angeles and today’s intermodal, global transportation network.
Senior NS executives take a buyoutFour senior Norfolk Southern executives—Senior Vice President-Planning James W. McClellan, Senior Vice President-Coal Marketing J. W. "Bill" Fox, Senior Vice President and Chief Information Officer Stephen P. Renken, and Vice President-Real Estate Richard W. Parker—have accepted an NS buyout package and will depart by year-end. They are among the 553 non-union employees (13% of the management work force) who have accepted a voluntary separation package offered in September. Of those 553, 314 were eligible to retire.
Spokesman Robert C. Fort said NS has a succession plan in place for every affected department. The company will take a fourth-quarter charge of $107 million to pay for the buyouts, which offer three weeks pay for every year of service, health insurance for one year, and outplacement assistance. Managers eligible to retire also received full retirement benefits.
McClellan and Fox spent 31 and 34 years, respectively, at NS and its predecessor railroads. McClellan also worked at New York Central, Penn Central, the FRA, Amtrak, and the AAR from 1966-77. Parker joined NS in 1984 from a Cleveland law firm; Renken joined in 1998 after working at BNSF.
New COO at RailAmericaRodney J. "Joe" Conklin has been appointed Executive Vice President and Chief Operating Officer-North American Rail Group at RailAmerica, succeeding Gary Spiegel, who resigned to pursue other interests.
Conklin, 49, who has over 27 years of railroad experience, was previously RailAmerica's Senior Vice President-Eastern Corridor, North American Rail Group. He joined RailAmerica in February 2000 after serving as Vice President-Field Operations for RailTex, Inc. Prior to that, he was employed by Burlington Northern and Santa Fe and its predecessor railroads for 23 years. Conklin held a variety of positions at BNSF, including Terminal Superintendent, Division Superintendent, and General Superintendent-Transportation. He began his railroad career in 1976 in BNSF’s engineering department at Gillette, Wyo.
Fuel tax reported to be on the way outRepeal of the 4.3 cents "deficit reduction" fuel tax paid by railroads and barges is reported to be part of the new energy bill agreed on by House and Senate Republicans on Nov. 14. Political observers expect the bill to be enacted with little change since Republicans control both houses of Congress. According to the Association of American Railroads, the fuel tax cost the railroads $174 million in 2002 and has cost them $2.1 billion since it was enacted in 1990. The energy bill is expected to finalized within one week.
CN said to be winner of BC Rail operationsThe Vancouver Sun reported Nov. 14 that the Province of British Columbia would seek legislation next week permitting the sale of BC Rail’s equipment and operations to CN. Canadian Pacific Railway and a U.S. consortium of Omnitrax and Burlington Northern and Santa Fe were also on the short list of bidders. The province will retain ownership of BC Rail’s 1,450 miles of track.
First diesel light rail line will open in FebruaryNJ Transit announced Nov. 13 that it has set Feb. 15, 2004, for the launch of the 34.5-mile Southern New Jersey Light Rail Transit System. It will be known as the River Line. Linking Camden and Trenton, it will be the first diesel-powered light rail system in the U.S. The line serves 20 stations and runs through 19 municipalities. NJ Transit said the contractor, The Rail Group (a consortium of Bechtel and Bombardier), would begin simulated passenger service on Jan. 4, starting with 30-minute headways, gradually dropping to 15-minute headways.
In other news, NJ Transit said it plans to open its Secaucus Transfer facility on Dec. 15 for weekday revenue service. The station, named in honor of New Jersey Senator Frank R. Lautenberg, allows NJ Transit commuter rail customers who ride the agency’s northern New Jersey lines serving Hoboken Terminal to transfer to trains serving New York Penn Station on the Northeast Corridor. It has been in weekend-only operation since September.
Carload freight flat, intermodal still risingIntermodal traffic on U.S. railroads posted another sharp gain in the week ended Nov. 8, increasing 9.6% over the same week last year. Carload traffic remained essentially flat, with an 0.1% increase from a year ago. Revenue ton-miles increased 2.7%. In this year’s first 45 weeks, intermodal volume was up 6.6%, carload freight was down 0.1%, and ton-miles rose 1.2%.
Canadian railroads reported a 9.2% increase in carloadings and a 6.8% rise in intermodal volume in the week ended Nov. 8. Year-to-date carload traffic declined 0.1% from last year, while intermodal was up 6.8.
