July 2005
Amtrak authorization bill makes progressThe Senate Committee on Commerce, Science and Transportation has voted 18-4 in favor of S. 1516, the “Passenger Rail Investment and Improvement Act of 2005,” a bi-partisan bill that would authorize Amtrak ands institute some reforms over the long term while “financially supporting Amtrak so it can do its job,” according to Sen. Trent Lott (R-Miss.), a primary sponsor. Among the bill’s other sponsors are Ted Stevens (R-Alaska), Conrad Burns (R-Mont.) John Rockefeller (D-W.Va.) Frank Lautenberg (D-N.J.) and Kay Bailey Hutchison (R-Tex).
The committee defeated 7-15 a John McCain (R-Ariz.) amendment to delete “placeholder” language allowing bond funding, which would depend on action by the Senate Finance Committee.
S. 1516 would commit the government to financing Amtrak operations for six years beginning Oct. 1. It would permit Amtrak and states served by Amtrak to issue bonds to pay for billions in long-delayed maintenance. It would also permit freight railroads to bid to take over long distance service (but Northeast Corridor service and authorize The Secretary of Transportation to renegotiate Amtrak’s long-term debt, currently at about $276 million a year. Overall, federal subsidies to Amtrak for capital expenses would rise to about $1.9 billion a year, a 58% increase over its current allotment. Operating subsidies would be cut by about 40%, to an average of $556 million a year.
Amtrak President and CEO said that “It is heartening to see a truly inclusive and bi-partisan approach to chart the future of passenger rail service in this country. We look forward to working with these legislators, as well as with policymakers in the Administration, the states, and elsewhere as the process gets under way with renewed urgency and seriousness. Amtrak has operated without a federal authorization since October 2002. The time to chart the future is long overdue as the present model is not sustainable. Amtrak's responsibility must be to inform this process with expertise and in good faith, and we will do so. While I realize that the process is at the beginning, I think this is a very positive first step. “
Meanwhile, the Bush administration yesterday endorsed a recommendation from Transportation Department Inspector General Ken Meade that Amtrak eliminate food service and sleeping cars on some long-distance routes to cut costs. “Overall, our analysis shows that eliminating sleeper cars, dining cars, and other amenities on Amtrak's long-distance routes could save between $75 million and $158 million per year in operating costs and avoid an additional $79 million in planned annual capital expenditures,” the report said. Other amenities the report recommends cutting include onboard entertainment, lounge seating, and checked baggage service. Transportation Secretary Norman Mineta said “It is time for Amtrak’s management to show its commitment to preserving and improving passenger rail service in this country by acting on [these] recommendations without further delay.”
“In the months to come, Amtrak will be launching a number of pilot projects intended to identify the most effective strategies for addressing the long-distance operating cost issues you have highlighted,” Amtrak Chairman David Laney responded to Mead. “However, on previous occasions Amtrak has said cutting its amenities would hurt the railroad more than help it.”
CPR to discontinue service on 10 branch linesCiting “long-term structural changes in the grain handling industry,” Canadian Pacific Railway has added 10 low-volume branch lines totaling just over 412 miles in Manitoba, Saskatchewan, and Alberta to its three-year network plan for discontinuance of service. “Rail traffic has all but disappeared from these lines, which makes them no longer viable for us to continue operating,” the railroad said. “Adding them to our three-year network plan is the first step in the legislated discontinuance process.” Line discontinuance will follow a process established in the Canada Transportation Act; CPR must first offer these lines to third parties and then to governments before the railroad can discontinue operations.
The 10 branch lines are the La Riviere Subdivision, between Morden and La Riviere (30.7 miles); Napinka Subdivision, between La Riviere and Killarney (49 miles); Radville Subdivision, between Weyburn and Bengough (70 miles); Outlook Subdivision, between Loreburn and Broderick (24.7 miles); Kerrobert Subdivision, between Conquest and Herschel (51.5 miles); Bulyea Subdivision, between Neudorf and Cupar (54.5 miles); Bromhead Subdivision, between Estevan and Tribune (42 miles); Irricana Subdivision, between Bassano and Standard (36.4 miles); Cardston Subdivision, between Stirling and Raymond (7.7 miles); and Stirling Subdivision, between Foremost and Stirling (45.7 miles).
“The decision allows us to direct much-needed resources—like crew time, any salvaged rail and ties—to other subdivisions in each province that have traffic or are experiencing growth and additional capacity needs, including capacity for commodities like grain and potash,” CPR said.
Coal coasts to new record on Norfolk SouthernNorfolk Southern says its coal shipments reached a record volume of 45.7 million tons in the first quarter, exceeding the previous record, set in 2001, by 1.9%. A new record was also set in the second quarter for total coal, coke, and iron ore volume, which reached 47.3. million tons, up 2.6% from the previous record set in the fourth quarter of 2004. NS said the surge in coal traffic resulted from the continued rebuilding of stockpiles by utilities, plus shipments to a new coke plant and strong demand for domestic metallurgical coal.
GATX Rail net up sharply; so are car pricesGATX Rail’s utilization of its 107,000-car North American fleet continued at the high level of 98% in the second quarter as the company posted a net income of $23.1 million compared to $18.7 million in the prior-year period. The strong market has caused freight car prices to rise “sharply,” commented the leasing company. “While this provides us with advantaged new car costs under our Committed Purchase Program, economics on car purchases in the spot market are less appealing at this time,” said GATX Corp. President and CEO Brian A. Kenney. “We will remain disciplined in our investment approach.”
Florida East Coast raises full-year earnings forecastFlorida East Coast Railway reported a 17.5% increase in revenues in the second quarter, to a record $58.9 million, and a 25.7% increase in operating profit, to $15.9 million, compared to the same period in 2004. The operating ratio improved to 73.0% from 74.5%. Florida East Coast Industries Chairman, President, and CEO Adolfo Henriques said that given the strong first quarter performance “we are increasing the 2005 full-year outlook.” Railway segment revenues are now expected to range between $220 million and $230 million, an increase of ll-15% over 2004 , and operating profit is expected to range between $56 million and $58 million, up 18-23%.
NS operating efficiency soars in record quarterNorfolk Southern reported July 27 that it shaved its operating ratio by 4.1 percentage points to a lean 72.5% in the second quarter, a period that saw operating revenues rise by 19% to $2.15 billion, railway operating income increase by 39% to $592 million, and net income soar to $424 million, all records. NS shares rose 4.55% on the strength of the news.
Second-quarter net income included two special items totaling $120 million related to coal rate adjustments and tax legislation in Ohio. Without these items, earnings would have been $304 million, or 75 cents per share, still a record for any quarter before accounting changes. Wall Street’s consensus earnings estimate was 65 cents.
NS posted record net income of $518 million for the first six months, up 67% from the same period a year earlier. Operating revenues also set a six-month record, rising 17% to $4.1 billion.
Second-quarter strength came both from general merchandise revenues, which were up 12% to a record $1.15 billion, and a surge in coal revenues, up 36% to $578 million compared with the prior-year period. Intermodal revenues were up 18% to $428 million. Higher rates and fuel surcharges contributed to the increase in revenues.
Second-quarter operating expenses were up 13% to $1.56 billion from the corresponding period last year, primarily due to higher fuel prices and the costs of additional train and engine service crews and maintenance activities associated with higher business levels.
CSX net earnings increase 38%CSX has reported net earnings of $165 million for this year’s second quarter, 73 cents per share, a 38% increase from the second quarter of 2004. Surface Transportation revenue rose 8% to $2.2 billion, producing the 13th consecutive quarter of year-over-year growth, and operating revenue increased to $422 million, up $142 million over last year’s quarter. (The Surface Transportation operating ratio was not immediately available.)
“This was our sixth consecutive quarter of core earnings growth,” said CSX Chairman, President, and CEO Michael J. Ward. “It was also the second consecutive quarter of record operating income in Surface Transportation, reflecting overall strength in our markets and an increased focus on productivity. In the future, we expect a continuation of favorable economic conditions, industry growth, and a strong pricing environment. At the same time, CSX is taking the necessary steps to improve service for our customers and drive long-term growth for our shareholders.”
