August 2006
Amtrak names a new presidentAlex Kummant, a former Union Pacific regional vice president, has been named president and CEO of Amtrak. He replaces Acting President David Hughes, who took over from David Gunn, who was abruptly dismissed late late year.
Kummant most recently was executive vice president and chief marketing officer of Komatsu America Corp., a Japanese manufacturer of heavy construction equipment, where he was responsible for the company’s mining and utility business segments as well as construction equipment marketing. Prior to Komatsu, he was president of Bomag, a German manufacturer of heavy and light equipment for soil, asphalt, and refuse compaction.
At UP, Kummant was brought on board by former president Ike Evans as vice president-Premium Operations, overseeing the intermodal and automotive network performance. He was then appointed vice president of UP’s Central Region, headquartered in Kansas City. Prior to his tenure at UP, he was with Emerson Electric Co.
Kummant’s first job on a railroad came at age 18 in Lorain, Ohio, working on a track crew for the Lake Terminal Railroad at the U.S. Steel Lorain Works.
Raleigh-Durham puts regional rail on holdAfter spending $140 million on a planned 28-mile regional rail line serving North Carolina’s Raleigh-Durham area, and contracting for another $15-20 million, the Triangle Transit Authority is ready to call at least a temporary halt to the project. Acting on a staff recommendation from General Manager John Claflin, the authority’s board is asking the Federal Transit Administration to remove the project from FTA’s New Starts process, due to recent changes in the federal “cost-effectiveness” formula.
The project, estimated to cost more than $630 million, has experienced other reverses. “Inflation was a factor, increasing the project’s cost about $1 million a month during 2005,” said TTA. “Higher costs for concrete and steel following Hurricane Katrina also drove up costs.”
TTA some months ago placed an order for 32 DMUs with the Korean-Japanese consortium United Transit Systems, which is led by carbuilder Rotem.
In an effort to complete the project, TTA will explore other funding sources, including a public private partnership. It may also “at some point” decide to reenter the new-starts process at FTA.
Design and engineering plans have been completed, and 93% of the necessary land has been acquired, with local, state, and federal funds. Under an agreement with FTA, the land will be held by TTA for future transit use. Meanwhile, “all engineering designs and plans have been stored and are being kept in a secure location.”
FRA pushing for ECP brakesNorth American freight railroads have been experimenting with ECP (electronically controlled pneumatic) brakes since the early 1990s and for various reasons haven’t found the means, technologically or financially, to implement them throughout the freight car interchange fleet. ECP pilot programs have focused on captive car fleets used in unit train service. The chief drawback has been the difficulty of retrofitting 1.3 million freight cars with interoperable technology. Many questions remain unanswered. For example, should a hard-wired or wireless system be adopted? How will equipped and non-equipped cars operate within the same consist? What is the cost, and—most problematic—who will pay for it? Railroads, or the shippers, which own 50% of the interchange fleet?
Enter the Federal Railroad Administration, which, after an exhaustive study performed by Booz Allen Hamilton (available on the FRA website at www.fra.dot.gov/us/content/1713), has announced it intends to issue a Notice of Proposed Rulemaking on ECP brakes early next year. The intent of the NPRM is “to propose revised federal rail safety regulations to facilitate the installation of ECP brake systems capable of preventing derailments and shortening train stopping distances.” ECP, FRA Administrator Joe Boardman said in a prepared statement, “offers a quantum improvement in rail safety.”
FRA cited that ECP brakes “are applied uniformly and virtually instantaneously on every rail car throughout the train, rather than sequentially from one rail car to the next as is done with current air brake technology. The system provides improved train control when braking and can reduce stopping distances up to 60%.” FRA also said that it “is open to considering plans from railroads interested in using ECP brakes before the proposed rule changes are completed . . . in order to achieve the safety benefits as soon as possible.”
FRA added that deployment of ECP brakes “supports the U.S. Department of Transportation’s new National Strategy to Reduce Congestion on America’s Transportation Network. Better brakes mean longer trains can move more freight faster and safer to help reduce congestion on America’s rail system.”
