September 2007
Standard Car Truck Co. acquires ZeftekStandard Car Truck Co. Friday announced it has acquired ZefTek, Inc., of Montgomery, Ill., in a move designed to strengthen Standard Car's global market position and allow ZefTek to advance its leadership in wear and damage prevention in the railroad industry.
Standard Car Truck Co. offers freight car truck design, stabilizer systems, railroad freight car trucks, and locomotive components.
"By adding the innovative engineered solutions of ZefTek to Standard Car’s portfolio, we will create an extraordinarily powerful environment for railroad innovation," said Rick Mathes, CEO of Park Ridge, Ill.-based Standard Car, in a statement.
Said Zeftek President Michael Murphy, "We can’t think of any better platform to fulfill this vision than with Standard Car Truck Company. We are great admirers of how they do business."
Railroads add employees in AugustThe Surface transportation Board reports that U. S.. Class I railroad employment reached 166,943in mid-August, up 0.54% from the previous month though down 0.63% from August 2006. Despite declining freight traffic, the number of transportation (train and engine) employees rose to 69,801 in August, a 1.53% increase over July. Also up in August was maintenance of way and structures employment, which at 35,743 was 0.32% above July.
Amtrak ridership surge continuesAmtrak reports that July 2007 was its "highest ridership and ticket revenue month ever by significant margins," due in part to "collapsing airline service—Northwest and United cancellations, US Airways luggage issues, industry-wide poor on time performance."
Amtrak said that system-wide July ridership of 2.41 million trips was 9% ahead of July 2006 and 6% over budget. Ticket revenue in July added up to $141.7 million, an 11% increase over last year and 4% over budget.
The railroad's biggest July surge was in the Northeast Corridor. Acela revenue of $31.6 million was 30.7% over July 2006 and 23% over budget. NEC regional revenue totaled $36.4 million, 8.4% over last year. Elsewhere on the system, short distance trains brought in ticket revenue of $33 million, 10% above last year, and long-distance trains brought in $40.6 million, a 3% increase.
Amtrak's strong July performance in its busy New York-Boston corridor provided evidence of what improved serviced can do to bring in new business and improve customer satisfaction.
"Acela ridership was strong between New York and Boston, up 31% from FY06, due to additional service frequencies and significant on-time performance improvements in that segment," said Amtrak. "Peak leg load factors increased seven points vs. FY06 and revenue per available seat mile was up 28%. Despite a traditional off-peak travel season during summer, many Acela departures in late afternoon and early evening consistently achieved over 75% peak leg load factors."
Rail ton-mile volume up from last yearU.S. railroad traffic took a slight turn for the better in the week ended Sept. 22, with ton-mile volume up 1.4% from the comparable week last year. Carload freight increased 0.2%, with loadings up 4.7% in the West but down 5.4% in the East. Intermodal volume continued to trail last year's levels in the most recent week, down 2.5%. In Canada, carload traffic was up 3.6% and intermodal was up 4.6%. Kansas City Southern de Mexico reported carload freight up 0.2% and intermodal up 8.6%.
Oberstar: New administration could aid rereg billHouse Transportation and Infrastructure Committee Chairman Jim Oberstar (D-Minn.) has pledged a long-term effort to advance legislation to regulate freight railroad rates. "It is realistic to think that this can become law, and if not in the context of the present administration, in a subsequent administration," Oberstar said at a Thursday breakfast sponsored by Dittus Communications, The Hill news group, and the American Chemistry Council.
"We're going to do a bill, it will be reported by this committee and it will reach the House floor," vowed Oberstar. He acknowledged difficulties in moving the bill this year given Congress' intent to adjourn on Nov. 16. But Oberstar said he would seek to move it "very early" in the next session.
Railroad reregulation: Old positions, new rhetoricThe advocates and the opponents of railroad reregulation long ago staked out their positions: Some big railroad customers want to wrest rate reductions and service concessions from the railroads. The railroads say that this would deprive them of billions of dollars a year in revenue and severely eat into their capital improvement programs. At a Congressional hearing this week on the Railroad Competition and Service Improvement Act of 2007, very little was said on the subject that was new, but it was said at a high rhetorical level.
NAFTA rail trade increasesThe U.S. Department of Transportation announced that the value of rail imports among the U. S., Canada, and Mexico—the North American Free Trade Agreement (NAFTA) partners--increased 13.6% to $6.1 billion in July compared width July 2006, and exports rose 1.9% to 2.8billion. Imports by truck increased 6.3% to $24.5 billion and exports by truck were up 8.3% to23 billion. Pipeline imports increased 15.8% to $4.1billion, with exports up 49.8% to $192 billion.
Germany finds funding for $2.6 billion maglev lineGerman authorities have put together a funding package of 1.85 billion euros ($2.6 billion) to build a 23-mile, 280-mph maglev line linking the Bavarian capital city of Munich with its airport. The line is to be built by Siemens and ThyssenKrupp utilizing Transrapid technology and is scheduled to open in2014, cutting a 40-minute trip to 10 minutes.
Siemens and ThyssenKrupp will each put up put up 50 million euros of the cost. The rest of the financing comes the federal government, 925 million euros; the state of Bavaria, 490 million; Deutsche Bundesbahn, the federal railway, 236 million; and the Munich airport, 100 million; and the European Union, 50 million.
Germany’s long history of magnetic levitation development goes back nearly half a century, but so far an operating maglev line has found a home only in China. A maglev line of nearly 20 miles connects Shanghai’s financial district with Pudong Airport.
Former maglev proposals in Germany have progressed to a point but have finally stumbled at the money barrier. A test train collision that killed 23 people last year was a further setback. In the present instance, German Finance Minister Peter Steinbrueck has said the $2.6 billion estimate is five years old and probably low.
Groundbreaking set for new railcar plantGroundbreaking for the National Alabama Corporation’s new freight car plant is scheduled to take place at Barton Riverfront Industrial Park in Colbert County Sept. 27 with Alabama Gov. Bob Riley and National Steel Car Chairman Gregory Aziz in attendance.
When it goes into to operation in late 2008 or early 2009, the new facility will have the capacity to build 10,000 cars a year and will employ up to 1,800 people. Plans for the plant were announced by National Steel Car, a Canadian company, in July. Its cost is estimated at $350 million. National Steel Car operates a freight car plant in Hamilton, Ontario, that it says is the biggest single-site facility in North America, with an annual capacity of 15,000 cars and a workforce totaling 2,500.
Second Avenue Subway wins full-funding grantThe Federal Transit Administration informed New York’s Congressional delegation yesterday that it will approve a $1.3 billion full-funding grant to help build the first phase of New York City’s long-awaited Second Avenue Subway. The full-funding agreement, combined with $1.05 billion previously dedicated to the project by the State of New York and $450 million approved by New York voters in the 2005 Transportation Bond Act, will provide the lion’s share of the funding for the subway’s first phase, according to a joint statement from Congresswoman Carolyn Maloney, New York Gov. Eliot Spitzer, and New York,State Assembly Speaker Sheldon Silver, all strong supporters of the new rail line along what Spitzer calls "the most heavily traveled transit corridor in the country." The first segment will include stops at 96th, 86th, and 72nd streets and tunnels from 99th Street to 62nd Street. At 63rd Street, the new line will link with the existing Q line, providing a one-seat ride from the Upper East Side to Times Square, Wall Street, and Brooklyn.
CP: PRB expansion would cost $3 billionCanadian Pacific Executive Vice President and CFO Mike Lambert says the cost of securing the right-of-way and building track into the Powder River Basin to be about $3 billion, but the total cost of the project would be much higher if equipment purchases and other costs are included.
Observers have presumed CP's proposed $1.48 billion acquisition of the Dakota, Minnesota & Eastern Railroad, announced earlier this month, was fueled by the desire to access PRB, and some analysts have estimated access would cost the railroad up to $6 billion.
But Lambert says that though CP has the option to access the PRB, it may not automatically do so. The railroad would need to construct about 250 miles of track in order to gain reach the PRB, now served by Union Pacific and BNSF.
CN grabs the "J"Following weeks of speculation, Canadian National and United States Steel Corp. have entered into an agreement under which CN will acquire a major portion of the Elgin, Joliet & Eastern from U.S. Steel’s Transtar subsidiary for $300 million. The "J," as it is popularly known, operates about 200 miles of main line track encircling Chicago from Waukegan, Ill., on the north, to Joliet, Ill., on the west, to Gary, Ind., on the southeast, and then to South Chicago. A Class II, the J employs 700 people in Illinois and Indiana, owns 58 locomotives, and operates a fleet of general service and specialized railcars. It serves steel mills, petroleum and chemical plants, and a diverse group of distribution centers, handling a large range of commodities ranging from bulk raw materials to finished products to coal, which is delivered to utility plants in Illinois and Indiana. Interline connections exist with all of the major railroads serving Chicago. The J generates about $100 million in annual revenue.
For CN, acquiring the J is a strategic move that will provide a bypass around Chicago’s western perimeter. Combined with CN's acquisition a few years ago of the Wisconsin Central, it eliminates the remaining "missing link" in CN's greater Chicago network, physically connecting the railroad’s Eastern, Western, and Southern regions. "Chicago is essential to CN’s rail operations, yet it presents us with major operational challenges," said CN President and Chief Executive Officer E. Hunter Harrison. "It now takes longer to go from North to South Chicago than it does to go from Winnipeg to Chicago. This transaction will improve rail operations on the CN system and the rest of the Chicago rail network by moving CN trains out of the urban core to EJ&E lines on the outskirts of the Chicago metropolitan area. It will significantly improve the fluidity of CN’s rail operations in the Chicago region, rewarding customers with faster transit times and more reliable service." Harrison said CN will be able to take trains off the Indiana Harbor Belt and the Belt Railway, Chicago’s principal switching carriers, as well as off the St. Charles Air Line, freeing up capacity and saving a day or more of transit time.
The streamlined operations and reduced congestion resulting from the acquisition "will benefit current CN and EJ&E customers, the City of Chicago, nearby communities, and the overall rail network in the region," Harrison said. CN plans to invest approximately $100 million for integration, new connections, and infrastructure improvements to add capacity on the EJ&E and "allow network synergies to be realized over time."
CN said the transaction will be financed with a combination of debt and cash and is expected to be slightly accretive to its diluted earnings per share in the first year following Surface Transportation Board approval. Under the agreement, U.S. Steel's Transtar subsidiary will retain its railroad assets, equipment, and employees that support the Gary Works site in Northwest Indiana and the steelmaking operations of U.S. Steel. Transtar's remaining operations will become the Gary Railway. "This transaction is positive for all involved," U.S. Steel Chairman and CEO John P. Surma said. "Our EJ&E employees and customers, and the communities in which we operate, will benefit from the EJ&E being part of a large Class I, while U.S. Steel will be able to focus on the railroad assets serving Gary Works."
Harrison expects the STB to treat the acquisition as a minor transaction. "The combination of the two rail networks is straightforward and will allow EJ&E's existing traffic to be moved more efficiently and at lower cost," he said. "Competition is not an issue. There are no shippers served only by CN and EJ&E who will lose direct rail competition as a result of the acquisition, nor will there be any other adverse impacts on competition. As in past transactions, we are committed to keeping gateways open and honoring trackage rights agreements with all connecting carriers." Both CN and U.S. Steel believe that if the transaction is approved by the STB as filed, it should close by mid-2008.
