July 2006
NS posts record revenue in second quarterAdjusted for special items, Norfolk Southern reported second-quarter net income of $375 million, or $0.89 per diluted share, a 23% increase over the prior year on a comparable basis. (Last year’s reported second-quarter net income of $424 million included two coal rate case settlements plus an Ohio tax-credit benefit that added up to $120 million.)
For the quarter, operating revenues were up 11% to $2.39 billion—an NS quarterly record—led by metals and construction products. Operating expenses were also higher, coming in at $1.72 billion, a 10% increase over second-quarter 2005, due to higher diesel fuel prices, costs associated with increased traffic volume, and higher expenses related to casualties and other claims.
Norfolk Southern's operating ratio also improved by 0.8 percentage points to 71.7%--the lowest it has been since the Conrail integration.
Wabtec restructures, reports second-quarter earningsWabtec announced this week that it will downsize two Canadian plants by shifting production to “lower-cost facilities and outsourcing.” Based in Ontario, the Stoney Creek and Wallaceburg plants are home to subsidiaries WABCO Freight Car Products and Wabtec Global Services, and Wabtec Foundry, respectively. The move is part of a restructuring plan that will “improve the profitability and efficiency of certain business units,” said Wabtec.
The plan includes expenses of about $11 million pre-tax--primarily for pension-related accounting charges and fixed asset write-downs--which will be recorded in second-half 2006 and first-half 2007. Wabtec said it anticipates realizing “a payback of less than one year on cash restructuring expenses, which are expected to be about $3 million.”
The company also reported that profits were up in the second quarter. Net income came in at $22.1 million, 39% higher than the same period last year. Net sales, however, fell 2% to $261.9 million.
Commented Wabtec President and CEO Albert J. Neupaver: “The company's operating performance in the second quarter was strong, with our gross margin more than four percentage points higher than the year-ago quarter. This margin performance demonstrates that we are making meaningful progress in our efforts to improve Wabtec's cost structure. As anticipated, these efforts are driving substantial earnings growth in a year when our sales are stable at a high level. With demand expected to remain strong in our freight markets and with a record multi-year backlog of more than $1 billion--a significant portion of which represents transit projects with deliveries accelerating next year--we are optimistic about Wabtec's growth prospects in 2007 and beyond.”
FRA opens nationwide dialogue on private-crossing safetyThe Federal Railroad Administration is seeking comments on how private highway-rail grade crossings can be improved nationwide. About 400 accidents and 30-40 fatalities occur annually at these largely unregulated crossings.
Public meetings are being planned for this year to discuss determining when a private crossing has a public purpose and whether the state or federal government should assume a greater role in setting safety standards. The first meeting will be held in Fort Snelling, Minn., with others “tentatively planned” for North Carolina, California, and Louisiana.
“The lack of a common safety approach at private crossings unnecessarily puts certain motorists at risk,” FRA Administrator Joseph H. Boardman said during today's announcement. Establishing responsibility for safety at private crossings is one of the U.S. Department of Transportation's goals outlined in the Highway-Rail Grade Crossing and Trespass Prevention Action Plan, which was issued in 2004.
CPR faces down a "tough second quarter"Canadian Pacific Railway saw profits triple in the second quarter with net income coming in at C$378 million vs. C$123.1 million during the year-earlier period. This surge was due, in part, to one-time gains of C$176 million in taxes and C$58 million in foreign exchange on long-term debt. Key coal and potash business revenues, however, fell more than C$70 million in the three-months ended June 30. Commented CPR President and CEO Fred Green: “CPR faced down a tough second quarter,” responding “quickly to the drop in [these] volumes with focused initiatives which produced improved yield and reduced expenses.”
The railroad's operating expenses of C$849.1 million rose 2% over the 2005 period (C$834.8 million), which was mostly attributed to higher fuel prices. Total revenue for the quarter (C$1.13 billion) improved by 2% over last year's second quarter (C$1.11 billion). Growth in grain, intermodal, automotive, and industrial and consumer products offset declines in coal and sulphur and fertilizers, where revenues declined by 28% and 10%, respectively. Revenues also included the sale of the Latta subdivision, which was part of the year's planned land sales.
The first six months of the year brought earnings of $489 million--more than doubling first-half 2005's C$203.9 million. Revenues of C$2.24 billion were up 6% over 2005's C$2.12 billion, on double-digit increases in grain, industrial and consumer products, automotive, and intermodal business.
“With the success of our balanced scheduled railroad and our recent network capacity investments, we are well positioned for the second half of the year when bulk volumes are expected to increase,” summed up Green.
CPR expects to grow revenues between 5% and 8% for the year, and expenses are anticipated to rise by 3% to 6%. Capital investment is slated to be between C$810 million and C$825 million in 2006.
Kawasaki expected to land Metro-North contractKawasaki Rail Car is the apparent low-bidder in a contract for up to 380 new M-8 commuter cars for MTA Metro-North Railroad. Connecticut Governor Jodi Rell announced the $522 million contract today. If granted final approval, new railcars will enter service on the New Haven, Conn., line by 2009. The states of Connecticut and New York share ownership of the line, and Connecticut is expected to cover 65% of the contract's cost.
MNR and the Connecticut Department of Transportation recommended the selection of Kawasaki, whose bid was about $120 million to $180 million lower than rival Bombardier. MNR will review the selection today, and submit a request for approval to the board of parent company New York MTA on Wednesday. Governor Rell will place the matter on the Aug. 11 Connecticut Bond Commission agenda to secure the necessary state funding.
The contract is for 210 cars, and includes options to purchase another 170 as well as spare parts, special tools, and test equipment to operate and maintain the M-8s.