Mexico’s TFM railroad reported a decline of 6.0% in both originated carload freight and intermodal volume in the week ended Nov. 8. For 45 weeks, TFM reported a 2.1% drop in carload volume and a 14.2% increase in intermodal units originated.
NC-Lavalin picked to build Toronto airport linkFrom a field of four bidders, Canada’s Ministry of Transportation has selected SNC-Lavalin Engineers and Constructors, Inc. to build a $200 million, privately financed rail link connecting downtown Toronto and Pearson Airport. Dubbed "Blue 22," the service would provide a 22-minute trip for $C20. The plan calls for SNC-Lavalin to arrange for the leasing of track from CN already used by GO Transit and VIA Rail, and to build a spur to the airport. Conventional diesel-hauled trains will be used.
Credit Suisse analyzes rate-case significance Norfolk Southern’s victory at the Surface Transportation Board in its coal rate dispute with Duke Energy is seen by Credit Suisse first Boston as "a positive for both eastern carriers," allowing them to put in greater rate increases than previously expected. In a research report released on Nov. 12, Credit Suisse said the potential earnings impact "over time is significant."
"If we assume that NS and CSX can raise rates by $2 per ton on all utility coal on contracts that come up for renewal over the next several years, the impact to earnings is around 33% for each carrier," said the report. "They might not be able to raise rates by this much on all utility coal contracts that roll over, but it is clear the results are significant if they can continue to pass along coal rate increases."
Conferees settle on $1.22 billion for AmtrakSenate and House conferees have agreed to give Amtrak $1.22 billion for this fiscal year, very close to the $1.3 billion that Amtrak President David Gunn has said can keep the trains running. The Bush administration had asked $900 million, a figure that the House accepted. Gunn, who originally asked for $1.8 billion, said a $900 million authorization would mean the end of Amtrak. The Senate, which has influential Amtrak partisans like Kaye Bailey Hutchison of Texas and Trent Lott of Mississippi, voted to give the railroad $1.35 billion. A House-Senate conference committee reached agreement on the $1.22 billion package on Nov. 12.
Greenbrier backlog doubled in a yearThe Greenbrier Companies says its North American and European freight car backlog more than doubled in the fiscal year ended Aug. 31, rising from 5,200 units valued at $280 million to 10,700 units valued at $580 million. Greenbrier announced its FY 03 results Nov. 12. The company said its railcar market share in North America "continues to exceed 30%, more than double our share of industry capacity."
An assist from Atlanta for SNCF ticket-takersAtlanta-based XcelleNet, Inc., says it’s helping French National Railways (SNCF) move "from a ‘leather bag and ticket clippers’ approach to a mobile computing solution that will electronically collect ticket information and transfer it to central site." The role of XcelleNet’s Afaria will be "management of data and applications that flow between its central sites and 1,000 handheld devices used by railroad ticket inspectors across France." XcelleNet in its Nov. 11 announcement quoted SNCF Project Manager Dominique Orcel as saying: "Afaria enables us to mobilize an application for use by the inspectors in a way that protects them from the complexity of new technology and allows us to see what activity is taking place at our front lines."
Reflectorization rulemaking process beginsThe Federal Railroad Administration has issued a Notice of Proposed Rulemaking for Reflectorization of Freight Rolling Stock. "We believe this proposal can help increase train conspicuity at poorly illuminated crossings—particularly passively signed crossings—during periods of darkness or limited visibility," FRA Administrator Allan Rutter told the Texas Transportation Institute’s 2003 National Highway-Rail Grade Crossing Safety Planning Institute in San Antonio.
Rutter also reported on the agency’s progress in drawing up a new Highway-Rail Crossing Safety Action Plan to replace one announced by the U.S. DOT in July 1994. The new plan is to be submitted with the DOT’s FY 2005 budget request.
Among the engineering improvements under consideration for the new plan are encouraging the use of four quad gates; standardizing innovative devices using symbols, text, legends, and flash modes that are universally understood by highway users, and encouraging the use of pre-signals.
NS ponders impact of coal rate rulingNorfolk Southern said Nov. 11 that only time would tell what impact the Surface Transportation Board’s decision in the NS/Duke Energy rate case would have on the railroad’s earnings. While upholding the disputed coal rates, the STB invited the complaining power company to begin a proceeding to determine whether the rates should be phased in under the Constrained Market Pricing Guidelines. "At this time, Norfolk Southern is continuing to bill and collect amounts based on the challenged tariff rates consistent with its past practice," said the railroad. "Due to the passage of time, however, the ultimate outcome could have a significant effect on the results in the particular quarter or year resolved."