Harrison told Railway Age that acquiring the J will, in the long term, benefit the $1.5 billion CREATE (Chicago Region Environmental and Transportation Efficiency) project to improve rail network fluidity and reduce congestion in the greater Chicago region, often described as the U.S. rail system’s single largest choke point. However, it is not a substitute for CREATE, a project that is "at best, six or seven years away," he said. "Funding for CREATE is still uncertain." The J acquisition addresses only some of the congestion problems CREATE is attempting to rectify.
Congressional duo say FTA slights streetcarsTwo Oregon congressional representatives say the federal government, including the Federal Transit Administration, holds a bias against light rail and streetcar development in favor of buses. At a hearing Wednesday in Washington, Rep. Peter DeFazio, D-Ore., challenged the FTA's implemention of Small Starts, the first federal program aimed at funding streetcars. Small Starts was designed by Rep. Earl Blumenauer, D-Ore., a longtime champion of light rail, who says he intended to give relatively small-scale street projects a faster path to federal funding than large LRT projects, which can face years of federal scrutiny.
But DeFazio, Blumenauer, and other Oregonians suggest the FTA is slighting or ignoring successful light rail efforts in Portland. "There's a contest going on here about the future role of the federal government in transit development in our cities around the country," said Rick Gustafson, executive director of Portland Streetcar Inc.
Through the Small Starts program, Congress directed the federal bureaucracy to give streetcar proposals credit not just for moving people efficiently but for spurring growth nearby in the form of restaurants, shops, apartment and condominium buildings. Bus routes, which can easily change, do not show such corollary development, rail advocates insist.
But FTA still seeks to evaluate streetcars (and LRT) primarily by traveling speeds. Current FTA rules have frustrated DeFazio and Blumenauer, who believe FTA officials are ignoring Congress by favoring buses.
NREC provides U.S. Army's newest "recruits"The U.S. Army rail program within the Tank-Automotive & Armaments Command (TACOM) has just ordered two National Railway Equipment Co. 3GS-21B 2,100-hp, four-axle Ultra-Low Emitting N-ViroMotive GenSet locomotives to report for duty. The locomotives are being purchased by the Volpe National Transportation Systems Center, which manages such equipment acquisitions for the U.S. Army. The acquisition comes under the Army Rail Modernization Plan, directed by Deputy Chief of Staff Gordon Schwerzmann at the Pentagon.
"This project supports the DOT’s strategic goal to promote transportation solutions that protect our national security," said U.S. Army Military Surface Deployment and Distribution Command Inter-Service Locomotive Management Committee Chairman George Gounley. His department is charged with "identifying the latest technologically advanced rail equipment and determining how this commercial equipment can benefit Army installations in their training and deployment missions."
The Army Rail Modernization Program, which falls under TACOM's Life Cycle Management Office, is a 20-year program to replace all of the Army's aging locomotives with "the latest commercial and environment friendly locomotives." "We are happy to be a part of the U.S. Army's rail modernization, providing locomotives that are ahead of their time in technology and efficiency," said NREC Vice President-Marketing and Sales Jim Wurtz. "They will serve the Army’s rail transportation needs very well for many years."
Each of the three generator sets in the locomotives incorporates a 700-hp, low noise, industrial-grade QSK19L (19 liter) engine equipped with NREC’s N-Force electronic control system. In addition to low emissions and fuel savings, the N-ViroMotive"s microprocessor-based electronic control system helps to improve tractive effort adhesion efficiency by 60-65% and significantly reduce maintenance requirements by 40-50%, says NREC. The locomotives meet Texas emissions regulations and exceed EPA Tier II regulations. NREC says they will operate with as much as 80% lower NOx emission levels and fuel efficiency 50% better than the older units they will replace. Delivery is scheduled for early- to mid-2008.
Grade crossing incidents decline in first half: FRARailroad safety continued to improve significantly during the first half of 2007 as 34 states experienced fewer train derailments and collisions as compared to the same period last year, Federal Railroad Administrator Joseph H. Boardman announced.
FRA statistics for the six-month period show that railroads had 246 fewer train accidents, or a 16.8% reduction, compared with the comparable period in 2006, Boardman said. Highway-rail grade crossing safety also improved; collisions between motor vehicles and trains fell by 122, or 8.5%, while grade crossing fatalities decreased by 21, or 11.5%.
"We are making real progress when it comes to improving safety on the nation's rail system," Boardman said, noting that full-year data for 2006 showed it to be one of safest years on record. "To continue this success, railroads must step up their efforts to ensure trains, tracks, and grade crossings are even safer," he said.
Buffett continues BNSF share purchasingWarren Buffett's Berkshire Hathaway Inc. has acquired 6,000 more shares of BNSF, but the relatively modest acquisition boosts Berkshire's stake in BNSF to 52.98 million shares, or 15 percent of the Fort Worth, Texas-based company, according to a filing late Monday with the Securities and Exchange Commission.
Berkshire reported in an SEC filing last week that it has options to buy 7.85 million shares of Burlington Northern. If the company exercises all the options, it would increase its stake in Burlington Northern to 17.2 percent.
MARC mulls expanded, changing roleMaryland transportation officials seek to extend MARC rail service into Virginia and Delaware, and to expand its role beyond traditional "commuter" operations, as they weigh tripling the system's passenger capacity in the next 30 years.
The state's plan anticipates a ridership increase from 30,000 per day to more than 100,000 daily riders by 2035, spurred in part by jobs coming with military base realignments. MARC service would extend past their current southern terminus, Washington, D.C.'s Union Station, to L'Enfant Plaza, and to the Pentagon and Crystal City in Virginia, home to many defense industry jobs, presumably complementing rail existing service offered by Virginia Railway Express. By 2015, MARC's Penn Line, part of the Northeast Corridor, would continue north to Newark, Del., providing a connection to SEPTA local services.
Added stations, more peak-hour services, and off-peak and weekend services would occur; added connections to Metro Stations in Washington, D.C., would also be pursued.
Indeed, officials said they foresee MARC operating more like Metro."It lays out a path to gradually transform MARC over a 30-year period of time into something that resembles public transit," said Henry M. Kay, deputy administrator of the Maryland Transit Administration. "Rather than being a kind of marginal service that provides a lot of value for a very small number of people, it becomes comparable to I-95. There's a lot of capacity over a very long day."
KCS to pay TMM $54 million in final settlementKansas City Southern announced that it will pay a little over $54 million to Grupo TMM, SA to resolve all remaining disputes related to KCS's acquisition of Grupo TFM Railway (now part of Kansas City Southern de Mexico) in 2005. The settlement could have been much higher.
"KCS will pay TMM $54.1 million in cash to retire two escrows currently valued at approximately $86.8 million on the company’s financial statements and to resolve all claims between the two parties," said today’s announcement in Kansas City. "Without this settlement, KCS could have owed an additional payout from an escrow of $40 million in 2010 payable in KCS shares."
KCS Chairman and CEO Michael F. Haverty commented: "We are pleased with the settlement because it avoids any possibility of a larger future payout to TMM and future dilution of KCS shares."
Angel Trains orders 60 Bombardier locomotivesBritain’s Angel Trains, which leases rolling stock to operators throughout continental Europe as well as the United Kingdom, has placed a $316 million order with Berlin-based Bombardier Transportation for 60 additional TRAXX electric locomotives. The carries options for additional units. Angel Trains already owns a fleet of 100 TRAXX locomotives which its subsidiary Angel Trains Cargo has placed with a variety of freight operators across Europe. The new order, consisting of a.c., d.c., and multi-system units, will provide power for trains operating between Austria and Hungary and between Sweden and Norway, among other corridors.
"The platform strategy of the TRAXX vehicle family, and consequently the high percentage of common components makes it particularly economic for use throughout Europe," said bombardier. "Due to their modular construction, the final con figuration of the locomotives can be smoothly adapted to the respective areas of use and their infrastructure."
Portec Rail: Specialty load securement for Class VIII vehiclesLarge, Class VIII rubber-tired vehicles such as tractors, buses, fire trucks, recreational vehicles, and industrial vehicles have typically moved from production facility to sales distribution points over the highway, often under their own power, accumulating mileage and wear and tear as they go. TTX's new Uni-Level, a single-level, fully enclosed motor vehicle carrier, was developed especially for these vehicles.
A specialized vehicle tie-down system was needed for the Uni-Level, and Portec Rail Products, Inc. has provided this with the WinChock™ Uni-Level Securement System, which will soon be in service following extensive development, impact testing, and over-the-road performance validation.
Through a contractual arrangement with Portec Rail’s Shipping Systems Division, a "key strategic customer" has placed an order for 100 carsets of the patented WinChock™ System for installation on TTX’s new Uni-Level cars, which are expected to be placed in service during the first quarter of 2008.
"This product is ready to change the way these vehicles are transported to distribution facilities," says Portec Rail Shipping System Division President and General Manager L. J. "Cook" Sieja. “Manufacturers of Class VIII vehicles have envied how their automotive counterparts efficiently and safely ship from assembly plant or port to sales distribution points by rail. Now, with railcars equipped with WinChock™, they too can enjoy the cost benefit of distribution by rail. The WinChock™ Uni-Level Securement System demonstrates Portec Rail’s commitment to provide innovative solutions to move more and more vehicles by rail.”
Portec Rail also recently added the Vulcan line of wheel securement systems to its product portfolio, which offers equipment “for securing any type of load on a railcar.”
FRA issues five research-related grantsThe FRA has issued five rail-related research grants involving track and equipment inspection, positive train control technology, and reduced locomotive emissions and fuel consumption.
The University of California at San Diego is receiving a $175,000 grant that will continue ongoing research to develop a rail inspection method that allows for higher inspection speeds and higher defect detection reliability than currently available and ways to predict and identify potential rail buckling while the train is in motion.
Norfolk Southern is receiving a $250,000 grant to demonstrate the effectiveness of Hot/Cold Wheel Detector scanners installed alongside the track to improve safety by identifying when wheel defects might develop due to abnormal braking conditions. The railroad is contributing $260,000 to this project.
The National Research Council of Canada is receiving a $290,000 grant to continue research into a variety of interactions between the wheels of the locomotive and rail cars and the tracks, including wheel/rail profiles, wheel/rail friction management, and wheel/rail inspection equipment and procedures.
The Railroad Research Foundation, a part of the Association of
American Railroads, is receiving a $500,000 grant to demonstrate technology based on industry standards that would allow for the interoperability of different Positive Train Control systems as a train travels from one railroad network to another.
Union Pacific is receiving a $150,000 grant to study if locomotive emissions and fuel consumption can be reduced through the use of rail car-based rail lubrication systems by lessening the amount of friction between the wheels and the track. Previous studies using locomotive-based rail lubrication systems have not proven successful. The railroad is contributing $244,280 toward this project.
Two short lines obtain FRA grants for track Two short line railroads, one in Pennsylvania and the other in Vermont, have received FRA grants to upgrade track. The St. Lawrence & Atlantic Railroad is receiving $921,224 to replace approximately three miles of 50-year-old track with rail capable of handling heavier loads , at various locations between North Stratford and Norton, Vt. The railroad is providing $230,306 in matching funds. In Pennsylvania, the Buffalo & Pittsburgh Railroad is receiving $3.75 million grant to begin upgrading a portion of a 25-mile track spur from Creekside to Cloe. Funds will be used to install approximately eight miles of new track to support delivery of coal to the Edison Mission Homer City Power Plant. Pennsyvlania's Department of Transportation is providing $937,500 in matching funds.