NJ Transit awards switcher contract to WabtecWabtec Corp. announced that its MotivePower subsidiary has received an $8 million contract from New Jersey Transit to remanufacture eight switcher locomotives to comply with EPA Tier 2 emissions levels. Scheduled for delivery in 2007, the locomotives will be remanufactured at MotivePower's Boise, Ida., facility.
UP's '07 capital spending may hit $3.2 billionAfter reporting record revenues and profits for the second quarter, Union Pacific CEO Jim Young said “our current thinking is that 2007 capital spending could be about 15% above 2006, which would put it around $3.2 billion.” While “our plans are still very preliminary,” Young said “our recent financial performance and strong outlook give us increasing confidence that our cash from operations will grow strongly next year. We will allocate this cash toward multiple purposes.”
"Precision railroading" gives CN an earnings boostCN's second-quarter results prove the “power and value” of a “precision-railroading model,” President and CEO E. Hunter Harrison told investors yesterday. The model, he said, “is grounded in a solid service plan, the relentless pursuit of asset velocity, and a strong focus on safety.”
The railroad posted a 58.6% operating ratio, improving 2.6 percentage points over the same period last year. Profits grew 75%, coming in at C$729 million, despite a reduction of about C$25 million from the continued appreciation of the Canadian dollar relative to the U.S. dollar. Year-ago profits were C$416 million. Operating income for the quarter rose 13% to C$805 million from C$713 million.
In the second quarter, revenues increased 6% to C$1.95 billion, which CN attributed to freight-rate hikes for all commodity groups, including a higher fuel surcharge, and volume growth led by CN's grain and intermodal groups. These gains, too, were partly offset by the “unfavorable C$100 million translation impact of the stronger Canadian dollar on U.S. dollar-denominated revenues.”
Intermodal revenues rose 17% to C$365 million, benefiting from growth in international container traffic, primarily from Asia, and increased transborder and domestic movements, CN reported. Grain and fertilizers revenues were up 16% to $301 million. The only groups posting declines were forest products (1% to C$444 million) and automotive (6% to C$131 million) due, in part, to reduced pulp and paper shipments, and production slowdowns at domestic automotive manufacturers, respectively, according to CN.
Operating expenses increased slightly (1%) to C$1.14 billion compared to C$1.13 billion in 2005.
Because “CN maintained a strong free cash flow performance during the quarter,” the railroad is offering a new program for the repurchase of up to 28 million common shares by July 24, 2007. In the second quarter, CN repurchased 7 million shares, worth C$347 million, as part of a 32 million share buyback program, which has now concluded.
In the first six months of the year, CN's operating ratio improved 2.7 percentage points to 62.3%. Earnings swelled 53% to C$1.09 billion, including a C$250 million deferred income tax recovery, while first-half 2005 profits were C$715 million. Operating income for the period rose 15% to C$1.43 billion from C$1.24 billion. Operating expenses reached $2.36 billion, not far off from 2005's C$2.31 billion. Revenues grew slightly (7%) to C$3.79 billion compared to C$3.54 billion in the same 2005 period.
UP posts strong quarterly results, announces construction of new intermodal terminalUnion Pacific profits soared 67% in the second quarter. At $390 million, or $1.44 per share, they handily beat Reuters analyst estimates of $1.33 per share. During the same period last year, the railroad earned $233 million, or $0.88 per share.
Quarterly operating income was “the best ever in the history of the railroad,” President and CEO Jim Young said during today's earnings announcement. It came in at $717 million, almost double the $468 million reported in 2005. “Reaching this milestone so early in the year is a clear indication that the demand environment remains very strong, and that we are moving volume more efficiently,” said Young. The railroad converted that strong demand and yield gains into its best operating ratio in more than two years, 81.7%.
The railroad posted operating revenues of $3.92 billion, up 17% from second-quarter 2005. The 2005 results, $3.34 billion, were impacted negatively by derailments in Wyoming's Powder River Basin. The recent quarter's commodity revenue also rose 17% to $3.74 billion.
“We expect the volume strength we saw in the first half of the year to continue through the upcoming peak shipping season,” said Young. “The biggest challenge ahead for us will be to continue to make progress on our operating initiatives, productivity, and service reliability in face of record volume.”
To handle growing intermodal volumes, UP also reported that it will invest more than $90 million to develop a new intermodal terminal in San Antonio, Texas. The 300-acre rail port is expected to process 100,000-plus containers and trailers annually. Construction is slated to begin next year and wrap up in 2008.
Freight car orders, deliveries, backlog up in 2006's first halfFreight car orders dropped, while deliveries and backlog held steady in second-quarter 2006, according to figures released today by the Railway Supply Institute's ARCI (American Railway Car Institute) committee. Orders were placed for 18,190 cars, 49% fewer than in the previous quarter. Nevertheless, first-half orders totaled 54,181, 48% higher than the same period in 2005. Deliveries came in at 38,008 for the first six months of the year, a 13% gain over the year-earlier period.
Topping the order books in the second quarter were tank cars (7,955), followed by covered hoppers (3,483) and gondolas (2,738). In the intermodal category, five-unit articulated platforms took the lead with 1,020 orders.
On July 1, the backlog of cars on order and undelivered was 85,692, just 1% lower than the backlog on April 1, and a 42% increase over the backlog one year ago.
Railroads tell STB: We're ready How will the Class I railroads meet peak service demands this fall? That's what Surface Transportation Board Chairman W. Douglas Buttrey wants to know, on behalf of rail customers nationwide. He's called on the CEOs of all Class I's to provide this week their fall peak service plans to “ensure that spikes in rail traffic demand that are expected for the remainder of the year can be handled as efficiently as possible.” This is the third year the STB has requested details.
So far, Buttrey has been pleased with the results, noting that the railroads report “significant capital investments in facilities and equipment, focused operational planning to enhance their performance metrics, increased hiring and training of employees, and regular communication with customers.”