FRA gets moving on DM&E $2.3 billion loan requestAfter a long wait, a timetable is beginning to emerge for action by the Federal Railroad Administration (www.fra.dot.gov) on Dakota, Minnesota & Eastern’s application for a loan of approximately $2.3 billion to help build a 280-mile line into the Powder River Basin coalfields and improve 600 miles of existing line.
Late on Aug. 16, FRA announced that it will adopt the final environmental impact statements (EIS) issued earlier by the Surface Transportation Board on the DM&E project, and was making available its own draft findings “to address issues not fully covered in the STB review.” Both documents will be available for public comment through Oct. 10. After a record of decision is signed by the FRA administrator, the agency will have 90 days to approve or deny the application. Thus, a decision may be expected no later than early January.
DM&E says STB action will help attract expansion capitalIn a decision announced Aug. 14, the Surface Transportation Board cleared the way for the Duluth Minnesota & Eastern to use a separate subsidiary, Wyoming, Dakota Railroad Properties, Inc. (WDRPI), to build and operate a 280-mile line into the Powder River Basin coalfields. DM&E believes this will help attract the necessary public financing for the $6 billion project. DM&E has applied to the Federal Railroad Administration for a $2.4 billion loan to help build the new coal line and rebuild 600 miles of existing track.
“We have to attract a lot of private financing regardless of the outcome of the FRA loan,” said DM&E President and CEO Kevin V. Schieffer. He said that creating a new subsidiary to build and operate the new line “will expand the universe of investors, and will provide more flexibility in structuring some of that $4 billion in private capital investment.”
STB says overhead traffic counts toward profitabilityThe Surface Transportation Board (www.stb.dot.gov) has denied CSX Transportation’s request for authority to abandon a 12.74-mile line in Anderson, S.C. The board ruled that the line is profitable when overhead as well as local traffic is taken into account, and that CSXT’s estimate of the cost of essential repairs is inflated.
STB said CSXT sought to abandon the line because it generated total revenues of only $194,079 from two on-line shippers, which “counted alone, resulted in an avoidable loss of $118,717 in 2005.” CSXT also claimed it would cost $913,860 to rehabilitate the line to FRA Class I condition.
STB found the line to be profitable, considering revenues from 10 overhead shippers whose traffic is interchanged with CSXT at Belton Yard, a point on the line. The board also found estimated rehabilitation costs to be overstated, based on the available record. STB denied the request “without prejudice to CSXT’s either refiling a petition for exemption or filing a formal abandonment application to provide the information needed to make its case.”
Wabtec to refurbish British high speed equipmentWabtec Rail has won a $27 million contract to refurbish 107 cars used in high speed train service by Great North Eastern Railway Limited (GNER) of London. The work will be performed at Wabtec Rail’s facility in Doncaster, England. Interiors will get new seating, luggage racks, and lighting, end exteriors will get a new paint job.
P&W profit rises on higher revenuesProvidence & Worcester has reported second quarter net income of $277,000, a 34% increase over the $207,000 profit posted in the second quarter of 2005. Operating revenues in this year’s quarter rose 9.9% to $7.2 million due to increased volume, higher rates, and fuel surcharges. Operating expenses increased 9.6% to $7 million, with diesel fuel and employee health and welfare costs accounting for 40% of the increase.
RailPower losses persist as backlog doublesRailPower Technologies said today that it currently has firm orders for 152 locomotives, compared to a backlog of 79 units at the end of the second quarter of 2005. The company also reported a net income loss of C$15.3 million for this year’s second quarter, when it produced 13 locomotives and delivered three, vs. a loss of C$7.4 million for the prior-year period; and a loss of C$23.9 million in this year’s first six months vs. a loss of C$12.2 million in same period last year.
“We continue to focus on accelerating our engineering efforts, improving our purchase agreements, and implementing stronger manufacturing support and financial controls as our work-in-process increases to meet delivery requirements,” said José Mathieu, RailPower's president and CEO. “We expect our production levels in the third quarter to be consistent with second quarter levels, as we continue to implement our operational improvements. We are confident that as we complete these initiatives, we will be well positioned to significantly increase locomotive production volumes in the fourth quarter.”