10East lands CP mobile business platform contractCanadian Pacific has selected 10East Corp. to deploy its RailDOCS Mobile Business Platform on a system-wide basis, following a successful U.S. pilot test, to support the railroad's U.S. properties' federal compliance logistics for the signal department.
By year's end, 10East, a Software as a Service and Business Process Outsourcing supplier, will complete software changes necessary for CP to address differences in Canadian and U.S. government requirements.
"We are excited to be working with CPR. Our proven systems will deliver huge advantages, especially in light of the new U.S. regulations surrounding Configuration Management," said Mike Wilson, 10East president. "Now the real work begins with training and getting mobile tools into the hands of the maintenance workers so we can earn our keep."
Flood fix for NYC subways could be costlyIn the wake of the Aug. 8 rainstorm that flooded New York City's transportation system and crippled its subways, the New York MTA has sent a report to Gov. Eliot Spitzer outlining steps it will take to prevent a recurrence of that day's chaos. These include an immediate commitment of $30 million for short-term fixes plus longer-term initiatives in engineering, operations, and communications that could cost hundreds of millions of dollars.
MTA's summary of the report submitted to Albany concluded that "the severity, timing, and lack of warning of the Aug. 8 storm hindered storm preparations and exposed the vulnerabilities of several aspects of the MTA's transportation system. The system flooded due to enormous amounts of water pouring into the subways and low-lying rights-of-way from flooded streets, overwhelmed pumps or backflow from external drainage sources, and some drainage blocked by debris from the storm itself."
As a beginning, said MTA, "Doppler radar is being installed in each agency's operations center, an MTA-wide Emergency Response Center has been created, and new storm protocols will be into place to guide alternative service.
"Engineering solutions target the to ten flood-prone locations -– six operated by NYC Transit, two by Metro-North Railroad, and two by Long Island Rail Road -- with an action plan already in place. Solutions for the remaining locations will be developed over the next 60-90 days, drawing from a toolbox of potential to both to prevent water inflow and to remove it once it flows in, including installing check valves to prevent backflow, pursuing better sewer connections,increasing pumping capacity, pre-deploying portable pumps and personnel, installing closeable vents and constructing step-ups to station stairwell entrances that flood. Innovative street furniture will be considered to raise vents at key locations."
San Francisco ponders congestion pricingAdd San Francisco to the short list of U.S. cities seriously considering congestion pricing as one way to ease traffic congestion—and help finance public transit. City officials are evaluating a proposal to charge Bay Area drivers using the city's most traffic-choked routes, including the Embarcadero, Van Ness Avenue, Broadway and Harrison Street. Doyle Drive, a major approach to the Golden Gate Bridge, is the first thoroughfare being examined.
In September federal officials awarded the Bay Area $158 million to tackle congestion. In return, local officials had to agree to charge a toll on Doyle Drive. That fee has yet to be determined, but officials are looking at $1 to $2 on top of the existing $5 bridge toll.
Also under consideration is an exit fee for drivers arriving from Treasure Island, San Francisco's newest neighborhood, in the middle of the bay, onto the city's mainland during rush hour.
Details of the congestion pricing initiatives under consideration in San Francisco have yet to be worked out. But city officials note the MUNI system needs an extra $100 million a year to make significant service improvements, and could benefit from a congestion pricing plan.
NYCT gets ready to welcome cellphones—to a pointTransit Wireless, a joint venture of four companies, has agreed to pay MTA New York City Transit at least $46.8 million over a 10-year period in return for the right to wire the system's 277 underground station platforms and connecting passages (though not subway cars) for cellphone use. The MTA board is expected to approve the proposal at a meeting next week. MTA sources said lower offers were made by American Tower and by a consortium including Verizon Wireless and Sprint Nextel.
It will cost Transit Wireless $150 million to $200 million to install the wireless system, which it will pass on to its subway-rider customers. Six downtown Manhattan stations will be initially equipped, starting about two years from now; once the system has proved itself the contractor will have four more years to equip the remaining areas.
Companies in the Transit Wireless joint venture are Nab Construction, Q-Wireless, Dianet Communications, and Transit Technologies.
Carbuilder seeks to cut labor costs at JohnstownChicago-based FreightCar America, Inc., announced that it has asked the union at its Johnstown, Pa., plant to discuss "possible labor cost reductions" in order to keep the plant open. The carbuilder said it previously informed the union that costs at Johnstown were uncompetitive and "because of a recent turndown in the railcar industry, it now had to consider the possibility of closing the facility if labor costs could not be reduced to competitive levels."
"The best way for the union and employees at the Johnstown facility to secure the future is to work under a collective bargaining agreement that provides for competitive wages, work rules, and benefits that are appropriate in today's marketplace," said Tom McCarthy, the company's senior vice president, human resources.
FreightCar America also has manufacturing facilities at Danville, Ill., and Roanoke, Va. Its principal product is coal cars, though it also supplies bulk commodity cars, flat cars, mill gondola cars, intermodal cars, coal steel cars, and motor vehicle carriers.
How railroads can invest $148 billion in new capacity: A Cambridge Systematics reportThe cost of building enough rail capacity to meet a looming crisis in national transportation will be high—about $148 billion; the cost of not doing it could be “immeasurably higher,” says a landmark study by Cambridge Systematics released today by the Association of American Railroads.
“Without this investment, 30% of the rail miles in the primary corridors will be operating above capacity by 2035, causing severe congestion that will affect every region of the country and potentially shift freight to an already heavily congested system,” says the study.
The study found that $135 billion of the total required investment will be needed by Class I railroads to improve tracks, signals, bridges, tunnels, terminals, and service facilities. While these railroads may reasonably expect to raise most of the money, $96 billion, in the financial marketplace, a $40 billion gap will remain, or about $1.4 billion per year.
That gap, says the study, could be funded through railroad infrastructure tax incentives, now in legislation before Congress, public/ private partnerships, and other sources.
“If these investments aren’t made, everyone in the country will feel the impacts,” said AAR President Edward R. Hamberger. “If they are made, they will help the freight rail industry ease highway congestion, reduce stress on highways and bridges, significantly lower transportation-related energy construction and emissions, and maintain existing capacity for Amtrak and local commuter rail.”
Railroad antitrust bill advances in SenateShipper and organized labor interests that are trying to re-regulate the railroads claimed a victory today when the Senate Judiciary committee voted to send S. 772, the Railroad Antitrust Enforcement Act of 2007, to the Senate floor for action.
Railroads claim the legislation is based on the false assumption that the carriers are “broadly exempt from the nation’s antitrust laws” and “can engage in anti-competitive conduct fee of government oversight.”
“This is not true,” says an industry position paper. “In fact, freight railroads are subject to antitrust laws that prohibit agreements among railroads to set rates, allocate markets or unreasonably restrain trade.” The industry contends that “the few, very limited antitrust exemptions applicable to railroads prevent dual and potentially conflicting oversight of railroads by the STB and the courts, while promoting safer, more efficient rail service.”
Intermodal volume at new weekly high for ’07U.S. railroads hauled 252,283 trailers and containers in the week ended Sept. 15, the highest weekly volume so far this year, though it was 2% lower than the corresponding week last year, which was the busiest week in history for intermodal. Carload freight in this year’s latest week was down 2.0% from last year, to 338,247 cars. Ton-mile volume was off 0.8% from last year to 35.5 billion.
In releasing the latest traffic figures today, the Association of American Railroads noted grain carloadings were up 14.7% over last year and chemicals gained 6.8%. The key category of lumber and wood products trailed last year by 20.9%, reflecting the continuing slump in construction.
Canadian railroads in the week ended Sept. 15 reported carload traffic down 3.5% to 79,210 cars, while intermodal volume increased 6.3% to 50,816 trailers or containers. Kansas City Southern de Mexico carload freight totaled 10,324 cars in the latest week, down 14.% from the same week last year, and intermodal volume was 4,836 trailers or containers, up 11.5%.
AAR calls fuel-surcharge study findings “absurd”“A malicious and biased report released last week by the chemical industry is based on a duplicitous accounting sham.”
The Association of American Railroads used this biting language in a prepared response to a study released last week by the American Chemistry Council (ACC) and Consumers United for Rail Equity (CURE) that charges railroads with “purposely and systematically” overcharging customers by more than $6.4 billion over a four-year period by imposing excessive fuel surcharges. ACC and CURE and their members are among several disparate interests—ranging from powerful shippers, who want lower freight rates, to a disaffected labor union currently engaged in a national contract negotiations—that are trying to persuade Congress to reregulate the railroads.
ACC and CURE derived their figures from a comparison of actual fuel costs and revenue from fuel surcharges as reported by railroads in 10-K and 10-Q filings with the Securities and Exchange Commission. The consulting firm of Snavely King Majoros O’Connor & Lee, which conducted the study, estimated that five major U.S. railroads “collected $11.7 billion in fuel surcharge revenue in response to a $5.3 billion increase in fuel costs.”
“Never have so few stolen so much from so many—and with so little being done about it,” said ACC President and CEO Jack Gerard.
AAR responded with strong words of its own: “I don’t know how much the chemical industry paid for the study, but they should ask for their money back,” President and CEO Edward R. Hamberger said. “Their own figures, if used as they should be, show that additional railroad fuel costs since 2002 exceeded railroad fuel surcharges. This is an extraordinarily misleading report and we call on the chemical industry to repudiate the study. . . . The chemical industry is taking manipulation and misuse of data to the extreme. This study fails to take into account the cumulative effect of rising fuel costs.”
How so? AAR, saying the study “is flat wrong because it is based on a comparison of apples to oranges,” used this example: “If the price you pay at the pump for a gallon of gasoline increased 20 cents per year for each of the last five years, from $2.00 to $3.00 per gallon, [the study says] you should conclude that your gasoline price increased by only 20 cents—the latest increase—not the extra $1.00 you are paying every time you go to the gas station. Under the ACC’s methodology, if diesel fuel was $2.00 a gallon in 2002, increased 20 cents in 2003 and then another 20 cents in 2004, 2005, 2006, and 2007, the chemical industry believes it should pay only 20 cents extra for fuel in 2007.”
“The relevant comparison to railroad fuel surcharge revenue is not the change in fuel costs from one year to the next, but the cumulative increase in fuel costs over the entire five years,” AAR said.
Using the ACC’s own data and estimates, AAR said that, to date since 2002, railroads have incurred $12.1 billion in additional fuel costs, but have recovered less than that in fuel surcharge revenues—$11.7 billion.
“Individual railroads established separate, varying fuel surcharge programs, which were not considered in the ACC study,”AAR said. “The study glosses over this fundamental error by suggesting that one or more of the railroads may have increased their base rates in one or more years to cover the prior years’ increase in fuel costs. However, the study offers no evidence that this actually happened or that changes in base rates, if any, pertained to fuel instead of changes in the freight transportation marketplace. Also, the STB recently took a close look at way railroads handle fuel surcharges. Contrary to the ACC’s allegations, the STB made no finding that railroads were ‘overcharging.’”