Norfolk Southern and Union Pacific are among those expressing optimism about their fall performance. “We expect to handle the volumes we foresee in 2006 safely and efficiently,” NS Chairman, President, and CEO Wick Moorman wrote in his letter to STB. UP President and CEO Jim Young was similarly upbeat, noting that his railroad continues to make “great progress” improving performance, which will “enable us to meet peak demand.”
Moorman reported that NS has taken many steps to handle traffic this fall. Its Thoroughbred Operating Plan “will continue to allow us to handle more freight using the same amount of resources,” he wrote. And the railroad's 2006 capital budget of $1.2 billion is covering investments in track, locomotives, crews, signal systems, and other tools to meet customers' transportation needs.
Due to growing intermodal volumnes, NS has added terminal capacity at Kansas City, Mo.; Louisville, Ky.; Charlotte, N.C.; and Austell, Ga.; and has partnered with Kansas City Southern to handle more of this traffic over the Meridian Speedway. It also added new infrastructure along the Georgia, Florida, and Tennessee corridors, for instance, and plans to invest in further improvements.
Since fall 2005, 150 new high-adhesion, six-axle locomotives have entered service and NS has retained leases on another 85. By stepping up car repair efforts, renewing car leases, and improving car distribution, the railroad expects to have sufficient rolling stock available to customers.
But all of these efforts come with a hefty pricetag, Moorman stressed. In response to rate complaints, in particular, he said, “There is no free lunch. Without market-based adjustments to our rate structures, we cannot invest and expand to meet the ever-growing transportation demands of our many customers.”
Moorman pointed out that two issues could negatively impact NS's performance, however: governmental action on the transportation of highly hazardous materials and efforts to re-regulate the railroad industry. “Public policy must not impede the railroads' ability to garner the resources necessary to meet the demands for freight transportation in the future, not just during the fall peak of 2006,” he summed up.
UP's Young told STB that its $2.8 billion capital plan was "designed to maximize capacity going into what will clearly be a record-setting peak season.” This year's plan includes $1.5 billion for ongoing maintenance, $305 million for capacity expansion, $180 million for new commercial facilities, plus equipment acquisition costs for 200 new road locomotives and 2,100 more freight cars. The railroad also is growing its train and engine employee workforce by more than 600.
To meet intermodal demand, the railroad has opened new ramps in Dallas and Salt Lake City, expanded its Marion, Ark., facility, and is working with the ports and ocean carriers to improve operations in the Los Angeles Basin. “We are aggressively repositioning equipment (both locomotives and empty cars) to address the imbalance of imports over exports that come into the Los Angeles area,” Young noted.
UP has a number of capacity expansion projects in various stages of completion. Among those slated to wrap up this year: the construction of an additional 56 miles of second track along the Sunset Corridor between West Colton, Calif., and El Paso, Tex.; and the addition, with BNSF Railway, of 19 miles of third main track in Wyoming's Southern Powder River Basin between Reno and Nacco. By September, UP and BNSF plan to finish building high speed crossovers at various locations along the corridor, and by year-end 2007, complete a $100 million project to add third and fourth main line tracks along their SPRB joint line.
“While there is a great deal of publicity about the railroads' ability to fulfill the growing [coal] demand, it is clear that the rail transportation portion of the supply chain is operating much more efficiently than one year ago,” wrote Young, who pointed out that the SPRB joint line set records for trains originated in one day (May 1, 2006) and one month (January 2006), for instance. UP's SPRB tonnage increased 6% in the first six months of 2006, breaking the previous record for first-half loadings set in 2005.
UP also is adding capacity to main lines and terminals through such operational improvements as the implementation of its Unified Plan and Customer Inventory Management System, Young wrote. He reported that June terminal dwell improved two hours vs. June 2005, even as volume climbed 12,000 cars per week, and that second-quarter car inventory as a percentage of carloads has declined “markedly,” indicating improved car cycle times on the network.
CN maintenance-of-way workers end strike, for nowCN and the Brotherhood of Maintenance of Way Employes Division of the International Brotherhood of Teamsters have agreed to meet “in the coming days” to work out a long-standing contract dispute. The 250 union members removed the pickets they put up yesterday (RA, Breaking News, July 19), and returned to work. The labor action did not affect railroad operations, according to CN. CN and the union will request to stay legal proceedings.
Transit ridership posts first-quarter gainsWith 2.5 billion trips taken, U.S. public transportation ridership grew 4.25% in this year's first quarter, according to an American Public Transportation Association report. While all modes experienced growth, light rail--including streetcars and trolleys--had the biggest ridership jump of 11.2% over the same period last year. Many saw double-digit increases, due to the addition of new services in the past 12 months and high gasoline prices. They include: San Jose, 27.3%; Minneapolis, 26.0%; Philadelphia, 18.0%; San Diego, 17.3%; Buffalo, 16.7%; Sacramento, 14.9%; Los Angeles, 13.4%; New Jersey, 12.7%; and Memphis, 10.4%. Bus ridership experienced the second highest increase of 4.5%. Commuter rail trailed slightly with 3.4%.
Iowa Interstate acquires CBGRRailroad Development Corp. subsidiary Iowa Interstate Railroad (IAIS) has acquired the Great Western Railway of Iowa LLC (CBGR) from OmniTRAX. CBGR is a terminal switching carrier in Council Bluffs, Iowa, consisting of 30 track-miles of switching and industrial tracks that interchanges with four other railroads. It has storage capacity for 1,300 freight cars as well as the ability to perform AAR contract repairs, and also serves a transload facility and a grain elevator. CBGR is located directly west of IAIS’s existing Council Bluffs facilities. IAIS says the acquisition will allow it to expand its intermodal operations in Council Bluffs (it interchanges with Union Pacific and BNSF Railway) and grow its bulk transload business. Long-term, IAIS plans to rehabilitate the CBGR infrastructrure and incorporate yards and operations into one facility.