RailPower also said it will require additional financing in the fourth quarter and is talking with potential lenders. “Due to engineering and supplier issues, the company had to delay its production and delivery schedule. This resulted in additional pressures on liquidity due to the mismatch between inventory levels and actual production and deliveries. In the meantime, working capital requirements to support the revised production schedule, delays in deliveries, and operational expenses will continue to be substantial and will weigh progressively on actual liquidity.”
A back-door approach to the D.C. rerouting battle? A new rail line bypassing the nation's Capitol may be built to alleviate security concerns and passenger/freight bottlenecks. The District of Columbia Department of Transportation, in cooperation with the National Capital Planning Commission and other regional partners, has hired consulting firm Parsons Brinckerhoff to evaluate alternative alignments, analyze their benefits and costs, and rank their suitability by early 2007. Just who would approve, build, and pay for such a line is unclear.
CSX Transportation currently operates through the Washington, D.C., area, and voluntarily reroutes trains carrying certain types of hazardous materials. But early last year, the Washington, D.C. Council passed legislation making it illegal to transport hazmat by rail within 2.2 miles of the Capitol. Patchwork regulations, CSX said at the time, would have a significant impact on all hazmat transport--with different communities having different sets of restrictions. The U.S. Court of Appeals for the Washington, D.C., Circuit, agreed and overturned the law in May 2005. A three-judge panel said that regulating hazardous rail shipments is a federal- rather than city-government issue, covered by the Hazardous Materials Transportation Act and the Federal Rail security Act. Rerouting, it added, "creates security risks because it will increase the length of time hazardous materials are in transport."
CSXT Vice President-Public Safety & Environment Skip Elliott told Railway Age that the case has started a necessary dialogue and review of hazmat transport at the state and local levels (RA, “Secure hazmat corridors,” January 2006, p. 59). “In my opinion, this will ultimately drive change in shipments of high-hazmat products, involving rerouting or additional tracking capability or technology,” he said. “I don't know the answer. We need clarification from the court as to who is responsible for rerouting, from the legal aspect, and what dialogue needs to take place among carriers, chemical manufacturers, shippers, and the government to ensure it's transported in a safe manner."
Meanwhile, the Department of Homeland Security and CSX are in the midst of an 18-month pilot project to secure the railroad’s 7-1/2-mile corridor between Reagan National Airport and Benning Road rail yard (RA, CSX and DHS partner to protect D.C. Corridor, Sept. 2005, p. 20). Under a $9.8 million DHS contract, Duos Technologies, Inc., and Epsilon Systems Solutions, Inc., are installing more than 300 cameras and sensors to automatically detect anomalies and simultaneously alert the authorities to respond. It’s not certain that such an effort would preempt rerouting, which also has been proposed in Boston, Cleveland, and Baltimore.
Railroad personnel keeping “eyes and ears” openWhile the threat level has been raised for air transportation following a thwarted terror plot targeting flights from the U.K. to the U.S., North American railroad threat levels remain the same. According to Association of American Railroads President Edward R. Hamberger, the Department of Homeland Security has confirmed that no threats have been made against U.S. rail operations. “However,” he pointed out, “Our freight members are increasing their vigilance, watching for any suspicious persons or activity around railroad facilities.” He added that AAR’s passenger members also have stepped up railroad police and canine patrols “at key stations and trains.”
American Railcar announces new plant, new orders, and improved incomeAmerican Railcar Industries, Inc., (ARII) announced Aug. 9 that it plans to build a new manufacturing plant adjacent to its existing tank railcar plant at Marmaduke, Ark. The new plant would have an initial capacity of 2,500 tank cars annually though as a “flexible” facility it would also be capable of building covered hopper and intermodal cars. Construction is expected to begin in the third quarter of 2006.
At the same time, the existing Marmaduke plant is being expanded to increase capacity by 1,000 cars annually. This plant was shut down during the second quarter for repair of damage from a tornado that struck in April (See Breaking News, April 24).
