August 2005
“What's in your wallet?”Bay Area Rapid Transit is hopeful that its 2 million annual riders soon will be carrying BART Rewards Cards in theirs. Similar to an airline or other cobranded program, the transit agency is looking to “build loyalty” with its customers and reward them for riding its system. Credit-card issuers interested in partnering with BART to develop or market such a program can download more information by visiting www.bart.gov/advertising/rewardscard.
FEC hires Greenbrier to provide processing servicesFlorida East Coast Railway has selected Greenbrier Management Services, a division of the Greenbrier Companies, to process daily car-hire payables on all rail equipment interchanged onto its lines, including conventional and intermodal cars, trailers, and containers. GMS already provides receivables service for the regional railroad's fleet of more than 7,500 railcars and trailers. Terms of the new contract were not disclosed.
The payables system, which is also employed by Minnesota, Dakota & Western and International Bridge Terminal Railroad, is Web-enabled so that users can proactively manage their expenses.
“The FEC account will draw upon the many automated processing features that have been programmed into our new system for customers with operating complexities,” said GMS Associate Vice President-Business Development Jeff Gates, during today's announcement.
And FEC is one of those customers. Traffic levels are comparable to those of a Class I, says Amy Bramlitt, the railroad's vice president and CFO. The GMS platform, she notes, will process payments in a “timely fashion."
CPR introduces women's scholarship programCanadian Pacific Railway has launched a scholarship program for women participating in conductor training programs at Canadian colleges. Ten $1,000 scholarships will be awarded annually over the next three years to students attending such schools as BCIT (Vancouver), SAIT (Calgary), George Brown College (Toronto), and College Gerald-Godin (Montreal).
The railroad anticipates hiring “several thousand” running trades employees between now and 2010, and is looking to add more women to its ranks. Currently, it employs some 1,200 women in Canada, with 200 of those in field operations. “We want to increase this number, particularly for the conductor position, which can lead to other career opportunities, including locomotive engineer positions,” says Paul Wajda, director-industrial relations and technical training at CPR.
CPR conductors can expect average salaries of $65,000 a year. Locomotive engineers, promoted from railway conductor positions, earn an average salary of $85,000.
Wabtec renews Japanese license agreementsWabtec Corp. has renewed 80-year-old license agreements with NABTESCO and Mitsubishi Electric Corp. (MELCO) of Japan for another five years. Using Wabtec technology, the Japanese companies are the sole suppliers of railcar braking equipment in their homeland, and also offer it in China, Taiwan, the Republic of Korea, and Asia.
In making the announcement late yesterday, Wabtec noted that it “has leveraged the relationships with NABTESCO and MELCO to manufacture braking components for railway customers in Taiwan and China, and it is currently exploring other market opportunities with both.”
Greenbrier to streamline operationsTo centralize reporting and governance and reduce overhead costs, The Greenbrier Companies will place its North American manufacturing units under a single organizational structure and convert its U.S. subsidiaries into limited liability companies. All of manufacturing will continue reporting to L. Clark Wood, president of manufacturing operations.
“These actions will facilitate continued improvements in manufacturing costs and in lean manufacturing processes,” said President William A. Furman, during the announcement yesterday. “They also will smooth the progress of succession planning in our largest business unit, while we position Greenbrier to capitalize on growth opportunities.”
As part of the restructuring, Greenbrier has promoted Alejandro Centurion to senior vice president-manufacturing operations, with responsibility for all new railcar operations at Gunderson-Concarril in Sahagun, Mexico, Gunderson in Portland, Ore., and TrentonWorks in Nova Scotia, Canada; and Agustin Palestino to general manager-Gunderson-Conccarril. For North American manufacturing operations, Owen Whitehall has been named vice president-supply management; Greg Saxton, vice president and chief engineer; and Howard Werth, controller. Tom Sass and Bob Hickey remain responsible for Gunderson (Portland, Ore.) and TrentonWorks operations, respectively. Also reporting to Wood will be John Nussrallah, who was recently named president-Greenbrier Europe. Lorie Leeson, assistant vice president-corporate finance, will now oversee the financial accounting and reporting activities of Greenbrier's manufacturing operations.
PHL, ports seek clean-burning locomotivesThe Ports of Long Beach and Los Angeles and Anacostia Rail Holdings subsidiary Pacific Harbor Line have tentatively agreed to launch a $23 million program to replace PHL’s 18 switcher locomotives with “clean-diesel” and alternative-fuel units that will reduce air emissions. The replacement program is part of a new 10-year extension of an agreement between the ports and PHL, which also dispatches all BNSF Railway and Union Pacific trains within the ports.