In a conference call announcing first quarter results, CSX said it expected earnings for the year to range between $3.15 and $3.25 cents a share. This compares with a recent Wall Street forecast of $3.07.
FreightCar America stock climbs on strong earningsShares of FreightCar America rose more than 23% after the company posted a second-quarter profit of $9.1 million, or 76 cents per share, vs. a net loss of $4.3 million, or 63 cents per share, in the prior-year period. Sales totaled $230.76 million for the quarter compared to $94.9 million in the same period a year ago. Freight car orders were up 60% to 5,104 units, and the unfilled order backlog doubled to nearly 16,000 units.
Portec reports record sales and earningsPortec Rail Products, Inc., earned net income of $1.708 million on sales of $24.1 million in this year’s second quarter, compared with a profit of $1.464 million on sales of $18.5 million in the second quarter of 2004. The company posted first-half 2005 net income of $2.713 million on sales totaling $44.9 million, up from $1.121 million on sales of $33.7 million for the corresponding 2004 period. “Our second quarter 2005 net sales and net income were a record for the company,” said President and CEO John S. Cooper. “All six of our business units contributed to the record performance for both the second quarter and first half of 2005, and our new order bookings increased throughout the second quarter. Business was particularly strong for our track component and friction management products at our Railway Maintenance Products Division and at our Montreal operation.”
Canadian Pacific Railway 'brings it home'“The fluidity across our network is generating greater operating efficiency, which is driving more of our growth to the bottom line,” said Canadian Pacific Railway President and CEO Rob Ritchie, during today's second-quarter earnings announcement. Despite increased workloads and a $160 million track capacity expansion project along its busiest corridor (between the Canadian Prairies and Vancouver), “CPR employees know what our company has committed to deliver and they are bringing it home,” he maintained.
CPR’s operating ratio for the quarter came in at 75.5%, improving by 2.5 percentage points. Net income grew 47% to C$123.2 million, or 77 Canadian cents a share, from C$83.7 million, or 53 Canadian cents a share, in the year-earlier period. Excluding foreign exchange losses on long-term debt, earnings would have been 87 Canadian cents a share in the second quarter. Operating income increased 23% to C$271.1 million from C$220.6 million. These results were achieved even with a 7% rise in operating expenses, which were due, in large part, to higher fuel prices, according to the railroad.
Second-quarter revenue was up 10% to C$1.11 billion, driven by increases of 48% in coal, 10% in intermodal freight, and 7% in grain over the same period last year. For the first six months of the year, revenue rose 12% to C$2.12 billion from C$1.89 billion in first-half 2004. The railroad expects revenue to grow 12% to 14% in 2005. And assuming oil averages $55 per barrel and the exchange rate averages about 81 U.S. cents to the Canadian dollar, earnings per share in 2005 will be in the range of C$3.15 to C$3.25.
More bilevel TGVs on the waySNCF (French National Railways) exercised two options with Alstom Transport worth $660.3 million for TGV Duplex trainsets and power cars.
The first contract is for 24 complete TGV Duplex trainsets and four trainsets without power cars. It is the final option of an overall contract signed in October 2000 for 82 TGV Duplex trainsets with Alstom/Bombardier consortium led by Alstom. The four trainsets without power cars will be assembled with power cars from the existing TGV Réseau fleet. The 28 trainsets will join the TGV Duplex fleet, which runs mainly on the TGV Méditerranée line between Paris and Marseille.
The second contract calls for eight power cars for the TGV Est network (Paris-Ostfrankreich-Süddeutschland). They’re part of an overall contract drawn up in January 2003 for 30 power cars and 31 options and will operate with existing renovated TGV Réseau trainsets.
The TGV Est will connect Paris, eastern France, southwest Germany, Luxemburg, and Switzerland as of mid-2007.
Wabtec earnings up 60%Based on strong sales growth and “strong demand for new rolling stock” that boosted sales by 31%, Wabtec Corp. posted second-quarter 2005 earnings per diluted share of 32 cents, a 60% increase compared to the year-ago quarter’s figure of 20 cents and the fifth consecutive quarter the company has reported an earnings increase. Wabtec also affirmed its previous guidance for 2005 full-year earnings per diluted share of about $1.10, a growth rate of about 55% compared to 2004. Net income for the quarter was $15.2 million and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was $32.7 million, compared to $9 million and $23.5 million, respectively, in 2004.
Wabtec’s 31% quarterly sales increased to $270.2 million, a record, “mainly due to strong demand for locomotive and freight car components, the CoFren (assets of Rütgers Rail SpA) acquisition, and the ramp-up of a locomotive modules contract,” the company said. But gross margin decreased slightly, from 24.9% compared to 25.5% for the year-ago quarter, “primarily from the locomotive modules contract, which incurred a loss in the 2005 second quarter, as anticipated.” Wabtec expects this contract to be profitable in the second half of 2005 and for the remainder of the project. Quarterly operating expenses were 18% higher, due primarily to the CoFren acquisition and higher sales. As of June 30, 2005, Wabtec had debt, net of cash and securities, of $53.4 million (13% of total capital), compared to $82 million (20% of total capital) three months earlier.
BNSF posts strong second-quarter results With earnings soaring 47% and an operating ratio improving by 4 percentage points to 76.7%, BNSF reported a strong second quarter that beat analyst expectations and overcame service problems in the Powder River Basin.
Between April and June, net income rose to $366 million, or 96 cents a share, from $249 million, or 67 cents a share, during the same period last year. Thompson Financial-polled analysts had anticipated profits of 93 cents a share.
Operating income also was up substantially, coming in 40% higher at $710 million vs. $508 million during the year-earlier quarter. Operating revenue was $3.14 billion—an 18% increase from $2.69 billion last year—beating analyst predictions of $3.07 billion. BNSF posted these numbers despite a 12% jump in operating expenses to $2.34 billion, attributable to 37% higher fuel prices after hedge funds and a 4% increase in gross ton-miles.
BNSF reached a record $3.04 billion in freight revenues, or a 15% increase over 2004’s second quarter. The growth, the railroad noted, reflects revenue gains in all company business groups, including coal. Coal revenues rose 7% to $591 million compared with $553 million a year earlier, despite PRB operational and maintenance disruptions caused by adverse weather conditions. Revenues derived from fuel surcharges were $234 million, nearly three times last year’s $65 million.
Commenting on the railroad's second-quarter results, BNSF Chairman, President, and CEO Matt Rose said, “The second quarter of 2005 was our thirteenth consecutive quarter of year-over-year volume increases and sixth consecutive quarter of double-digit freight revenue growth."
“BNSF’s results support our belief that the railroad industry’s pricing story is alive and well,” said MorganStanley railroad analyst Jim Valentine. “We believe the industry’s newfound pricing discipline will lead to higher than historical earnings growth and returns, which will ultimately lead to valuation multiple expansion for the group.”
Siemens to expand manufacturing capacitySiemens Transportation Systems is expanding its Sacramento, Calif.-based light rail vehicle manufacturing plant to include carshell production. As many as 75 new employees will be hired.
This “multi-million dollar” investment will help STS continue to offer “competitive pricing and high-quality products,” according to President and CEO Oliver Hauck.
Denver Regional Transportation District and Calgary Transit recently exercised options with STS for an additional 34 and 33 LRVs, respectively. The carshells for both orders will be built at the Sacramento facility.
Metro-North, LIRR place $425 million car orderMTA Metro-North Railroad and MTA Long Island Rail Road have exercised options for an additional 194 M-7 EMUs (electric-multiple units) from Bombardier Transportation. As part of the $425 million deal, MNR is ordering 36 more cars for $80 million; LIRR, 158 for $345 million.
Now on the order books for both commuter railroads are 1,172 M-7s, valued at some $2.5 billion, according to Bombardier. This includes base orders of 192 cars for LIRR and 980 option cars from both LIRR and MNR. So far, more than 630 M-7s have been delivered. Should all remaining options be exercised, the entire contract would amount to 1,266 cars, worth $2.7 billion.