CN maintenance-of-way workers go on strikeAbout 250 maintenance-of-way workers walked off the job today at CN's Grand Trunk Western, Detroit Toledo & Shore Line, and Detroit Toledo & Ironton lines. They are members of the Brotherhood of Maintenance of Way Employes Division of the Teamster's Rail Conference.
According to the union, the strike and related lawsuit were initiated “after many months of attempts to resolve [a contract] dispute through bargaining and mediation.” BMWED says it served CN with contract demands in December 2004, and both groups participated in bargaining and mediation with the National Mediation Board through March 2006. CN then submitted new proposals, which the union claims will “eliminate existing seniority rights, give CN a free hand in contacting-out all maintenance-of-way work, allow CN complete discretion in making work assignments, and impose unprecedented huge and annually increasing health insurance contributions.”
Senate subcommittee approves Amtrak increaseProspects for Amtrak’s Fiscal Year 2007 federal operating and capital support appear bright as the Senate Transportation Appropriations Subcommittee has approved $1.4 billion—$500 million more than the Bush Administration’s proposed $900 million amount, $300 million higher than the House’s final figure of $1.1 billion, and $200 million more than Amtrak’s $1.3 billion FY 2006 appropriation. The Senate subcommittee decision to fund Amtrak at $1.4 billion still must pass a full Senate Appropriations Committee vote and also must go before the full Senate. If the final Senate amount exceeds the House’s $1.1 billion—and indications are that it will—a House-Senate Conference Committee will determine Amtrak’s final figure.
The Bush Administration appears to have abandoned its attempts to zero-fund Amtrak and is no longer trumpeting “reform.” This year’s budget process so far has been quiet compared to last year’s, when now-departed Transportation Secretary Norman Mineta went barnstorming around the country giving speeches on Amtrak that many critics and industry observers said were rife with misinformation and distortions. “The Bush Administration has sought repeatedly to gut Amtrak’s budget, but cannot find any meaningful support on Capitol Hill,” remarked United Transportation Union International President Paul Thompson. “The House’s decision to fund Amtrak at $1.1 billion next year—a figure Amtrak says would keep the railroad operating—appears to establish a floor.”
Spokesman Cliff Black said Amtrak “appreciates the support the Senate subcommittee has demonstrated by approving $1.4 billion.”
CSX: “Well positioned for profitable growth”Despite recent challenges, CSX Corp.'s second-quarter earnings more than doubled from the same period last year. Chairman and CEO Michael J. Ward is crediting the success to “momentum in our operations, improvements in productivity and service, and our ability to capture price in a strong market environment.”
Coming in at $390 million, or $1.66 per share, earnings include insurance recoveries from Hurricane Katrina and tax-associated benefits, which account for a gain of $0.50 per share. This compares with second-quarter 2005's $165 million, or $0.73 per share, which included costs related to a debt repurchase of $0.54 per share, partially offset by a state income tax benefit of $0.31 per share. Excluding this year's one-time items, CSX would have posted earnings of $1.16 per share, or a 21% increase over the 2005 period's $0.96 per share.
Surface Transportation revenues reached $2.4 billion during the second-quarter, increasing 12% over the year-ago period. Including insurance recoveries, the division recorded operating income of $645 million, a 52% rise from last year's $422 million. Without those recoveries, CSX would have reported an operating income of $519 million during second-quarter 2006, or a 23% increase. The railroad's operating ratio was 78.6%.
CSX also announced today that it has approved a 2-for-1 stock split, upped its quarterly dividend 54% to $0.10, and authorized a $500 million share buyback program that will be completed within the next 12 months. These decisions reflect “our strong balance sheet, and follow record operating performance as well as new investments to expand network capacity,” Ward explained. Optimistic about the future, he said that the company is “well positioned” for profitable growth. “We are confident in our ability to achieve double-digit growth in operating income, earnings, and free cash flow over the next five years.”
STB announces lineup for “paper barriers” hearingNineteen witnesses representing a broad spectrum of railroads and railroad customers have signed up to argue their positions on the issue of “paper barriers” at a Surface Transportation Board Hearing in Washington on July 27.
The STB said it scheduled the hearing in response to a renewed petition by the Western Coal Traffic league “that the STB adopt rules limiting the extent to which agreements for the sale or lease of railroad lines, by larger railroads to existing or newly created short line railroads, my contain ‘paper barriers’ restricting the incentive or ability of purchaser or tenant to interchange traffic with connecting railroads that could compete with the seller or landlord railroad.”
The board has assigned the witnesses to four panels. On Panel I are the Western Coal Traffic League, Alliance for Rail Competition, American Chemistry Council, Edison Electric Institute, and National Grain and Feed Association. Panel II has the Association of American Railroads, American Short Line and Regional Railroad Association, Railroad Industry Working Group, and Union Pacific Railroad. On Panel III are the American Energy fuels and Services Co., Arkansas Electric Cooperative Corp., Dow Chemical Co., and Entergy Services and Entergy Arkansas, Inc. Panel IV consists of Columbus & Greenville Railroad, Genesee & Wyoming and Farm Rail System, Oil Creek & Titusville Lines, Reading Blue Mountain & Northern Railroad, Watco Companies, and Wheeling & Lake Erie Railway.
Cubic, GE Security complete explosives detector test Security tightened last month at Maryland's Metro Subway station in Baltimore. Two ticket vending machines outfitted with explosives detectors were tested as part of a pilot sponsored by the Department of Homeland Security's Science and Technology Directorate, Maryland Transit Administration, and Maryland Department of Transportation. The purpose: to identify riders who may have been in contact with explosives before boarding a train.
