May 2006
For Schneider, CSX, and KCS, a new intermodal initiativeJust in time for the peak traffic season, Schneider National and partners CSX Intermodal, Kansas City Southern, and the Marion, Ohio, Industrial Center will begin offering Ohio Valley shippers dedicated intermodal service to Kansas City, Mo. The service, which starts June 5, will bypass Chicago and provide connections to California and the Southwest. It's expected to link Dallas and Mexico by year's end, and possibly the Pacific Northwest.
“Customers have been searching for an Ohio-based intermodal service solution,” said Scott Arves, Schneider National's president of transportation, who noted that it “will enable us to provide an exciting range of service to our Ohio Valley customers, shorten the transit time to the West Coast, and cut costs in their supply chains.”
Four trains will run the 700 miles to and from Marion and Kansas City, with departures from each city six days a week. Schneider, which will operate the ramp and drayage, said that the primary offering will be in containers, but trailer service also will be available.
MotivePower to supply 16 "clean-diesel" locos to Pacific Harbor LinePacific Harbor Line, Inc., (PHL) has awarded Wabtec Corp. subsidiary MotivePower, Inc., a $21 million contract to remanufacture 14 six-axle and two four-axle locomotives for switching service at the Ports of Long Beach and Los Angeles. Equipped with new 2,000 h.p. diesel engines from Detroit Diesel and electronic control equipment from Q-Tron (another Wabtec subsidiary), the units will exceed U.S. Environmental Protection Agency Tier 2 emissions standards. PHL will cover one-half of the units' cost, with the ports and the South Coast Air Quality Management District sharing the balance.
Slated for delivery in 2007, the units are part of a “No Net Increase” program to reduce port-related emission sources (RA, October 2005, p. 18).
Niagara Frontier taps Ansaldobreda for LRV overhaulNiagara Frontier Transportation Authority has awarded Ansaldobreda, Inc., a $32.8 million contract to rebuild its 27 light rail vehicles. Work will begin this fall on the first group of four cars, and is expected to continue until 2010. The cars will be equipped with modern communications and control technology, including an electronic passenger information and counting system and propulsion control logic. A majority of the work, which will extend vehicle life to 2035, will be performed at Super Steel Products Corp in Schenectady, N.Y.
1,000th Evolution® unit going to BNSFSeventeen months after starting production of the Evolution® Series locomotive, General Electric is preparing to ship the 1,000th Evolution unit to BNSF. The milestone locomotive, with the road number 5972, is one of nearly 750 ordered by the railroad.
GE says it took seven years and $250 million to develop the Evolution locomotive, which cuts fuel costs by 3-5% and reduces regulated emissions by more than 40% compared to GE's previous generation of power. About 700 of the 850 locomotives that GE expects to build this year will be Evolution units.
Houston METRO selects HDR/S.R. BeardHouston METRO is awarding a two-year contract to HDR/S. R. Beard & Associates to serve as general planning consultants for M??p??E?B$2 billion program of transit improvements for the Houston metropolitan area. The program includes expansion of the METROrail light rail line, new bus rapid transit lines in four corridors, commuter rail service, and intermodal facilities.
“The time is coming for ECP brakes”South Africa's Spoornet railway has ordered New York Air Brake electronically controlled pneumatic (ECP) brakes and Wire DP distributed power for 110 new electric locomotives. The order, announced May 22, is in addition to the previously announced fleet conversion to ECP braking. The new locomotives will operate on Spoornet's 385-mile export coal line from the mines to the port of Richards Bay.
"The time is coming for ECP brakes,” said Marshall Beck, NYAB senior vice president of marketing and sales. “The EP-60 system delivers fuel savings in the range of 3-4%, better train handling and safety by shortening stops, and lower maintenance costs by reducing intrain forces and the resulting wear and tear on cars. Spoornet's leadership may convince the heavy-haul railway market to invest in this state-of-the-art technology.”
Spoornet, which is operated by the government-owned logistics company Transnet, is the world's first railroad to convert an entire segment of its operation to ECP brakes.
New York plans $25 million blitz on railcar graffitiA new type of graffiti artist has surfaced in New York, leaving indelible marks etched on subway car windows with blades or acid. The Metropolitan Transportation Authority has been quick to respond, budgeting $25 million to replace and maintain windows in around 5,000 cars that are vulnerable to the new attack weapons. The newest of New York City Transit's 6,200 cars already have windows coated with a layer of polyester called Mylar that can be easily removed. A similar protective coating is planned for the entire fleet. The budget, which must be approved later this year, includes $10 million for initial replacements and $5 million a year for three years to remove graffiti-marred coatings.