The agreement, which is expected to be finalized this week, calls for PHL to replace its fleet with 16 locomotives equipped with prime-movers that exceed U.S. Environmental Protection Agency Tier 2 emissions standards. In addition, PHL would acquire two alternative-fuel locomotives, one using liquefied natural gas and the other incorporating hybrid diesel-battery technology. PHL estimates that using these replacement locomotives will prevent 163 tons of NOx and three tons of particulate matter from being released into the atmosphere annually—a 53% reduction in NOx emissions and a 45% reduction in particulate matter emissions per locomotive. Negotiations with undisclosed manufacturers are under way.
The ports will each contribute up to $5 million toward the program’s estimated $23 million cost, with the balance coming from PHL and a $3.2 million AQMD (Air Quality Mitigation District) Carl Moyer grant. “This agreement is another step toward implementation of our No Net Increase program to reduce Port-related emission sources adjacent to our communities,” Port of Los Angeles Interim Executive Director Bruce E. Seaton said.
The agreement also provides incentives for PHL to not block street crossings for more than 10 minutes. The locomotives will be equipped with automatic shut-down devices if the engines idle for more than 15 minutes. PHL will use cleaner-burning emulsified diesel fuel, as will the existing fleet of older locomotives during the transition period. In addition to the test on the alternative-fuel locomotives, PHL will be testing diesel oxidation catalysts on the locomotives. If proven effective, PHL will use them on all locomotives.
New problems plague Powder River coal supplyRepair work continues on a Southern Powder River Basin coal line shared by BNSF and Union Pacific, but that's no longer the main cause of reduced traffic on the line, according to a UP announcement on Aug. 25.
“Since the beginning of August, 70% of the missed trainloads are attributable to a variety of reasons, ranging from landslides in the pits, to no coal inventory, to no equipment upgrades,” said UP. “One mine has loaded only a couple of trains this week.”
BNSF is conducting the repair work, which passed a critical point when it shifted this week to cleaning coal dust from ballast through undercutting. Heavy rains and snows last spring caused two major derailments on the line.
UP said it hopes the SPRB mines resolve their problems “by the beginning of September so that UP and BNSF can take advantage of available track capacity.”
Meanwhile, said UP, the two railroads continue to add capacity to their Powder River Basin operations: “UP and BNSF recently opened another segment of a third main track, are planning to build an additional segment, and are launching a major study of capacity needs for the next five years.”
UP added that it has invested more than $6.2 billion in coal transportation in the last 10 years.
The Southern Powder River Basin problems have raised concerns in the electricity generating industry about diminished inventories and rising prices. Soaring oil prices underscore the importance of coal to the economy. By one estimate, coal fuels about 55% of the national electricity supply.
Mexico City rail contract goes to CAFMexico’s Transport Ministry has selected a consortium headed by CAF of Spain to build and operate a suburban rail system in Mexico City. The project is worth an estimated $615 million. Alstom of France and the Mexican company ICA were also contenders for the concession. A ministry spokesman said CAF “presented the best conditions for the government in terms of the best tariff offered for future users of the service.”
New York MTA boosts security efforts with $212 million contractIn the wake of the London bombings, New York MTA began work today on a $212 million project to enhance security throughout its transportation network. Its new Integrated Electronic Security System/Command, Communication, and Control program (IESS/C3) includes CCTV cameras, motion and perimeter detectors, and intelligent video software. Together, the technology will allow MTA to detect intruders entering unauthorized areas or unattended bags left on station platforms, among other scenarios. Alarms and alerts of such activities will be sent automatically to eight Command, Communication, and Control centers for immediate analyzation and response. (The centers will link to the new MTA police department mobile command centers, as needed.)
“This is cutting-edge technology,” MTA Executive Director Katherine Lapp told reporters during a news conference this morning. “And it will protect our customers and employees in the years to come.” After 18 months of planning, she announced that MTA awarded a three-year contract for the project to Lockheed Martin and its subcontractors, ARINC, Inc., Slattery Skanska USA Civil, Inc., SYSTRA Engineering, Intergraph Corp., Cubic Corp., and Lenel Systems International, Inc.
More than 1,000 cameras and 3,000 sensors will be installed on subway and commuter train platforms/stations, tunnels, bridges, and other critical locations. They will not be added to subway cars or buses at this time, according to Lapp. Because the IESS design is modular, it can be expanded to additional locations and incorporate new sensor technology in the future.
