June 2004
Amtrak’s five-year plan for passenger—and freightAmtrak has updated its five-year strategic plan that, in addition to spelling out in detail its own capital needs, addresses capacity issues faced by freight railroads—and not just where Amtrak trains are hosted. It makes "new recommendations today to address the growing needs and challenges of intercity rail service." Amtrak developed this plan by working closely with states and freight railroads.
The 2005-2009 plan has three components dealing with the existing national system, state-initiated intercity corridors, and the national freight network. It states that Amtrak "is making steady progress on the existing system to achieve its state-of-good-repair objectives and is continuing to control operating expenses." The corridor component includes "state proposals supported by Amtrak for specific passenger rail corridor development." The freight component "contains recommendations to protect and upgrade key facilities owned by freight railroads." The latter two require federal matching investment programs.
"The update to the five-year plan continues the effort we began last year to provide specific and precise details on exactly how every dollar is to be spent to bring the existing Amtrak system up to a state-of-good-repair," said Amtrak President and CEO David Gunn. "However, states and the freight railroads face serious problems of capacity, congestion, and reliability, and there is a growing consensus within the rail industry that we must come together to address these challenges."
To support Amtrak’s existing operations, the five-year plan calls for federal funding averaging about $1.6 billion annually. It maintains annual federal operating support at $570 million. "The majority of federal support is for capital improvements to the existing system and will be used to bring facilities and equipment up to a state-of-good-repair," Gunn said. Amtrak and the Bush Administration are currently far apart on the amount of federal support: The $900 million proposed by the Administration would force a shut-down, Gunn has maintained. Currently, Amtrak is operating under continuing resolutions that maintain an annual support level of $1.3 billion, which Gunn says is "sustainable"—but not for long.
Planned infrastructure improvements over the five years include continued work on Amtrak’s Northeast Corridor: reconstruction of 32 interlockings, installation of 885,000 concrete ties, 423 miles of track undercutting, 352 miles of new rail, rebuilding of five major bridges (including the 97-year-old Connecticut River bridge), 136 miles of signal cable replacement, and renewal of 300 miles of catenary hardware. In addition, it includes 326 locomotive overhauls, and remanufacture or overhaul of 1,457 passenger cars and 11 cab cars (wreck repairs assume a rate of 20 passenger cars and six locomotives annually). Amtrak also wants to acquire 80 automobile carriers to replace 50 year-old Auto Train equipment.
Gunn said that "numerous states are fully committed to the development of intercity passenger rail corridors, with a goal of increasing speeds and providing more frequent service. During the past year, Amtrak has worked with these states to clearly identify these corridors, their congestion and capacity challenges, and their capital investment needs. Plans for each corridor reflect preliminary work completed or work ready to commence. Our role was to help refine these plans and present them in a single, unified document. The corridors highlighted in our strategic plan have the full support of state and local policy-makers, they have detailed capital and operating plans, and they have sign-off by the host railroads. The only thing missing is the availability of a federal match."
Last year, the Bush Administration called for federal/state rail partnerships to develop passenger rail as part of an overall reform plan that has largely been dismissed in Congress. However, "while Amtrak has questioned other elements of the Administration’s plan that divide the railroad into three separate corporations according to function, Amtrak plans to strongly support states’ efforts to win federally matched capital investments," Gunn said. Working with the states, Amtrak evaluated the corridors’ readiness for immediate development, with those meeting all of the study’s criteria designated as Tier I corridors. Corridors designated as Tier II met more than half of the criteria. The elements of the criteria are a long-term master plan, market revenue forecast, operating expense forecast, infrastructure investment plan, equipment investment plan, host railroad acceptance, agreement to fund a 20% match, and agreement to cover any added operating deficit.
"Because Amtrak trains travel on 20,000 miles of rail owned by the freight railroads, we have a unique perspective on these railroads’ increasing congestion, deferred maintenance, and lack of capacity," said Gunn. "The problem is reflected in the growing number of delays to intercity passengers on both long-distance and corridor trains. Complicating the growing congestion, the freight railroads are abandoning and downgrading secondary lines for economic reasons."
To address these problems, Amtrak has recommended that the federal government also consider a "freight investment-matching program" combining federal funds with those of the states and/or the freight railroads for key segments of the freight rail network. The investments "would not necessarily be limited to lines on which Amtrak operates, but would be based on a number of factors, such as congestion relief, benefit to local freight shippers, and cost-effectiveness." Norfolk Southern and Canadian Pacific issued statements endorsing the proposal.
"This recommendation is a work-in-progress that deserves further study," said Gunn. "However, it is clear that if the railroads are having trouble carrying the business they have today, their ability to met the growth they are projecting is totally unrealistic. Unless the railroads can earn their cost of capital, they are going to squeeze the rail network and it will break. Meanwhile, we are pouring billions of public money into highways and other transportation modes, yet highways are increasingly congested as well. It doesn’t make sense. We need some balance in our priorities and in our investments, and federal leadership to make that happen. The problem is flying below the radar right now, and if we don’t act soon we risk losing a significant portion of the rail network."