ARII also announced that it “has signed agreements with two important customers to purchase a total of 2,000 railcars per year from the company in each of 2008 and 2009. One of these customers has options to purchase up to an additional 2,000 railcars. It is currently anticipated that the railcars for these orders would be produced at the new plant. These orders represent a significant increase in the company’s backlog over the 12,790 railcars reported as of June 30, 2006.”
(In a later announcement out of Chicago, GATX Rail, Inc., announced that it will acquire up to 4,000 new cars from ARII subject to the exercise of options, beginning in 2008. GATX Rail has a leasing fleet of around 108,000 cars in North America.)
American Railcar also announced strong financial results for the second quarter, with insurance covering much of its business losses resulting from the temporary shutdown of the damaged Marmaduke plant.
For the three months ended June 30, revenues were $151.6 million vs. $160.7 million for the prior-year quarter. The covered hopper car plant set a new quarterly record for production and revenues. Net earnings were $10.8 million or 51 cents per diluted share for the quarter vs. $1.9 million or 17 cents per diluted share for the 2005 period. Net earnings for this year’s quarter included $5 million of business interruption insurance. The company received an additional $3 million of insurance for continuing expenses for the second quarter and expects further payments for the third quarter.
ARII shares were up nearly 4.5% near the close of trading on Wall Street today.
KCS appoints international intermodal chiefUnderscoring the importance it attaches to “the International Intermodal Corridor” between Lazaro Cardenas, Mexico, and the southeastern U.S., Kansas City Southern has appointed Theodore Prince to the position of vice president-sales and marketing, inermodal and international development. Prince comes to KCS from Optimization Alternatives, Ltd., Inc., where he was senior vice president-marketing and sales. Before that he had nine years of intermodal experience with Conrail.
Court upholds nuclear-waste train conceptThe U.S. Court of Appeals for the District of Columbia Circuit has rejected the State of Nevada’s arguments against moving nuclear waste over a 319-mile new rail line to a repository at Yucca Mountain 90 miles north of Las Vegas.
Nevada had based its arguments on both environmental and technical considerations. “We conclude that some of Nevada’s claims are unripe for review and the remaining claims are without merit,” said a decision issued by the three-judge panel on Aug. 8.
Now scheduled to open in 2017, the project is running 19 years beyond the original schedule. The U.S. Department Energy says that under the current plan, the repository would receive about 175 shipments per year for 21 years—about 130 by rail and 45 by truck.
Tank cars, the next generationA hazmat shipper—Dow Chemical Company, a railroad—Union Pacific, and a supplier—Union Tank Car Company, have assembled a joint project team to develop what they’re calling the “next-generation tank car” for transportation of highly hazardous chemicals. Work will focus on all aspects of hazmat transport, not the least of which is design of the tank car itself. Other parts of hazmat transport—for example, the supply chain—will also be studied. Each company participates in the Responsible Care® program, the U.S. chemical industry’s performance initiative to reduce emissions and improve worker safety.
Project directors at the three companies include Bob Grimaila, Union Pacific vice president-environment and safety; Henry Ward, Dow Chemical Company director-transportation safety and security; and Rich Sobilo, Union Tank Car director-engineering.
UP, Dow, and UTC have also established an advisory board to help guide development of a next-generation tank car design. Board members (with their specific responsibilities) include Christopher Barkan, Ph.D., University of Illinois at Urbana-Champaign (Railroad Engineering and Risk Analysis); Phil Daum, PE, Engineering Systems Inc. (Tank Car Design); Chip Day, Center for Toxicology and Environmental Health, L.L.C. (Hazmat Response); Chief John Eversole, International Association of Fire Chiefs (Local Hazmat Emergency Response); James Rader, AllTranstek L.L.C. (Transportation Fleet Management and HazMat Regulatory Compliance); and Frank Reiner, PE, Chlorine Institute (Transportation Safety).