Cubic Corp. and GE Security supplied the new technology, which they began offering jointly last fall (RA, November 2005, p. 22).
While the final results will be reviewed and made available later this summer, the pilot “met expectations” and the data collected from it “appear to be good enough to take this potentially useful technology further along the commercialization testing path,” MDOT Assistant Secretary Earl Lewis said during today's announcement.
The Early Warning Explosives Detection System™ integrates GE's fingertip trace detection analyzer, the Itemizer FX, with Cubic's automatic fare collection equipment. When a transit user touches the ticket vending machine's start button, the transaction is initiated and the button is evaluated for explosives compounds. Anyone who set off the machine during the pilot went through further screening. If activated, the system is designed to send passenger identification and location data, including a photo, to security authorities. These details also can be sent to monitoring systems and transmitted to transit security staff. In addition, data may be transmitted to the fare-gate via realtime communications or the passenger's encoded ticket. This way, transit users can be denied entrance to the train platform or paid area, or allowed to proceed while law enforcement is deployed.
Chicago & North Western lives on Unveiled yesterday was the latest in Union Pacific's Heritage Series: a Chicago & North Western locomotive. Decked out in the UP predecessor's historic colors and graphics, it joins the Denver & Rio Grande Western, Missouri Pacific, Western Pacific, and Katy units. In August, UP plans to introduce the Southern Pacific.
“The many railroads that have become a part of Union Pacific added more than track and territory, they also contributed the expertise and knowledge of the many people who worked for those great lines,” said Bob Turner, senior vice president-corporate relations. “The creation of our Heritage Series [in July 2005] is just one way we are honoring the generations of men and women who helped to build a great nation and the foundation for our future.”
GWI readies for a rebuild south of the borderNearly a year after Hurricane Stan damaged its 175-mile branch line in Southern Mexico, Genesee & Wyoming (GWI) subsidiary Ferrocarriles Chiapas-Mayab, S.A. de C.V. is ready to rebuild. The 1,000-mile regional has received word that Mexico's Ministry of Communications and Transportation will fund 75% of the $20 million pricetag. Insurance will cover $2 million and GWI, $3 million. Work on the line, which runs between Tonala and the Guatemalan border, is expected to start this year. According to GWI, the government funding is still “subject to, among other things, final contractual agreement” with the railroad. GWI acquired FCCM in September 1999.
Ex-Alstom officer Sturtz joins GlobalGlobal Railway Industries, Ltd., announced the appointment of William Sturtz, formerly with Alstom Signaling, Inc., as chief operating officer, effective immediately. “Bill's extensive manufacturing experience will be utilized to help improve bottom-line performance of Global's core operations through revenue growth, expense reduction, and by capitalizing on synergies between our subsidiaries,” said Global President and CEO Terry McManaman. At Alstom Signaling, Sturtz was vice president of sourcing/business development.
Trinity's European rail business goes on the blockWithin 45 days, Trinity Industries expects to sell its European rail business to a company based in Luxembourg. Negotiations are still under way and no terms of the deal have been disclosed.
After “reviewing strategic alternatives,” the sale makes sense. “It allows us to dedicate more of our resources and assets to the opportunities we have in North America,” commented Trinity Chairman, President, and CEO Timothy R. Wallace.
If the sale goes through as planned, third-quarter results will be impacted. Trinity noted that it “does not expect a material financial impact to be recorded.”
But if the deal doesn't close, “we are fully committed to waiting out the recovery of the railcar market in Europe,” Wallace said. He emphasized that the company has “taken steps to reduce our costs and are currently building a better backlog of orders.”
New Mexico set to launch Rail Runner ExpressStarting tomorrow, New Mexico residents can leave their cars at home if they're traveling between Bernalillo and Albuquerque. The Mid-Region Council of Governments is launching its Rail Runner Express commuter rail service with free rides for the next three months. Its first three stations, Sandoval County/U.S. 550 (the northern-most station, located in Bernalillo), Los Ranchos/Journal Center, and Downtown Albuquerque, will be open, with the Downtown Bernalillo station (just south of Sandoval County/U.S. 550) opening later this summer.
Service to the southern-most station in Belen will begin this September or October, wrapping up the project's $135 million, 46-mile first phase, which includes nine stations. Rail Runner will operate along former BNSF Railway lines, using five MotivePower MP36PH-3S locomotives and 10 Bombardier bilevels.
Initially, the Mid-Region Council and the New Mexico Department of Transportation are offering free bus service to the Sandoval County/U.S. 550 and Los Ranchos/Journal Center stations, coinciding with Rail Runner's schedule.
The second phase of the project, valued at $240-$255 million, will extend service northeast from Bernalillo to Santa Fe, partially on a new alignment. It is slated for completion in late 2008.
BNSF forms employee councils to address work/life balanceHaving a good balance between work and home life can be a challenge for anyone. For railroaders, it's especially difficult. That's why BNSF Railway recently formed special councils of first-line supervisors to identify and address their concerns. Members were chosen from each operating division and hold a variety of supervisory job duties. They serve as liaisons between their supervisors and BNSF management.
Designed to supplement BNSF's other work/life balance efforts, the councils will help the railroad “better understand the challenges and opportunities that our supervisors face and give them an opportunity to provide us feedback and suggestions for improvements,” says Mark Schulze, vice president-safety, training, and operations support. “Our aim is to make this an effective, two-way communications opportunity.”
The first councils formed were for mechanical and engineering employees. Last month, 13 transportation employees got their turn, and soon telecommunications' will, too. Councils meet quarterly, with monthly conference calls, and members serve two-year terms, initially rotating off at 18-, 24-, or 30-month periods.