“Railroad Antitrust and Competition Enhancement Act of 2005” introducedAnother bill seeking to remove exemptions for railroads from federal anti-trust laws and satisfy shipper calls for more competition among railroads has been introduced in Congress.
The “Railroad Antitrust and Competition Enhancement Act of 2005,” introduced today by Reps. Mark Green (R-Wisc.), and Earl Pomeroy (D-N.Dak.), would expand the ability of the U.S. Justice Department, states, and the general public to bring antitrust cases against railroads. The bill is supported by several railroad shipper groups from the who claim that current laws allow the railroads to avoid competition with each other while remaining outside the reach of antitrust prosecution. Among them are the Alliance for Rail Competition, which organized a lobbying effort on Capitol Hill that took place Wednesday.
The Green-Pomeroy bill, which has been referred to the House Judiciary Committee and Transportation and Infrastructure Committee, would give the Justice Department a role in reviewing proposed railroads merger. That function is now handled solely by the Surface Transportation Board. The railroads support STB oversight and oppose any changes to current law. The Association of American Railroads is withholding comment until it has a chance to review the bill.
The Green-Pomeroy bill joins S. 919 (Railroad Competition Act of 2005) and H.R. 2047 (Railroad Competition Improvement and Reauthorization Act of 2005). S. 919 and H.R. 2047 are not endorsed by the largest shipper trade organization, the National Industrial Transportation League, which has decided to remain neutral and “enter into discussions with the rail industry and rail user groups to address solutions to the nation’s rail transportation problems, including capacity, security, and competitiveness.”
Pomeroy’s announcement of the bill seemed to be aimed specifically at his local constituents. “In North Dakota, shippers are at the mercy of a railroad monopoly that sets rates in an anticompetitive manner,” he said, presumably alluding to BNSF Railway. “This unfair practice costs our producers millions, and there is no reason that railroads should have this monopoly status protected under law. This legislation will ensure that railroads play by the same rules as any other business, which will increase competition and help lower shipping prices.”
Amtrak continues to gain groundThe Senate Appropriations Committee late yesterday to provide Amtrak with $1.45 billion in Fiscal Year 2006 funding, an increase of $50 million above what the Transportation, Treasury, the Judiciary and Housing and Urban Development Appropriations Subcommittee approved on Tuesday, and $274 million above the House-passed level of $1.176 billion. The Senate Appropriation Committee’s actions will be followed by Senate floor action, then by House/Senate Conference Committee action, so a final FY 2006 figure for Amtrak—as well as a reauthorization bill being considered by the Senate Committee on Commerce, Science, and Transportation—may still be quite some time away.
UP earnings rise 47%Strong growth in five of its six commodity groups helped Union Pacific post a 47% gain in earnings for second-quarter 2005, compared to the prior-year period. “We continue to see strong demand for our services and we are improving our ability to handle the increased volumes more efficiently,” said Chairman and CEO Dick Davidson. “This is our first year-over-year operating income growth in six quarters. While we still have a lot of work to do, our progress is encouraging, and we look forward to continuing this positive trend as we begin to see the benefits of our network management initiatives.”
UP’s second-quarter net income was $233 million, or $.88 per diluted share, compared to second-quarter 2004’s $158 million, or $.60 per diluted share. Operating income during the quarter was $468 million, up 30% from the $359 million reported last year. The operating ratio dropped 2.1 points, from 88.1% to 86.0%, based on record quarterly operating revenue of $3.34 billion (a 30% increase over 2004) and operating expenses of $2.88 billion (an 8% increase over the prior-year period, based partially on a 44% fuel price increase). Operating income of $468 million was the highest reported since fourth-quarter 2003. Year-to-date, UP’s operating ratio is 88.0%, compared to 88.6% for the first two quarters of 2004.
On a commodity basis, quarterly revenue rose as follows: Industrial Products up 19%; Agricultural up 16%; Intermodal up 10%; Chemicals up 7%; Energy up 5%; and Automotive up 1%
Two of UP’s three key operating metrics improved in second-quarter of 2005 vs. the prior-year period. Average terminal dwell time improved 11%, from 30.9 hours to 27.4 hours. Railcar inventory (cars on line) improved 2%, to 318,434 cars. But average train speed fell slightly, from 21.3 mph to 21.2 mph.
Railroad shares climb on CN earnings reportRailroad investors reacted enthusiastically to a strong second-quarter earnings report posted by CN on July 20. CN's own shares climbed around 6% by 3 p.m., while Norfolk Southern's shares rose 4.29%; BNSF's, 4.12%; Canadian Pacific Railway's, 3.51%; Union Pacific's, 2.50%; and CSX's, 1.87%. The good news that CN brought to Wall Street was that its second quarter net income of $428 million was 28% above that of the comparable period last year and its operating ratio sank to a record quarterly low of 61.2%.
There was further upbeat news from the Montreal-based railroad: “Strong results and solid outlook prompt management to increase full-year 2005 earnings guidance--diluted earnings per share for the year are now expected to rise in the range of 20% to 25%, compared with previous guidance of a 10-15% increase.”
CN Chairman, President, and CEO Hunter Harrison also said: “Our free cash flow performance was outstanding and will permit us to reward shareholders with a new share buy-back program effective July 25, 2005. Under this program, CN plans to purchase for cancellation up to 16 million, or about 6%, of the issued and outstanding shares of the company.”
CN said its second-quarter revenues increased by 10% to $1.838 billion, largely owing to freight rate increases, a higher fuel surcharge, and the inclusion of revenues from the rail and related holdings of Great Lakes Transportation LLC and BC Rail. Operating expenses increased 3% to 1.125 billion.
KCS sheds five branchesKansas City Southern Railway has leased five branch lines in Oklahoma, Arkansas, Louisiana, and Alabama to three short lines owned by Watco Companies. They include the Waldron Branch (Heavener, Okla., to Waldron, Ark.), Nashville Branch (Ashdown to Nashville, Ark.), Hodge Subdivision (Gibsland to Pineville Junction, La.), Minden Branch (portion of the Hope Subdivision from Springhill to Hinkle, La., and the Sibley Branch from Minden to Sibley, La.), and Tuscaloosa Branch (portion of the Tuscaloosa Subdivision east of Columbus, Miss. to Tuscaloosa, Ala., the Warrior Branch between Tuscaloosa and Fox, Ala., and the Brookwood Branch from Brookwood Junction to Brookwood, Ala.). Under the lease, these branch lines will continue to receive rail service, but from Watco-owned Arkansas Southern, Louisiana Southern, and Alabama Southern railroads. Transition of rail operations are expected to begin in September on the two Louisiana lines, with the Arkansas and Alabama properties to follow in October and early November.
DOT puts safety on the tableCommuter railcar worktables and seats are the subject of a new U.S. DOT safety improvement project.
The DOT’s Research and Innovative Technology Administration (RITA), which operates the Volpe National Transportation Systems Center, has awarded two contracts worth $850,000 to Massachusetts-based technology firm TIAX (www.tiaxllc.com) “to develop a safer passenger seat and worktable that will reduce injuries and improve the ability of passengers to safely exit a train following a collision,” TIAX, working with the Federal Railroad Administration and RITA, “will design a worktable that will absorb energy upon impact and reduce the risk of head, chest, abdomen, and leg injuries. The table also will be designed to allow passengers to evacuate more easily following a collision. In addition, improved three-person seats will be developed to reduce the risk of head, chest, and leg injuries by safely compartmentalizing passengers and ensuring that the seat remains attached to the floor upon impact.”
For California, a Sealed CorridorThe North Carolina Department of Transportation’s successful “Sealed Corridor” initiative on a state-owned right-of-way between Charlotte and Raleigh operated by Norfolk Southern and Amtrak will be emulated in California on Metrolink’s Antelope and Ventura County lines, which run from Los Angeles to Symar and Chatsworth. The Federal Railroad Administration, which contributed to the NCDOT program, is providing a $250,000 grant for the Metrolink project.