UP goes OTPUnion Pacific, which in recent years has been struggling with operational and capacity problems, has announced a major software-based overhaul of its network dispatching functions, which are based at the railroad’s centralized Harriman Dispatching Center in Omaha. UP has contracted with Union Switch & Signal (US&S, supplier of Harriman’s original technology in the 1980s) for a Next Generation Computer Aided Dispatch System (CAD) that includes Optimizing Traffic Planner™ (OTP). The technology will control UP’s 33,000-plus -mile North American rail network.
OTP is described by US&S as a “real-time software technology-based system for planning and optimizing the movement of rail traffic across a rail network. With the OTP system in place, Union Pacific will be in a position to greatly increase operational efficiency while reducing costs.”
The OTP application platform, says US&S, “is designed to solve the problem of optimizing the movement of trains across a rail network in a way that satisfies a railroad’s complex logistics and operating needs as well as its business objectives.” OTP is equipped with a “problem-solving engine” capable of generating multiple optimized train movement plans continuously for all scheduled trains, selecting the best plan for execution. It can generate new and revised plans based on updated information it receives from the field, reacting to unexpected events such as adverse weather conditions or other uncontrollable events, like grade crossing collisions. “This capability for real-time response enables OTP to maintain the highest level of optimization over time for the railroad,” says US&S.
Terms of the contract were not disclosed.
CN expands intermodal serviceIn response to surging Asian imports and strong domestic demand, CN will soon accommodate an additional 125,000 intermodal units a year across Canada-a rise of 15%. Effective Aug. 22, the railroad's new service plan will boost train capacity by more than 20% for overseas containers moving between the Port of Vancouver and Montreal and Toronto, and by more than 10% for domestic container moves between Toronto and Montreal and major Western Canada centers.
CN's “precision intermodal” IMX product coupled with its “ample rail network capacity,” is allowing for the service expansion, according to Executive Vice President-Sales and Marketing James Foote. No new investments in track or terminal handling capabilities are required, he noted.
CN offers fourth morning service between Toronto and Vancouver, as well as third morning service to Edmonton and Calgary from Toronto, and second morning service between Toronto and Winnipeg.
Graniteville class action settlement approvedA class action settlement has been reached between Norfolk Southern and the residents of Graniteville, S.C., where a Jan. 6, 2005, hazmat derailment resulted in nine deaths from exposure to chlorine gas. This agreement, approved in federal district court yesterday, provides restitution for minor personal injury, property damage, business and wage loss, expenses, and inconvenience.
The settlement was subject to final approval after members of the class were given an opportunity to review its terms. All objections were found to have no merit, and approval was subsequently granted. U.S. District Judge Margaret Seymour found the settlement to be “fair, adequate, and reasonable.”
“This settlement will resolve the majority of claims resulting from the derailment without the delay and expense of lengthy litigation,” said Bob Wells, general manager-casualty claims for NS, who noted that the railroad is processing the first payments of claims submitted through the “proof of claim” process preliminarily approved in May and finally approved at yesterday's hearing. Work continues with individuals who were not included in the class.
Preliminary findings from the Graniteville accident point to human error as the cause of the derailment: the failure of a train crew to properly line a switch.
Tax incentives for intermodal developmentIllinois Gov. Rod Blagojevich signed legislation yesterday enabling local municipalities to offer tax breaks and other incentives to developers of intermodal terminals. The legislation is designed to allow municipalities to more easily designate proposed or current intermodal terminal areas as TIF (Tax Incremental Financing) districts, in which income from the increase in the taxing value of an area is diverted for a set number of years so a developer can recoup project costs. The legislation also provides intermodal developers a sales tax exemption on building materials used for constructing or upgrading facilities.
CSX outlines growth strategy“The railroad renaissance is here.” That’s what CSX Chairman, President, and CEO Michael Ward told attendees at the company’s 2005 Investors and Financial Analysts Conference, held this morning at the New York Stock Exchange. One driver of the renaissance, he said, was a boom in U.S. consumption, fed primarily by Asian imports. “This is a tremendous opportunity for CSX,” Ward maintained. Rail traffic, he said, will continue to grow. One contributing factor is ongoing trucking problems, which include congested highways, new hours-of-service rules, higher fuel and insurance costs, and driver shortages.