At the transportation council's first meeting, members discussed BNSF's division trainmaster initiative, which studied how to better manager work/life issues; the approval process and distribution of such technological devices as Blackberries; and the training courses BNSF offers. At its fall meeting, the council is scheduled to meet with the engineering and mechanical councils to talk about common concerns as well as best practices.
For TieTek, a new advisory boardTieTek has formed an advisory board to help build up its composite crosstie and structural products business. The North American Technologies Group, Inc., subsidiary has hired on Charles Marshall, retired vice chairman of Genesee & Wyoming, Inc.; Bruce Babbit, U.S. Secretary of the Interior from 1993 to 2001 under President Clinton; Robert L. Thornton, retired vice chairman of JPMorgan Chase, Dallas; Brad Schoenberg and Matthew Kness, founders and owners of B. Schoenberg & Co., a plastics recycler; and Justin Oberman, who recently left the Transportation Security Administration, which he helped found and where he was responsible for the agency's credentialing process.
“Our executive team is honored to have the counsel of these experienced and insightful advisors,” NATK and TieTek CEO Neal Kaufman said during today's announcement.
New York MTA launches contactless fare collection trialThe New York Metropolitan Transportation Authority has joined the gradual shift worldwide toward contactless smartcard fare collection with a six-month trial of a privately developed and financed technology on a portion of the NYC Transit Lexington Avenue (4- 5-6) subway, from 138th Street Station in the Bronx to Borough Hall Station in Brooklyn. MTA is partnering with Citigroup and MasterCard on the trial, which is available only to holders of Citibank debit cards and Citi MasterCard credit cards.
The system, dubbed Tap & Go™, is the first transit application of MasterCard Worldwide’s PayPass™ contactless payment technology. Citigroup is issuing specially designed, key fob-like debit payment tags to pre-selected customers in the New York City region. They can use the tag or their contactless debit or credit cards at specially equipped turnstiles at 30 stations on the Lexington Avenue line. The turnstiles, which also accept conventional MetroCards, are equipped with tag readers and specific signage and are identified by a unique logo, a white star in a green circle whose color matches the NYCT logo for the 4-5-6 subway.
For the MTA, the partnership with Citigroup and MasterCard is a no-cost way to evaluate contactless smartcard technology. For the vendors, it’s a clever way to market their credit and debit cards to customers who are also transit users. The MTA says that, long-term, it intends to replace the MetroCard, which has been in use for approximately a decade, with smartcards, much like transit agencies in Washington, London, San Francisco, Boston, Atlanta, and Hong Kong are doing, with varying degrees of success.
Despite being touted as “contactless,” Tap & Go™ is not fully contactless. Users must “tap” their tags or cards directly on the reader to activate the turnstile. The system is claimed to be faster and more reliable than swiping a MetroCard through a turnstile reader slot (a skill that some transit users still have trouble mastering), though the action involves more than a simple tap. It actually involves momentarily placing the device flat against the reader. The advantage of using it seems to be not so much decreasing the time it takes to move through the turnstile (a feature the MTA highlighted with fleet New York Giants running back Tiki Barber as master of ceremonies at the opening press conference), but the convenience of being able to pay for subway rides with the same device one would use for retail purchases and banking transactions.
There are two fare collection options: 1) Pay-As-You-Go, in which customers are charged $2.00 per ride (the standard, non-zone-based fare throughout the entire NYCT subway and bus network). Transactions are consolidated on a Citi credit card or Citibank debit card statement. Through Oct. 31, participants will automatically receive three free rides paid for by Citibank and MasterCard. 2) Pre-Pay, in which customers create a transit account whose transactions appear on their monthly statements as an MTA charge. The MTA’s quantity discount applies (for example, a $20 pre-pay nets 12 rides). Pre-Pay customers also get the complimentary three rides through Oct. 31. They can establish accounts and check status at www.mastercard.com/subwaytrial or by calling a toll-free number, 1-888-907-7277. Cards and tags can be used to pay for up to 10 fares at the same turnstile, as well as for purchases at merchants that accept PayPass.
The Tap & Go™ payment tag uses close-range RFID (radio frequency identification) technology from On Track Innovations Ltd., a supplier of contactless microprocessor-based smartcard systems. It’s designed by Ziba, an international design consultancy. ACS (Affiliated Computer Services), a supplier of fare collection systems, is providing back-office payment platform services as well as installation support. Lipman Engineering subsidiary Dione supplied its Dione Secura contactless terminal modules. Booz Allen Hamilton provided transit-related consulting services to MasterCard.
Indian rail network attackedJust days after the first anniversary of the London transit system bombings, India's Western Railway has been attacked. Today, during the evening rush hour, eight bombs reportedly exploded in Mumbai, killing more than 100 riders and injuring another 300. They were on trains or platforms at the Khar, Mahim, Matunga, Jogeshwari, Borivili, and Bhayander stations, and between the Khar and Santacruz stations.
According to CNN sister network CNN-IBN, “one person was arrested in New Delhi in police raids after the explosions . . . but there was no claim of responsibility for the attacks.”
Meanwhile, security remains on alert in the U.S. The Lebanese and U.S. governments recently disrupted a terrorist network that reportedly planned a fall attack on Port Authority of New York and New Jersey train tunnels.
There are no plans to raise the nation's threat level as a result of the Mumbai bombings, however. U.S. Department of Homeland Security Secretary Michael Chertoff today issued a statement saying that there "is no specific or credible intelligence suggesting an imminent threat to the homland or our transit systems."