Help us help you: Sign up for APTA’s new transit emergency assistance programWhen hurricanes or other emergencies strike, the American Public Transportation Association wants its members to be ready to help each other. That’s why it has partnered with the Federal Transit Administration to develop an Emergency Response and Preparedness Program. This voluntary industry “Mutual Aid Program Plan” will “assist fellow transit systems and their cities, regions, and states with emergency evacuation and temporary transit operational needs,” wrote APTA President Bill Millar in a member letter to drum up support.
Once members sign up, the association plans to compile an inventory of transit resources, including vehicles (by type, fuel, and accessibility--bus, railcar, paratransit, for example), support vehicles (tow and fueling trucks and emergency vehicles), support equipment (generators, etc.), and personnel (transit operators, mechanics, supervisors, and police/security). FTA is making resources available for the program’s development and administration.
For more details, contact APTA’s Greg Hull (ghull@apta.com ) or Rachelle Jezbera (rjezbera@apta.com ).
Arizona Eastern Railway eyes new business, new lineThe 133-mile Arizona Eastern Railway (AER) is looking to grow. By building a 10-mile branch line from Bowie, Ariz., to Miami, Ariz., the Pacific Holdings LLC subsidiary expects to generate another 5,000 carloads of traffic and eliminate some 22,000-truck trips annually. It just needs the Surface Transportation Board to sign off on the $22 million project, which includes putting up a new 500-foot bridge across the Gila River. In the short line's application, filed last week, it seeks “expedited consideration” with a decision by March 2007, so operations can begin in March 2008. (The filing is subject to completion of an environmental review by the Board’s Section of Environmental Analysis.)
The new line will serve a new Phelps Dodge Mining Co. copper mine complex and an industrial park in Safford, Ariz., making one roundtrip per day. AER already hauls 7,000 carloads a year for Phelps.
Pennsylvania plans transit and rail freight spendingPennsylvania's Transportation Commission has approved a four-year investment program that includes $9.4 billion for public transit improvements and $174 million for freight rail projects. The new plan, announced Aug. 3, also lists $9 billion for highways and bridges and $614 million for aviation projects.
Pennsylvania is perennially short of funds to carry out its transportation plans. A report is due Nov.15 from the Transportation Funding and Reform Commission, which Gov. Edward G. Rendell created in 2005 to explore funding mechanisms.
Cubic Transportation moves from operating loss to profitCubic Transportation Systems, a Cubic Corp. unit that supplies electronic fare collection systems, has reported an operating profit of $1.1 million for the quarter ended June 30, compared to an operating loss of $5.2 million in the prior-year quarter. Sales were $61.6 million in this year's quarter compared to $57.2 million in the 2005 period.
Intermodal sets new weekly recordU.S. railroads hauled 250,966 containers and trailers in the week ended July 29, exceeding the former weekly record of 250,115 units set in the week ended Oct. 25, 2005.
For the entire month of July, intermodal volume totaled 938,160 units, up 6.7% over July 2005. Carload volume in July was 1,291,956 cars, up 2% from July 2005.
For this year's first seven months, intermodal volume was up 6.5% and carload volume increased 1.5%
STB cracks down on fuel surcharge practicesThe Surface Transportation Board is seeking public comment on a number of proposed standards for railroad fuel surcharges, including those that would prevent “double-dipping” and provide more transparency. This follows the agency's May 11, 2006, hearing on how surcharges are calculated and charged, which included extensive testimony from the rail industry, customers (including the NIT League and American Chemistry Council), and the public (see breaking news updates, May 11 and May 9).
At that hearing, “The shipper community expressed deep dissatisfaction with the railroad industry's methods of assessing fuel surcharges,” STB said. “Shippers recognize that railroads are entitled to recover the increased costs they incur from the rising price of fuel. However, most take issue with the manner in which fuel surcharges are generally being imposed--as a percent of the base rate. They maintain that fuel surcharges that are tied to the level of the base rate bear no direct relationship to actual fuel consumption and are instead used as a 'profit center.'”