Pataki asks Bush for rail link grantNew York Gov. George E. Pataki sent a letter to President Bush on June 28 asking for a cash grant to help pay for a $6 billion rail link from the World Trade Center site to the Long Island Rail Road and Kennedy International Airport. The project would entail the digging of a new tunnel beneath the East River. Pataki said funding for the new link would include at least $560 million from the Port Authority of New York and New Jersey.
The money sought by the governor—up to $2 billion, according to Pataki’s office—would come from converting unused tax credits into cash. The tax credits are part of a $21.4 billion package that the President and Congress pledged to help Lower Manhattan recover from the 9/11 terrorist attacks.
Pataki’s appeal to the White House came two months before Bush is scheduled to come to New York City to accept the Republican presidential nomination. The governor said his request had the support of New York City Mayor Michael R. Bloomberg.
"The proposed Long Island and JFK rail service will help attract tens of thousands of jobs lost after September 11th and will result in growth across the metropolitan area," said Pataki’s letter. "Redeploying these untapped federal funds will contribute substantially to the revitalization of Lower Manhattan and the broader area."
CPR, NS restructure Northeast operationsCanadian Pacific Railway and Norfolk Southern have revised and expanded their existing operating agreements in the northeastern U.S. to include new trackage rights, haulage rights, and classification yard services agreements, subject to approval by the U.S. Surface Transportation Board. The new arrangement, which involves CPR’s northeastern U.S. subsidiary Delaware & Hudson Railway, "will increase operational efficiency and enhance rail service to customers," the two railroads said in a statement.
CPR had previously announced that it was restructuring its unprofitable D&H operations and "was seeking proposals for ways to increase freight volumes, reduce operating costs, and improve earnings." The new agreement with NS, President and CEO Rob Ritchie said, will do just that. It is designed "to take this part of our network to a level of profitability that will make it self-sustaining," Ritchie said. He added that CPR "is prepared to examine additional measures that, in concert with our NS agreement, will further optimize our assets and drive up profitability"—raising speculation among industry observers that the agreement may be a precursor of a sale of the D&H to NS.
Under the agreement, CPR and NS will consolidate classification yard operations in Buffalo and Binghamton, N.Y. CPR will discontinue yard operations in Buffalo, shifting all activity to the NS yard there; NS will shift its yard operations in Binghamton to CPR’s East Binghamton yard.
CPR will move NS traffic between Rouses Point and Saratoga Springs, N.Y., under a haulage agreement, thereby increasing CPR revenue. NS will operate its own trains over CPR’s Saratoga Springs-Binghamton line under a trackage rights agreement that will provide NS with a substantially shorter route to Quebec and the Maritime provinces. NS will haul CPR’s Binghamton-Buffalo traffic, replacing a trackage rights agreement under which CPR operated its own trains between the two cities, thereby reducing CPR’s operating costs and generating additional revenue for NS.
In addition, under a trackage rights agreement, CPR will operate over a new NS connection that will link Detroit directly with Chicago. NS will be building a connection at Butler, Ind., where its Detroit-Fort Wayne and Chicago-Toledo lines currently cross at grade. The new NS route will be considerably shorter than CSX Transportation’s Detroit-Grand Rapids-Chicago line that CPR is currently using under a haulage rights agreement.
NS Chairman, President, and CEO David Goode described the new agreement with CPR as "an excellent example of railroads cooperating to better serve our customers."
CN dispatchers ratify agreementCN train dispatchers based in Montreal, Toronto, and Edmonton and represented by the Teamsters Canada Rail Conference/Rail Canada Traffic Controllers (TCRC/RCTC) have ratified a new three-year collective bargaining agreement. Retroactive to Jan. 1 of this year, the agreement improves dispatcher wages and benefits.
CN, which recently renewed its contracts with the Canadian Auto Workers union and Canadian National Railways Police Association, is still negotiating agreements with four other Canadian unions.
Intermodal trailer growth exceeds 15%Intermodal traffic on U.S. railroads reached a new weekly record of 220,280 trailers and containers in the week ended June 19, with trailer volume up 15.3% from the corresponding week in 2003 and container business up 11.5%. It was the fourth time this year—and the second consecutive week—of record intermodal traffic, said the Association of American Railroads. Carload freight totaled 339,201 units in the most recent week, a 4.4% gain over the year earlier period. Total volume, an estimated 30.8 billion ton-miles, represented a 5.3% increase over the 2003 week.
In Canada, intermodal volume in the week ended June 19 was essentially flat, at 42,924 trailers and containers, though carload traffic was up 11% to 66,953 units. Mexico’s TFM railway handled 11,382 units of carload traffic in the week ended June 19, an increase of 0.6% over last year, and 2,057 intermodal units, a drop of 53.5% from the corresponding week last year.