Brookville adds a new locomotive to its stableBrookville Equipment Corp. will soon unveil its multi-engine CoGeneration™ series of locomotives. Operating with up to three shared power sources (diesel engine, batteries, or overhead catenary), the units provide near-zero emissions and lower fuel costs, according to the manufacturer. Diesel NOx emissions are said to be 51% lower than required by the EPA, with a 95% reduction in diesel particulate matter. By running the engine and alternator at the slowest speed necessary to provide required power, the CoGeneration™ also reduces noise. It includes IGBT controls and auxiliary power units. According to Brookville, the primary model of the CoGeneration series will operate on three 700-hp diesel engines.
Meanwhile, Brookville is gearing up to supply 15 low-emission, four-axle switchers to New York MTA's Metro-North and Staten Island Railroads, under a contract that includes an option for 10 more. MNR will use 11 of the units along its Danbury and Waterbury, Conn., branches and Connecticut's Shore Line East commuter line. The 2,000 traction-hp units are said to meet EPA Title 30, Part 92, Tier 2 requirements. Shipments are scheduled to start in fourth-quarter 2007 and wrap up by first-quarter 2008.
In 2000, Metro-North took delivery of two Brookville 70-ton diesel-electric switchers, valued at approximately $2 million (RA, October 2000, p. 55).
Mineta joins communications firmFollowing his recent resignation as U.S. Department of Transportation secretary, Norman Y. Mineta has accepted a position at Hill & Knowlton, Inc., a communications consultancy. Mineta will serve as vice chairman, based in Washington, D.C.
Paul Taaffe, chairman and CEO of Hill & Knowlton, commented that Mineta's "expertise in global infrastructure and trade issues, and knowledge of the public and private players worldwide, make him an unrivaled resource for clients seeking operational and policy solutions in the U.S. or internationally."
In June, Mineta announced that he would voluntarily step down from his government post, which he held for five and a half years (See Breaking News Update, June 23, 2006). President Bill Clinton's Commerce secretary and a former California congressman, Mineta served in Congress for 21 years, where he was chairman of the House Transportation and Public Works Committee and an architect of the landmark Intermodal Surface Transportation Efficiency Act. He starts his new job on July 24.
Hill & Knowlton, part of WPP Group plc, has 71 offices in 40 countries.
PATH's passenger screening pilot enters phase two The Department of Homeland Security and the Port Authority of New York and New Jersey will start the second round of security tests at Jersey City's Exchange Place Station on July 13. For 15 days, they will evaluate non-intrusive, imaging technology--possibly infrared or millimeter wave scanners--that screen riders for explosives from a distance.
In early March, the groups completed the first phase of the pilot, which studied how screening equipment affects traffic flow (RA, March, p. 19). X-ray machines and metal detectors (specially modified for the rail environment) were used to randomly screen riders. Data was collected on the percentage of false alarms, rate of screening, delays of passengers, and manpower requirements.
Both tests will help DHS determine “life-cycle costs and conduct ongoing risk analyses." In addition, they will “indicate which technologies and operational procedures should be further developed or refined in order to make the mass commuter rail and subway systems more secure,” DHS reports.
BNSF signal engineers get creativeWith rail traffic at all-time highs, keeping train speeds up is critical. That's why a few resourceful signal engineers at BNSF Railway sought out a new way to solve an old problem.
Multiple times a year, they were charged with uninstalling and reinstalling wayside signals through the Cascade Tunnel between Wenatchee and Everett, Wash., to accommodate track maintenance equipment. The work often took a full day, since each signal's metal holding frame had to be unbolted from the tunnel wall and each wire disconnected from the electrical panel--a process that lasted approximately three hours.
“Sometimes as many as five trains a day had to be held or rerouted while the signal was being worked on,” reported John Li, Wenatchee-based supervisor, signal at BNSF.
So his team--Randy Rausch, Mark Simmons, Jack Hagel, and Bill Cruttenden--redesigned the signal holding frame and modified the cable connectors. The result: Signal work has been reduced to an hour apiece.
"The improvement has been extremely helpful, especially during maintenance-of-way blitzes in the tunnel, like the one we had last month,” Li said. “This is just another way that the signal team is doing its part to increase velocity."
DHS to provide $400 million in critical infrastructure security grantsThe U.S. Department of Homeland Security is making available some $400 million in Fiscal Year 2006 grants to the transportation and chemical industries, among other groups. The funding will help develop “sustainable, risk-based critical infrastructure security initiatives" to protect against man-made and natural threats, DHS Under Secretary for Preparedness George Foresman said during today's announcement.
The DHS Office of Grants and Training's Infrastructure Protection Program will divide and disperse the funds among seven programs. Direct allocations will be made to five. They include:
* Transit security. Owners and operators of critical transit infrastructure, including rail, intracity bus, and ferry systems will receive more than $136 million. Of that total, $123 million will be allocated to Tier I urban areas, where systems are most at risk, based on such factors as total ridership, underground rail systems, and underwater systems. According to DHS, eligibility is limited to those providing service within a defined Urban Area Security Initiative jurisdiction. The New York metropolitan area (including New York City; Jersey City and Newark, N.J.; and New Haven, Conn.), for instance, will receive $47 million to secure its rail systems; $5.5 million for buses; and $1.3 million for ferries, a DHS spokesman told Railway Age.
* Buffer zone protection. State and local authorities will receive $48 million to support security planning and equipment acquisition for such critical infrastructure as chemical facilities, nuclear and electric power plants, dams, stadiums, arenas, and other high-risk areas. Local jurisdictions are required to work with states to produce buffer zone plans that outline protective measures for these facilities. Plans must be submitted to DHS for evaluation and approval before funding will be provided.
* Chemical buffer zone protection. A grant of $25 million will help increase security and risk-management capabilities at the state and local level. The goal, according to DHS, is to protect chemical sector critical infrastructure “that, if attacked, could cause weapons of mass destruction-like effects.”