Because demand for its rail services is expected to grow long-term, CSX has developed a five-year capacity improvement plan, which includes annual Surface Transportation capital expenditures of approximately $1.3-$1.4 billion in 2006 and 2007. (This compares to $1 billion in such expenditures over the last three years.) Investments will be made, in part, to expand capacity on the railroad’s Southeast Corridor (Chicago to Florida) and River Line (Albany, N.Y., to New York City). Starting in 2006, CSX will begin increasing the number of rail sidings and improving signals, and making additional infrastructure improvements in these corridors and others along its 22,000-mile network. CSX expects to spend $1.2 billion annually between 2008 and 2010.
“Our goal is to make targeted investments for reliability and growth while increasing our customer service levels and financial results,” Ward explained. He described the investments as “prudent.”
Ward and other CSX officials painted a favorable long-term financial picture, as well. For full-year 2005, CSX anticipates revenue growth of 8-10%. Through 2010, it is expected to rise 4-6% annually. Surface Transportation operating income growth is expected to rise 10-12%; earnings per share, 12-14%; and free cash flow, 10-12%. The railroad’s operating ratio is expected to drop into the mid-to-high 70s range.
Swift acquires BNSF-leased containersSwift Intermodal Ltd., a subsidiary of truckload carrier Swift Transportation Co., Inc., is acquiring 3,800 53-foot intermodal containers currently leased by BNSF Railway that are part of the North American Container System (NACS) program. BNSF says the acquisition will allow it “to improve its intermodal facility operational fluidity” and “create additional shipping capacity for the entire intermodal community.”
NACS is a North American doublestack network encompassing almost every major U.S. market. It is designed to facilitate the free interchange of 48- and 53-foot domestic containers among member railroads without restrictions. BNSF plans to allow the free interchange of the remaining containers sponsored by NACS that are still in service through Dec. 31, 2006.
CSX, UP partner to offer truck-competitive unit train serviceAs a trucking alternative, Union Pacific and CSX Transportation have teamed up to ship produce cross-country on a new high speed, dedicated unit train. The 55-car train will begin making the nearly five-day trip (124 hours) between Wallula, Wash., and Albany, N.Y., in first-quarter 2006.
Railex, LLC, a division of AMPCO Distribution Services Management, LLC, will own and operate both of the new loading and unloading centers, as well as manage handling and distribution of product at each end.
Such products as apples, pears, onions, and potatoes will be carried in 64-foot refrigerated boxcars, which offer enhanced insulation, energy-efficient cooling systems, and GPS monitoring to ensure proper temperature control.
Trinity posts strong earnings growth in second quarterMarket demand for products from all of its North American business segments helped drive up Trinity Industry's earnings for the second quarter. For the three months ending June 30, Trinity posted net income of $21.8 million or 43 cents a share--a whopping five times higher than the year-earlier period's $3.6 million or 6 cents a share. This beat the Thomson First Call-polled analysts' expectations by 4 cents a share. Revenues grew 37%, topping $731.3 million vs. $548.7 million in 2004.
The strong quarterly report comes despite a $2.3 million write-off of goodwill associated with Trinity's railcar operations in Europe, plus a $3.1 million after-tax loss provision “due to the effect of cost increases in steel and components containing steel on certain rail and barge contracts.”
“All of our North American business segments were profitable during the second quarter, building on the momentum we established during the first quarter,” commented Trinity's Chairman, President, and CEO Timothy R. Wallace, during the earnings announcement. “Productivity improvements implemented in our North American railcar businesses are reflected in their increased earnings and our North American railcar backlog increased slightly to approximately 17,500 units.”
Merger costs impact KCS earningsThe consolidation of a Mexican acquisition triggered Kansas City Southern's net loss of $25.8 million, or 32 cents a share, during this year's second quarter--a sharp decline from the year-earlier period's profit of $7 million, or 11 cents a share.
In today's announcement, KCS explained that second-quarter results were “adversely impacted” by one-time charges of $51.4 million, relating to the April 1, 2005, acquisition of an additional 48.5% in Grupo TFM, S.A. de C.V.
The acquisition boosted KCS's consolidated revenues, however. They rose to $381.1 million from the $153.9 million reported in the year-ago period. Even on a “same rail system comparative basis,” consolidated revenues grew 12.5% over the pro forma second-quarter 2004 combined revenues of $338.8 million, principally from KCS's three rail operating companies: Kansas City Southern Railway, Texas Mexican Railway, and TFM.
KCSR posted $178.6 million in revenues--16.8% higher than last year's $152.9 million. According to KCS, this is the ninth consecutive quarter of “substantial quarter-over-quarter growth.” Even with operating expenses topping $152.7 million (vs. $129.8 million a year earlier), KCSR's operating income improved 12.1% to reach $25.9 million. The railroad's operating ratio rose slightly to 85.5% from 84.9% during the same 2004 period.