FRA initiates noise-reduction ruleThe Federal Railroad Administration published a notice of proposed rulemaking in the Federal Register on June 24 dealing with noise reduction in locomotive cabs. Noting that newer locomotives already incorporate such features as "better insulation, relocation of air brake exhaust piping, and less vibration from cab equipment," FRA said the new rule "supports these and other methods to reduce interior cab noise to the proposed lower levels." The NPRM, "Occupational Noise Exposure for Railroad Operating Employees," responds to a mandate in the Rail Safety Enforcement and Review Act of 1992. The recommendations represent a consensus of thinking among railroad labor, management, and related interests, said FRA.
Cost of capital declines againThe Surface Transportation Board has determined that the railroad cost of capital in 2003 was 9.4%, compared with 9.8% in 2002 and 10.2% in 2001. The 2003 figure is the lowest in the 25 years for which the cost of capital has been calculated on a government mandated formula to help determine railroad revenue adequacy. The cost of capital was at its highest in the first five years after passage of the Staggers Rail Act of 1980, ranging from 17.7% (1982) to 13.6% (1985) In most of the 1990s it was in the 11-12% range.
Economy and other forces drive freight car demandA resurgent economy is the main force energizing the freight car market, but "other developments will foster further advances in the demand for railcars," says Economic Planning Associates. "The rebound in rail trailer traffic will stimulate demand for TOFC equipment to accommodate the healthy advances of last year and the robust increases thus far in 2004," says EPA’s June 2004 quarterly report on railcar trends. "The explosive growth of ethanol production in recent years, coupled with a firm government commitment to future production of ethanol will boost demand for ethanol service tank cars and high cube covered hoppers to carry dry distiller grain. Stricter air emission standards will promote the use of lower sulfur western coal, which is also lower BTU value coal, leading to greater volumes of coal traveling longer distances. Under the competitive deregulatory environment of today, power providers will opt for the most efficient equipment to carry this coal."
EPA’s production forecasts are little changed from its February report. They call for delivery of 42,600 cars in 2004 (compared with 32,180 in 2003), rising in steady increments to nearly 60,000 in 2009. Intermodal, covered hopper, and tank cars are the units currently in strongest demand.
CPR allocates container shipping spaceCanadian Pacific is addressing the intermodal crunch on Canada’s west coast through a kind of rationing system designed to manage growth in busy shipping lanes. The railroad described the system this way in an announcement on June 22: "CPR will allocate to each of the shipping lines it serves an annual import container volume through the Vancouver Gateway based on past volumes and growth projections. CPR will supply sufficient railcars to meet the allocated volume. Intermodal terminal operators will commit to quick turnaround of railcars to maximize car availability."
"This is a critically important part of a more disciplined and orderly approach to the integrated logistics system," said Fred Green, the carrier’s executive vice president-operations and marketing. "It encompasses shipping lines, ports, and terminal operators, as well as customers that transload shipments into domestic containers."
Green added that "no logistics system can accommodate significant unplanned volume increases like those that exceeded system capacity in the first quarter this year."
Washington Group venture wins Metro Gold contract Construction of a six-mile extension to the Metro Gold light rail system in Los Angeles is set to begin in August following the award of a $600.4 million design/build contract to a joint venture led by the Washington Group (50%). Other members of the Eastside LRT Constructors joint venture are Obayashi, Inc. (35%) and Shimmick Construction Co. (15%). The Washington Group was part of a joint venture team that recently completed a design/’build contract for a 13.7-mile segment of the Gold Line between union Station and Pasadena.
WMATA austerity budget includes fare hikesThe Washington Metropolitan Area Transit Authority will preserve existing service levels in the fiscal year starting July 1, but at a price: Metrorail fares will rise 15% and Metrobus fares will increase 5% effective June 27.
The increases are expected to produce annual revenue of $29.2 million. They were announced as WMATA approved an FY2005 budget that includes $840.7 million for operating expenses, with $538.5 million coming from passenger and non-passenger revenues and $402.2 million from subsidy payments by local jurisdictions. The capital improvement budget is $314.1 million. It provides $290.1 million for infrastructure renewal, $19.3 million for extensions to the rail system and new bus services, and $4.65 million for facilities such as garages to accommodate ridership growth.
Metro General Manager and CEO Richard A. White said the WMATA board continues to work to secure funding for "urgent unfunded priorities totaling $1.5 billion." He identified these as infrastructure rehabilitation, $525 million; adding 120 new rail cars and beginning the operation of eight-car trains, $601 million; purchase of 185 buses and associated facilities, $172 million; and security enhancements, including a back-up operations control center, $144 million.
White said the board in May approved a draft plan "to submit a Metro Matters Funding Agreement and Risk Mitigation plan to the contributing jurisdictions for discussion and approval with the goal of executing a funding agreement by Oct. 21."
"Hold that door"Because transit door-related problems account for up to 50% of service delays and are the primary cause for rider injuries, the American Public Transportation Association's Rolling Stock Equipment Technical Forum recently completed a survey of automatic door systems at five rapid transit agencies. At APTA's Rail Transit Conference in Miami earlier this month, six forum members reported on the door evaluations at New York City Transit, Washington Metro, Bay Area Rapid Transit, Chicago Transit Authority, and Port Authority Trans-Hudson. The purpose of the nearly year-long project was to identify electro-mechanical, electronic, and software failures, and environmental issues that impact door operations, and as a result, find solutions to offset them, according to project lead and forum chair Paul Messina, who serves as superintendent-rail investigations in NYCT's Office of System Safety.