NS's David Brown moves to CSXTCSX Transportation has again dipped into rival Norfolk Southern's talent pool for a senior management officer. CSXT announced that it has named David A. Brown, 47, formerly vice president of strategic planning for NS, as vice president and chief transportation officer, with responsibility for the operation of 1,300 trains a day over CSXT's 21,000-mile network.
“David will provide the leadership and experience to continue the significant progress our team has made in safety, reliability, and customer service,” said Tony Ingram, CSXT's executive vice president and chief operating officer. Ingram was Norfolk Southern's senior vice president, transportation and mechanical, before joining CSXT in March 2004.
Bombardier, Siemens wins German order Bombardier Transportation and its consortium partner, Siemens, will supply an additional 14 ET 425.2 electric multiple units (EMUs) to DB Regio AB in Germany at an estimated cost of $81 million. Bombardier will build nine of the trains and Siemens, five. According to Bombardier, a total of 236 EMUs from the ET series have been delivered to Germany since March 2000.
NATK revenues surge in first quarterNorth American Technologies Group Inc. (NATK), which manufactures plastic crossties through its subsidiary TieTek, has reported revenues totaling $1.92 million for the first quarter of 2006 compared with revenues of $0.24 million for the last quarter of 2005. The company cut its operating loss to $2.44 million in this year's quarter from $5.18 million in the prior period.
NATK attributed the improvement to capital investments in plant and machinery, which increased production in the first quarter plus the application of a surcharge in its crosstie prices to reflect the increased cost of plastic.
NATK CEO Neal Kaufman said the company entered the second quarter with both lines busy, "improved terms in our agreement with our largest customer [Union Pacific], a strengthened balance sheet, and an improved management team.�
Alstom posts first profit in five yearsStrong demand in its rail transport and power generation businesses led Alstom to its first profit in five years in the fiscal year ended March 31, the company announced in Paris. Net income rose to $228 million from a loss of $804 million the prior year. Operating profit increased 58% to $956 million on revenues that were up 4% to $17.2 billion. Chairman and CEO Patrick Kron commented, “the group is now well-placed to take full advantage of its broad technology offering and its strong positions in infrastructure markets with growth potential.�
Safety award winners announcedFor the 17th consecutive year, Norfolk Southern has taken home the top E.H. Harriman Memorial Award for employee safety. The award, based on the lowest casualty rates per 200,000 employee-hours worked, takes into account the volume of work performed and the number of fatalities, injuries, and occupational illnesses, which are documented and confirmed by the Federal Railroad Administration. Eleven other freight and passenger railroads also received Harriman awards.
As part of Group A--line-haul railroads whose employees worked 15 million employee-hours or more during 2005--NS was joined by BNSF Railway, which received the silver award, and CSX Transportation, which took the bronze.
For railroads with 4-15 million employee-hours, Canadian Pacific was presented the gold, a step-up from its silver award last year, while Kansas City Southern received the silver, and Metra (Chicago), the bronze.
Florida East Coast Railway was presented the gold medal in Group C--railroads with fewer than 4 million employee-hours worked. The silver went to Pan Am Railways and the bronze to Elgin, Joliet & Eastern.
For switching and terminal companies, the Terminal Railroad Association of St. Louis won its fourth consecutive gold. Conrail was awarded the silver and the Belt Railway Company of Chicago received the bronze.
In addition, four railroad were presented special certificates of commendation for “continuous improvement in safety performance.� They are: BNSF, Conrail, Metra, and Texas Mexican Railway (a KCS subsidiary).
The winners were selected by a committee of transportation industry professionals.
In related news, Robert Coronado, a BNSF maintenance-of-way safety assistant, has won the 2005 Harold F. Hammond Award for “demonstrating outstanding safety achievement.� A 34-year rail industry veteran, Coronado heads up BNSF's engineering training in Southern California and has developed the on-track, safety-training module used across the BNSF network. He was instrumental in producing the “Operation: Track Awareness� training video, as well. In Coronado's busy, 100-trains-a-day territory, only one worker was injured in 2005 and all are injury-free, so far, this year.