The California study, says FRA, “will evaluate whether it is possible to reduce or eliminate the chance of cars crossing into the path of trains. The purpose of the assessment is to decide which grade crossings should receive safety improvements or be permanently closed.” In January, the chain-reaction crash of two Metrolink commuter trains and a parked Union Pacific freight train in Glendale, Calif., killed 11 and injured 200. An inbound Metrolink train in push mode hit an SUV that had gotten stuck on the tracks following an aborted suicide attempt, derailed, struck the UP train, then plowed into an outbound Metrolink train.
The study will evaluate 49 crossings on Metrolink’s 26-mile Antelope Line between Los Angeles and Symar, and the 32-mile Ventura County Line between Los Angeles and Chatsworth. It will consider current and projected traffic conditions, recommend safety enhancements, create a grade crossing improvement priority list, identify potential closures, and provide cost estimates to accomplish the plan’s objective. Potential improvements may include four-quadrant gates, extended gate arms, grade separations, highway median separators, traffic signal upgrades, and permanent closures.
In addition, Metrolink will develop a program to construct locked gates and other barriers to deny access to its right-of-way at certain locations other than highway-rail crossings, including fencing to deter trespassing.
North Carolina’s program to date has made safety upgrades at 67 crossings, and 64 public and private crossings have been closed, with improvements at over 100 others still in various stages of project development.
Amtrak funding moving through the SenateDefying a threatened veto recommendation from U.S. Transportation Secretary Norman Mineta (who is still pushing for a zero-budgeting of Amtrak despite winning almost no support in Congress), the Senate Transportation, Treasury, the Judiciary and Housing and Urban Development Appropriations Subcommittee has approved $1.4 billion for Amtrak as part of a $136.6 billion Fiscal Year 2006 funding measure—up from the final House number of $1.176 billion passed two weeks ago. The bill will now move to the full Senate Appropriations Committee for approval; action may take place tomorrow.
The Senate number maintains all current Amtrak routes and services, but it contains language enforcing a prohibition on subsidizing food and beverage service and sleeping car losses. Authority is also granted to the Secretary of Transportation to allow surcharges to be levied on tickets for capital expenditures, as long as ridership is not decreased. Amtrak is also directed to implement new cost accounting methods.
Amtrak supporters such as Sen. Patty Murray (D-Wash.) believe such language is tantamount to micromanaging Amtrak operations. “It would be my preference to have reforms considered by the Commerce, Science and Transportation Committee,” she said. This committee has authorizing jurisdiction and has the power to enact legislation that, among other things, determines the makeup of the Amtrak board and its specific duties, as well as set limits on the amount of funding that can be appropriated each year. It is expected to consider an Amtrak reauthorization bill shortly. Amtrak has been functioning on annual appropriations and continuing resolutions for several years, without a reauthorization.
While yesterday’s Senate action spells good news for Amtrak, there is still a long way to go in the legislative process. The Senate Appropriation Committee’s actions will be followed by Senate floor action, then by House/Senate Conference Committee action. A final FY 2006 figure for Amtrak—as well as a reauthorization bill—may still be quite some time away.
Freight car orders, deliveries continue to climbThe North American freight car building industry delivered 33,695 new cars in the first half of 2005, and accepted another 36,605 orders, according to figures released by the American Railway Car Institute Committee of the Railway Supply Institute. Backlog held steady at 60,544. With the market continuing to boom, manufacturers are “optimistic” about the remainder of 2005, says RSI Executive Director-Washington Thomas D. Simpson.
New car deliveries have been rising steadily since fourth-quarter 2004. In this year's second quarter, 17,914 new cars were delivered, increasing 13.5% over the first quarter, and 19,132 ordered, growing 9% since first quarter. Topping the order books were aluminum gondolas, five-unit intermodal platforms, and tank cars, according to ARCI.
Approaching fall peak, railroads are hopeful but not complacentNorth America’s major railroads have informed the Surface Transportation Board that they appear to be headed for another record level of business this year and are prepared to handle it as well as or better than they handled last year’s surge. Performance measures are either steady or improving and the supply of operating crews, motive power, and freight cars is vastly improved over a year ago. But capacity issues are far from resolved. The Union Pacific, for example, told the STB that while it expects to handle this fall’s peak demand more effectively than it handled 2004’s, “Nevertheless, continued strong demand for rail services is pressing the limits of our capacity in several areas and stressing our system.”
UP and other railroads were responding to a June 15 request by STB Chairman Roger Nober for an update on their plans for handling the fall peak shipping season. By July 19, all of the railroad reports except that of Canadian Pacific railway had been received and posted on the STB’s website. STB was also still awaiting a requested readiness report from the Short Line and Regional Railroad Association.
A new cloud on the horizon this year involves shipments of Powder River Basin coal by UP and BNSF. As UP Chairman and CEO Dick Davidson put it to the STB: “Union Pacific’s plans for peak-season coal transportation have been frustrated by developments in the Powder river basin. BNSF and Union Pacific serve the mines in the Southern Powder River Basin via a jointly-owned line that is maintained and dispatched by BNSF. Two derailments in mid-May, following heavy snow and rains, demonstrated that the build-up of coal dust on the Joint Line crippled the railroad. . . . A long-term maintenance program to clean the ballast and rebuild the railroad has begun and will continue until coal weather halts it in November. These developments have had a significant effect on Union Pacific’s ability to meet demand for Wyoming coal. We are telling our customers to expect to receive 80% to 85% of the tons they had estimated, although we and BNSF have been loading a somewhat higher percentage thus far in July.”
In other areas, UP had a far more upbeat story to tell. Hard hit by crew and motive power shortages last UP, UP has acted swiftly to fill the gaps. Davidson said UP brought aboard 5,000 new train service employees in 2004 and “for the peak period of August through November this year, we expect to have nearly 1,500 more train and engine employees trained and qualified than we had during the same period of 2004.” Davidson also said UP had acquired 315 new locomotives in the first seven months of 2005 and expects to have approximately 300 more locomotives during this year’s peak period than in the 2004 season. “We are also acquiring through purchase or lease the equivalent of approximately 4,000 freight cars in 2005,” he said.
In addition to these measures, Davidson described productivity improvements resulting from “a redesign of our network, the Unified Plan, to improve service reliability” and “the use of industrial engineering methods to maximize our performance in terminals and on certain segments of the railroad.”
CSX Transportation, another railroad hard hit by last year’s capacity crunch, was also able to report progress to the STB, though it acknowledged that systemwide velocity still needs improvement. CSXT believes its car fleet is sufficient to meet peak-season demands, but it will be acquiring an additional 100 new locomotives in coming months, Chairman, President, and CEO Michael J. Ward said in his response to the STB. “Engineer training has doubled over 2004 levels,” said Ward. “CSXT expects to have trained 1,350 train and engine service employees by the start of this year’s fall peak.” In this year’s second half, CSXT will be completing “significant investments in its St. Louis Gateway and connecting routes” to make it easier to bring western coal to its utility customers. “To prepare for long-term growth in customer demand,” said Ward, “CSXT is currently undertaking a comprehensive analysis and simulation along key corridors where it believes future capacity improvements may be required to handle a sustained increase in freight traffic.”
BNSF, which handled last year’s demands with relative ease and appears ready do so again this year, described to the STB a capital investment program geared to matching capacity with demand. “We attempt to balance existing capacity, as well as our annual ‘expansion capital program,’ against the imperfect demand forecasts of our customers,” said Chairman, President, and CEO Matt Rose. “Given the unprecedented and unpredicted rail volumes of BNSF have been moving since mid-2003, we are proud of keeping our overall rail network fluid. In response to these volumes, the expansion portion of our 2005 capital plan was doubled compared with 2004 and represents 22% (or about $450 million) of our $2.1 billion capital program.”
“At the same time,” added Rose, there are significant financial constraints that will not allow BNSF, nor do we believe any other railroad, to invest in sufficient capacity just in order to handle potential large volume spikes.”
BNSF this year plans to acquire 285 locomotives and expects to add around 200 more at the beginning of 2005. BNSF has added 6,500 cars to its fleet this year, after last year’s 4,500.