Among the project's benefits are improvements to door design, better operating performance, fewer service interruptions, movement toward preventative/scheduled maintenance, and more satisfied customers (transit agencies and riders), noted John M. Andreas, director-business development at Faiveley Rail, Inc., and a member of the 33-person project team. The team--which includes representatives from the five transit agencies surveyed, Transportation Systems Design, Inc., BoozoAllen & Hamilton, Inc., LTK Engineering, InterFleet Technology, Inc., Kawasaki Rail Car, Inc., and Faiveley Rail, Inc., among others--developed a detailed, 19-page questionnaire covering car classes, door design and quality, door-car interface, door operations/usage, environment, and maintenance. It was designed to be user-friendly and incorporate questions pertinent to light rail and commuter rail agencies as well, since it's hoped that they will be surveyed in the future.
According to the forum, only five rapid transit agencies were selected initially due to their size and geographic location. Also, because the survey was comprehensive, this group size was thought to be manageable, said Messina.
Survey data is available online at www.traindoors.com (hosted by TSD), and is being entered into a Microsoft Excel spreadsheet database. Since a master, relational database is still in the works to combine the extensive data, it's too soon to draw formal conclusions. However, team members are inviting transit industry members to review the information and provide feedback. Contact Paul Messina (Fax: 718/243-7920) with comments or questions.
RFP issued for $804 million PATH investmentThe Port Authority of New York and New Jersey announced several months ago that it planned to replace or rehabilitate the entire PATH railcar fleet, and on June 17 it issued a formal request for proposals. The RFP seeks bids from builders for the design and manufacture of 246 new cars, with alternate bids for the rehabilitation or replacement of an additional 94 cars. The total program, which is estimated to cost $804 million, includes the award of several contracts for car maintenance equipment, renovations to the Harrison Maintenance Facility, and preliminary work on a new signal system.
The Port Authority expects to award a contract for the new cars later this year and to begin phasing them into service by late 2008 or early 2009. The entire order is to be completed by 2011. The cars will have three doors on each side for faster loading and unloading.
The program represents the largest investment in PATH since the Port Authority acquired it from the Hudson & Manhattan in 1962.
Greenbrier will supply cars to IraqThe Iraqi Coalition Provisional Authority has ordered 240 container platforms to be built by Wagony Swidnica, the Greenbrier Companies’ manufacturing operation in Poland. "This order is particularly important since it is the first business that Poland has secured in Iraq since joining the Coalition armed forces at the beginning of the war," Greenbrier and the Boston Transit Group said in a joint statement on June 17. It’s the Polish company’s first order from Iraq in 20 years. Greenbrier noted that Wagony Swidnica, which employs 900 workers in lower Silesia, "has recently been recapitalized, in part, with the critical assistance of the Polish government in extending a much needed KUKE export guarantee."
Greenbrier receives orders for 7,000 carsStrong new evidence of the railroad business turnaround came on June 17 with Greenbrier’s announcement that it has received orders for 7,000 new railcars valued at $400 million. The biggest orders were placed in mid-June by TTX, for 4,700 double-stack intermodal wells and 400 boxcars—-"the largest single award Greenbrier has ever received," according to the carbuilder. The announcement did not specify who placed the other orders, nor was there a detailed breakdown of costs. Greenbrier Companies President and CEO William A. Furman did say that "the pricing for the orders takes into account the current volatile environment for steel and specialty components."
The new orders pushed the company’s North American and European backlog to a record 14,600 units valued at $860 million as of June 17. Since September 2003, the beginning of Greenbrier’s fiscal year, it has received orders from North American and European customers for 11,500 cars valued at approximately $800 million.
Quinn introduces rail security billIn what could be one of his last major pieces of legislation before he leaves Congress at the end of this year, Rep. Jack Quinn (R-N.Y.), chairman of the House Rail Subcommittee, has introduced a bill that would provide more than $1 billion in new federal spending to expand and improve anti-terrorist security programs for passenger and freight railroads. It would also provide more than $600 million to improve the safety of tunnels used by Amtrak and commuter railroads in the Northeast Corridor.
"The new legislation will provide the resources to harden our nation's rail system against the possibility of terrorist attack and improve our ability to recover from such an incident," Quinn said. "It will direct the preparation of comprehensive security plans, including contingency plans, for preventing and, if necessary, recovering from any terrorist incident." The bill provides for anti-terrorist measures "ranging from simple to high-tech, including expanding authority of existing railroad police forces and developing new counter-terror technologies to protect all aspects of the nation's rail network."
"Railroad security would gain a crucial financial boost if this legislation gains entire House and Senate approval and support from the President," says the United Transportation Union, which, along with other rail labor organizations, "has been working with subcommittee members for some time on this legislation."