Union Pacific had earlier issued a strongly-worded response to the study. “While commissioning a privately-managed study is a well known lobbying tactic in Washington, this particular project sets new standards for data manipulation and selective use of the facts,” said UP Executive Vice President Jack Koraleski in a letter to customers dated Sept. 14. “Truthful reporting shows that UP had a fuel expense recovery shortfall of $1.013 billion between January of 2003 and the end of March 2007. This means we recovered only 77% of our increased fuel costs during that period. We recovered 89% of our incremental fuel costs during the first quarter of 2007.”
Railway Age honors NARP’s Ross Capon with 2007 Claytor AwardRoss B. Capon, executive director of the National Association of Railroad Passengers (NARP), has been selected as this year’s recipient of the W. Graham Claytor, Jr. Award for Distinguished Service to Passenger Transportation. Now in its 14th year, the award is given annually by Railway Age magazine to honor those who have contributed to the advancement of passenger rail in America.
“For 32 years, Ross has led the only national organization advocating for the users of passenger trains of all modes,” said William C. Vantuono, editor of Railway Age. “Ross’ credibility, political skills, and in-depth knowledge, as well as the respect he has earned from his constituents and Capitol Hill, have ensured that the concerns of rail passengers are heard and acted upon by railroads and by state and federal policymakers.”
Vantuono noted Ross’ role in NARP’s efforts to help break the tension between freight and passenger rail operators regarding on-time performance, and his leadership in advancing a visionary 40-year plan to improve America’s freight and passenger rail system as just two of the reasons for honoring Capon with the award.
Under Capon’s leadership, NARP has increased membership from 4,300 in 1976 to 23,000 today. Capon also played a role in establishing the Dr. Gary Burch Memorial Safety Award, which is presented annually to the railroad employee judged to have done the most to improve the safety of railroad passengers. In 1997, Capon helped establish Amtrak’s Customer Advisory Committee, whose goal is to improve the quality of service from the customer's point of view and provide an avenue for direct input to management about customers’ perception of service. Capon is also a member of the Federal Railroad Administration’s Railroad Safety Advisory Committee, the Transportation Research Board’s Committee on Intercity Passenger Rail Systems, and the board of Travelers Aid International.
Capon will be presented with the honor at Railway Age’s Passenger Trains on Freight Railroads Conference in Washington D.C. on Oct. 23, 2007.
About the Claytor Award
Established in 1994, the W. Graham Claytor, Jr. Award for Distinguished Service to Passenger Transportation honors the memory of the late Amtrak President W. Graham Claytor, Jr. A decorated World War II veteran, Claytor served as CEO of the Southern Railway, Secretary of the Navy, and Deputy Secretary of Defense and had an illustrious legal career prior to his 12 years of service as president of Amtrak. His skillful leadership, railroad expertise, and political skills are widely credited with Amtrak’s survival during particularly turbulent years. Among past recipients of the Claytor Award are former Senators Claiborne Pell and Daniel Patrick Moynihan; former Amtrak President Paul Reistrup; former Secretary of Health and Human Services Tommy Thompson and former Governor Michael Dukakis (both of whom were Amtrak board members), and former U.S. Department of Transportation Deputy Secretary Mortimer L. Downey.
About NARP
With more than 23,000 individual members, NARP is the largest national membership advocacy organization for train and rail transit passengers, and has worked since 1967 to expand the quality and quantity of passenger rail in the U.S. Its mission is to work towards a modern, customer-focused national passenger train network that provides a travel choice Americans want. In June, NARP unveiled a proposal to expand and modernize the country’s intercity rail system, helping to reduce both the nation’s carbon emissions and its dependence on oil, and facilitating the efficient movement of people and goods. More information on NARP and this vision can be found at www.narprail.org.
About Railway Age
First published in 1856, Railway Age covers developments in the $25 billion North American railway industry. The magazine’s editorial emphasis is on technology, operations, strategic planning, marketing, and other issues such as legislative and labor/management developments. Its circulation of 25,000 goes to railway management, railway suppliers, and consultants. Railway Age is the flagship publication of the Simmons-Boardman Publishing Corporation Rail Group, which also publishes Railway Track & Structures, and International Railway Journal and European Rail Outlook out of offices in Chicago, Ill., and Falmouth, England, respectively.
Key staff appointments at Simmons-BoardmanSimmons-Boardman Publishing Corporation has appointed a new advertising sales manager in its railway division and has promoted a veteran sales manager to a new corporate marketing post.
Heather Disabato, an experienced sales and marketing and customer service professional, has been named Midwest Regional Sales Manager for the Simmons-Boardman Publishing Corporation Rail Group, with responsibility for Railway Age, Railway Track & Structures, International Railway Journal, and European Rail Outlook. She is serving advertisers in the nine-state area covered by Peter Sexton for 15 years and is based in the company's Chicago offices.
Disabato spent the past 11 years as a marketing and sales representative in the paper industry, at Midland Paper Company, Wheeling, Ill., and WWF Paper Company, Elk Grove Village, Ill. Prior to that, she spent 14 years developing advertising campaigns at Kitzrow & Kitzrow, an Evanston, Ill., advertising firm. A native of Willmette, Ill., Disabato studied graphic design and advertising at Columbia College She and her family reside in Evanston, Ill.
"Heather Disabato brings impressive credentials to the Simmons-Boardman Rail Group," said Senior Vice President and Rail Group Publisher Robert P. DeMarco. "Our advertising clients, and our industry-leading railway trade publications, will most certainly benefit from her creativity and dedication to customer service."
Disabato can be contacted at (312) 683-0130; email hdisabato@sbpub.com.
In his new position, Simmons-Boardman Corporate Marketing Manager Peter Sexton has responsibility for creating and producing sales promotion and marketing programs for the company's trade publications, both print and electronic, including Railway Age, Railway Track & Structures, ABA Banking Journal, Marine Log, and Sign Builder Illustrated.
Sexton joined the Chicago office of Simmons-Boardman in 1992 as Regional Sales Manager of Rail Group publications. He continues to work out of the Chicago office and is also working closely with Disabato on accounts in his former sales territory.
Sexton's career includes extensive experience in creative and account management at major national advertising agencies, and sales and marketing responsibilities at leading consumer and business-to-business publications. He has also edited employee publications for major international manufacturers.
"Simmons-Boardman trade magazines are the leaders in their respective fields," said company Chairman and President Arthur J. McGinnis, Jr. "Peter Sexton's expertise in marketing and sales promotion will help ensure we maintain our leadership role in print and electronic media."
Sexton is married and currently resides in Lake Bluff, Ill., where he is active in local government and various civic activities.
Harsco receives two Far East ordersThe Harsco Track Technologies (HTT) division of Harsco Corp. has received two new orders for rail grinders from Japan and Singapore totaling more than $12 million. The orders, which include two 10-stone units for Japan and one 16-stone configuration for Singapore Land Transport Authority, will support ongoing railroad and transit system track maintenance requirements in the two countries.
The grinders will be built in HTT’s manufacturing facilities in West Columbia, S.C., and are scheduled for delivery during 2008. The Singapore LTA order is HTT’s second rail grinder order from that agency; Japan has been an HTT customer since the early 1980s.
Noting that “80% of the world’s railway track is outside the U.S.,” Harsco Minerals & Rail Technologies President Richard C. Neuffer said this latest order indicates that HTT “continues to build on its strong foundation in North America by adding a growing and complementary presence in key international markets.” Earlier this year, HTT was awarded its largest sales contract ever—two orders from the Chinese Ministry of Railways for more than 40 new rail grinding units worth more than $350 million in new revenues over the next four years. This was soon followed by another rail grinder order from China for a new express rail line being built to Beijing International Airport in time for the 2008 Olympic Games. Earlier this month, Harsco acquired and added ZETA-TECH Associates of Cherry Hill, N.J., an internationally recognized specialist in railway engineering services and analytical forecasting that is also regarded as one of the leading technical experts in rail grinding engineering. ZETA-TECH continues to operate as an independent business unit of Harsco, under the direction of Dr. Allan Zarembski.
Among ZETA-TECH's proprietary products is its SmartGrind® rail grinding management and planning software.
AAR report cites need for more freight rail capacityThe Association of American Railroads Thursday morning will release its National Rail Freight Infrastructure Capacity and Investment Study at a press conference at the Rayburn House Office Building in Washington. AAR and other key transportation policy leaders will detail the need for $148 billion in capacity investment during the next three decades, including construction of new track, signals, bridges, tunnels, terminals, and service facilities.
The study, conducted by Cambridge Systematics, Inc., will be submitted to the National Surface Transportation Policy and Revenue Study Commission, established by Congress to evaluate the nation's future transportation needs and the options available to finance them. AAR says the report details the scope of investment, both from public and private sources.
An AAR statement notes that if rail capacity isn't increased, the nation's highway system, already stressed, will be forced to absorb most of the increase. Expanding rail capacity instead would "significantly lower transportation-generated emissions, reduce highway congestion and ease wear and tear on highway infrastructure," AAR says. The proposal "will also maintain existing capacity for Amtrak and commuter rail."
AAR also says the study "benchmarks existing freight capacity" as a baseline for the investment needed to meet projected future demand.
Future peaks could pose problems, railroads warnIn their annual "Peak Letters" to the Surface Transportation Board, railroads say they're confident they can handle any seasonal traffic surge this year, but they identify troubling trends that could make the handling of future peaks problematic.
"Events in Washington could substantially affect Norfolk Southern's ability to meet rail transportation demands in the future," NS CEO Charles W. Moorman told STB Chairman Charles D. Nottingham in a letter dated Sept. 14. At the heart of proposals to re-regulate the railroads, he said, "is the irreconcilable notion that shippers can have better service, more rail infrastructure, and ever-declining rates -- all at the same time. The last thing the country needs in he face of current predictions of demand for future freight transportation is to reverse course."
Union Pacific Chairman and CEO Jim Young identified a host of concerns relating to his railroad’s continued ability to make substantial investments in growth capital. "As we look ahead to 2008," he said, "our plans to investing in additional capacity are uncertain due to today's regulatory and legislative climate. The STB's recent proposal on the calculation of the industry’s cost of capital, its new regime for rate regulation, and the reregulation legislation introduced in Congress, if adopted, will compel us to reconsider our future investment policies."
Young concluded: "New capacity cannot be created without adequate revenue and returns. Either the private sector is able to earn a rate of return sufficient to fund new investment, or the government must pay the cost itself. If neither invests, the rail industry’s contribution to moving this country’s freight will diminish."
Tacoma Rail tests NREC GenSet locomotiveNational Railway Equipment Co. today reported the results of a two-week test of its two-engine 1,400-hp GenSet (2GS-14B) four-axle switching locomotive by Tacoma Rail. The test measured the demonstrator locomotive’s operational benefits against those of the railroad’s older four-axle units.
It found that: "For over 90% of the in-service time, only one of the two GenSets was needed. Idle time was reduced by 80%. Estimated fuel consumption was reduced by 70%. Estimated emissions were significantly reduced by up to 85%. Due to tractive effort improvement, sand use was reduced by over 80%."
NREC also said that on railroads where its GenSets are used, maintenance costs have been reduced by more than 50%.
PATCO delays its smart card debutPATCO has delayed introduction of its "Freedom Card" smart card technology until year's end, according to company president John J. Matheussen. PATCO and parent Delaware River Port Authority, both bistate organizations serving the Philadelphia area, originally targeted the card's debut for late summer.
The $13 million project would equip the passenger rail line's turnstiles to accept plastic cards with an embedded computer chip at a sensor. Freedom Cards also would work in PATCO parking lots located at some of the system's stations along the 14-mile line serving Philadelphia and its New Jersey suburbs.