As for the Powder river Basin situation, Rose said BNSF expects “modest impact on the number of coal trains that will be operating on the Joint Line during the balance of 2005” and is “working closely with our utility customers and the mines to ensure that coal supply is in line with their needs.”
Norfolk Southern’s response to the STB included a description of how it routinely adopts its operating plan to seasonal demands: “Earlier this year Norfolk Southern embarked on a complete review of TOP [Thoroughbred Operating Plan] to ensure that it had sufficient capacity for our current business mix volumes, and expected growth. Dubbed ‘TOP II’ the plan also incorporates intermodal and some scheduled unit trains in order to improve locomotive distribution and improve line segment efficiencies. One of the primary purposes of the TOP II review is to add train capacity where needed to handle projected growth. Including peak fall volumes. The new TOP II plan is now complete and will be fully implemented by September 2005.”
To handle increased business, NS is also leasing 137 locomotives through the fall peak on a short term basis and is continuing long term leases on 150 locomotives.
Super Steel will assemble Green Goat locomotivesRailPower Technologies Corp., which developed and is marketing Green Goat® switching locomotives, announced that it has signed supply and assembly agreements with Super Steel Products Corp. of Milwaukee, Wis., and Super Steel Schenectady, Inc. off Glenville, N.Y. RailPower said assembly of its energy-saving hybrid switchers at Super Steel’s facility in Schenectady “will give us significant capacity for the large, East Coast markers.”
New York gearing up for a new train stationAfter spending years on the backburner, New York City's long-awaited train station project is finally under way. The Empire State Development Corp. (ESDC) has selected The Related Companies and Vornado Realty Trust to convert the Farley Post Office, located across Eighth Avenue from Penn Station, into a new $818 million transit/shopping hub. The architect is James Carpenter Design Associates in collaboration with Hellmuth, Obata + Kassabaum in New York.
The new Moynihan Station--named after late Sen. Daniel Patrick Moynihan, who first secured federal funding for it-will help ease overcrowding at Penn Station, which serves more than 500,000 daily New Jersey Transit, Long Island Rail Road, and Amtrak riders. NJ Transit will be its principal tenant, not Amtrak, as originally intended, due to funding issues.
“With the new Moynihan Station, we are going to give commuters a more modern, much expanded facility,” said ESDC Chairman Charles A. Gargano, during the announcement yesterday.
The project will include 300,000 square feet for the train station, 850,000 square feet for commercial space, and up to 1 million square feet of air rights, which are slated to be transferred to an adjacent site for a new residential building. The Post Office will continue to occupy 250,000 square feet in the building.
Among Moynihan Station features:
* A new passenger station for NJ Transit, including ticketing, customer service, train information systems, and passenger seating.
* LIRR information and ticketing.
* Port Authority Airport access, providing airline passenger and baggage check-in, flight information, and rail service to airports.
* A variety of retail shops, restaurants, a boutique hotel, and a merchandise mart.
* Thirty-three new access routes, including elevators, escalators, and stairways to the boarding platforms serving LIRR, NJ Transit, and Amtrak.
* New street entrances for all rail passengers on the west side of Eighth Avenue, on Ninth Avenue, and on Thirty-first and Thirty-third Streets.
* Connecting corridors between Moynihan Station, Penn Station, and the Eighth Avenue New York City Transit station will be enlarged and include improved accessibility features.
* A connection with Ninth Avenue and future West Side development by a street-level Thirty-second Street Concourse.
The new station project will be funded by the state, city, and federal governments, in addition to the U.S. Post Office, Vornado Realty Trust, and The Related Companies.
UP's track improvement projects under wayAs part of $1 billion-plus in 2005 track maintenance projects, Union Pacific began work between Boone and Denison, Iowa, late last week. The improvements, valued at $47.2 million, include removing and installing 196,181 concrete ties; spreading 222,000 tons of ballast; replacing the surfaces at 45 road crossings; and replacing 24 turnouts. They are expected to be complete by the end of October.
Senate rejects increased transit security fundsThe U.S. Senate yesterday passed 96-1 a $31.86 billion Fiscal Year 2006 Department of Homeland Security funding bill that earmarks $100 million for mass transit security—a one-third reduction from the current level of $150 million. The Senate bill now must be reconciled with a House bill, which maintains mass transit security funding at its current level.
A bipartisan amendment to increase mass transit security funding to $1.2 billion failed, even though it was backed by 53 of the Senate's 100 members. Supporters would have required 60 votes to prevail because the additional money would have exceeded the Senate’s self-imposed spending caps. The $1.2 billion would have been designated for subway surveillance cameras, bomb-sniffing dogs in train stations and on railcars, additional security personnel for all mass transit, and more bomb detection devices.
The Senate’s action comes one week after four terrorist suicide bombs killed 54 and injured nearly 1,000 on London’s mass transit system. The London attacks prompted calls for increased security funding for U.S. mass transit. The American Public Transportation Association, citing $6 billion in long-term needs, urged Congress to appropriate $2 billion for Fiscal Year 2006.
Homeland Security Secretary Michael Chertoff angered mass transit advocates and members of Congress from urban areas when he implied that airline security is more pressing than mass transit security, which he said should be primarily a local concern. “The truth of the matter is that a fully loaded airplane with jet fuel, a commercial airliner, has the capacity to kill 3,000 people. A bomb in a subway car may kill 30 people,” Chertoff told the Associated Press. “When you start to think about your priorities, you're going to think about making sure you don't have a catastrophic thing first. . . . Bear in mind also that aviation is almost exclusively a federal responsibility, whereas state and local government has a very large role in transit.” In a separate interview with The New York Times, Chertoff said that “a nuclear weapon that killed a million people is a different order of consequence than 50.”
APTA responded strongly to Chertoff’s open-mouth-and-insert-foot statements: “To say that a terrorist attack on a subway is less important than an attack using a commercial airline is another example of how the federal government treats the millions of public transportation riders as second class citizens when it comes to security. Thirty-two million times a day, people use public transportation. That is 16 times more than use domestic airlines. However, in the period from Sept. 11, 2001 through May 31, 2005, aviation has received $18.1 billion for security from the federal government while public transportation has only been allocated $250 million. Transit security is a national security issue and our national leaders, including DHS Secretary Chertoff, should make a commitment to protect all American citizens to the fullest extent and in the most appropriate way possible. . . . Paying to protect American citizens, including transit riders, from terrorist attacks is the responsibility of the federal government. Local governments, with their extremely limited tax base, cannot cover the costs. To purposely not adequately fund public transportation is not a responsible position for our federal leaders to take.”
Chertoff’s remarks were published shortly before he was scheduled to testify before homeland security committees in both the House and Senate yesterday. In his testimony, Chertoff attempted to remove his foot from his mouth by stressing that protecting aviation is far different from protecting subways and buses. “We could never run the New York City subway system like we run an airport,” he told the House Homeland Security Committee. “We couldn't have people walk through magnetometers. It’s not possible.” Later, at the Senate hearing, under questioning from an outraged Sen. Joe Lieberman (D-Conn.), who read him excerpts from the AP interview, Chertoff said he wished to clarify his remarks: “I do want to emphasize, so there is no mistake about it, that as we speak, and before London, we were working very, very hard focusing on the rail system.”
FRA says push-pull passenger operations safeThe Federal Railroad Administration has issued a report, “Interim Analysis: Push-Pull and MU Train Operations,” that says push-pull passenger train operations are basically safe. There is no greater risk of derailment in push mode (cab car first) than in pull mode (locomotive first), says FRA, though the agency did recommend that certain structural modifications could be made to cab cars to make them safer for passengers in the event of an accident. Such modifications could include crash energy management (crush) zones.
FRA’s July 1 interim report, part of an ongoing evaluation of push-pull operations, was issued as the result of an investigation following the Jan. 26 chain-reaction crash of two Metrolink commuter trains and a parked Union Pacific freight train in Glendale, Calif., that killed 11 and injured 200. Eight of those killed were in the cab car of an inbound train in push mode that hit an SUV that had gotten stuck on the tracks following an aborted suicide attempt. The train derailed, struck the UP train, then plowed into an outbound Metrolink train. The FRA said the circumstances of the accident were unusual. The driver of the SUV has been charged with 11 counts of murder.