Rail’s newest grassroots effort launchedA new, non-profit, grassroots organization has been launched in Washington, D.C. by railroad and rail supply industry officials to mobilize the industry’s half-million employees and retirees "to promote a positive railroad agenda and get the word out about the public benefits of railroading."
GoRail (www.gorail.org, 877-446-7245) is a program of the non-profit Go21 (Growth Options for the 21st Century), which is partially funded by the Association of American Railroads. Go21’s director is Bill Gibb, who also heads CABT (Coalition Against Bigger Trucks). Go21 is described as "Citizens united in support of a stronger economy, effective solutions to highway congestion, a cleaner environment, and improved quality of life by advocating increased use of freight railroad transportation as an alternative to continued reliance on an overcrowded, inefficient, and costly highway system."
GoRail is closely affliated with AAR’s public-outreach project, RailFanClub (www,railfanclub.org), and provides electronic access to many AAR informational and promotional materials. It’s mission, says Director Shannon Bagato, "is simple: A strong and growing railroad industry is essential for America’s future, and harmful policies like re-regulation and unfair taxation would hurt not just the railroad industry, but all Americans. What we need are pro-rail policies that will grow business, reduce highway congestion, and create new economic opportunities."
FTA advances Dulles Corridor projectThe Federal Transit Administration announced June 10 that it has moved the Dulles Corridor Rail Project into preliminary engineering--"the second phase of a three-part process in which the project’s design, scope, and cost are refined before construction can begin." The next phase, if the FTA determines it to be justified, will be final design. The project is a joint venture between the Virginia Department of Rail and Public Transportation and the Washington Metropolitan Area Transit Authority. It contemplates a five-station, 11.6-mile extension from WMATA’s West Falls Church Metrorail station to Wiehele Avenue in Reston.
BNSF ordered to pay rate reparationsThe Public Service Company of Colorado, doing business as Excel Energy, has won a rate challenge against Burlington Northern and Santa Fe. The Surface Transportation Board ruled unanimously that Excel had proved the challenged coal rates to be unreasonably high; it ordered BNSF to reduce the rates and pay reparations to the utility. STB found in favor of Excel based on the "stand-alone cost" test, which determines the cost at which a hypothetical new railroad, standing alone, cold deliver efficient transportation service to the complaining shipper. Filed on Dec. 20, 2000, the complaint was resolved in a decision rendered June 8, nearly three and one-half years later. At issue were rates for the movement of Powder River Basin coal from Wyoming to Excel’s Pawnee Steam Electric Generating Electric Station near Brush, Colo.
STB asks Class I‘s for peak-season plansSurface Transportation Board Chairman Roger Nober announced June 10 that he had sent letters to all Class I railroads expressing concern over "increasing service demands . . . and especially over the handling" of anticipated peak-season volumes in the fall. He asked each railroad to report to the board on its plans for what is traditionally the industry’s busiest season. Nober said his letters "acknowledged that the industry is carrying an unprecedented amount of freight and has worked to improve customer service, inter-railroad coordination and cooperation, and the development of new service offerings."
Rail security bills introduced in HouseRep. Stephen Lynch (D.-Mass.) has introduced H.R. 4476, the “Rail Transit Safety and Security Act of 2004,” in the House.
The bill, according to the Railway Supply Institute, would order the Under Secretary for Border and Transportation Security in the Department of Homeland Security (DHS) to conduct a vulnerability assessment of the nation’s rail systems and provide recommendations for improvements within 90 days; create eight regional federal rail security managers to serve as points of contact, share threat information, and work with local officials to implement comprehensive security plans using rail security best practices; encourage rail employees to bring forward safety and security concerns by offering whistleblower protections; authorize $640 million for improvements to Amtrak’s Northeast Corridor tunnels (lighting, communications equipment, fire safety, passenger egress, and ventilation); authorize $2.5 billion in capital security assistance grants to help fund tunnel and perimeter protection systems, explosives detection systems, surveillance equipment, communications equipment, evacuation improvements, and emergency response equipment; authorize $1.35 billion for operational security assistance grants to help fund training exercises, drills, public awareness campaigns, and canine patrols; and authorize $50 million for R&D of new rail security techniques and equipment.
H.R. 4476 has been referred to the House Transportation and Infrastructure Committee for consideration.
In related legislative activity, the House Appropriations Subcommittee on Homeland Security has marked up a $30.8 billion appropriations bill for homeland security for Fiscal Year 2005. The bill, which would provide a 5% increase over FY 2004 enacted levels, would appropriate $1 billion for high-density urban areas, “including no less than $100 million for rail security,” according to RSI Additional appropriations include $11 million for rail security demonstration projects (under TSA), $125 million for port security, $166 million for vehicle and cargo inspection (VACIS) technologies, $101 million for 791 new Coast Guard personnel to enforce maritime security plans, $547 million for developing new homeland security related countermeasures, and $16 million for container security research.