But problems during trial runs have caused a postponement, Matheussen said Monday, forcing the line to retain its current plastic magnetic-strip fare card medium.
Cubic Transportation Systems Inc., of San Diego, is installing the smart card system for PATCO.
GE offers VeriWise rail and intermodal optionsGE Equipment Services is making its VeriWise remote equipment monitoring technology available to the rail and rail intermodal industries. VeriWise RAIL and VeriWise INTERMODAL will permit customers to "manage their fleet operations through a secure Web interface at their discretion and on their own schedule," said the company.
"With approximately 150,000 VeriWise units already installed on over-the-road assets, a monitoring solution for rail and intermodal units is a natural progression for us and a necessary tool for the management and protection of railcar and intermodal fleets," said Jay Wileman, president and CEO of GE Equipment Services, Rail Services.
VeriWise uses remote monitoring devices to provide information about a fleet’s location and the environmental conditions inside each railcar or intermodal unit. "Given our increased homeland security concerns, federal regulations on the tracking and monitoring of hazmat materials are inevitable," said Wileman. "GE is anticipating these regulations and delivering the technology to address security concerns today."
Double-deck DMU slots Denver display Colorado Railcar will host an open house Sept. 20 at Denver Union Station aboard its recently completed Double Deck diesel multiple-unit (DMU) car. The railcar will be open to the public from 11:00 a.m. until 6:00 p.m. local time, parked on track 3 behind Union Station. The company notes access to railcar will be via the underground tunnel at Union Station, and that the car will be on static display only. Colorado Railcar seeks to tap a growing market for lighter-haul regional and commuter rail services, particularly from small and start-up rail agencies, though others -- including Amtrak and New Jersey Transit -- have eyed the company's product line.
UP charges "data manipulation" in fuel cost claimUnion Pacific issued a strongly-worded response to the "outrageous" claim of a shipper-sponsored study that said major railroads, including UP, collected more than $5 billion in excess fuel surcharges over a four-year period. The study was based on an examination of fuel costs and fuel surcharges reported by the railroads in filings with the Securities and Exchange Commission.
"While commissioning a privately-managed study is a well known lobbying tactic in Washington, this particular project sets new standards for data manipulation and selective use of the facts," said UP Executive Vice President Jack Koraleski in a letter to customers dated Sept. 14.
"The data we reported includes fuel consumption, average priced per gallon, fuel surcharge revenues, and incremental fuel expense," said Koraleski. "This information is included in financial statements including the company’s Form 10-Q, which is filed with the Securities and Exchange Commission. There is no question of its accuracy.
"Truthful reporting shows that Union Pacific had a fuel expense recovery shortfall of $1.013 billion between January of 2003 and the end of March 2007. This means we recovered only 77% of our increased fuel costs during that period. We recovered 89% of our incremental fuel costs during the first quarter of 2007," Koraleski said.
Rail re-reg said to gain "bipartisan traction"House hearings begin this week on shipper-sponsored legislation that railroads fear could cost them billions of dollars a year in freight revenues. The Association of Americans has warned that H.R. 2195/S. 953, the Railroad Competition and Service Improvement Act of 2007, contains provisions "that could force railroads to lower their rates to below-market levels for certain favored shippers at the expense of other shippers, rail employees, and the public at large."
In an editorial published Sept. 15, the Washington Times asserted that "Democratic Rep. Oberstar of Minnesota is using his position as chairman of the House Transportation and Infrastructure Committee to push through Congress a bill that could strangle the railroad industry under the pretense of promoting market competition."
The threat of rail deregulation isn't new, said the Times, but it's gaining strength. "While in some form moving around on the Hill for the last 10 years, the measure is now gaining bipartisan traction," said the paper.
The Times found it "rather astonishing that nearly a third of the members who have signed onto this legislation are Republican, including Rep. Ron Paul of Texas, the self-crowned libertarian prince of the free market ... The Republicans should use this case to retain its brand as the party of fiscal restraint and free markets. Conservatives and other free traders need to get this one right."
MTA launches "sustainability" reviewNew York's Metropolitan Transportation Authority today announced the formation of a Sustainability Commission charged with outlining a sustainability master plan for the agency by Earth Day 2008.
The master plan will quantify the MTA's ecological footprint and identify recommendations to reduce it, in ways that will provide both environmental and financial benefits for MTA and the region it serves. MTA said.
MTA, by far the largest regional transit operator in the United States in terms of ridership, traditionally has a significant impact on industry suppliers, making any commitment to "green business" potentially weighty -- and lucrative -- to those dealing with the agency.
"The MTA's public transportation network makes the entire New York region sustainable, but in the era of climate change we have a responsibility to go even further," said Elliot G. Sander, MTA executive director and CEO. "The commission will build on the exciting green initiatives we've already completed to make sustainability a permanent part of the MTA's DNA."
The Sustainability Commission will examine a wide range of issues, looking at everything from energy use and waste management to transit-oriented development and green, high-performance buildings. Commission members will include representatives from the MTA, New York City, planning groups (including the Regional Plan Association), and environmental organizations.
Norfolk targets Oct. 1 LRT contract signingBarring any last-minute obstacles, Norfolk, Va., expects to sign contracts Oct. 1 for federal funds to advance its $232 million light rail project, Virginia's first. Construction of the 7.4 mile line is slated to begin sometime in November, with revenue operations for "The Tide" beginning early in 2010.
The Norfolk line will run from the Eastern Virginia Medical Center through downtown and along a rail corridor parallel to Interstate 264 to Newtown Road at the Virginia Beach city line. Eleven stations are planned to serve up to 12,000 passengers a day. A revised bus network would feed into the rail line. Virginia Beach officials previously have rejected involvement in the project, though public debate has kept Virrginia Beach's eventual participation and inclusion alive as a possibility.
A 60-day congressional review concludes Sept. 29. Local congressional representatives and officials at Hampton Roads Transit anticipate no objections arising before that time in Congress.
Intermodal volume trails last year by 3.6%U. S. railroad freight traffic continues to run slightly below last year’s levels, with the intermodal segment turning in the weakest performance. In the week ended Sept. 8, intermodal volume was off 3.5% from the corresponding week last year. Carload freight was down 1.6% and total volume, measured in ton-miles, was off 0.3%. Year to date, intermodal traffic is down 1.9%, carload volume is down 3.5%, and ton-miles are down 2.0%.
In Canada, intermodal volume in the week ended Sept. 8 was up 6.2% and carload traffic was down 4.5%. For this year’s first 36 weeks, intermodal was up 2.8% and carload volume was down 1.0%. Kansas City Southern de Mexico reported an increase of 3.5% in intermodal volume for the latest week and a decrease of 9.0% in carload freight. Year to date, intermodal was up 14.0% and carload traffic was down 3.9%.
Sound Transit adds new trainsSeattle's Sound Transit is expanding Sounder commuter rail service as of Sept. 24th with two new weekday round-trips on its Seattle-Tacoma south corridor and one on the Seattle-Everett north corridor, including a first-ever reverse-commute train. The additional runs expand Sounder service hours in both corridors, with the first train starting at 5 a.m. and the last train making its final stop at 6:55 p.m.
Sound Transit will be adding a fifth peak-direction weekday round-trip train between Seattle and Tacoma, with stops in Puyallup, Sumner, Auburn, Kent, and Tukwila. The north corridor gets a third round-trip train between Everett and Seattle, with a stop in Edmonds.
The south corridor service expansion introduces a reverse-commute train that will operate from Seattle to Tacoma in the morning and return northbound in the evening, enabling riders to commute to jobs in South King County and Pierce County. This train has been dubbed "City of Destiny" in honor of Tacoma's long-time motto.
"These enhanced services are a big step toward full Sounder service offerings, which we hope to have on line by the end of 2008," Sound Transit said. By the end of next year, the agency expects to have four round-trip trains running in the north corridor, and nine round-trip trains running in the south corridor. Two of the new south corridor trains will be reverse-commute.
Excess fuel charges estimated at $6.4 billionConsumers United for Rail Equity (CURE), a lobbying organization, and the American Chemistry Council say a new study shows that railroads "purposely and systematically" overcharged customers by more than $6.4 billion over a four-year period by imposing excessive fuel surcharges.
That figure is derived from a comparison of actual fuel costs and revenue from fuel surcharges as reported by railroads in 10-K and 10-Q filings with the Securities and Exchange Commission. The consulting firm of Snavely King Majoros O'Connor & Lee, which conducted the study, estimated that five major U.S. railroads "collected $11.7 billion in fuel surcharge revenue in response to a $5.3 billion increase in fuel costs." "Never have so few stolen so much from so many -- and with so little being done about it," said Jack Gerard, president and CEO of the Chemistry Council.
The study's sponsors complained that earlier this year "the railroads were ordered by the Surface Transportation Board to stop collecting the fuel surcharges, but STB never ordered any refunds and even allowed the railroads to keep collecting the overcharges for an additional three months." STB also "failed to quantify the amount of fuel overcharges," an oversight that the Snavely study undertook to rectify.
CURE and its members are among a number of disparate interests—ranging from powerful shippers, who want lower freight rates, to a disaffected labor union currently engaged in a national contract negotiations—that are trying to persuade Congress to reregulate the railroads.
DOT freight index falls 2.9% in July The U.S. Department of Transportation Bureau of Transportation Statistics said its freight transportation services index, which measures changes in the output of services by the railroad, air freight, and trucking industries, fell to 108.5 in July, a 2.9% drop from a year earlier and its lowest level since February. It was the first July-to-July decrease since 2001. The passenger transportation index, which measures local transit, air travel, and intercity rail, rose 2.8% to 114.8 in July, compared to the year-earlier period. The combined freight and passenger transportation services index fell 1.6% in July to 109.7 from the same month last year. The data are preliminary and scheduled to be revised in four months.
STB orders rail competitiveness studyCiting the Government Accountability Office’s “concerns over competition and shipper captivity in the rail industry” and an October 2006 GOA recommendation that the Surface Transportation Board “conduct a rigorous analysis of competition in the industry and consider actions to address problems associated with abuses of market power,” the STB has awarded a contract to Madison, Wis.-based consultant Christensen Associates to conduct a $1 million study “that will assess the current state of competition in the freight railroad industry in the United States.” The study, “Report to the U.S. STB on Competition and Related Issues in the U.S. Freight Railroad Industry,” is scheduled to be completed and made public in the Fall of 2008.
Christensen is an economic and engineering consulting firm with experience analyzing the transportation sector and other markets. The “independent” study, STB said, “will focus on providing a comprehensive analysis of a wide range of issues including competition, capacity, and the interplay between the two” as well as “an examination of various regulatory policy alternatives.”
Senate spending bill bolsters Amtrak A $106 billion U.S. Senate transportation and housing bill approved yesterday by an 88-7 vote appropriates $1.4 billion for Amtrak -- effectively rejecting the Bush Administration's attempt to eliminate $500 million in Amtrak operating support. The bill -- which the White House indicated it would veto -- also contains an almost 50% increase over current spending to repair and replace the country's crumbling network of highway bridges.
NYCT's Lombardi retiring after 45 yearsMichael A. Lombardi, MTA New York City Transit's senior vice president for subways, will retire in November. Lombardi, 63, has worked for the agency since signing on as a machinist's helper 45 years ago. He has held the top operating job since 2002. Lombardi is widely admired in the transit industry, and NYCT President Howard H. Roberts, Jr., characterized his departure as a "huge loss," according to The New York Times. Steven Feil, chief of operations service delivery, has been designated to fill the role on an acting basis pending the appointment of a permanent successor.