Also honored with certificates of commendation for “their work enhancing safety� are: Paul Servansky, an Amtrak track inspector, based in Lancaster, Pa.; Dale Bobby, Canadian Pacific track inspector, St. Paul, Minn.; James Jorgensen, Jr., Conrail industrial car inspector, Detroit, Mich.; Jerome Sydnor, CSX machinist, Huntington, W.Va.; Raul Martinez, KCS engineer, Laredo, Tex.; Duane Parker, Montana Rail Link locomotive engineer, Missoula, Mont.; R. Floyd Morton, NS flagging foreman, Athens, Tenn.; and David Gilbert, UP machinist, North Platte, Neb.
Caterpillar buying Progress Rail for $1 billionCaterpillar, Inc., of Peoria, lll. announced today that it plans to buy Progress Rail Services, Inc., which is based in Albertville, Ala. for $1 billion in cash, stock and assumption of debt.
Progress Rail, which provides remanufactured locomotive and railcar products and services with a work force of about 3,700, generated sales of $1.2 billion last year from its operations at more than 90 facilities in the U.S. Canada, and Mexico. Its majority owner is One Equity Partners, a private equity affiliate of J. P. Morgan Chase & Co., Inc. Caterpillar, with 2005 revenues of $36.3 billion, is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines.
The acquisition agreement calls for Caterpillar to pay Progress Rail’s owners $800 million in cash (53%) and Caterpillar stock (47%) and $200 million through the assumption of long-term debt. The transaction is expected to close by July 1.
“The rail aftermarket services business is a strong fit with our strategic direction and will leverage our remanufacturing capability,� said Caterpillar Chairman and CEO Jim Owens.
�By leveraging the world-class capabilities of Caterpillar within Progress Rail, the future is bright for our employees, our customers, and our business," said Progress Rail President and CEO William P. Ainsworth.
Watco sells A&O short line to Four RiversWatco Companies, Inc. of Pittsburg, Kans., announced that it has sold the 158-mile Appalachian & Ohio Railroad in West Virginia to Four Rivers Transportation, Inc. of Paducah, Ky. Details of the transaction were not disclosed. Four Rivers also operates the 300-mile Paducah & Louisville Railway, including several branch lines, between Paducah and Louisville, as well as the Evansville & Western between Mt. Vernon, Ind., and Oakville, Ill., a January 2006 start-up.
Privatized rail transit in Pennsylvania? Pennsylvania Gov. Ed Rendell says the state has been exploring the possibilities of turning over certain highway and rail transit operations to private entrepreneurs—a tried and tested way of bringing private sector money to the building, repair, and operation of public transportation infrastructure. The private interests would operate highways and transit on a for-profit basis and pay the state for the privilege of doing so.
Toll road privatizations similar to what Rendell has in mind have taken place recently in Illinois and Indiana
Rendell said a rail candidate for privatization would be the proposed Philadelphia-to-Reading Schuylkill Valley Metro railway.
He said a decision would not come for another year, and then would acquire legislative approval.
Short lines top Class I’s in traffic growthAtlanta-based RMI reports that its RailConnect Index® Quarterly Analysis of Traffic Statistics showed that short line carload traffic increased by 2.2% in the quarter ended March 25, exceeding the 1.8% growth reported by Class I railroads for the first 12 weeks of the year. The RailConnect Index includes traffic summaries of 14 commodity groups from 265 short line, regional, and terminal switching railroads.
Hearing set on NYMTA $5.44 billion '07 programThe Metropolitan Transportation Authority of New York has scheduled a hearing for June on proposals to spend $5.44 billion in FY 2007 on trains and buses, track, stations, and signaling and communications for New York City Transit, the Long Island and Metro-North commuter railroads, and its other properties.
The biggest single planned expenditure is $1.238 billion for new subway cars—620 B Division R160 cars and 47 A Division cars. The second biggest is $1.195 billion for NYCT signaling and communication projects, including $268 million for communications-based train control on the Flushing Line. NYCT is also down for $242.9 million in station improvements, $192 million for track, $136.6 million for line equipment, $65.5 million for power, $277 million for shops, and $32.7 million for yards.
LIRR spending will total $624.3 million, including $44.7 million for stations, $131.4 million for track, $137.6 million for line structures, $219.8 million for communications and signals, $10.9 million for shops and yards, and $79.9 million for power.
Metro-North expenditures will include $136.9 million for stations, $94.6 for track and structures, $4.2 million for communications and signals, $11.9 million for power, and $289 million for shops and yards.