While railroads “largely concede” that fuel surcharges are not tied to consumption, STB reported, “most claim that, when their systems are examined as a whole, they are not recovering the full increase in the cost of their fuel.” Why? “That appears to be because railroads cannot apply fuel surcharges to every customer, and therefore, in order for the railroads to recover their full additional fuel costs, some shippers are charged surcharges that are greater than the actual incremental cost of the fuel used for their particular shipments,” according to the STB. Nevertheless, railroads argue that surcharges are “fair, equitable, and, most significantly, easy to administer.”
Despite this, the federal agency is proposing that “a railroad wishing to assess a fuel surcharge would need to develop a computation more closely linked to its increased fuel costs attributable to that movement.”
Because many shippers also alleged that railroads are “double dipping,” STB proposes prohibiting the tactic of “charging for the same fuel-cost increases for the same shipment both through a fuel surcharge and through application of a rate escalator based on an index, such as the STB's Railroad Cost Adjustment Factor (RCAF), without first subtracting any fuel-cost component from that index.”
According to STB, several shippers said that railroads rely on “inappropriate, inflated indices for calculating the increases in the costs of fuel that they incur.” That's why the STB proposes requiring a “single, uniform index--the Energy Information Administration 'U.S. No. 2 Diesel Retail Sales by All Sellers (Cents per Gallon)'--for measuring fuel-cost increases.”
At the May hearing, shippers argued “nearly unanimously” that transparency is necessary. So in its fourth and final proposal, STB is suggesting that “Each Class I submit a monthly report to the agency showing the railroad's actual total fuel costs, total fuel consumption, and total fuel surcharge revenues, as well as how much of its total fuel surcharge revenues were shared with its short line connections.”
Comments are due Sept. 25.
NS opens a new $44 million line in PennsylvaniaOn Aug. 7, Norfolk Southern will start running trains along a new 16-mile line linking its Conemaugh Line in Saltsburg, Pa., with the coal-powered Keystone Generating Station in Shelocta, Pa. No longer will they operate on the former circuitous, limited-capacity route, which spread out over 51 miles, according to the carrier.
Construction of the $44 million Shelocta Secondary began in April 2005. Five miles of new track and right-of-way were built, with more than 1.4 million cubic yards of soil moved to establish efficient grades. Another 11 miles were rehabbed. NS said it expects to haul more than 3 million tons of coal here annually.
North American Joint PTC project gets a boostThe North American Joint PTC (Positive Train Control) project will push forward with a $679,000 grant from the Federal Railroad Administration. While the long-running project has evoked controversy--often perceived as being “expensive, overly complicated, and time-consuming”--one of its goals is to eventually replace traditional signaling equipment with lower cost technology that tracks train location and speed, provides movement authorities, and enforces speeds and limits of authority. It's hoped that the new technology “will allow passenger trains to safely operate at 110 mph between Chicago and St. Louis in the same rail corridor as slower freight trains,” according to FRA. The FRA, Association of American Railroads, Union Pacific, and Illinois Department of Transportation are collaborating on the project.
Florida plans to invest $491 million toward billion-dollar commuter rail lineFlorida Gov. Jeb Bush today announced an agreement in principle under which the state will invest $491 million “to improve infrastructure and expand capacity on two existing rail lines, one of which will be used to establish commuter rail service through a multi-county stretch in the region.” The statement's commitment is part a plan to create a commuter rail system serving the Orlando area that sources say will cost nearly $1 billion. In addition to infrastructure acquisition and improvement, the commuter system will require engineering, station construction, and railcar purchases that will cost an estimated $473.5 million. Republican Congressman John L. Mica, a long-time rail advocate, pledged to work with the Federal Transit Administration for federal funding of half that amount. State and local governments will also contribute.
Today's announcement said, “Planners expect to have the first phase operational in 2009, ahead of the start of the $2.3 billion reconstruction of I-4 between Kirkman Road and State Road 434. The commuter rail system is expected to carry as many passengers during peak hours as a single lane of I-4.”
(It was highway reconstruction along the southeastern coast of Florida a number of years ago that led to a “temporary” commuter rail line in the 72-mile Miami-West Palm Beach-corridor that was enormously successful and is thriving under the name of Tri-Rail. It is currently completing a $333 million double-tracking expansion.)