KCS Chairman, President, and CEO Michael R. Haverty remains bullish on the future. “Favorable progress has been made in a short time period in transforming KCS into a significantly larger transportation company,” he said during the earnings announcement. “Given the complexities of the transition, everyone should be encouraged by how rapidly and smoothly the process has gone and can look forward to KCS being uniquely positioned to take advantage of newly emerging international traffic patterns.”
Haverty pointed out that KCS accomplished a great deal in this year's second quarter: “KCSR streamlined its rail operation into three divisions in order to sharpen focus on strategic points along its system. Being able to focus on key traffic and interchange points will help KCSR structure its service to meet capacity issues as its traffic volumes steadily increase. The Tex-Mex began a major upgrade of its track infrastructure funded by a 25-year, $50 million RRIF loan to expand capacity and ensure the efficient handling of growing traffic volumes between the U.S. and Mexico. TFM continued to make steady progress in reorganizing its marketing, operations, and finance and accounting functions to conform with and be integrated into the KCS system, including investing in the communications infrastructure required to ensure a timely installation of MCS in the first quarter of 2006.”
Utah orders commuter cars from BombardierThe Utah Transit Authority has placed a $29 million order with Bombardier Transportation for 12 bilevel commuter railcars, with an option for 23 additional cars. Scheduled for delivery between June and October 2006, the cars will be used in the first phase of service between North Weber County and Salt Lake City. The service will eventually extend 120 miles from Bingham City in the north to Payson in the south. The cars will be built at Bombardier's facilities in Thunder Bay, Ont., and Plattsburgh, N.Y. In announcing the order, Bombardier Transportation, North America, President William Spurr commented that more than 750 bilevels are now in operation by 11 public transit authorities across Canada and the United States.
Transport bill earmarks $100 million for CREATE SAFETEA-LU, the new, $286.4 billion transportation funding bill that President Bush signed into law on July 30, provides funding mainly for highway projects, with $52.6 billion set aside for rail/bus transit projects. But freight railroads did not come away empty-handed. The law earmarks $100 million for initial federal funding of CREATE (the Chicago Regional Environmental Project), a $1.5 billion plan to ease the movement of freight and passengers through the Chicago bottleneck. Another public/private partnership, the Alameda Corridor East extension in California, gets $125 million. The new program also increases Section 130 grade crossing safety funding from $165 million to $220 million annually; sets aside $90 million for the Heartland Project to increase rail intermodal clearances between Virginia and Ohio; authorizes $35 million in new RRIF loans (and lifts the collateral requirement for these loans); and earmarks nearly $30 million for rail relocation projects in Portsmouth, Va., and St. Teresa, N. Mex.
Congress passes long-awaited transportation bill After a nearly two-year impasse, Congress has given the green light to a $286.4 billion transportation bill, succeeding TEA-21, to fund highway, bridge, railroad, pubic transportation, and safety programs through 2009. It guarantees $52.6 billion for public transportation and includes some $6 billion for transportation safety and $24 billion for special projects over the next six years. Although the White House had threatened to veto anything exceeding $284 billion, President Bush has signed the bill into law.
House and Senate conference committee members hashed out differences between their separate reauthorization bills to reach this funding level, which is $7 billion less than the Senate's proposal ($293.4 billion, including $53.8 billion for transit) and $2.5 billion more than the House's version ($283.9 billion with $52.3 billion in guaranteed transit funding).
While pleased with the bill's passage, American Public Transportation Association President William W. Millar said that more funding is still needed. “The U.S. Department of Transportation has identified infrastructure needs far in excess of the final amount approved in this new legislation and our members hope that Congress will continue to review funding sources and mechanisms that will enable us to more completely address the growing needs of our country,” he said.
Trespasser deaths on the rise againThe Federal Railroad Administration reports that 203 trespassers were killed on railroads in this year's first five months, a 14% increase over the 178 trespasser deaths reported in the same period of last year. Grade crossing collisions caused 146 fatalities, down 8.8% from the prior-year period. Safety statistics posted on the FRA's website on Aug. 1 show a total of 5,151 accidents/incidents reported in January-May this year, down 12.6% from the 2004 period. Train accidents declined 9.4% to 1,222, though fatalities rose from four to 21. Collisions were down 6.7% to 97, and derailments decreased 6.65% to 900.