MTA Capital Construction Co. is to get $300 million in FY 07 for work on the East Side Access project and $3 million for work on the Second Avenue Subway, both of which are multiyear, multi-billion-dollar undertakings.
Biggest CTA car order goes to BombardierThe Chicago Transit Authority has selected Bombardier Transportation to build up to 706 new rapid transit cars at a total cost of $933 million. The contract now being negotiated covers a base order of 206 cars plus an already-exercised first option for 200 additional cars. There are other options for 300 more cars. It's the biggest railcar order in the Chicago agency's history.
The new cars will be CTA's first to utilize a.c. propulsion. They will also be equipped with a leveling system to ensure that access to the car floor is even with the station platform during boarding. This is in accordance with requirements of the Americans With Disabilities Act.
The production schedule calls for 10 prototype cars to be delivered within 30 months of the notice to proceed. Delivery of production series cars is to begin nine months after testing.
William Spurr, president of Bombardier Transportation North America, commented: “We are honored to add Chicago to the list of major cities in North America that will be served by Bombardier rapid transit cars. This includes Boston, Mexico City, Montreal, New York, and Toronto.� Spurr noted that a fleet of 1,030 R142 Bombardier cars delivered to New York City has achieved an average Mean Distance Between Failure (MDBF) “well above� New York's original 100,000-mile requirement. “Bombardier fully intends to continue that tradition of high performance and reliability with this order for the CTA,� he said.
Bombardier picked for Montreal fleet renewal The Quebec government announced today that it had selected Bombardier to negotiate with STM, the Montreal transportation authority, for the supply of 386 rubber-tired railcars valued at more than C$1 billion for the Montreal Metro. Alstom was also interested in the order, but Quebec's economic development minister, Raymond Bachand, said Bombardier was the only qualified domestic supplier. The cars will be manufactured at Bombardier's plants in St. Bruno and La Pocatiere, Que.
Siemens wins Portland LRV orderPortland's Tri-County Metropolitan Transportation District of Oregon has awarded a $75 million order to Siemens Transportation Systems for 21 new S70 light rail vehicles, with an option for three additional vehicles. This will bring TriMet's total Siemens fleet to 126. Siemens will build the new order at its expanded plant in Sacramento, Calif., with the first delivery scheduled for 2008.
Albuquerque selects HDR as consultantHDR has been named program manager/general engineering consultant for the City of Albuquerque Modern Streetcar project, which envisions a system running along the Central Avenue corridor from Old Town to Nob Hill and from Central Avenue to the Albuquerque International Airport. Subconsultants include URS Corp. and LTK Engineering Services, Inc. Estimated to cost more than $200 million, the project is planned for opening in August 2009.
Rail business boosts Koppers revenuesKoppers Holdings says strong demand in the North American railroad market helped drive first quarter sales to $264.6 million, 14% higher than in the same quarter last year. The company's first quarter net loss of $6 million included $11.5 million in charges related mainly to an initial public offering, plant closures, and restructuring. Excluding those charges, net income was $5.5 million compared to $0.6 million in the 2005 quarter. President and CEO Walter W. Turner said sales and margins in the first quarter exceeded expectations, adding, “As we move forward in 2006, we continue to be optimistic about the growth opportunities that we see in our core aluminum and railroad markets.�
More “reasonable and equitable” fuel-surcharge practices needed, says ACCRail fuel surcharges greatly exceed actual fuel costs. That's what American Chemistry Council Senior Director-Distribution Tom Schick told the Surface Transportation Board at today's hearing on the subject. In 2005, fuel surcharges resulted in approximately $1 billion in unnecessary costs to rail customers, he added, referring to an analysis prepared for ACC by Snavely King Majoros O'Connor and Lee, Inc. He told STB that there are five main reasons for this:
* “Fuel surcharges often are not based on actual fuel consumption: Surcharges should be related to the amount of fuel consumed to provide a specific service to a shipper. Instead, they are based on other, often unrelated factors.
* “Fuel surcharges are inappropriately linked to freight rates: Rates are based on a wide range of competitive factors, and their differences are not relevant to the amount of fuel consumed for a particular trip.
* “Higher fuel costs are often covered by other means: Railroad fuel costs are captured through several mechanisms, such as the Rail Cost Adjustment Factor. Adding a fuel surcharge often means fuel costs are recovered more than once by the railroad. Such double jeopardy is unfair.