Wabtec begins secondary stock offeringWabtec Corp. on Nov. 11 established a price of $14.68 on a previously announced secondary offering of more than 4.8 million shares of its common stock. The shares represent 11.1% of the total number outstanding. They were being offered by Charlesbank Equity Fund II, Vestar Equity Partners, and Vestar Capital Partners. Wabtec shares traded as high as $15.22 on Nov. 11. During the 52 prior weeks, they ranged between a low of $10.16 and a high of $18.44.
CSX cutting three layers of managementAs part of a streamlining process that will reduce its layers of management "from 11 to no more than eight," CSX announced Nov. 10 that it will eliminate 800 to 1,000 non-union positions. "These reductions will be made over the next six months through a structured process, one layer at a time, beginning at the top," said a CSX statement. "Outplacement services and benefits will be provided to those who do not have a place in the redesigned organization. The estimated cost of the program is expected to be in the range of $60 million to $80 million, most of which will be recognized over the next two quarters. The full effect of the savings will be realized mid next year."
CSX Chairman, President, and CEO Michael J. Ward said: "Our goal is to create smaller, more responsive, and streamlined organizations focused on driving operating income up and better realizing our full potential. This effort will allow us to deliver stronger results more quickly."
"Despite tremendous successes in growing our revenues over the past three years, I am not satisfied with our efforts to control costs and improve productivity. The initiative announced today will result in broad changes in the way we do business," said Ward.
In a letter to employees last summer, Ward said organizational changes were on the way (RA, August, p. 12). "We have disappointed out customers and shareholders," he said. "Most of all we have disappointed ourselves." In a letter that closely followed Ward’s, Executive Vice President and Chief Operating Office Al Crown described the reorganization plan and the reasoning behind it: "Too many layers of management built up after the Conrail integration have been calling ‘audibles,’ to use a football phrase," said Crown. "The habit of repeatedly making ad hoc changes to the [operating] plan stuck with us after our Conrail service recovery. That process just isn’t working in today’s operating environment. . . . We cannot continue our old ways."
Crown is no longer with CSX. In September, Ward announced that Crown was leaving the company. Ward assumed Crown’s duties as chief operating officer.
KCS will dedicate Jackson TransLoad CenterKansas City Southern will officially mark completion of the first two of five construction and operational phases of its Jackson TransLoad Center in Richland, Miss., on Nov. 11. The 55-acre TLC, located at 187 Transload Drive, just south of Jackson on Old Highway 49, is strategically located midway between Dallas, Tex. and Atlanta, Ga., and between Memphis, Tenn., and the Gulf of Mexico. It extends KCS’s reach to non-rail served shippers, the railroad said in a statement. The facility is owned by KCS and operated by Kinder Morgan Materials Services.
Phases I and II of the Jackson TLC were completed over the past 18 months. Features include track capacity for 70 car spots, 15 acres of outside storage, pavement, lighting, a truck scale, convenient access to Interstates 20 and 55, and the ability to handle commodities ranging from bulk plastics and food products to clay, forest products, and steel. KCS projects the facility will handle 1,500 cars in 2003. With the completion of Phases III, IV, and V, business levels are projected to increase to 3,000 cars annually by 2006. KMMS will ultimately employ 12 people directly and create an additional 15 to 25 truck-driving jobs.
UP to step up speed limits in TexasFollowing recent track improvements, Union Pacific will begin boosting train speeds on two Smithville, Tex., lines this month.
Current 15-mph operation on UP's line across Highway 95 will be raised to 30 mph. And operation on the line running across Marburger and Taylor streets will increase from 20 mph to 40 mph. Speeds will increase 5 mph each week, starting Nov. 14, until the new limits are reached on Nov. 28.
UP has raised train speeds through several communities recently, after making necessary highway-rail grade crossing signal modifications. The changes allow more efficient operation and lessen motorist delays.
French engineering group buys PandrolPandrol, which makes rail-fastening products at plants in 11 countries, has been sold to the French engineering group Delachaux S.A., for $277 million. The seller is the investment trust and buyout specialist Candover, which acquired Pandrol and two other companies from Charter plc in 1999. Candover said the transaction is subject to approval by competition authorities in Britain, France, and Spain.