UP’s monthly SPRB coal loadings reach new highUnion Pacific loaded 17.2 million tons of Southern Powder River Basin coal in August, an all-time record. UP said increased train length was partly responsible. A total of 2,056 Joint Line trains were loaded in August, also a new high . UP shares the Joint Line with BNSF Railway.
CN opens Port of Prince Rupert container terminalCN officially opened its new Port of Prince Rupert (British Columbia) container terminal yesterday with partners Maher Terminals and the Prince Rupert Port Authority. The new terminal creates a “Pacific Gateway” for intermodal shipments moving to such destinations on the CN rail network as Toronto, Montreal, Chicago, and Memphis. The Port’s first major customer is COSCO Container Lines Americas, Inc.
CN Executive Vice President-Sales and Marketing James M. Foote noted that the Prince Rupert facility is “the closest port to Asia by up to 58 hours of sailing time, compared to any other West Coast port in North America, and gives shippers approximately one extra round-trip voyage per year. The Port is strategically located to handle excess capacity in one of the world’s busiest shipping corridors, with expansion plans in the near future.”
Foote added that CN will continue to invest in its western Canadian network. Ongoing improvements include upgrades to rail traffic control systems west of Prince George and siding extensions that will increase capacity from Prince Rupert through to Memphis. CN has upgraded tunnels and bridges, built new intermodal terminals in Prince George and Edmonton, and acquired 2,250 intermodal platforms and 50 new locomotives specifically to support expanded services.
UP orders four six-axle genset locomotivesUnion Pacific has awarded a contract to Railpower Technologies Corp. for four multi-genset, six-axle locomotives. The low-emission, fuel-efficient units are to be delivered during the first quarter of 2008. This is Railpower’s second order for six-axle locomotives. Norfolk Southern placed the first order earlier this year.
“We're delighted that Union Pacific is further expanding its fleet with more of our RP-series locomotive technology in support of their effort to adopt robust, cleaner locomotives and to reduce fuel costs,” said Railpower President and CEO José Mathieu. “This order is in line with our strategy of expanding our multi-genset Eco-Motive product range and paves the way for future orders.”
NJ Transit considers service expansionNew Jersey’s Interstate 78 corridor, which runs east-west across an increasingly densely populated northern section of the state, is in need of expanded commuter rail services, and NJ Transit has contracted with SYSTRA Consulting to conduct a feasibility study.
Commuter rail expansion would consist of extending service on NJT’s existing diesel-only Raritan Valley Line, which connects with Newark Penn Station on the Northeast Corridor and which shares some of its operations with Conrail and Norfolk Southern freight trains, to Phillipsburg, N.J., and possibly into Pennsylvania. RVL service currently terminates at High Bridge, N.J., in Hunterdon County, with 22 of the line’s 29 weekday trains originating at Raritan, which is east of High Bridge on the former Lehigh Valley Railroad. The service extension to Phillipsburg would encompass about 20 miles; commuter trains actually operated from there up until 1981.
NJ DOT officials say traffic congestion on I-78 in Hunterdon and Somerset Counties has been steadily worsening, with volume growing about 5% a year since 1980. Population and employment in the corridor is expected to grow as much as 46% by 2030.
SYSTRA is scheduled to complete its $1.2 million ridership and capital/operating cost study by year-end 2008. SYSTRA will draw upon a previous study conducted by the North Jersey Transportation Planning Authority, which controls transportation spending in 13 northern New Jersey counties.
NJT’s plans for the RVL and other lines operated with diesel push-pull trains involve introducing dual-mode diesel/a.c. catenary electric locomotives hauling MultiLevel cars. Such equipment would provide riders with one-seat service into New York Penn Station. RVL riders currently must transfer to Northeast Corridor electrified service to get to NY Penn. A specification for these dual-mode locomotives developed jointly by STV, Inc. and NJT has been issued, and NJT recently exercised an option with Bombardier for additional MultiLevels. As well, the Trans-Hudson Express Tunnel, which would create two new rail tunnels into Manhattan and increase service into NY Penn from 25 to 48 trains per hour, are a key part of NJT’s long-range plans. Groundbreaking on THE Tunnel is projected for 2009.
Indian company acquires RoadRailer® licenseWabash National Corp. announced that it has licensed Kirloskar Pneumatic Co. Ltd. (KPCL) to manufacture and sell the RoadRailer® intermodal system in India. Dick Giromini, president and CEO of Wabash National, noted that the RoadRailer technology—“with the flexibility of an over-the-road trailer that is especially equipped for railroad intermodal service”—is “particularly adaptable for countries that are developing freight infrastructures.”
RTD's Scott to take the helm at MARTADr. Beverly Scott, general manager of the Sacramento Regional Transit District, will succeed Richard McCrillis as general manager of MARTA (Metropolitan Atlanta Rapid Transit Authority). McCrillis plans to retire in 2008; he will continue to serve as GM at MARTA until Scott is available to assume her duties.
In addition to RTD, Scott has served as general manager of the Rhode Island Public Transit Authority and has also served in executive positions with several other transit agencies, among them MTA New York City Transit and WMATA (Washington, D.C.).
NTSB: CTA's "organizational accident"The National Transportation Safety Board has determined the probable cause of a 2006 derailment of a Chicago Transit Authority train as unsafe track conditions caused by "ineffective management and oversight" of track inspection and maintenance and system safety programs.
On July 11, 2006, the last car of northbound CTA train number 220 derailed in the tunnel between Clark/Lake and Grand/Milwaukee stations in downtown Chicago. After the train came to a stop, electrical arcing between the last car and the 600-volt third rail generated "a significant amount of smoke, creating hazardous conditions," NTSB said. There were 152 injuries, primarily due to smoke inhalation, and no fatalities. Total damage exceeded $1 million.
NTSB's final report said that lateral forces generated as the train moved through a curve in the tunnel caused gauge spreading (one rail was forced outward), causing a wheel to drop into the gauge side of the rail. The weakness in the rail was due to "a series of corroded, worn, bent and broken [rail] fastener devices that were no longer securely anchoring the track to the half-ties on the tunnel floor."
NTSB said internal management problems at CTA, including "a deficient safety culture that allowed the track infrastructure to deteriorate to an unsafe condition," were responsible for the derailment. The agency also cited two "oversight agencies"—the State of Illinois Regional Transportation Authority and the Federal Transit Administration—as not requiring the CTA "to correct unsafe track conditions." FTA was "ineffective in its oversight of RTA," NTSB said. The agency characterized the problems it found at CTA as " a series of latent conditions and active failures at many levels throughout the CTA corporate structure, which is characteristic of an organizational accident." Among these were "hundreds of missing track inspection records."
NTSB said it will issue 14 safety recommendations to FTA, the State of Illinois, RTA, the Chicago Transit Board, and the CTA.
SEPTA selects US&S for re-signaling projectUnion Switch & Signal Inc. has won a SEPTA contract to oversee the Kay Interlocking Re-Signaling Project. The project features a new five-track interlocking design and interfaces with both the SEPTA West Interlocking to the east and, to the west, Amtrak's Zoo Interlocking located on the Northeast Corridor. The new system will provide a fully protected, bi-directional operation on all tracks.
US&S says project elements include the design, fabrication, factory testing, and delivery of a new remotely controlled interlocking that includes all instrument houses, control panels, instrument cases, signal power transformers, impedance bonds, track wire, junction boxes, positionlight signals, US&S M-style electric power switch and lock layouts, and its MicroLok II vital and non-vital interlocking control. The target completion date for the job is October 2008.
STB chairman cites "giant challenge" for HoustonDuring a helicopter tour over the Houston area's rail network yesterday, Surface Transportation Board Chairman Charles D. Nottingham got a birds-eye view of the traffic tie-ups that that busy grade crossings can produce. He later commented, in a statement released by the Port of Houston Authority, that during the tour "we saw a train that had stopped four lanes of traffic, with commuters and a city bus making U-turns around it.
"It’s a giant challenge for Houston," he added. "But any tough problem can be solved by a team approach."
Houston Mayor Bill White explained the reason for inviting the STB chief to Houston: "The city and county don't have the authority to address this issue," he said. "We wanted to look to Chairman Nottingham to see what to do to impress the rail transportation system to do its part."
The Port Authority said in a statement that studies sponsored by the Texas legislature recently authorized the creation of the Gulf Coast Freight Rail District to address mobility issues caused by the proliferation of rails in the region.
Richardson touts rail on campaign trailDespite criticism of his pro-passenger rail policies in his home state of New Mexico, Gov. Bill Richardson, a Democratic candidate for president, is touting a pro-rail message on the campaign trail. Richardson, addressing Denver residents on Monday, said he would work with Colorado to advance commuter and light rail options.
"Let me say something I observed coming into Denver today: You have a traffic problem," Richardson quipped. The candidate said his platform includes developing federal partnerships with states and cities to help with transportation projects.
NJ Transit rail ridership soars to new recordNew Jersey Transit rail ridership increased 6.1% to a record high of 73 million trips in the fiscal year that ended June 30. In the fourth quarter, average weekday commuter rail ridership was 276,000 trips, an increase of 6.6%. Light rail ridership was up 22.3% to 19 million trips for the fiscal year, with the fourth quarter establishing a new weekday average of 66,000 trips.
Bus ridership grew 1.4% in FY 2007 to 159 million trips and average weekday bus ridership was 548,000 in the fourth quarter, the highest ever recorded.
"These ridership figures reaffirm the importance of public transportation for our residents and for the state and regional economies," said Governor Jon S. Corzine. "They also underscore the need to continue investing in the system through such projects as Access to the Region's Core to meet future transportation needs."
In announcing the new ridership figures, NJ Transit noted that it operates the nation’s largest public transportation system, providing nearly 850,000 weekday trips on 11 commuter rail lines, three light rail lines, and 240 bus routes.
Sumitomo buys Southern Illinois RailcarSC Rail Leasing America Inc., a subsidiary of Sumitomo Corp. of America, announced that it has acquired the business and operations of Southern Illinois Railcar Co. and its affiliate, Ohio Ag Terminals. SIRC currently owns and manages over 2,500 cars, mostly covered hoppers. "With Sumitomo’s financial expertise and capability, SC Rail America is planning to expand its fleet to over 8,000 railcars in five years, which will place the company in the to 10 railcar leasing companies in the industry," said today’s announcement.
L.B. Foster will use DM&E profits to expandL.B. Foster Co. says it plans to plow most of its profits from the sale of the Dakota, Minnesota & Eastern into acquiring other companies and has already identified "eight to ten" potential acquisitions. All are in the railroad construction area and annual revenues ranging from $20 million (Foster’s minimum threshold) to $100 million. Foster, an equity owner of DM&E for 21 years, will also direct some of its new cash flow into repayment of $35 million in debt and possibly the buyback of shares.
Foster will receive an initial $151.5 million upon closing of the sale of DM&E to Canadian Pacific and two additional payments if DM&E’s long-planned extension into the Powder River Basin coalfields is completed--$41.6 million when construction begins and up to $84.2 million when a certain volume of coal tonnage has been moved.