RailAmerica fills CEO and president postsRailAmerica, Inc., Chairman Gus Pagonis announced today the appointments of Charles Swinburn as CEO (effective Aug. 1) and Donald Redfearn as president. Swinburn, a former U.S. deputy assistant secretary for transportation, has been a RA board member for nine years, and Redfearn has served as an officer and board member since 1992.
Swinburn commented that he was "honored" and "excited by the opportunities ahead."
The appointments were the latest in a restructuring of RA management that began with the announcement on March 12 that the offices of chairman and president & CEO--formerly held by Gary Marino--were being split, with Pagonis becoming chairman and Marino continuing to serve as president and CEO. Not long thereafter, Marino--who had headed the company since its founding in 1992--retired (RA, May, p. 15). Redfearn was named acting president.
A 30-plus year veteran of the railroad industry, Swinburn has held several positions in the Transportation Secretary's office, managing the DOT's staff efforts to resolve the Northeast rail crisis, establishing and managing $2 billion in aid programs to the industry, overseeing Amtrak's $700 million annual budget, and serving on Amtrak's board of directors and Alaska Railroad's management committee. As the deputy assistant secretary for policy, he managed DOT staffs and railroad industry deregulation efforts. In the private sector, Swinburn established and led Rollins Field Services, a company that performed approximately 2,300 waste remediation projects and became a leader in "Superfund" cleanups. Since 1993, he has been an attorney with Morgan, Lewis & Bockius in Washington D.C. Swinburn was a highly decorated Marine major. In Vietnam, he received the Distinguished Flying Cross twice and the Air Medal 35 times, flying more than 700 combat missions.
Redfearn has served as chief administrative officer since January 2000, and held the position of executive vice president and secretary since 1994. He noted that he was "looking forward" to working with Pagonis, Swinburn, and the RA team "as we continue to build the organization and execute our strategy for the future."
In compliance with the rules of the New York Stock Exchange, the RA board also appointed Douglas Nichols as the new chairman of the Corporate Governance and Nominating Committee, succeeding Swinburn, who also resigned as a member of the company's Compensation Committee.
Israel orders 54 more Bombardier carsBombardier Transportation announced June 10 that it will build an additional 54 double-deck cars for Israel Railways at a price of $94 million. This follows an order placed in 1999 for 93 double-deckers. Scheduled for delivery starting in December 2005, the new cars will be manufactured mainly at Bombardier's plant in Gorlitz, Germany, with final assembly in Israel.
Bombardier also announced that it expects to receive an order later this year for 25 to 30 new FLEXITY(1) Outlook trams for Marseilles, France. An initial contract is for engineering work and customized design to meet the special needs of the Mediterranean port city. Vehicles of the same family are in service in Austria and Poland, and are on order for cities in Turkey, Switzerland, and Belgium.
New insurer comes onlineArch Insurance Group, a division of Arch Capital Group Ltd., has formed a railroad department "with up to $25 million in new capacity." Its product portfolio includes coverage for rail operators, lessors, contractors, suppliers, and service providers, providing primary liability for short line railroads, excess placements on commuter railroads, layered freight railroad programs, commercial general liability for suppliers, and railroad protective liability for other specific projects. Policies are available on a claims-made basis, but occurrence-based coverage is also available, according to Arch.
Headed by Senior Vice President Robert J. Keller and Vice President David Adamczyk, the new department has underwriting facilities in New York City and Owings Mills, Md.
"We are a dedicated team who understand the risks confronting today's railroad industry," said Keller. "Our team offers a full line of quality products and services from risk assessment to underwriting, first-rate claims handling, and emergency response services."
UP expects sharp drop in second quarter earningsCiting the high cost of continued "operational inefficiencies," plus rising fuel prices, Union Pacific issued a statement on June 9 saying it expected second quarter earnings to be in the 60-65 cents range. That’s substantially below the Thomson First Call consensus analysts’ estimate of 96 cents a share. In last year’s second quarter, the company earned $1.05 cents a share.
"Operating expenses in the second quarter continue to reflect the higher costs associated with running a less efficient network, as well as the costs of addressing our service issues," said the statement. "These include costs in areas such as hiring and training, crew expenses, fuel consumption, and equipment costs. In addition, expenses have been affected by record diesel fuel prices, which are expected to average $1.15 cents per gallon in the second quarter, a year-over-year increase of over 30%."
UP Chairman and CEO Dick Davidson said he’s confident that the right initiatives are under way to restore service quality. "We are graduating new trainmen into service at a steady pace," said Davidson. "Through the first six months of 2004, we expect to graduate over 2,000 conductors, with another 1,400 expected to graduate in the third quarter. We are also bringing additional locomotives onto the network almost daily, through a combination of both short- and long-term lease acquisitions. This includes the accelerated delivery of an additional 125 new locomotives, originally scheduled for delivery in 2005, to the second half of 2004."