* “Some shippers are overcharged because others are not subject to fuel surcharges: Due to certain contracts or other circumstances, some railroads cannot impose a surcharge on some customers. But it is unfair and unreasonable to 'make up the difference' by unduly raising the charge for customers that do pay surcharges.
* “The reasonability of fuel surcharges can only be determined if there is complete data transparency: Railroads should report their actual fuels costs in a consistent, comprehensive, and uniform manner so that the STB, shippers, and Congress can accurately and readily determine the revenue obtained from surcharges.”
ACC's analysis recommends “replacing reliance on non-railroad measures of fuel costs with a simple process using the railroad's own measurement of fuel cost increases. The railroad have demonstrated they can measure railroad fuel cost increases [and] have decades of experience in recording the fuel cost component of the Rail Cost Adjustment Factor [and] the predecessor AAR rail cost index.”
?Significant inequities? found in fuel surchargesIn testimony prepared for a Surface Transportation Board hearing scheduled for May 11, the National Industrial Transportation League (NITL) says railroad fuel surcharges as now applied produce ?significant inequities.?
The NITL testimony, which runs to 93 pages with accompanying exhibits, makes these points, among others:
?[I]n addition to rail fuel surcharges, railroads and their customers also frequently use other structured methods of recovering changes in fuel costs, such as the Rail Cost Adjustment Factor (RCAF) established by the board?s predecessor agency the Interstate Commerce Commission, which contains a fuel component. In still other situations, a railroad and its customer may simply agree to utilize short-term contracts that reflect the market costs and conditions at the time, including the cost of fuel. A properly-structured fuel-recovery program should be flexible enough to accommodate a variety of such recovery mechanisms.
?Fuel surcharges should be cost-based and reasonably related to actual changes in the fuel expense incurred by a particular rail carrier or carriers in transporting a shipper?s goods from origin to destination. Among other things, this means that a fuel surcharge program should not be a profit-enhancing device for the carrier. This cost-based principle also means that fuel surcharge programs based upon a percentage of the transportation rate should be particularly scrutinized. Differences in rail rates do not closely correlate to differences in the fuel expense incurred in transporting goods for shippers. Especially at current levels, rate-based percentage fuel surcharges produce significant inequities. There are alternatives to rate-based fuel surcharge mechanisms which have been adopted in the marketplace.? (BNSF Railway recently switched to a mileage-based surcharge.)
On one issue, NITL was emphatic: ?It is not proper for a railroad to charge a portion of its customers an excess fuel charge in order to compensate for the fact that it does not charge another portion of its customers a formal ?fuel surcharge.? The primary reason that certain movements do not apply a surcharge is that both the railroad and the shipper have entered into a contract that precludes the application of these fuel surcharges. It is important to point out that the railroad agreed to this provision as part of an overall commercial decision, and the railroad should not attempt to make up for this shortfall in its fuel surcharges on other shippers.?
STB?s fuel surcharge hearing, which was announced March 14, has generated enormous interest. In addition to NITL, which represents a large number of shippers, the board will receive oral and written testimony from seven railroads, more than a dozen specialized shipper groups and trade associations, and five consultants. Montana Gov. Brian Sweitzer, who has been an outspoken defender of the rights of grain shippers and others, will introduce the proceeding.
Spitzer lists his transportation prioritiesNew York State Attorney General Eliot Spitzer has told the tri-state Regional Plan Association that if he is elected governor, he would have three main transportation priorities: the New York City Second Avenue Subway, the Long Island Rail Road East Side Access connection to Grand Central Terminal in Manhattan, and replacement of the vehicular Tappan Zee bridge across the Hudson River. As for a rail connection from downtown Manhattan to JFK International Airport, a favorite of current Gov. George E. Pataki, Spitzer said further study is needed on whether the benefits would justify the cost, which is estimated at $6 billion. Spitzer also indicated that he would support the NJ Transit-Port Authority of New York and New Jersey Access to the Region?s Core project to build two new rail tunnels under the Hudson River and a new station at 34th Street. He called ARC ?an important regional project that the Port Authority should help finance along with providing an equivalent level of funding to a comparable New York project of regional significance.?