Pandrol employs 636 people offers its products to 98 markets worldwide. "Since Candover acquired the business, Pandrol has consolidated its position as the global leader in resilient rail fastenings," said Candover Managing Director Colin Buffin. "As part of Delachaux, it will be able to capitalize on its market-leading position and take full advantage of further growth opportunities."
NS-BLE agreement continues worker bonusesNorfolk Southern and the Brotherhood of Locomotives announced Nov. 7 that they have reached a new agreement, with terms through 2009, that will continue to offer the union members bonuses on the same corporate earnings basis that determines management bonuses. The bonuses were first offered in 1999. The new agreement also includes wage increases in 2005 and 2007, enhancements to the union’s 401k plan, and incentive pay for weekend/holiday work.
"By resolving contract issues now, we will be able to focus our combined energies on improving operating efficiency and customer service on the railroad," said Norfolk Southern Senior Vice President-Administration Jim Hixon. BLE General Chairmen R. C. Wallace, L. W. Sykes, and W. E. Knight also praised the agreement. "We want to take the lead in helping NS become more customer-focused and more successful," said Wallace. "We expect to show results that will trigger even higher bonus payments."
CN builds on boxcar programCN is constructing 100 new Plate F boxcars for transporting high-quality paper products at its long-dormant Transcona Shops complex in Winnipeg, and will construct a second series of 100 boxcars beginning in first-quarter 2004.
Each car is 58 feet long, 17 feet high and 10 feet, 8 inches wide. Empty weight is 73,600 pounds. Fully loaded, each car weighs 286,000 pounds. Construction of the cars, which is being handled by 140 CN employees, began in September, and the first 100-unit batch will be completed by the end of December. The final 100-car batch will be completed by April, 2004. These will be the final cars constructed under this program, as CN’s fleet of these particular cars "will be sufficient to meet customer needs," CN said.
"This is the first car construction program at CN’s Transcona shops in several years," said CN Vice-President Engineering, Mechanical and Supply Management Sameh Fahmy. "Our employees rose to the challenge and will bring the first 100 cars into service on time and on budget. Consequently, CN decided to build the second 100-car batch needed to bring this fleet up to the required size, on the same assembly line in Transcona."
CN commemorated the role played by the late Terry Smith in bringing the construction project to Transcona. Smith, who was Shops Superintendent at the time of his death in March of this year, "developed a convincing case that showed that this work should be done at Transcona, instead of being contracted out to an outside company," said Fahmy. "These cars will be a lasting legacy to his memory and to the contribution he made to CN and Transcona Shops."
NS looks to a LEADERNorfolk Southern, assisted by a $615,000 Federal Railroad Administration research grant, will be conducting an 18-month pilot of New York Air Brake Corp.’s LEADER® (Locomotive Engineer Assist Display and Event Recorder) system, which helps locomotive engineers optimize train handling to increase fuel efficiency and improve scheduling and safety.
GE Transportation Systems is a partner in the pilot project. LEADER will be installed on 15 Norfolk Southern GETS Dash 9 locomotives equipped with GETS’s LocoComm® technology, an onboard communications management platform that interfaces in real time with locomotive control and trainline systems to communicate with GETS-offered information and tracking services. The locomotives will be assigned to trains operating over the 104-mile Winston-Salem line, which runs from Roanoke, Va., to Belews Creek, N.C.
LEADER, according to NYAB, "works by continuously logging the operating state of the train in its memory. Over a number of trips, the software accounts for all energy used in moving the train and creates a statistical profile of the operation. That data is then used to develop the highest energy-efficient trip, called a "Golden Run," and help engineers repeat it on subsequent trips by prompting them in real-time to adjust locomotive throttle and brakes for optimal performance."
"LEADER has the potential to be the next major advance in train handling," said NS Senior Vice President-Operations Planning and Support John Samuels, "Not only is there the opportunity to achieve significant fuel savings—a real benefit to the environment and potentially to our bottom line—but also to improve safety."
"We are confident the LEADER pilot program will demonstrate its ability to yield significant fuel savings as well as improve train handling methods, contributing to a safer environment," said NYAB Senior Vice President-Marketing and Sales Marshall Beck. "We appreciate the Federal Railroad Administration’s funding support. The partnership with GE Transportation Systems also represents an important step in realizing the technology’s potential."
AAR sees October traffic as good omen for the economyOctober was "by far the top month in history for U.S. intermodal rail traffic," according to Association of American Railroads Vice President Craig F. Rockey. "October also marked the first month since April 2003, and only the third month so far this year, in which U.S. rail carload volumes were up compared with last year," said Rockey, adding: "These volumes provide optimism that the North American economy may be starting to shake loose from the doldrums."