Lee B. Foster, the company’s chairman, and Stan Hasselbusch, president and CEO, discussed its acquisition strategy in a conference call with analysts. Noting that some companies now on the market are amply priced, Hasselbusch commented, "We will not overpay for any one company just to get the deal done."
Canadian Pacific announced Sept. 5 that it had agreed to acquire DM&E for $1.48 billion in cash and subsequent payments of $350 million and $750 million tied to the proposed new coal line.
In a prepared statement at that time, Lee Foster commented: "This is a wonderful outcome. We were privileged to be a part of the formation of the DM&E in 1986 and to witness and participate in its growth….[DM&E President] Kevin Schieffer’s leadership as well as the determination and imagination of the management team and the board of directors of the DM&E have resulted in a success story unparalleled in modern railroading."
BNSF upgrading IT functionsBNSF Railway is implementing new, advanced software on several of its primary internal information technology functions—financial, human resources, and compliance operations—with technology supplied by business software provider SAP.
In what Vice President-Technology Services and Chief Information Officer Jeff Campbell describes as “a complete transformation of the IT infrastructure from top to bottom and across business units,” BNSF is creating a single, integrated IT platform by implementing the SAP® Business Suite group of business applications with Duet™ software from SAP and Microsoft. Doing this “will improve transaction visibility and real-time processing of invoices,” among other benefits.
The software will be employed across all of BNSF's financial, compliance, payroll, and human resource functions. Budget monitoring and “human capital management” will be jointly handled by Duet software. A Microsoft Office interface from Duet will help users access data from SAP applications so that information can be more easily disseminated to employees. BNSF will also utilize SAP® Interactive Forums by Adobe to enable field employees to process their own master information and invoices. All of this, says SAP, is designed “to bring a more integrated and seamless approach to internal processes.”
According to BNSF Vice President and Controller Paul Bischler, virtually all back office systems will be replaced. “The integrated system will be a strategic platform,” he says. “We will process 50,000 payroll records through the new system and replace many internal systems, including financial reporting, invoice management, and portions of revenue and asset management processes. We believe this will enhance our existing processes and provide more efficient and improved data processing."
One purported benefit is the ability to rapidly deploy new employees in the field with training and certification in one package. “As much of the industry's workforce approaches retirement, BNSF is assured that those open slots will be filled with knowledgeable professionals much more quickly,” says SAP Industry Principal-Transportation and Logistics Rodney Strata. "IT revitalization is needed to prepare for the sweeping business changes that lie ahead for the railway industry.” SAP’s technology “adds common functionality to years of disparate IT buildup.”
STB lets two BNSF coal rates standThe Surface Transportation Board today said it found two complaints on BNSF coal haulage rates were not unreasonable under the Board's "stand-alone cost" (SAC) rate test.
AEP Texas North Co. challenged a BNSF rate of approximately $18 to haul a ton of coal 1,200 miles, while Western Fuels Association, Inc., joined by Basin Electric Power Cooperative, questioned a rate of approximately $6 to haul a ton of coal 200 miles. In both cases, the loads originated in the Powder River Basin.
But STB also has given each shipper the option of revising key portions of its case in light of the Board's recent changes to the SAC methodology that were made after the rate complaints were filed. Each shipper must advise STB by October 10, 2007, whether it intends to submit these revisions.
The two STB decisions, Docket No. 41191 and Docket No. 42088, can be found on the Board's website at http://www.stb.dot.gov.
Nonprofit Lancaster streetcar company formedThe Lancaster Streetcar Co., a Pennsylvania nonprofit corporation, has been formed to pursue ways to advance a streetcar system in its namesake city.
Backers and board directors, including city Mayor Rick Gray, acknowledge the difficulties in securing funds for a 2.6-mile streetcar loop, estimated to cost $14.1 million; ongoing operations funding also remains an unsolved issue. But the corporation says streetcars can be "a tremendous economic development tool."
Current plans, still in flux, envision streetcar headways of about 10 minutes along a north-south loop trversing Queen and Prince streets, from the city Amtrak station, to Southern Market Center at South Queen and Vine streets.
Lancaster Streetcar says it will seek tax-exempt status to "provide donors with tax advantages and help solidify corporate partners."
CSX spells out capital plansIn the face of a bleak economic environment in which freight traffic is expected to be flat or down somewhat this year due to softness in some parts of the U.S. economy and an environment in which railroad stock prices have fallen as much as 20%, CSX is pressing ahead with aggressive long-term capital investment plans. The railroad’s 2007 capex is projected at $1.7 billion. In 2008 and 2009, capex is projected at $1.6 billion each year. In 2010, capex will return to the $1.7 billion level.
"The capital spending process is continuous" and is "strategic and focused," CSX Chief Financial Officer Oscar Munoz said yesterday at the company's annual Investor and Financial Analysts' Conference in New York City. CSX plans to invest $4.9 billion in the 2008-2010 period—60% on infrastructure, 20% on locomotives and freight cars, and 20% on technology and network and terminal capacity. Among the investments will be $200 million annually on new locomotives (this year, 100 units are being acquired and 150 older, less efficient leased units are being returned to the lessor); $100 million annually on freight cars (multilevel autoracks, open-top and covered hoppers, gondolas, and boxcars -- fleets with "high returns and strategic value"); and a total of 9.9 million crossties on 1,800 miles of railroad. Among the technological investments will be wayside and equipment defect detectors and radio frequency-based systems to improve productivity and service quality at intermodal terminals.
All of these investments, Munoz said, are designed to improve productivity, reliability, efficiency, and safety.
UP begins building $43 million high bridgeUnion Pacific announced today construction has begun on the $43 million, 2,550-foot-long double-track high bridge in Boone, Iowa. The new bridge, to stand 190 feet high, is being built in anticipation of increased freight volumes and should aid in operational efficiency, the railroad said. OCCI, Inc., of Fulton, Mo., is the project contractor, in conjunctin with HDR Engineering, Inc., of Omaha, which is providing the engineering and drawings and obtaining the required permits for construction. The project is scheduled to be completed in November 2008.
Caltrain seen re-evaluating Wi-Fi plansA Caltrain plan for wireless Internet access aboard passenger trains has generated few bidders, and apparently no acceptable bids, the San Mateo Daily Journal reports. Caltrain had sought Wi-Fi on its Peninsula trains last year, hoping to become the first passenger rail agency in the United States to provide such service.
But the Peninsula Corridor Joint Powers Board, which governs Caltrain, is set to reject the only two bids it received on the project — one is too expensive and the other is too restrictive. "Unless the technology changes and it becomes cost effective, it will probably not happen until 2013," said San Mateo County Supervisor Jerry Hill, who sits on the board of directors.
Caltrain issued a request for proposals which drew interest from 94 firms, but only two of those submitted proposals: Nomad Digital Ltd., of Newcastle, England; and Frisco, Texas-based T-Mobile.
Caltrain may incorporate its Wi-Fi implementation into its 2025 plan, which includes major infrastructure and equipment upgrades, including electrification.
California container shipping fee bill stalled (for now)A bill in the California legislature to impose a fee on container shipping has been put on the shelf for this year, Bond Buyer reports. Gov. Arnold Schwarzenegger vetoed a similar bill in 2006. SB 974, in its most recent form, would have imposed a fee of up to $30 for each standard 20-foot container moving over the docks of the ports of Los Angeles, Long Beach, and Oakland.
Revenue raised from the fee was to be used for projects easing freight movement through the regions around the ports, and for pollution mitigation. The bill authorized the California Infrastructure and Economic Development Bank to issue revenue bonds backed by fee revenue. Schwarzenegger and SB 974's primary sponsor, Democratic state Sen. Alan Lowenthal, agreed to work together to advance the bill in 2008.
Retail interests have generated the most opposition to the bill, citing fears of paying increased fees on goods arriving via the ports. Los Angeles Mayor Antonio Villaraigosa also has criticized the proposal, arguing that it does not provide a mechanism to fund the rehabilitation or replacement of aging bridges near the Southern California ports.
Rails see “hopeful signal” in GDP reportWhile "a reluctant economy" continued to depress rail traffic in August, the Association of American Railroads sees a new estimate of 3.4% GDP growth in the second quarter as "a hopeful signal return to a more solid expansion." AAR Vice President Craig F. Rockey made this comment as the association announced a decline of 1.0% in carload traffic in August, compared with August 2006, and a decrease of 4.2% in intermodal volume. Commodities showing gains in August included: grain, up 5.8%; coke, up 20.0%; motor vehicles and new equipment, up 4.8%; and chemicals, up 2.3%. In the loss category: crushed stone, sand, and gravel, down 8.7%; metals and metal products, down 10.9%; metallic ores, down 12.1; and pulp, paper and allied products, down 11.1%. Canadian rail carload traffic was down 3.3% in August but intermodal volume was up 5.8%. KCS de Mexico’s carloads were off 3.2% and intermodal unit volume was up 14.1%.
CP agrees to buy DM&E for up to $2.5 billionCanadian Pacific has agreed to buy the 2,500-mile Dakota, Minnesota & Eastern rail system for $1.48 billion in cash plus contingency payments of up to $1 billion—$350 million “if construction starts on a Powder River Basin” coal line before Dec. 31, 2025, and another $707 million “when specified volumes of coal have been moved.” The purchase includes DM&E and its sister railroad, the Iowa, Chicago & Eastern. The system includes 1,000 employees, 7,200 railcars, and 150 locomotives. Based in Sioux Falls, S.D., DM&E is the largest regional railroad in the U.S., interchanging traffic with seven Class I railroads in eight states. It anticipates freight revenues of approximately $280 million this year, up 9% from 2006. The sale is expected to close in the next 30 to 60 days, although it is subject to review and approval by the Surface Transportation Board.
CP’s announcement came five months after the Federal Railroad Administration turned down DM&E’s application for a $2.3 million Railroad Rehabilitation and Improvement Financing (RRIF) loan to help fund the regional railroad’s $6 billion, 280-mile Powder River Basin coal line project. Describing the DM&E proposal as “the largest private railroad construction project in 75 years,” FRA said the loan would be “an unacceptably high risk to federal taxpayers.” DM&E CEO Kevin Schieffer persisted in his search for funding, and has been sufficiently confident of success to continue engineering work on the project.
In announcing the acquisition agreement, CP President and CEO Fred Green said "we have created a disciplined plan aimed at facilitating a decision on the expansion and insuring that the investment provides returns that exceed our thresholds." CP Chief Financial Officer Mike Lambert said “fully committed acquisition financing” has been secured. CP said it intends to invest $300 million upgrading DM&E's line over the next several years.
“We were pleased with the tremendous interest in our railroad and our PRB project that was demonstrated by this process,” Schieffer said. “We think the agreement ultimately reached with CP is the best for all our stakeholders, which include current DM&E shareholders, employees, customers, and the communities we serve, and the many groups and consumers waiting for the benefits that can be realized by the PRB project. Of all the candidates, we chose CP in large part because of its demonstrated knowledge and shared vision in our PRB project, and commitment to employee, customer, and community issues. CP has demonstrated the strongest interest in the PRB project and ongoing rail operations. However, the CPR merger doesn’t guarantee the project will proceed. It will depend on market demand, construction costs, and all the factors that we have always faced. But based on my experience with CP through the years, and especially these past months, I feel very good about where we stand today.”
Direct sellers of the DM&E include LB Foster, which will initially receive $151.5 million (and up to $126 million in possible future payments), and London-based Electra Private Equity, which originally invested in DM&E over 20 years ago.