“FRA is aware that when a collision does occur, whether at a crossing or with other rail rolling stock, passengers in a cab car or MU locomotive may be more vulnerable than passengers riding in a coach trailing a conventional locomotive,” the report said. “However, it is also likely that severity outcomes in high-energy events, such as the Glendale derailment, are more likely to be influenced by chance circumstances rather than by placement of a locomotive in the consist. . . . Very clearly, passenger rail as a whole has not experienced a notably unfavorable experience with push and MU service.” FRA cited such factors as cab signals, automatic train control, crossings equipped with lights and gates, grade separation in some densely populated areas, and closely scheduled operations that give priority to commuter train movements as “supporting a high degree of safety in contemporary commuter rail operations” and “appropriate for consideration as the merits of push-pull and MU operations are considered.” FRA characterized the risk of such operations as “small.”
Since the accident, Metrolink has prohibited passengers from riding in the front mezzanine of its bilevel cab cars by roping the area off, a practice the FRA calls “prudent.” The agency is one of many participating in a joint FRA RSAC (Rail Safety Advisory Committee)/APTA PRESS (Passenger Rail Equipment Safety Standards) task force to develop new safety specifications for cab cars, as well as an APTA-sponsored System Safety Planning Process.
Metrolink plans to issue an RFP for new bilevels this fall and is planning on requiring its new railcars to have crush zones.
Railway supplier opportunities in IraqAt the request of the U.S. Department of Commerce, the Association of American Railroads and Railway Supply Institute will be holding a briefing on business opportunities for railway suppliers in rebuilding the rail infrastructure in Iraq. The briefing will take place at AAR headquarters in Washington, D.C. on July 25. The principal speaker is Joel Szabat, Transportation Counselor, Iraq Reconstruction Management Office, U.S. Embassy in Baghdad. Szabat serves as lead advisor to the Iraqi Minister of Transportation. He “will share his experiences and vision for the reconstruction of Iraq’s railway sector,” according to a notice distributed by RSI. Additionally, Jay Brandes, Director of the U.S. Department of Commerce’s Iraq Investment and Reconstruction Task Force, will discuss the department’s services available to U.S. companies doing business in Iraq, as well as the various sources of funding to support reconstruction there. Railway suppliers wishing to attend the meeting or access it by teleconference should contact AAR’s Kelly Donley, (202) 639-2343 or kdonley@aar.org.
MTA's $21.1 billion capital plan gets the green lightThe Metropolitan Transportation Authority of New York's $21.1 billion capital plan for 2005-2009 has been approved. The New York State Capital Program Review Board finally gave the go-ahead yesterday, after weeks of negotiations. The plan was originally submitted last October, with a request for nearly $28 billion, and was recently resubmitted for the fourth time. The plan includes $14.9 billion for core programs at MTA's bus, subway (New York City Transit), and commuter rail systems (Long Island Rail Road and Metro-North Railroad). Another $495 million is slated for security.
U.S. transit security funding “badly needed”“The deadly bombings on commuter trains in London last week and Madrid last year should be a wake-up call for this country,” said U.S. Rep. Bennie G. Thompson (D-MS). “We should take the necessary steps to keep terrorists out of New York's subways, Boston's T, Chicago's El, Washington, D.C.'s metro, and the hundreds of bus systems across our nation.”
To address this, as well as the “unreasonable lack” of transit security funding, the congressman and others introduced to the House late yesterday the Secure Transit and Railroads across America and Investment in National Security Act of 2005. It would require the Department of Homeland Security to submit a National Transportation Security Plan for the nation's transportation systems. Bill sponsors also include Ranking Member of the U.S. House on Homeland Security, Democratic Caucus Chairman Rep. Robert Menendez (D-N.J.) and Rep. Eleanor Holmes Norton (D-D.C.).
According to the Democratic Office of the House Committee on Homeland Security, a National Transportation Security Plan had been expected to be complete in 2003. Congress later ordered DHS to finish it by April 1, 2005, but it's still pending.
Transportation Trades Department President Edward Wytkind has commended the Secure TRAINS Act, noting that it is a “badly needed” next step to making public transit systems safer. “We spend six-tenths of a penny per passenger on transit security, compared to $9.16 per airline passenger,” he pointed out.
Others in Congress are similarly concerned since the London bombings. Sen. Charles Schumer (D-N.Y.) has proposed to quadruple spending on mass transit security from $100 million to $400 million by introducing amendments to DHS's 2006 appropriations bill.
This week the full Senate is considering the 2006 DHS appropriations bill, which includes $100 million for transit and rail security grants--a cut from the $150 million that Congress provided last year.
The American Public Transportation Association, which has been urging Congress and the White House to make more funding available, is recommending that the Senate include $2 billion for transit security in this year's DHS appropriations bill to safeguard the public transit riders who take 32 million trips each weekday.
A 2004 APTA survey indicates that $6 billion is needed for transit security. Of that, $5.2 billion should be set aside for such capital improvement projects as improved, interoperable radio systems; security cameras onboard transit vehicles and at transit stations; access control to transit facilities and secure areas; and automated vehicle locator systems. Another $800 million is required annually for operational activities, including employee training and security drills; security drills with other first responders (police and fire); overtime pay for such drills; and extra personnel hours when the national security threat level is raised.
“America's transit agencies have already spent more than $2 billion for transit security out of their own budgets since 9/11,” APTA President William Millar said in a statement yesterday, supporting DHS Secretary Michael Chertoff's announcement that he will make transportation security a priority as part of DHS's reorganization plan. Millar was disappointed, however, that Chertoff did not call for additional funding. “The federal government needs to take responsibility for a greater share of transit security funding,” Millar maintained.
Public transportation security funding has been insufficient so far. In 2003, former DHS Secretary Tom Ridge designated $65 million to 20 transit agencies. The 2005 DHS allocations, amounting to $135 million out of a $150 million program, have not yet been distributed to the states or transit agencies, according to Millar. The State Homeland Security and Urban Area Security Initiative has made $8.6 billion available for security purposes, but individual states decide who receives the grant money--and grantees include emergency medical services, police and fire responders, as well as transit agencies. Transit providers have received “very little” of these funds, according to APTA.
“Public transportation has been a target for terrorists around the world over the past 25 years,” stressed Millar. “After last week's attacks in London, all branches of the federal government need to act quickly to make sure that our American citizens are as safe as possible.”
CPR, union reach tentative dealCanadian Pacific Railway and the International Brotherhood of Electrical Workers are closing in on a new five-year collective agreement, extending through December 2009. The tentative agreement is subject to ratification by some 450 IBEW members. Results are expected in September.
Commented CPR President Rob Ritchie during today's announcement: “With this settlement, CPR has successfully negotiated collective agreements with all of its unionized employees in Canada.”
Tex-Mex, Iowa Interstate receive RRIF loansTexas-Mexican Railroad (Tex-Mex) and Iowa Interstate Railroad (IAIS) have been awarded RRIF (Railroad Rehabilitation and Improvement Financing) loans from the Federal Railroad Administration.
A $50 million loan will help Tex-Mex, a Kansas City Southern subsidiary, upgrade infrastructure and refinance prior debt incurred from previous capital investment projects. Slated for rehabilitation are 146 miles of track, 26 bridges, and two rail yards at Laredo and Corpus Christi, Tex. The short line also will construct two sidings and lengthen one, and replace 75,000 crossties. The work will help increase operating speeds as well as capacity to accommodate growing freight traffic along the NAFTA corridor.
IAIS is using its $32.7 million loan to rehabilitate approximately 300 miles of track between Atlantic, Iowa, and Bureau, Ill., allowing it to handle 286K loads at operating speeds of 40 mph. In addition to upgrading bridges and sidings, the railroad will replace 700,000 rail anchors, five miles of rail, and 183,000 crossties; repair highway/rail grade crossings; put down 200,000 tons of ballast; and perform rail grinding on 40 miles of track. The project is scheduled for completion by the end of 2006.