The AAR reported on Nov. 6 that October carload traffic rose 1.6% (26,523 carloads) while intermodal volume was up 18.1% (161,011 units) compared with October 2002. Year-over-year intermodal comparisons were influenced by the 10-day West Coast port strike last October, said Rockey, but this October would still have been a record-breaker because "five of the top six weekly totals in history occurred in October 2003."
Thirteen of the 19 major commodity categories posted carload increases in October, led by coke (46.6%), crushed stone and gravel (7.8%), chemicals (4.8%), and grain (5.1%). There were decreases in carloadings of metallic ores (15.3%), coal (0.7%), and motor vehicles and equipment (1.3%).
In Canada, October carload traffic rose 6.5% and intermodal volume was up 2.4% compared with October 2002.
Mexico’s largest railroad, TFM, reported that originated carload traffic in October dropped 8.0% from the same month last year, and intermodal originations were down 9.3%.
Portec seeks $29 million in IPOPittsburgh-based Portec Rail Products, Inc. filed with the Securities and Exchange Commission Nov. 6 to raise $29 million in an initial public offering. The company plans to use the proceeds to pay off debt, for expansion, and for general corporate purposes. Shares would be listed on Nasdaq under the symbol PRPX. Portec earned net income of $2.8 million in this year’s first nine months, up more than 50% from the same period last year.
Norfolk Southern wins coal rate caseIn a closely watched maximum rate case, the Surface Transportation Board has ruled in Norfolk Southern’s favor. STB announced Nov. 6 that NS coal rates challenged by the Duke Energy Corp. "had not been found to be unreasonable under the Board’s ‘stand-alone cost’ [SAC] test." At the same time, the Board "expressed concern over the size of the rate increases involved and stated that, if Duke wishes to pursue the matter further, the Board would look at whether NS should be required to phase in those rate increases over some period of time."
The SAC rate review methodology used by the STB is designed to determine the lowest cost at which a hypothetical, efficient "stand-alone railroad" could provide the transportation service required by the complaining shipper. Duke had challenged NS rates for moving coal from Virginia, West Virginia, and Kentucky to four electricity generating plants in North Carolina. STB noted that this was "the first modern SAC case east of the Mississippi River."
In its own announcement of the STB’s action, NS said it "will comment further after it has had an opportunity to review the decision, including the invitation the Board extended to Duke Energy to invoke, if Duke Energy chooses, the phase-in constraints of the Constrained Market Pricing Guidelines."
Congress hears from Amtrak board nomineesIn testimony before the Senate Committee on Commerce, Science, and Transportation earlier today, President George W. Bush’s three nominees to the Amtrak board of directors gave some indication of where they stand on such contentious issues as an adequate funding level, maintaining a national passenger train network, privatization, and infrastructure/operations separation schemes that have been advanced by the Administration.
According to the National Association of Railroad Passengers, the three—Robert L. Crandall, former chairman and CEO of AMR Corp. and American Airlines; Louis S. Thompson, former Railways Advisor at The World Bank and a former Federal Railroad Administration official; and Floyd Hall, who ran K-Mart from 1995-2001—"support a national rail passenger system, said the U.S. could afford it and that U.S. rail passenger service would never be profitable, but also said Congress and the Administration should agree on Amtrak's mission and then provide adequate funding." The role of Amtrak’s board should be "to insure that those funds are used efficiently."
Thompson, whose nomination is reportedly opposed by rail labor except for the United Transportation Union, said it was "too early to decide what ‘reform’ might mean—the answer may depend on what the ‘mission’ decision is." Asked about privatization, he said, "I believe we need to make Amtrak stronger and more effective. I don't think privatizing Amtrak would do that. Could you involve the private sector more effectively? I believe so." Asked what level of funding Amtrak requires, Thompson said it was a case of "pay me now or pay me later. Amtrak might be able to scrape by at $1.0 billion, but this would defer essential capital investments and just create a bigger problem later."
"A sound U.S. transportation policy is an important task," said Crandall. "Trains and planes are more complementary than competitive. If New York-Washington trains ran consistently at 125 mph or more, the required investment would produce other benefits. You wouldn't have to further develop LaGuardia and Reagan National Airports; you'll save some money on airports and allow planes to be used more efficiently. . . . Unhappily, for whatever reason, our country doesn't seem to engage in that kind of transportation planning." Crandall and Hall, according to NARP, "said they did not know enough yet to comment on Amtrak's dollar needs."