* Intercity passenger rail security. Amtrak will be awarded more than $7.2 million to continue security efforts along the Northeast Corridor and in Chicago, and to extend them to the West Coast, where service reaches high-risk urban areas (Seattle, Sacramento, Oakland, San Jose, Los Angeles). DHS is requiring Amtrak to conduct a risk assessment of its West Coast service and demonstrate that funding allocations will be “fully coordinated with regional planning efforts in the Northeast Corridor.”
* Trucking security. The American Trucking Associations' will receive $4.8 million to continue its Highway Watch security program, which recruits and trains highway professionals to identify and report security and safety issues. The funding will be used to maintain a full-time Highway Watch Call Center, operate and maintain the Information Sharing and Analysis Center, among other measures.
(For complete guidelines and application kits for these programs,
click here.)
Critical infrastructure owners and operators within the other two programs, port security and intercity bus security, will have to meet grant eligibility requirements and apply within the next 30 days for the FY06 infrastructure grant funding. Port security will receive more than $168 million in grants; and intercity bus, about $9.5 million. DHS will make award decisions this September. (Click here for more details.)
Train accidents down 23% in year's first five monthsA preliminary report by the Federal Railroad Administration shows that train accidents declined by 23% to 856 in this year's first five months, compared with the same period in 2005. Collisions were down 39.5% to 52, and derailments dropped 21.8% to 631. Yard accidents were down 22.7%, to 472.
Railroads reported 264 fatalities in the January-April period, 8% fewer than in the 2005 quarter. Grade crossing fatalities were down 6.7%, to 112, but trespasser fatalities increased 12% to 149. There were only three railroad employee fatalities in the period, compared with nine in the 2005 quarter.
Railpower cuts production forecastRailpower Technologies Corp. disclosed today that it does not expect to meet its production target of 90 to 100 locomotives for 2006 and its gross margin target of 30% by the end of the fourth quarter. The revised target is for 50 to 65 units “based on a reassessment of current manufacturing and procurement activities by the company's new management team, combined with a customer requested delay in the delivery of 10 units to 2007.”
“We have revised our production schedule in order to finalize design details and subsequent procurement of components,” said Railpower President and CEO José Mathieu. “This will allow us additional time for quality assurance and the testing of locomotives before delivery. In the short term, this will result in added pressure on our margins.”
Mathieu said the company “is comfortable with its projected cash position but is also in the process of evaluating certain financing alternatives in support of its business plan.”
“With key people now in place, we have reviewed our operations and are now implementing necessary measures to ensure that Railpower is well positioned to complete its transition from a development stage enterprise into a successful commercial entity,” said Mathieu.
GE launches Maintenance MAX™Calgary, Canada-based fertilizer producer Agrium is the first company to implement GE Equipment Services’ Maintenance MAX™, a new fleet maintenance and management service. MAX interprets and applies historical GE data to help extend railcar maintenance intervals and reduce overall costs. Agrium is using the system on its 100-car fleet of covered hoppers.
Another 70 bilevels are added to Alstom's order booksSNCF (France) placed a $172.4 million order with Alstom for seven four-car and 14 three-car CORADIA DUPLEX™ trainsets. The 70-car contract is part of the railway company's fleet renewal project, which kicked off in 2000 with government financing. When it wraps up in 2009, 629 bilevel regional cars will have been purchased. So far, 487 are on the order books, valued at $928.2 million.
The 21 newest trainsets will serve the Centre region (five), Picardie (two), Lorraine (four), and Pays de Loire (10). Deliveries are expected to begin in September 2007.
KCS deploys new Revenue Management SystemKansas City Southern Railway's new Revenue Management System (RMS) is providing a “more accurate and timely picture” of daily revenues. Developed by 16 employees from the railroad's information technology, revenue accounting, and sales and marketing departments, the system was deployed on July 1.
According to KCSR, RMS “enhance[s] the transportation waybill and match[es] it against a new central price repository, which consists of both KCS published prices and foreign prices that are electronically transmitted and received through the Rate EDI Network. The system utilizes this re-engineered revenue waybill to drive downstream revenue accounting, financial reporting, and decision-support processes.” It is said to satisfy Sarbanes Oxley requirements.
Rail fans answering BNSF's callMore than 3,100 rail fans have signed up for BNSF Railway's new program, Citizens for Rail Security (CRS). While the program, introduced last month, does not grant access to BNSF property or facilities, registered CRS members agree to report suspicious activities and help prevent possible security breaches, according to the railroad.
Asking rail fans, who photograph and watch trains, to participate was a “natural,” commented BNSF's General Director-Police and Protection Solutions William Heileman last month (See Breaking News Update, “BNSF to rail fans: I want you!”, June 7). CRS “harness[es] their interest to help keep America's rail system safe.”
Participating rail fans will receive an official identification card and be able to access news and information on the CRS website (http://newdomino.bnsf.com/website/crs.nsf/request?open).
ATA reports truck driver turnover resultsTurnover for large truckload carriers hit a 10-year low in first-quarter 2006, according to recently released American Trucking Associations statistics. ATA reported that the turnover rate of 116% fell 20 percentage points from fourth-quarter 2005's rate of 136%.
ATA Chief Economist Bob Costello attributed the decline to “softer freight volumes and looser capacity.” He added, however, that “the rate still remains high and hasn't been below 100% since the fourth quarter of 2002.” (ATA has been compiling turnover data since 1995.)
Small truckload carriers saw the average turnover rate increase slightly to 111%. Historically, the turnover gap between small and large carriers has been significant, according to ATA. But “some small truckload carriers appear to be picking up a portion of the larger carriers' long-haul freight,” Costello said. Carrier reports to the association indicate that “a number of large truckload fleets are reducing some of their long-haul freight to accommodate drivers' preferences to spend more time at home.”