The $491 million commitment announced today includes $318 million “to improve the infrastructure and expand capacity on existing train tracks,” $150 million to purchase 63 miles of CSXT tracks between DeLand in Volusia County and Poinciana in Osceola County (which will be developed for peak and some off-peak commuter service), and $23 million to relocate operations from Taft Yard in Orlando to the new integrated Logistics Center.
“A portion of rail-freight through traffic will be relocated to an alternate corridor which would be expanded in a joint public-private partnership between the state and CSXT,” said the announcement.
The $318 million investment in existing tracks breaks down this way; $198 million for projects on the CSXT line between Baldwin and Plant City; $59 million to build five overpasses on this line; $52 million on other, unspecified CSXT lines around the state; and $9 million to build access roads to the new Integrated Logistics Center in Winter Haven, “the mother of all rail yards,” which CSXT will build.
CSX Corp. Chairman and CEO Michael J. Ward said in a prepared statement, “Today, our local, state, and federal leaders have recognized that we can meet future transportation needs in a region that is growing by leaps and bounds while also addressing the urgent need for commuter service in and around Central Florida.”
Car sales help propel Trinity to strong quarterStrong shipments of both freight cars and barges helped Trinity Industries increase its earnings from continuing operations to $62.6 million in this year's second quarter, or 79 cents per common diluted share, compared to $20.5 million, or 27 cents per share, in the prior-year quarter. This year's earnings included a gain of nine cents a share from a property sale.
Trinity Chairman, President ,and CEO Timothy R. Wallace said the company received orders for 10,012 railcars in North America during the second quarter, and shipped 6,233 cars. On June 30, Trinity's backlog of undelivered cars was 29,320, an increase of over 3,700 from March 30.
Trinity added more than 1,500 new units to its railcar lease fleet during the quarter, bringing the fleet total to more than 27,200.
Trinity further strengthened its position when its Inland Barge Group's order backlog grew to $487 million at the end of the second quarter.
EPA sees car market growth despite economic slowingIn its latest quarterly report on freight cars, dated July 2006, Economic Planning Associates (EPA) says it expects further gains in railcar demand “in spite of an anticipated economic slowing under the influence of Fed-induced higher interest rates and stronger inflation.” EPA's revised forecast calls for shipment of 76,800 cars in 2006 declining gradually to 60,500 cars in 2011. This compares with the April forecast of 76,000 deliveries in 2006 and 59,500 in 2011.
EPA points out that the freight car market is driven not only by rising carload and intermodal traffic but also by “replacement pressures and technological advances as well as legislative measures.”
KCS posts second-quarter profitKansas City Southern profits were up in the second quarter on net income of $19.2 million, or $0.26 per share, beating Thomson First Call analyst expectations of $0.19 per share. During the same period in 2005, the railroad saw a net loss of $27.3 million, or $0.33 per share.
Second-quarter 2005 results were impacted by one-time charges of $35.6 million related to profit sharing within the railroad's Mexican operations and $15.8 million associated with the acquisition of TFM, S.A. de C.V., now called Kansas City Southern de Mexico. Excluding those charges, net income for the 2005 period was $1.0 million, or $0.01 per share.
Consolidated revenues for the recent quarter came in at $413.1 million vs. $381.1 million a year earlier. The railroad attributed the 8.4% rise to pricing, increased fuel surcharges, and volume increases in coal and chemical and petroleum products.
KCS posted an operating ratio of 81.2%, an improvement of 3 percentage points over the year-ago period.
Chairman and CEO Michael R. Haverty said he expects KCS's “financial performance to continue to improve throughout the second half of 2006.” He said the reasons for this are improved coordination of rail operations, continued focus on yield management, strengthened leadership (with the recent addition of new executives), and ongoing integration of shared services for U.S. and Mexican operations, among other measures.
Open for business: Siemens' newly expanded manufacturing plantAfter nearly a year of construction, Siemens Transportation Systems has unveiled its newly expanded Sacramento, Calif.-based light rail vehicle manufacturing facility. The existing, 190,000-square foot plant has grown by 21,500 square feet to accommodate carshell production, now done in house. There is now room for a car body finishing center with multiple blasting, painting, and finishing systems as well as carshell welding work.