As has been his customary approach, Committee Chairman John McCain (R.-Ariz.) started the hearing with an opening salvo aimed at Amtrak’s previous management, its long-distance trains, and the amount of federal funding it has received since its 1971 startup, which he considers excessive. Sen. Ernest F. Hollings (D.-S.C.) responded to McCain by saying "Yes, Amtrak has received $26 billion over 32 years, but just since 9/11 the airlines have received $30 billion. The defense rests."
"Every one of you have said you want to make Amtrak work," Sen. Kay Bailey Hutchison (R.-Tex.) told the nominees. "My motto has been ‘national or nothing.’ I believe David Gunn is trying to keep our national system intact. My concern is if we don't save it, we will lose it for good." Hutchison also said that Amtrak funding remained stuck at $900 million in the House-Senate conference committee on FY04 appropriations. That’s the level that the House approved. The Senate has approved $1.35 billion, a level that Gunn says is barely enough to survive. $900 million, he maintains, will soon force Amtrak to shut down.
Tucson decisively votes down light railNearly two-thirds of Tucson, Ariz., voters rejected a transportation plan (Proposition 201) that included construction of a 13-mile light rail system, and an increase in sales taxes (Proposition 200) to pay for it. A year and a half ago, voters turned down an all-road improvement plan by an even larger majority.
Denver RTD picks up Lone Tree branchResidents of the Denver suburb Lone Tree voted to be annexed to the Regional Transportation District. They also approved a six-tenths of a cent sales tax to pay for bus service that could lead to light rail. Buses will initially connect Lone Tree and the Denver light rail system. A later LRT extension to Lone Tree would probably include stops at the Sky Ridge Medical Center, Lone Tree town center, and Ridgegate Parkway.
Light rail regains ground in HawaiiHonolulu’s city council voted unanimously on Nov. 5 to conduct a study to determine its position on a 22-mile, $2.6 billion light rail line recommended by a governor’s task force on Oct. 27. It was noted that groundwork for the new study was laid in a fixed-rail study 11 years ago. The proposed line would connect west Oahu and downtown Honolulu.
UP nets $610 million from Overnite offeringUnion Pacific came out well from the IPO (initial public offering) of its Overnite trucking business. "With the equity sale, exercise of the underwriters’ over-allotment option, and the $128 million dividend payable from Overnite, Union Pacific will receive proceeds totaling approximately $610 million after underwriting discounts and estimated expenses," the company said. Offered at $19–the high end of pre-sale estimates–Overnite shares rose as high as $23 in spirited trading. UP plans to use the proceeds for debt reduction.
TFM tax rebate withstands challengeGrupo TMM announced Nov.5 that Mexico’s Federal Court of the First Circuit had rejected a request from the Tax Attorney of the Mexican Government to review a tax rebate to the Grupo TFM railroad, of which TMM is a principal owner. The disputed VAT (value added tax) rebate, which could be worth nearly $1 billion including interest, was restored to TFM by the Fiscal Court in August.
CSX's chief commercial officer to retireCSX Corp. Chairman, President, and CEO Michael J. Ward has announced that P. Michael Giftos, executive vice president and chief commercial officer, will retire effective March 31, 2004. Clarence W. Gooden, the Class I's senior vice president-Merchandise Service Group, will assume Giftos's responsibilities.
"Mike has led us to marketing and sales excellence, enabling CSX Transportation to achieve vitally important revenue growth in a challenging business environment," Ward said. "Under Clarence's leadership, I am confident that CSXT will continue to lead in modal conversions and in capturing price and yield, building upon Mike's success in this important area."
A 29-year railroad veteran, Giftos served as CSX's chief legal officer for more than a decade before becoming chief commercial officer in April 2000.
Gooden joined CSX in 1970. He has held a variety of senior management positions, including president of CSX Intermodal, and vice president-transportation field operations, vice president-system transportation, and senior vice president-coal at CSXT.
BNSF ’04 spending will nudge $2 billionBurlington Northern and Santa Fe expects to invest $1.95 billion in capital improvements in 2004, compared with a projected $1.725 billion this year. Accelerated locomotive acquisitions—350 units—account for the increase. For 2005, BNSF forecasts capital spending of $1.45 billion. By comparison, BNSF invested $2.265 billion in 1999, $1.763 billion in 2000, $1.608 billion in 2001, and $1.505 billion in 2002.