Wall Street’s reaction was cautionary. “This transaction could potentially introduce a third competitor into the PRB, the fast-growing coal-producing region served today by only BNSF and Union Pacific,” said Morgan Stanley’s William J. Greene and Adam Longson. “Although it’s unclear today whether CP will move forward with building a rail line extension into the PRB, any increase in competition in a duopoly such as this would not be good for the pricing and margins of the incumbent carriers, in our view. While this is not a positive for either BNSF or UP, there are a number of factors that should mitigate the near-term impact. First, we suspect that it will be at least four to five years before a single ton of coal is moved on CP’s newly-acquired lines. Second, the most competitive pressure on coal rates is likely to be on traffic that interchanges with eastern railroads or transloads to river vessels, both of which are arguably moving today at competitive rates. Third, utilities captive to BNSF and UP are unlikely to be affected by this acquisition and could provide BNSF and UP with some offset to pricing pressures elsewhere.”
As far as the transaction’s impact on Eastern railroads, Morgan Stanley said that although Norfolk Southern and CSX “should be indifferent when it comes to coal sourcing,” it is possible that “another PRB-serving railroad could be a slight positive to [them]. If [BNSF and UP] are willing to compete for opportunities to source PRB coal to Eastern utilities, it could allow NS and CSX to capture a larger percentage of revenue from the haul by pitting [BNSF and UP] against each other.”
The DM&E’s Powder River Basin expansion saga has taken a long and rather twisty path. It began in June 1997, when the DM&E announced a $1.2 billion plan, later raised to $1.4 billion, to improve its existing track and build 280 miles into the coal fields of eastern Wyoming. On Feb. 20, 1998, the DM&E formally applied to the STB for federal approval. Close to four years later, on Nov. 19, 2001, STB sub-agency Section of Environmental Analysis issued a Final Environmental Impact Statement. On Jan. 30, 2002, the STB issued a decision approving the project; opposing parties, including the Rochester Coalition (led by the Rochester, Minn.-based Mayo Clinic), appealed. On Oct. 2, 2003, the Eighth Circuit U.S. Court of Appeals rendered a decision that partially remanded the project to the STB for further review. Meanwhile, in July 2005 the U.S. Department of Transportation/FRA began reviewing the DM&E's $2.3 billion RRIF loan application. On Feb. 15, 2006, the STB addressed the court order, and issued a second decision, again approving the DM&E project. Soon after, on April 14, 2006, the Rochester Coalition filed a second appeal, which the Eighth Circuit U.S. Court of Appeals turned down on Dec. 29, 2006, upholding the STB decision. On Feb. 16, 2007, legislation was introduced in U.S. Senate and House requiring Congressional approval for government loans greater than $1 billion. Four days later, the Rochester Coalition filed a lawsuit seeking to force the FRA to turn over documents related to the DM&E loan application. Finally, on March 5, 2007, the FRA announced the loan application had been denied over concerns the railroad would not be able to repay the loan. Following that, rumors persisted for months that the DM&E was seeking a buyer.
The Rochester Coalition said it is “encouraged” by CP’s acquisition of the DM&E and “looks forward to meeting the railroad’s new owners.”
LA Expo LRT line gets $315 millionThe California Transportation Commission today approved funding for numerous projects, including $315 million for Los Angeles' Exposition Light Rail project. The amount is roughly half of the projected $640 million cost of the route's first phase between downtown LA and Culver City, where construction is under way on phase 1 (and linking with the existing Blue Line). Phase two would extend the line roughly seven miles along one of two right-of-way options, roughly parallel to Interstate I-10, to the Santa Monica Transit Center, at a cost of roughly $800 million.
Albany to study LRT, rail line control Two new studies will examine prospects for light rail in New York's Capital Region and who should control existing passenger rail lines serving it, the Albany Times-Union reports. used by passenger trains are poised to go forward. The Capital District Transportation Authority board has approved two studies which could cost $1.3 million. CDTA holds the administrative contract for the New York State Senate High-Speed Rail Task Force, and handles the task force payroll and provides administrative services, such as legal expertise and contract approval. The LRT study will follow a previous CDTA effort terminated in 2001 that explored regional rail service between Albany and Saratoga Springs, with light rail one option. A second study will examine ownership of infrastructure used by Amtrak, particularly between Poughkeepsie and Schenectady, a CDTA spokesman said. CSX owns and controls most of the right-of-way used by Amtrak's New York state services.
Court bolsters New Jersey trash transfer oversight effortA federal appeals court has backed New Jersey environmental regulators seeking to fine the New York, Susquehanna & Western Railway for operatin g four trash transfer stations the state claims were not properly overseen. State officials say sloppy trash transfer procedures from truck to train threatens area air and water quality, and claims it has authority to fine railroads that don't comply with state guidelines. NYS&W's transfer facility in North Bergen is a particular point of contention. pollution. The court's 3-0 decision sends the case back to a federal judge in Newark, who had ruled that the garbage stations are subject to a federal law but not to more stringent New Jersey environmental rules. Officials in New Jersey welcomed the ruling.
FRA publishes proposed rule on ECP brakesThe Federal Railroad Administration has published a proposed rule that would permit trains equipped with Electronically Controlled Pneumatic (ECP) brakes to travel up to 3,500 miles between routine brake tests. That's more than double the current minimum distance.
"Trains with safer brakes mean safer railroad operations and improved freight rail service," said DOT Secretary Mary E. Peters. FRA Administrator Joseph H. Boardman pointed out that "an intermodal container train equipped with ECP brakes originating from West Coast ports could travel all the way to Chicago without stopping for a routine brake test, as it must do now."
The first ECP-brake equipped train is expected to make its first revenue run this month, operating under a waiver, said Boardman. Comments on the proposed rule are due by Nov. 5.
STB eases rate-review route for smaller shippersThe Surface Transportation Board has announced two new procedures for reviewing rate complaints that it says "open our doors to the more than 70% of rail traffic that until now has been effectively blocked from Board review due to the complexity and resulting high resulting high costs of the board's previous procedures."
One of the new procedures allows rail customers with small shipments to file a complaint for $150 and obtain an award of up to $1 million within eight months. A second procedure, involving mid-sized rail shipments, allows an award of up to $5 million within 17 months of filing. To minimize litigation, the STB will require mediation in all rate review cases.
Buffett boosts BNSF stake yet againWarren Buffett's Berkshire Hathaway, Inc. may boost its stake again in BNSF, possibly to as much as 25 percent, Reuters reports. According to a filing late Friday with the Securities and Exchange Commission, Berkshire told the railroad company on Aug. 28 that it had a "good faith intention" to buy more than $597.9 million of additional BNSF stock, on top of the 52.13 million shares it already owned. On the 28th, it bought 845,000 shares for about $67.5 million, giving it 52.98 million shares, or 15 percent, now valued at about $4.4 billion. Berkshire also said that "depending on market conditions," it may buy more stock "and thus designate the 25 percent threshold," according to the filing. The company notified BNSF of its intentions under U.S. antitrust law, including the Hart-Scott-Rodino act, the filing said.
CP and operating union reach agreementCanadian Pacific and the Teamsters Canada Rail Conference (TCRC) announced today that they have reached a tentative five-year contract agreement covering around 4,500 locomotive engineers and conductors. TCRC Vice President Douglas Finn son said the agreement "provides for improvements in wages, benefits, and pension provisions, as well as the introduction of work/life balance issues." CP's assistant vice president Labour Relations, Rick Wilson, called it "an important agreement that effectively balances the objectives of the TCRC members and the company’s goals." Details were withheld pending ratification by union members.
FRA finds flaws in Florida grade crossings Federal Railroad Administration officials say an inspection of 400 CSX railroad crossings from West Palm Beach to St. Petersburg found more than two-thirds failed to comply with federal law, according to the Tampa Tribune. Of the 400, 272 had at least one defect that put them out of compliance, though one official said many of the defects were comparable to a automobile "broken taillight." The inspection was prompted by car/rail collisions in the Lakeland and Plant City areas that killed six people within a month this summer.
Harsco acquires ZETA-TECH AssociatesHarsco Corp. announced today that it has acquired ZETA-TECH Associates—"a natural addition to our growing railway track services and technology," said Harsco President, CFO, and Treasurer Salvatore Fazzolari. ZETA-TECH, based in Cherry Hill, N.J., is highly regarded as a supplier of software that railroads use to monitor and evaluate their rail and track assets. It also provides technical consulting services for track engineering, forecasting, and analysis. In 2006, its revenues were just under $4 million. Fazzolari said ZETA-TECH's "strong reputation and high quality services" make it "a prime candidate for further growth and global scalability across Harsco’s worldwide customer base and marketing." Based in Harrisburg, Pa., Harsco’s Track Technologies division provides track maintenance equipment and services that are used by railroads as well as rail transit systems One of the world's leading diversified industrial service companies, Harsco posted revenue of $3.4 billion in 2006.
Grade crossing and trespassing deaths declineGrade crossing fatalities on U.S. railroads dropped 11.5% to 162 in this year’s first six months compared to the corresponding period a year ago, and trespasser deaths were down 6% to 221, according to the Federal Railroad Administration. There were five railroad employee fatalities in the first half of 2007, the same number as in the 2006 period. The FRA’s preliminary report shows that total accidents/incidents declined 9.0% to 5,962 this year, with decreases of 16.8% in train accidents 12.1% in collisions, 14.3% in derailments, and 20.8% in yard accidents. While there has been substantial improvement over last year, the industry’s safety record in most categories is even more impressive compared with that of three years ago. Grade crossing fatalities are down 19.0% from the 2004 period, train accidents have declined by 28.6%, collisions by 31.0%, derailments by 25.5%, and yard accidents by 35.4%. Trespasser fatalities, however, are up 2.3% from 2004.
Dugger named BART General ManagerDorothy W. Dugger has been appointed BART’s first female General Manager. Since 1994 she has served as Deputy General Manager. In her new position, she oversees operating and capital budgets totaling $1 billion, 104 miles of rapid transit lines, and nearly 3,300 employees. With BART since 1992, she had leadership roles in the agency’s mid-1990s $1.5 billion Renovation Program that refurbished all 669 railcars and replaced fare equipment, elevators, and escalators, and in the five-station extension to San Francisco International Airport and Millbrae. Dugger joined BART as Executive Manager of External Affairs, overseeing Customer Services, Government & Community Relations, Marketing & Research, Media & Public Affairs, and Planning. Prior to BART, Dugger spent a decade at the Port Authority of New York and New Jersey in public affairs and public policy positions. She has also served as legislative director for the American Civil Liberties Union and has held several key positions in congressional and state legislative campaigns. Dugger earned her B.A. from Rutgers University in 1973. She also attended the program for Senior Executives in State and Local Government at Harvard’s Kennedy School of Government.
LRT fights for slot on Scottish bridge projectBusiness groups voiced support Monday for a Scots parliamentary motion demanding light rail be included on any new Forth bridge crossing, according to the Scotsman. The motion criticizes the current public review process overseen by Transport Scotland for giving insufficient consideration to all potential types of transport in the Forth Replacement Crossing Study. Transport Scotland published the final FRCS report in May without recommending any LRT capability, which it said would add to the the total cost. The study ignored research by the South East Scotland Transport partnership which argued that given current traffic growth trends, a road-only bridge would be as congested as the existing bridge by 2031.