“This is an exciting time for Siemens Transportation as the demand for mass transit increases,” commented President and CEO Oliver Hauck. “We increased our output by 50% and our current backlog should keep us busy until at least summer 2009.”
The expansion project, which started last summer (see Breaking News Update, “Siemens to expand manufacturing capacity,” July 25, 2005), will help the company fulfill a recent TriMet order for 21 LRVs, among others.
VRE orders 50 new bilevelsVirginia Railway Express has exercised an option with Sumitomo Corp. and Nippon Sharyo, Ltd., for 50 bilevel commuter cars. The option, worth $109 million including additional options, follows a previous order for 300 bilevels that were delivered to Chicago's Metra in 2005. VRE's new bilevels, which can accommodate up to 140 riders, will facilitate the replacement of existing single-level cars, according to Dennis Larson, VRE's director-rail equipment and services.
The car body shells will be built at Nippon Shayro's Toyokawa plant in Japan, while final assembly will take place at Super Steel's Milwaukee, Wisc., plant. Delivery is slated to begin at the end of the year and wrap up in 2008.
Metro-North awards $292 million in shop-complex contractsA 275,000-acre facelift is under way at Metro-North Railroad. As part of a four-phase project, the agency's 100-year old Croton-Harmon Shop and Yard complex is getting new locomotive and passenger car repair facilities plus a wheel-truing facility. The joint venture of Slattery Skanska, Ecco III, Edward & Kelsey, and Parson Brinckerhoff has been selected to perform the work under contracts totaling $292 million.
The new car shop will have the capacity for the inspection and repair of up to 26 cars simultaneously. It will include two consist maintenance tracks, one scheduled periodic inspection track, three repair tracks, one truck repair track, a parts storage area, an office, locker rooms, and a lunchroom. The locomotive shop, to be configured as a double-ended, run-through facility, will allow for the inspection or repair of up to 10 units at the same time.
The renovation project's first two phases began in 1983, when MNR took control of Conrail's commuter operations in New York and Connecticut and inherited the shop complex. At an estimated cost of $103.8 million, specialty yard buildings were rebuilt and new drainage, fuel pads, sand pumps, high-voltage electrical lines, high-mast lighting, and paved service aisles (with room for 100 cars) were installed. The complex also was outfitted with wayside power, solar panels for yard switches, as well as a new fuel line and 200,000-gallon fuel tank.
The fourth and final phase will be the construction of an electric car shop. “We will be looking for funding to finish this important project in our next five-year capital program,” said MNR President Peter A. Cannito.
Crossing fatalities edge up againHighway/railroad grade crossing fatalities rose 2.7% to 151 in this year's first five months compared to the same period last year, while trespasser deaths declined 5.1% to 186, according to a preliminary report by the Federal Railroad Administration. This reversed recent trends, which have seen crossing deaths drop and trespasser deaths increase.
Only four other fatalities--three employee deaths and one in a train accident--were reported in this year's January-May period, bringing the total to 341. In the same period last year, there were 382 fatalities, including 10 employees and 21 in train accidents.
Other rail industry safety measurements continue to improve on a year-over-year basis. Total accidents/incidents were down 9.8% to 5,068 in this year's first five months, train accidents were down 17.5% to 1,125, collisions dropped 34.9% to 71, derailments fell 15.5% to 827, and yard accidents were down 19.6% to 611.
Trinity announces sale of European rail businessTrinity Industries has signed a definitive agreement to sell its European rail business to Romania-based International Railway Systems, S.A. While the European railcar market has “shown signs of recovery in recent months,” the sale will allow Trinity to “dedicate more of our resources and assets to the opportunities in North America,” commented Chairman, President, and CEO Timothy R. Wallace. Terms of the deal, which is expected to close in 14 days, were not disclosed.
Trinity announced last month that it was negotiating the sale (see Breaking News, July 17).