Trinity railcar operating profit reboundsThe third quarter of 2003 was turnaround time for Trinity industries’ rail group. "Our North American railcar shipments increased 45% from the second quarter to approximately 2,200 units," said Trinity Chairman, President, and CEO Timothy R. Wallace. "Our North American railcar market share doubled to 46% as our backlog increased 9%. The most positive sign of a recovery was the fact that our railcar group made its first operating profit in nine quarters. The capital we have committed to our railcar leasing business is beginning to be reflected in an increase in the year-over-year operating profit for our leasing business." Wallace added that rail business gains "were partially offset by the decrease in profit by our construction related businesses." Trinity announced on Nov. 5 that its third quarter net income was $1.8 million, on revenues of $363.4 million, compared with a net of $6.2 million, on revenues of $387.6 million, in the same quarter last year.
San Francisco voters approve transit measureVoters in San Francisco County have overwhelmingly approved extension of a half-cent transportation sales tax to pay for a new 30-year, $2.35 billion program of transit-related improvements. BART and Caltrain are among agencies that will benefit from the Proposition K initiative.
The vote, on Nov. 4, was 75% for, 25% against. It extends a tax approved in 1989 and due to expire in 2010. That initiative permitted the San Francisco County Transportation Authority to spend up to $160 million a year for approved projects and issue up to $742 million in bonds. Proposition K, covering the new 30-year plan, would allow the Transportation Authority to spend up to $485.2 million a year and issue up to $1.88 billion in bonds.
Proposition K calls for around half of the sales tax income to go for street improvements and Muni buses. Other earmarks are $100 million for BART station access, safety, and capacity improvements; the local match for the Caltrain Downtown Extension and Transbay Terminal; and $110 million for Bus Rapid Transit.
RailAmerica spins off San Pedro & SouthwesternThe San Pedro & Southwestern Railroad, a 67.9-mile short line connecting the Union Pacific Chicago-Los Angeles main line at Benson, Ariz., to Paul Spur, Ariz. (near Douglas), has been sold by RailAmerica to Arizona Railroad Group, an investment firm headed by David Parkinson, the founder and former chairman of short lines Arizona & California, California Northern, and Puget Sound & Pacific. Terms of the sale were not disclosed.
SPSR’s chief commodities are agricultural chemicals and copper-related products. The railroad’s headquarters and marketing offices are located in Scottsdale, Ariz., with operations and customer service based in Benson. Its infrastructure is capable of operating 286,000-pound cars. Parkinson said SPSR "has some significant upside potential . . . . We will be focusing on rail and industrial development opportunities in southeastern Arizona." No train crew or office staff changes are planned.
BNSF outsources car-repair billingBurlington Northern and Santa Fe has entered into an agreement with Greenbrier Management Services, a division of The Greenbrier Companies, for management of freight car repair billing. The agreement covers both payables and receivables totaling about 8,000 bills annually. GMS will generate and distribute invoices for repairs performed by BNSF shops to freight cars owned by other parties, audit repair invoices issued to BNSF by other parties, resolve exceptions or disputes, and provide accounting and management reports to BNSF. Terms of the contract were not disclosed.
Voters approve Houston LRT expansion planBy a narrow margin, Houston-area voters approved a $7.5 billion Metropolitan Transit Authority of Harris County plan to expand the city’s starter light rail system, which is scheduled to begin service in January 2004, into a regional network.
The vote on the "Metro Solutions" program, according to a report in today’s Houston Chronicle, was 52% yes, 48% no. The centerpiece of the plan is adding 73 more miles to the LRT system by 2025. Approved was a $640 million bond issue that will accelerate construction of the next 22 miles of LRT, add extensions to the 7.5-mile Main Street starter system between downtown Houston and Reliant Park, add 44 new bus routes, double HOV lanes, and extend Metro’s participation in local road projects by five years.
Federal matching funds will be needed. In an interesting twist, two legislators who had fought in the past to kill light rail—U.S. Rep. John Culberson and House Majority Leader Tom DeLay, both Republicans—vowed to go after federal dollars on behalf of Metro if voters endorsed the plan. "This vote does reflect the desperation of Houstonians for immediate traffic relief," said Culberson. "The closeness reflects deep flaws in Metro's plan." But, he added, "My job now is to move forward with this new instruction from the voters. I've got my marching orders."