"This 25-year loan will enable the IAIS to eliminate the deferred maintenance that occurred over the past 30 years and position the railroad to handle larger cars," said Dennis H. Miller, president and CEO of the Railroad Development Corp. subsidiary.
New cars for Metro-North?Good news came late last week for MTA Metro-North Railroad. Connecticut Gov. M. Jodi Rell signed a $1.3 billion transportation bill earmarking $667 million for 340-plus new New Haven Line cars and $300 million for a New Haven car maintenance facility. (Connecticut DOT jointly subsidizes MNR with New York State.) The funding is slated to come from a $1 per-ride surcharge for New Haven Line commuters (once the new cars enter service) plus an increase in the gross receipts tax on all petroleum products.
The bad news: The car order still could stall. The New York MTA's $21.1 billion capital plan for 2005-2009, which includes $100 million to initiate procurement of the MNR cars, has been rejected by New York State's Capital Program Review Board. Reports suggest, however, that a plan could be finalized soon. If it goes forward, a new car contract could be awarded as soon as first-quarter 2006, with delivery starting in 2008.
Acela Express returns to the NECAmtrak’s popular but problematic Acela Express trainsets began their return to Northeast Corridor rails today as the first two trainsets equipped with newly-designed disc brake rotor hubs entered revenue service between New York and Washington. Service will resume gradually, as each of the trainsets is outfitted with the new hubs. As trainsets become available, they will replace the Amfleet-equipped Metroliners currently in service.
Amtrak says that the first Acela Express trainsets to be placed back in service will operate in high-demand morning and afternoon time slots. Service resumed this morning with trains 2102 and 2107, 7:00 a.m. departures out of Washington and New York. These runs will be followed by trains 2120 and 2123, 3:00 p.m. departures out of both cities.
In April, the spokes on 300 passenger coach brake rotor hubs were found to have developed cracks that could have eventually led to a component failure resulting in a derailment. All 20 Acela Express trainsets were removed from NEC service after the cracks were discovered during a routine inspection. The spokes cracked after being subjected long-term to lateral stresses resulting from vibrations encountered during brake application.
In the original design, spokes were configured in a non-elliptical pattern that was not aligned with disc rotation. The new design developed by Knorr (the braking system supplier) incorporates reoriented spokes that are perpendicular to the point of rotation. The new design should be able to withstand higher lateral stresses. Acela Express brake rotors were supposed to last one million miles and undergo several re-truings before requiring replacement; the cracks were found after approximately 500,000 miles.
Florida Northern leases 70-mile CSXT lineThe Florida Northern Railroad Co. has nearly tripled in size following a lease agreement with CSX Transportation. In addition to its original 27 miles of track, the short line now operates a 70-mile rail line extending from High Springs, Fla., to Red Level Junction, Fla. It's expected to boost business by some 35,000 cars per year.
The Pinsly Railroad Co. acquired FNRC from CSXT in 1988.
London’s public transport system hit by terrorist attacksAt least four bombs, three in the London Underground subway system and one on a city double-decker bus, were detonated during this morning’s rush hour in London, England. At least 40 people have been confirmed dead, with up to 1,000 injured, according to several news reports. More casualties are expected. London’s public transport system has been shut down.
London police said explosions were reported at the Aldgate station near the Liverpool Street railway terminal, Edgware Road and King's Cross in north London, Old Street in the financial district, and Russell Square, near the British Museum. A group calling itself the “Secret Organization group of al-Qaeda Organization in Europe” claimed responsibility in a website posting, saying the attacks were in retaliation for Britain's involvement in Iraq and Afghanistan.
The attacks coincided with the opening of the G-8 summit in Gleneagles, Scotland, and with the International Olympic Committee’s awarding of the 2012 Summer Games to London yesterday.
U.S. public transit systems, especially those in major cities like New York and Washington, are now in a state of heightened alert, deploying extra police officers and K-9 teams.
Even though the Department of Homeland Security has not raised the threat level on freight railroads, and no rail-specific threats have been identified, the freight rail industry “has moved to a higher state of readiness,” said Association of American Railroads President and CEO Ed Hamberger. “The increased measures include deployment of additional police officers and K-9 teams to key areas, as well as elevated vigilance along the U.S. freight rail network. This is a precautionary step that is part of the industry’s security plan. We continue to work closely with all government agencies to ensure that we are receiving and sharing the best possible information about potential threats and prevention measures.”
PRB track work impacting coal haulsMajor track work—undercutting, shoulder ballast cleaning, track surfacing, and replacement/new installation of concrete ties—on the joint Union Pacific/BNSF Railway line in the Powder River Basin began this week and is expected to impact unit coal train operations on both railroads.
BNSF and UP on June 23 agreed on the elements of a revised Joint Line Maintenance Plan. The original plan was modified, said BNSF, “in view of the unprecedented levels of precipitation that affected the PRB from late April through mid-May.” The precipitation, compounded by long-term accumulations of coal dust, caused two major derailments to occur within two days of each other in mid-May. Poor drainage was cited as the primary culprit.
In a service advisory, BNSF told customers that it expects the m/w activity “to have a modest impact on the number of coal trains that will be operating daily on the Joint Line during the balance of 2005. While the maintenance work began several months ago on the Joint Line, the modified plan work will begin early in July. BNSF will continue to work directly with our utility customers and the mines to ensure coal supply is in line with their needs.”
UP had a somewhat less favorable forecast. In a July 1 service advisory, the railroad told customers that it “continues to operate under Force Majeure conditions on the Joint Line. Operations are significantly impaired and UP is unable to meet all of its obligations for coal based upon extraordinary track repair and slow orders in place since May 14, 2005, over which we have no control. Until further notice, UP plans to allocate coal proportionately among our customers based upon trains loaded as a percent of total NCTA (National Coal Transportation Association) train demand. We expect this daily allocation to be in the range of 80-85% of NCTA demand. Variations in this allocation process should be expected due to a number variables including, but not limited to, planned and unplanned utility outages; day-to-day Joint Line, utility, and railroad congestion, and rail carsets out of service or stored.” UP added that it will do everything possible to ensure that the allocation process is fair.”
Extensive maintenance and track repair is expected to run through November 2005, UP said. The railroad “anticipates that some maintenance and repair work may be carried over into next year, and we will be in a better position to advise what that entails as we get closer to November.”
UP said it expects total outbound train operation on the Joint Line to average 60 trains per day, with UP’s share of loadings averaging 54% (31-32 trains per day) for the month of July.
Here’s how the m/w plan is progressing: BNSF is using two undercutters and a Harsco P811 tie and rail replacement machine. The undercutters will remove coal dust on approximately 100 miles of roadbed and the P811 will replace ties and rail on approximately 14 miles of track. Through July, turnouts will be rehabilitated during 12-hour curfews. Beginning July 11 and running through August 23, the P811 will replace ties and track on the line between Nacco Junction and Reno Junction, working 16-hour stretches at a time from Monday-Thursday of each week. This will reduce the Joint Line from double- to single-track operation during those windows.
Accidents/incidents decline but fatalities riseRailroads reported a total of 4,093 accidents/incidents in this year’s first four months, down 12.8% from the prior-year period, but fatalities rose 6.8% to 284, according to the Federal Railroad Administration. The leading causes of death were trespasser incidents, 135, up 2.3%; highway/rail collisions, 117, down 5.6%; and train accidents, 21, up from only three in the 2003 period. The number of reported train collisions increased 6.7% to 80, derailments declined 1.89% to 736, and yard accidents decreased 6.9% to 530.
Portec a “100 Best Small Company”Business Week magazine has named Portec Rail Products one of its “100 Best Small Companies” in the “Hot Growth Companies” category. Portec is ranked at no. 87.
“We are honored to be part of this list of strong performers,” said Portec President and Chief Executive Officer John S. Cooper. “We have worked hard to grow our company strategically while bringing quality products and solutions to our customers. It is good to know that these efforts to move our company ahead by introducing new technology to the rail industry in addition to the continuous improvement of our current product offering is worthy of this type of recognition. . . . It is an exciting time to be in the railroad business and this just adds to the satisfaction.”