Passenger rail safety goes belly-up?literallyThe Federal Railroad Administration plans to unveil tomorrow what it?s describing as ?the nation's first passenger rail emergency evacuation simulator.? Developed jointly with Ensco, the Falls Church, Va.-based supplier of railroad safety inspection and test technologies, the simulator can roll a passenger railcar 180 degrees (upside down) in 10-degree increments in about 2 minutes, simulating railcar positions after derailments or other rail incidents. FRA says it will be used to assist in evaluating interior design safety of intercity and commuter passenger rail cars.
FRA and Ensco are demonstrating the simulator at WMATA?s Metrorail Carmen E. Turner Maintenance and Training Facility in Landover, Md. WMATA plans to use the simulator to train fire, police, and other first responders on techniques and problems associated with rescuing passengers from a railcar that has rolled over on its side or upside down.
UP, BNSF to expand Powder River Basin capacity Union Pacific and BNSF Railway are adding another 40 miles to their joint Southern Powder River Basin line to help boost coal-hauling capacity in Wyoming. Their new two-year, $100 million project includes construction of a fourth main line over Logan Hill and extension of the third main line at SPRB's north end.
The third main line, whose first 14 miles were completed last spring, will pick up an additional 19 miles later this month when a separate construction program ends (See Breaking News, ?BNSF sets new PRB coal train record,? April 12). This Reno-Milepost 158 segment is expected to be fully operational in September.
Prompting these improvements were recent coal production and mine/railroad infrastructure studies conducted by CANAC, a Montreal-based railway-engineering firm. The goal: Meet projected demand for SPRB coal in 2007 through 2009, enabling the UP-BNSF joint line to handle 400 million-plus tons annually. In 1985, the joint line handled just 19 million tons of coal. By 2005, that number grew to 325 million tons.
UP agrees to Tie-Tek price adjustmentsTie-Tek, an NATK subsidiary that manufactures composite railroad crossties, announced today that customer Union Pacific has agreed to an amended sales agreement under which Tie-Tek can adjust its prices to reflect changes in raw material costs. Tie-Tek stock rose 44% to 26 cents a share in over-the-counter trading following the announcement. In other developments this year, the company said it had raised additional funds in January, brought in a new CEO, optimized operational processes, and ?focused on exceeding customer expectorations for crosstie quality and delivery.?
Tie-Tek announced last week that it had again received ISO 9001-2000 certification from the International Standards Organization. At that time, CEO Neal Kaufman commented, ?As result of executing our investment and operations improvement plan from December 2005, both production lines at our Marshall, Texas plant are producing quality composite crossties.?
ARI posts record profits, car deliveriesThe first three months of 2006 have been busy for American Railcar Industries, Inc. In January, the railcar manufacturer and rebuilder completed an Initial Public Offering (RA, January, p. 16), and later purchased one of its suppliers, Custom Steel, to increase component production. ARI President and CEO James J. Unger reported today that first-quarter results were ?very strong.?
The company delivered 1,980 cars?1,527 covered hoppers, 431 centerbeam platforms, and 433 tank cars, a 33.6% increase over the same period last year. Its backlog of undelivered cars grew 115% over first-quarter 2005, to 14,596.
While ARI's Marmaduke, Ark., tank car plant was damaged by a tornado in early April (See Breaking News, April 24), Unger said that with ?continued support from our customers and good insurance coverage, we look forward to continued strong performance for the remaining months of 2006.?
First-quarter net earnings attributable to common stock were $6.7 million, or $0.35 per share, and included charges of $3.6 million in stock due to the IPO. Revenues of $178.7 million were up 36.52% over 2005?s $130.9 million and a net loss attributable to common stock of $2.0 million or $0.18 per share. Preferred stock and substantially all debt were retired in first-quarter 2006 following the IPO.
Analysts surveyed by Thomson Financial had expected earnings of $0.40 a share on revenue of $175.1 million.
Railpower moves toward volume productionRailpower Technologies, Inc., says it ended this year's first quarter with firm orders for 162 locomotives and with 52 locomotives in various stages of production. This compared with an order book of 80 locomotives at the end of the first quarter of 2005.
?During the quarter, we were focused on recruiting/training our staff as well as implementing the procedures and systems required for volume production,? said Railpower President and CEO Jose Mathieu.
The company reported first-quarter sales revenue and other income of $3 million, expenses of $8.9 million, and a net loss of $8.7 million. In the comparable quarter last year, revenues were $0.3 million and the net loss was $5.3 million.