Voters were targeted by campaigns conducted by the anti-rail group Texans for True Mobility and the pro-rail Citizens for Public Transportation, which together spent almost $3 million. The transit authority spent another $3 million to advertise Metro Solutions and promote LRT.
According to the Chronicle, the Houston region is the only one of the top 10 populated U.S. metropolitan areas without rail, "a topic that has been debated dating back to a 1973 failed rapid-transit referendum. Houston boomed as a car-oriented city but is now the place in America where residents drive the most miles per capita per day, pay the third highest transportation costs per family, breathe some of the most polluted air, and endure traffic congestion ranking in the top 15. Many voters said it’s time for a change."
CPR again wins Chrysler Gold awardFor the fourth consecutive year, Canadian Pacific has won the Chrysler Group Gold Award for transportation excellence. "CPR has demonstrated the ability to partner with us in pursuit of significant improvements in cost, quality, and delivery time," said the Chrysler Group’s director of logistics, Edward T. Sprock. In June, CPR won a five-year extension of its contract to move finished Chrysler Group vehicles within Canada, from Canada to the U. S. via Chicago, and from the U.S. to western and eastern Canada via Chicago and Albany, N.Y.
M ajor coal car order for Johnstown AmericaAmerican Electric Power has placed an order with Johnstown America Corp. for 1,250 BethGon® II aluminum coal gondola cars. The order, says JA, is its largest this year. Of the cars currently under construction, 875 will be used in Powder River Basin service, operated by Burlington Northern and Santa Fe, while the remaining 375 cars will be used to replace older equipment in AEP’s fleet.
The BethGon II is an updated version of the BethGon car, which JA says "is the most commonly used aluminum coal gondola car in western coal service." The aluminum BethGon, introduced in 1985, features lighter tare weight, higher cubic capacity, and "durability to meet the rigors of long-haul coal train service."
American Electric Power, headquartered in Columbus, Ohio, owns and operates more than 42,000 megawatts of generating capacity in the U.S. and select international markets. AEP is one of the largest electric utilities in the U.S., with almost five million customers linked to AEP’s 11-state electricity transmission and distribution grid.
White House names STB nomineesThe Surface Transportation Board has announced that President George W. Bush has named two nominees to fill the seats that have been vacant on the STB, to bring the total to three commissioners, including Chairman Roger Nober.
Bush intends to nominate William D. Buttrey to be a member of the STB, for the remainder of a five-year term expiring Dec. 31, 2007. Buttrey currently serves as an independent consultant in Memphis, Tenn. Previously, he served as a senior government affairs representative for Federal Express Corp. Earlier in his career, he served as Committee Counsel for the U.S. Senate Aviation Subcommittee. He holds a bachelor’s degree from the Tennessee Technological University and a J.D. from Memphis State University School of Law.
The second nomination is Francis P. Mulvey, also as an STB member, for a five-year term expiring Dec. 31, 2008. Mulvey currently serves as Democratic Staff Director for the House Committee on Transportation and Infrastructure Railroad Subcommittee. Previously he served as Deputy Assistant Inspector General for Rail, Transit, and Special Programs for the U.S. Department of Transportation. Prior to this, Mulvey served as Assistant Director for the U.S. General Accounting Office. He holds a bachelor’s degree from New York University, a master’s degree from the University of California at Berkeley, and a Ph.D. from Washington State University.
Tex-Mex assigns remote control to BLEThe Brotherhood of Locomotive Engineers, a bitter opponent of locomotive remote control operations as practiced by rival United Transportation Union and the Class I carriers, says it has reached its own remote control agreement with the 455-mile Texas Mexican. In an announcement Oct. 31, BLE said the "landmark" agreement "allows for the safe implementation of remote control operations and provides major pay increases." Assignments will be given to both engineers (lead remote operator) and conductors (remote operator). "The operators will have the flexibility to operate in the traditional mode when it makes sense to do so and will alleviate some of the safety concerns that we have with the remote control operations in place on the Class I’s," said BLE Tex-Mex General Chairman George Leyendecker.
UBS raises three Class I’s to "buy"UBS Warburg analyst Rick Paterson, in a research report Nov. 3, said railroad performance in 2004 was almost bound to be better than in 2003 and he put out "buy" recommendations on the shares of Norfolk Southern, Union Pacific, and CSX. Paterson kept Burlington Northern Santa Fe shares in "neutral" because of traffic mix and pricing concerns and capital spending issues, though he raised the railroad’s price target. Shares of NS, UP, and CSX rose during the day; BNSF stock prices were down slightly.