Cubic establishes company in BeijingSan Diego-based Cubic Transportation Systems, Inc., has already established a big position in China--"the world’s fastest developing market"—and it’s looking for a bigger one. The company’s chairman, Walter C. Zable, on June 9 announced the opening of Cubic Transportation Systems (Beijing), Ltd., in the Chinese capital. He said that along with partner Digital China, Cubic "will be bidding in the next few weeks for major contracts being tendered by the Beijing metro." He noted that Cubic has already designed and installed automatic fare collection systems in Guangzhou and Shanghai, as well as Hong Kong.
Rail gets 20% of "austere" LA budgetThe Los Angeles County Metropolitan Transportation Authority has adopted an "austere" budget of $2.9 billion for FY 2004-05, which starts July 1. Metro Rail will get $525 million for operating, construction, and capital costs, about 18.5% of the budget. Metrolink will receive $55 million, 1.8% of the total, for a commuter rail network that serves LA and four other counties. More than 48% of the budget is earmarked for bus and paratransit services. The remainder is for debt service, planning, and miscellaneous costs.
"This is not a happy budget," said Metro CEO Roger Snoble. "Our efforts to improve mobility in Los Angeles County have been slowed, largely because LA County may lose up to $2.3 billion in state transportation funding between FY03 and FY09."
"However," he added, "we’re still pushing forward with key projects such as the Metro Orange Line transitway in the San Fernando Valley and the extension of the Metro Gold Line to Little Tokyo and East Los Angeles."
Snoble said that while the new budget is $89 million higher than the one it replaces, the cost difference is mainly due to the scheduled start of construction work this summer on the six-mile Gold Line extension and major construction work on the 14-mile transitway from the Warner Center to the North Hollywood Metro Rail station.
RELCO acquires Joseph’s locomotive operating leasesRELCO Finance, Inc., an affiliate of RELCO Locomotives, Inc., announced the acquisition of Joseph Transportation Services’ locomotive leasing division. RELCO chairman and CEO Donald L. Bachman said the transaction "brings us almost 50 new operating leases and positions us as the largest operating lessor of switching locomotives in North America." Joseph’s president, Paul Jantsch, said his company will now focus on its core business of "selling, leasing, and financing new and used railcars."
Farebox recovery: How 14 systems comparePassenger fares covered 67.3% of the operating costs of New York City subways in 2002, the highest farebox recovery ratio among the nation’s 14 heavy rail transit systems, according to a just released Brookings Institution study. Close behind were the Washington Metro, 61.6%; New Jersey/Philadelphia’s PATCO, 61.4%; Philadelphia’s SEPTA, 58.6%; and San Francisco/Oakland’s BART, 58.4%. Chicago’s CTA came in at 44.3%; Boston’s MBTA, 43.7%; PATH’s trans-Hudson tubes, 41.0%; Atlanta’s MARTA, 39.2%; Maryland Mass Transit (Baltimore), 26.3%; Greater Cleveland’s RTA, 21.5%; the Los Angeles Metro, 19.6%; Miami-Dade Metrorail, 16.1%; and the Staten Island RTOA, 15.2%.
The recovery ratio comparison was part of a wide-ranging Brookings study of the funding needs of the Washington Metropolitan Area Transit Authority. The study found that only 2.34% of WMATA’s operating budget was covered by dedicated funds, compared with 30.08% for New York City Transit, 25.20% for NJ Transit, and 49.29% for MBTA.
First quarter crossing fatalities riseThe Federal Railroad Administration has posted preliminary statistics on its website showing that 93 people died in highway-rail grade crossing accidents in this year’s first three months, a 25.7% increase over the 74 fatalities reported in the corresponding 2003 quarter. There were 93 trespasser deaths in the first quarter of 2004, down 7.0% from the 100 fatalities in the year-earlier period.
Train accidents rose 0.6% in the first quarter to 731. There were 529 derailments, down 1.7% from the 2003 quarter, and 52 collisions, up 23.8%.
Toyota thanks Norfolk Southern for a smooth rideNorfolk Southern has pocketed three awards from Toyota Logistics for service excellence in 2003. Toyota awarded NS its President’s Award for overall excellence among rail carriers—the auto-maker’s highest award to a logistics provider. NS also won the Toyota Logistics Excellence Awards for on-time performance and quality performance among rail carriers. NS’s record for defect-delivery of Toyota vehicles in 2003 was 99.91%. Since the awards started in 1996, NS has won the President’s Award twice, the Award for On-Time Performance three times, and the Award for Quality Performance six times.
Security test at New Carrolton cut shortOriginally scheduled to last one month, the test of a bomb-detection device at the New Carrolton, Md., suburban rail station was ended on May 26 one week ahead of schedule. The Transportation Security Administration said it had collected all the information it needed and did not want to delay Memorial Day weekend travelers. The screening test applied only to Amtrak and commuter rail passengers--not to Washington Metro riders--and Amtrak patrons were excused if they had only two minutes to make a train. The test began on May 4.
Former NS officer moves to CSXTJames D. Bagley joined CSX Transportation as vice president-engineering effective June 1. Bagley worked for 31 years with Norfolk Southern; he retired from NS four years ago. His new appointment was announced June 2 by CSXT executive vice president and chief operating officer Tony Ingram, who was Norfolk Southern’s senior vice president-transportation network and mechanical before moving to CSXT in mid-March.