?Delays in the design of the third generation of the GG20B model hybrid yard switcher caused production delays,? said Mathieu, adding that design is now complete and the Generation III switcher has been put into service on Canadian Pacific Railway.
Mathieu said he expects the design for Railpower's production yard switcher to be completed in the second quarter. The first phases of production for a Union Pacific order are under way.
?Preparing our organization for large production runs was a necessary step to achieving our targets for the year,? said Mathieu. ?While these changes impacted our deliveries in the first quarter, we are on track to meet our delivery targets. We are targeting 10 to 15 deliveries in the second quarter, with deliveries ramping up in the third and fourth quarters.?
UP, EPA to run locomotive-emissions pilotTwo Union Pacific locomotives will soon undergo emissions-reduction testing at the U.S. Environmental Protection Agency's National Vehicle and Fuel Emissions Laboratory in Ann Arbor, Mich. The goal: To reduce byproducts of diesel-fuel combustion in older locomotives.
A 14-year-old, 3,800-hp SD60M will be equipped with MIRATECH Corp.'s oxidation catalysts that convert the exhaust's particulate matter into water and carbon dioxide. The Southwest Research Institute, based in San Antonio, Texas, has been selected to install the devices and verify just how much particulate matter is removed. Once completed, the locomotive will enter revenue service in the Los Angeles Basin for at least one year of evaluation.
A filter will be added to a 24-year-old 1,500-hp switcher to trap diesel-particulate matter using high-temperature silicon carbide blocks. As the exhaust gases containing the particles accumulate, the device periodically heats the carbon, causing it to ignite and burn off as water and carbon dioxide. The locomotive is slated to begin operating in Oakland, Calif., this September.
Look for the whole truth on coal, railroads urge FERCThe trains that deliver coal to utilities are an important part of the electricity supply chain, but they aren?t the whole story, the railroads have reminded the Federal Energy Regulatory Commission (FERC). In a letter dated May 3, the Association of American Railroads urged the FERC to hold a public workshop examining the whole supply chain. The AAR letter followed by one day a joint letter to the FERC from the American Public Power Association, the National Rural Electric Cooperative Association, and the Edison Electric Institute calling for a workshop on ?railroad coal-delivery challenges.?
The AAR urged the commission also to look at these other aspects of maintaining an adequate coal supply: ?Utility management of coal inventories. Patterns and consequences of heavy investment in gas-fired plants and its impact on companies that produce and transport coal. Unloading capacity at power plants. Coal producers? ability to meet rapidly increasing demand. Lack of adequate investment in transmission line capacity. Capacity of waterways to move coal. Impact of higher natural gas prices on coal demand.?
?It?s a complex, interconnected issue that involves the complete supply chain, from production to transportation to the receiving end,? AAR President and CEO Edward R. Hamberger told the FERC.
?The railroad industry is moving more coal than ever before,? added Hamberger, ?posting a record 415 million tons from the Powder River Basin alone in 2005. And 2006 is expected to set yet another record of about 450 million tons. Likewise, eastern coal deliveries during 2005 to utilities were up on the two major eastern railroads?6.3% from Norfolk Southern and 7% on CSX.?
Trinity keeps ?momentum? going in first quarterIn the first three months of the year, Trinity Industries booked 12,941 railcar orders--its highest quarterly volume since 1998--and delivered 6,164 cars, including more than 1,800 for its lease fleet. That fleet, now totaling some 26,000 cars, is ?a very important part of our ongoing strategy,? Trinity's Chairman, President, and CEO Timothy R. Wallace said during today's earnings announcement.
The "momentum established in 2005" helped Trinity post at least double-digit revenue growth in its Rail, Railcar Leasing and Management Services, Inland Barge, Construction Products, and Energy Equipment Groups, resulting in a "strong first quarter," Wallace reported.
For the Rail Group, revenues came in at $539.9 million, a rise of 24.29% over the same period last year. Operating profits of $57 million were five times higher than the year-earlier period's $8.8 million. The Railcar Leasing and Management Services Group saw revenues rise slightly to $56.3 million, up 7.24% over first-quarter 2005. The group's operating profit reached $17.6 million, a 29.41% increase over the year-ago period.
Car orders go from ?astonishing? to ?astounding?Economic Planning Associates, Inc. anticipates ?healthy levels of railcar demand? at least through 2011. Noting that orders ?exploded? in this year?s first quarter, EPA has raised its estimate for new car deliveries in 2006 to 76,000 from an earlier forecast of 73,750.