Business Week’s Top 100 Best Small Companies are chosen from Standard & Poor’s COMPUSTAT database. More than 10,000 publicly traded corporations are considered. A company's annual sales must be more than $50 million and less than $1.5 billion, with a current market value greater than $25 million, a current stock price of at least $5, and be actively traded to qualify. Companies are ranked according to their three-year results in sales growth, earnings growth, and return on invested capital.
Premium track materials part of CPR expansionPremium chrome-alloy rail, concrete ties cast with an imbedded steel plate, and “angular” rock ballast figure heavily in Canadian Pacific Railway’s $160 million capacity-expansion program in western Canada. The expansion, which is in addition to CPR’s previously announced $760 million 2005 capital program, is designed to expand freight capacity between the Canadian Prairies and the Vancouver Gateway, the right-of-way of which crosses the Rocky Mountains. This is CPR’s busiest corridor, and volume continues to grow, with heavy demand in Asia for Canadian commodities and resources and increasing imports of consumer goods made in Asia.
The capacity expansion program involves more than 530,000 feet of premium rail, 137,000 wood and concrete crossties, and 300,000 tons of ballast. The special track materials are being installed in 25 locations CPR deems critical to meeting growing demand for rail service. When work is completed in fourth-quarter 2005, CPR says it will have enough capacity to run 38 trains a day between the Prairies and the Vancouver Gateway. That’s an increase of four trains a day, or more than 400 freight cars, over current capacity.
The chrome-alloy rail, which is able to support longer, heavier trains, is being installed mountain grades. CPR says it “is highly resistant to wear and fatigue under heavy loads and demanding operating conditions.” The new rail has high chromium content, and the steel in the railhead is hardened to a greater degree and depth than in standard rail. Its longer service life, says CPR, “reduces maintenance and replacement costs.” This rail is handled in quarter-mile lengths weighing almost 30 tons.
About 25% of the expansion program’s 137,000 crossties are a recently developed concrete tie cast with an imbedded steel plate said to reduce abrasion and extend tie life. They are being installed in high-curvature track. CPR expects these ties to last up to 40 years, compared with a hardwood tie lifespan of 20 to 25 years.
The angular crushed-rock ballast is composed mostly of granite. While able to meet hardness and durability specifications, its individual pieces are no larger than 2.5 inches and have sufficient fractured faces and angularity that enable them to “virtually interlock when tamped in place,” says CPR. “These characteristics produce ballast that distributes the load from passing trains, allows water to drain and resists plant growth that can destabilize the track.”
Tax law change will boost NS incomeA change in Ohio’s corporate tax laws will enable Norfolk Southern to increase its second-quarter 2005 net income by approximately $95 million, or $0.23 per diluted share.
Tax legislation signed by Ohio Governor Bob Taft on June 30 phases out the Ohio Corporate Franchise Tax and phases in a new gross receipts tax called the Commercial Activity Tax. The Corporate Franchise Tax was generally based on federal taxable income. Its elimination “will result in a favorable adjustment to Norfolk Southern’s deferred income taxes in the period of enactment, as required by Statement of Financial Accounting Standards No. 109, ‘Accounting for Income Taxes,’” NS said in a statement.
NS will report 2Q 2005at a quarterly analyst meeting on July 27.
FRA awards research grantThe Federal Railroad Administration has awarded a $237,794 grant to the University of California at San Diego to conduct research on rail flaw detection technology that will use ultrasonic waves and a pulsed laser to inspect rail from head to web to base. Once a prototype is developed, the technology will be installed on FRA’s newest track research vehicle, the T-18, which was recently added to the agency’s fleet of automated track inspection vehicles. FRA says the technology “will be able to identify certain types of defects often missed by current inspection methods.”
FRA’s National Rail Safety Action Plan calls for improved rail inspection procedures. The agency also has studies under way to determine the effect of fatigue on different types of rail steels and how cracks develop and spread within rail; to review railroad crosstie construction design to ensure that rails stay fastened and remain properly aligned; and to develop technologies to warn train crews of broken rails.
Teamsters ratify CN labor contractCN and the Teamsters Canada Rail Conference (TCRC) have ratified two five-year collective agreements that provide wage, benefit, and quality of work-life improvements. One agreement applies to CN locomotive engineers across Canada; the other covers engineers working on CN’s Northern Quebec Territory. Nationally, the TCRC has about 1,600 active members at CN, with 1,490 in freight service. Its NQT unit represents roughly 65 CN employees.
TFM gets a new CEOTFM, S.A. de C.V. has named Francisco Javier Rion as its new chief executive officer.
Rion joins TFM from Bombardier Transportation, where he was president of the Rail Control Solutions Division based in London, England, since May 2001. From July 1995 to April 2001, he was Bombardier's president and managing director in Mexico City. From July 1991 to 1995, he was general director of Dina Autobuses/ConsorcioG-Grupo Dina in Mexico City. From 1976 to 1991, Rion held a number of operations, manufacturing, and engineering management positions with Ford Motor Company, S.A. de C.V. He was also a member of the North American Advisory Committee of the Mexican Investment Board from 1997 through 2000. A Mexican national, Rion is fluent in both Spanish and English. He holds an industrial engineering degree from the Universidad La Salle in Mexico and has postgraduate studies in Finance at the University of Michigan and in Business Administration at the Instituto Panamericano de Alta Direccion de Empresa.
Rion replaces TFM interim CEO Vicente Corta Fernandez, who remains a partner in the law firm of White & Case S.C. and will continue to serve as counsel to TFM in Mexico.
TFM is one of three railroads controlled by Kansas City Southern. The others are The Kansas City Southern Railway Co. and The Texas Mexican Railway Company. KCS recently assumed full control of TFM from Mexican shipping conglomerate Grupo TMM.
Bombardier scores in South AfricaThe Gauteng Provincial Government in South Africa has selected a consortium led by Bombardier Transportation as the preferred bidder on the Gautrain Rapid Rail Link, a turnkey 50-mile rail transit system that will link Johannesburg, Tshwane, and Johannesburg International Airport. The system includes 10 stations and a bus feeder system; its opening is planned to coincide with the 2010 Soccer World Cup. The public/private partnership-based contract consists of financing, design-build, and operations and maintenance. It is expected to be awarded in 2006, following negotiations.
Bombardier leads the Bombela consortium, which also includes French civil contractor Bouygues Travaux Publics; RATP Développement, a major French rail and bus operating company; South African civil contractor Murray & Roberts; and Loliwe Rail Contractors and Loliwe Rail Express, which are partnerships of South African companies. Bombardier will be responsible for the core electrical and mechanical systems, including a fleet of Electrostar vehicles and a CITYFLO 250 train control system.
Nissan pulls dangerous TV adOperation Lifesaver has been successful in persuading Nissan Motor Company to pull a television commercial for the Altima SE-R depicting highway-rail grade crossing gates shifting to block a train from crossing in front of a driver.
OLI wrote to Nissan President and CEO Carlos Ghosn on June 28, explaining its objection to the commercial. The letter said, in part, that “even though most viewers will realize the scenario is unlikely, the overall effect is to reinforce people’s dangerously incorrect perception that trains can stop for vehicles in their path. Unfortunately, nothing could be further from the truth. . . . This misleading scene has generated more calls and e-mails from concerned Operation Lifesaver safety volunteers than any other recent commercial depicting dangerous behavior around tracks or trains.”
OLI may have driven its point home by citing an example of a grade crossing collision involving the same Nissan automobile as in the ad: “One of Operation Lifesaver’s safety volunteers sent me a news article from a 2002 California incident, where a woman driving an Altima drove through a lowered crossing barrier into the path of a train,” wrote OLI President Gerri Hall. “This is the tragic reality, in stark contrast to your advertisement’s fantasy ending.”
Nissan agreed to pull the ad and, according to Hall, “has expressed a willingness to work cooperatively with Operation Lifesaver in the future.”