Bagley’s appointment was part of a broader announcement that W. Michael Cantrell would retire on Sept. 1 as CSXT’s senior vice president-engineering and mechanical and that his position would not be filled. "Instead, three experienced professionals will lead the various functions of his office and report directly to Ingram," said a CSXT press release. Bagley is one of the three. The others are Richard J. Regan, who has been promoted from chief mechanical officer-locomotives to vice president-mechanical, and Richard M. Kadlick, who will continue in his current role as vice president-engineering & mechanical quality and standards.
Cantrell joined CSXT in 1996 after 22 years with Cummings Engine Co. In announcing Cantrell’s decision to retire, Ingram commended him for playing "a key role in developing improved labor-management relationships and implementing advanced technology, such as the auxiliary power units and wireless communications technology."
Car builders struggle to meet demandOrders were placed in this year’s first quarter for 17,692 freight cars, nearly 50% more than in the previous quarter. On April 1, the backlog of cars on order and undelivered was 42,424, 24% higher than the backlog on Jan. 1, and a 76% increase over the backlog one year ago. All of this was welcome news to carbuilders, but there was a downside, said the American Railway Car Institute Committee of the Railway Supply Institute. ARCI spokesman Tom Simpson said that "continued shortage of truck castings and the spike in steel prices and scrap surcharges along with limited steel availability has the industry concerned about being able to respond to this increased demand for new freight cars in 2004."
Pittsburgh reopens Overbrook LinePittsburgh’s first new light rail vehicles in 19 years began running June 2 over the restored and modernized Overbrook Line. Closed in 1993 due to deteriorated tracks and bridges, the rebuilt Overbrook Line and 28 new LRVs are the main elements of the Pittsburgh Port Authority’s $386 million Stage II Light Rail Transit Project.
Los Angeles light rail extension wins fundingWith federal funding finally assured, Los Angeles Metro CEO Roger Snoble signed a construction contract on June 1 for a six-mile extension of the Metro Gold Line from Union Station to East L.A. The signing followed the Federal Railroad Administration’s approval of a full-funding grant of $490.7 million to help pay for the project. The total cost is estimated at $898.8 million.
The initial contract executed by Snoble is for $600.4-million and authorizes the beginning of construction by Eastside LRT Constructors, a joint venture of Washington Group International, Obayashi Corp., and Shimmick Construction.
Scheduled to open in mid-2009, the eight-station light rail extension will serve a densely populated area that includes Little Tokyo and Boyle Heights.
CSX will meet with concerned shippersResponding to "customer concerns about rail service," CSX will join the NIT League in hosting a shipper forum on June 10 "to review current service levels and plans for the future." Among those taking questions from shippers will be CSX Chairman and CEO Michael Ward and Executive Vice President and COO Tony Ingram. Also on hand will be NIT League President John B. Ficker, who recently helped Union Pacific arrange a similar forum.
New STB members confirmedThe Senate has confirmed Francis Patrick Mulvey of Maryland and William Douglas Buttrey of Tennessee as members of the Surface Transportation Board. This action follows their Nov. 3, 2003, nominations by President George W. Bush.
"I am very happy that the two nominees have been confirmed," commented STB Chairman Roger Nober. "The agency has many pressing industry matters before it, and I'm eager to turn with my colleagues to the work before us."
Buttrey--the seventh board member since the STB's establishment in 1996--was formally sworn in on May 28. He will serve for the remainder of a five-year term expiring Dec. 31, 2008. Most recently an independent consultant, Buttrey previously held the position of senior government affairs representative with Federal Express Corp., a company he served for 22 years. Earlier in his career, he was committee counsel for the Senate's Aviation Subcommittee, and attorney/advisor in the Office of the General Counsel at the former U.S. Civil Aeronautics Board.
Mulvey will be sworn in "soon," according to the STB. He currently serves as democratic staff director for the House Committee on Transportation and Infrastructure Railroad Subcommittee. Previously, he was deputy assistant inspector general for rail, transit, and special programs for the Department of Transportation.
Interested in a piece of Amtrak? There’s still timeThe Federal Railroad Administration announced in the Federal Register June 1 that it’s giving interested parties an extra month to submit comments "on how the Secretary of Transportation, working with the affected States, could develop and implement a procedure for fair competitive bidding by Amtrak and non-Amtrak operators for State-supported intercity passenger rail routes." FRA extended the original deadline of May 28 to June 28.
CPR rates to reflect more current fuel pricesCanadian Pacific on June 1 implemented a new fuel surcharge program based on the monthly average price of West Texas Intermediate (WTI) crude oil rather than a quarterly average of WTI prices. "Once the previous calendar month’s average WTI price has been calculated, customers will have the current month to convert their payment systems to account for a rate adjustment," said CPR. "The surcharge will flow through to customers the following month." Rates may be adjusted up or down, depending on "price fluctuations in a volatile market."