?While the 26,569 units ordered in last year?s fourth quarter were astonishing, the 35,991 cars and platforms ordered in the first quarter of this year were astounding,? said EPA.
The company?s new forecast sees car deliveries over the next five years ranging from 73,000 to 60,000 annually. ?Anticipated continued improvements in the revenues and profits of the rails and their major customers, along with still relatively modest interest rates, will serve to facilitate the decision to invest in rolling stock,? said the April report. EPA also said that carbuilders ?will benefit from the fact that component capacity constraints and sharply escalating material costs will, for the most part, be behind them.?
GWI?s North American operations thriveGenesee & Wyoming, Inc. (GWI) reports that its North American operations produced a 34.4% increase in revenues in the first quarter, to $113.0 million; a 47.8% increase in net income, to $12.6 million; a 54.7% increase in operating income to $22.1 million; and an improvement of 2.5 percentage points in its operating ratio, to 80.5%, compared to the same quarter last year. The $28.9 million increase in revenue included $8.9 million in same-railroad revenue growth in the U. S. and Canada, $20.0 million from the acquisition of rail lines from Rail Management Corp., and $0.9 million from a rail property acquired from CSX. These gains were partially offset by a $0.9 million decrease in revenues in Mexico, where a portion of track has been out of service since Hurricane Stan last October. When Australian operations are included, GWI?s net income in the first quarter was $14.0 million, an increase of 28.6%. GWI is in the process of restructuring in Australia.
China tests homemade maglev trainThe Xinhua News Service reported today that China has successfully tested a low-cost maglev train, capable of reaching a speed of 100 mph, on a quarter-mile test track in Chengdu. Zhang Kunlun, deputy director of the School of Electrical Engineering at Southwest Jiaotong University, was quoted as saying that ?China has mastered the technology of low-to-medium-speed maglev trains.? The test vehicle is 37 feet long, 8.5 feet wide, and 11 feet high.
A maglev train based on German technology is already in service between Shanghai and its airport. China recently announced that it plans to build a 110-mile maglev line between Shanghai and the tourist city of Hangzhou.
Income growth and improved operating ratio mark KCS first quarterKansas City Southern posted strong first-quarter 2006 financial results highlighted by a 20.2% increase in revenue and a drop of two percentage points in operating ratio, compared to the 2005 period. Net income improved by 14% to $8.0 million, or $0.11 per diluted share. The quarter?s results (as well as results going forward) are based on consolidated figures for all KCS rail operations, which now include Kansas City Southern de Mexico (formerly TFM). Prior-year figures reflect combined results from separate U.S. and Mexican operations.
KCS?s operating income of $61.3 million was a 20.2% increase over 2005. Consolidated revenues of $388.4 million represented a 5.5% improvement over the prior-year period. Operating expenses of $327.1 million reflected a 3.1% increase attributed primarily to a 17.3% increase (to $8.6 million) in fuel costs. The consolidated operating ratio was 84.2%, compared to a combined first-quarter 2005 operating ratio of 86.2%. Revenue growth, said KCS, ?was primarily driven by success in expanding higher margin business opportunities, improved service performance, a strong pricing environment, and fuel surcharges in both the U.S. and Mexico.?
?We were encouraged that, by the beginning of March, our operating metrics, especially train speeds, terminal dwell times, and cars on line, improved significantly and began to translate into greater bottom line profits,? said KCS Chairman, President, and CEO Michael R. Haverty. ?In particular, we expect strong revenue growth from the imminent start-up of intermodal service between the southeast U.S. and the interior and Pacific Coast of Mexico. We see a strong pricing environment in the U.S. and Mexico for the rest of the year, and anticipate substantial cost improvements by the fourth quarter as we install the KCS computer operating platform, MCS, in Mexico, allowing us to schedule and track individual cars. With every quarter, the potential of our combined rail network becomes increasingly evident.?
KCS also announced that it has closed the deal on its joint venture with Norfolk Southern to increase capacity and improve service on KCS?s 320-mile east-west Meridian Speedway between Meridian, Miss., and Shreveport, La. The deal involves KCS contributing the line to a new joint-venture company, Meridian Speedway LLC. NS will, over time, invest $300 million in cash, substantially all of which will be used for capital improvements. NS has made an initial cash contribution of $100 million. The U.S. Surface Transportation Board completed its regulatory review of the transaction on April 10.