October 2005
Portec posts record sales and profitsPortec Rail Products, Inc., reported record sales for the third quarter--$24.2 million vs. $17.0 million in the same period last year--as well as record net income--$1.73 million or $0.18 per share vs. $976,000 or $0.11 cents per share last year. President and CEO John S. Cooper said new order bookings increased throughout the third quarter, adding: “Demand continues to be strong for track components at our Railway Maintenance Products division and at our Montreal operation. In addition, we had a solid sales performance of our friction management product line at RMP, Kelsan, and at both our United Kingdom and Montreal operations. Our Shipping Systems division also posted a strong performance.”
Lease renewal pricing up 11% at GATX RailGATX Rail, which has 108,000 cars in its North American fleet, reported third quarter net income of $20.7 million, compared with $13.2 million in the 2004 quarter. Fleet utilization has been at the 98% level since last year. The company said that during this year's third quarter, lease renewal pricing on its most common car types increased approximately 11% over expiring lease rates. This compares to an increase of 8% in the fourth quarter of 2004, 9% in the first quarter this year, and 15% in the second quarter.
FreightCar America backlog at record highFreightCar America booked orders for 6,884 new freight cars in the third quarter, up 40% from the same period last year, and entered the fourth quarter with a record backlog of 19,134 cars. At the same time last year, 11,491 cars were on order and undelivered. The company's third-quarter sales this year were $263.4 million; net income was $17.0 million, or $1.35 per share. Revenue deferred from a contract last year contributed $0.25 a share to this year's profit. In last year's third quarter, FreightCar America reported a net loss of $7.7 million on revenues of $118.6 million million.
“Our performance in the third quarter reflects our ability to execute the orders on hand by focusing on raising the output rates at our facilities to increase the deliveries of new railcars,” said President and CEO John E. Carroll, Jr. “We continue to achieve higher levels of productivity at all our facilities.”
UP reports “a solid 22% improvement”Excluding a special tax item, Union Pacific earned a net income of $251 million or $0.94 per diluted share in the third quarter--“a solid 22% improvement” over the $202 million or $0.77 per share earned in the same period last year, said Chairman and CEO Dick Davidson. Including a $118 million, $0.44 per share non-cash income tax reduction announced Oct. 5, UP's third quarter net income came to $369 million, or $1.38 per share.
“In addition, operating income and operating margin improved for the second consecutive quarter,” said Davidson. “Despite two hurricanes and record volumes, our operating team did a tremendous job maintaining and improving network fluidity.”
Operating revenue grew 13.5% in this year's quarter on a 1% increase in commodity carloads plus “yield improvements and fuel cost recovery.”
UP's third quarter operating ratio was 86.1% compared with 86.4% in the prior-year period.
There was some improvement in operating metrics in the third quarter, with average terminal dwell time down 7% to 28.1 hours and cars on line down 1% to 318,626. Train speed fell slightly, from 21.8 mph in 2004 to 21.6 mph this year.
“We continue to be challenged as we work to move record volume across a system that has been stressed by hurricanes along the Gulf Coast and major washouts in Kansas,” said Davidson. “Nevertheless, efforts to improve our operating efficiency are beginning to show results.”
CN lists 329 miles for discontinuanceCN announced plans today to discontinue seven branch lines in Saskatchewan with a total length of 329 miles. They are the Lewvan Subdivision between Minard Junction and Rowatt, the Northgate Spur between Lampman and Northgate, the Turtleford Subdivision between Hamlin and St. Walburg, the Bolney Spur between Spruce Lake Junction and Paradise Hill, the Robinhood Subdivision between RH Junction and Glaslyn, the Amiens spur between England and Spiritwood, and the Lillian Spur between Lillian and Preeceville.
Peter Marshall, senior vice president, CN Western Region, said these lines are no longer used because the grain handling system has been restructured. Under the Canada Transportation Act, commercial purchasers or governments have 12 months to apply to operate these lines.
New-order bookings rise at L.B. Foster Increased sales of pilings helped drive L.B. Foster Co.'s revenues to $97.5 million in the third quarter, up 14% from the same quarter last year. The company's net income increased 75% to $2.3 million. New-order bookings for the quarter were $100.2 million, 38% ahead of the same period last year.
“As anticipated, profitability was hampered in the third quarter due to the lack of production at our Grand Island concrete tie facility,” said President and CEO Stan Hasselbusch. “This plant was closed in July as we began installing new tie-manufacturing equipment. This equipment will be in full production in December, on schedule. Our new Tucson tie manufacturing facility, however, is behind schedule due to permitting issues. We anticipate start-up of this facility in the second quarter of 2006."
Special items will affect KCS earningsKansas City Southern won't announce its third-quarter results until Nov. 2, but in a statement today the company listed “three individually significant items” that those results will reflect.
One is a one-time non-cash gain of $134.7 million VAT (value-added tax) settlement reached with the Mexican government earlier this year in connection with KCS's acquisition of Mexico's TFM railway.
Another is the impact of Hurricanes Katrina and Rita, which KCS estimates will reduce operating income by approximately $7.8 million.
The third is a charge to third-quarter operating income of $37.8 million to increase reserves for employee injury and third-party claims. This is based on a new actuarial study of casualty reserves initiated in the third quarter.
As demand rises, FEC beefs up capital programThe railway segment of Florida East Coast Industries earned operating income of $16.5 million in the third quarter, up 111% from the prior-year period, on revenues that increased 29% to $59.9 million. The operating ratio improved to 72.4% from 83.1% in the third quarter of 2004. FECI said “strong demand and improved pricing” boosted revenues. The impact from hurricanes reduced third-quarter revenues by $4 million to $4.5 million and operating income by $3.5 million to $4 million.
FECI Chairman, President, and CEO Adolfo E. Henriques said the company will add $14 million to the railway's planned capital program for 2006 to purchase four new locomotives and to add 11 miles of siding from Indian River to Frontenac to support anticipated growth in business.
CSX records seventh quarter of improvementCSX Corp. earned net income of $164 million in the third quarter, or 72 cents per share, up 34% over the same quarter last year and one cent below the Wall Street estimate. The company's core rail and intermodal businesses reported a 37% increase in operating income, to $361 million, the seventh consecutive quarter of year-over-year improvement. Revenues rose 9% to $2.1 billion, and the operating ratio dropped to 83.0%, 4.3 percentage points better than in the same period last year.
CSX announced a 30% increase in its quarterly dividend, to 13 cents per common share.
“The strong third quarter results were particularly gratifying in light of the impact of Hurricane Katrina,” said Chairman and CEO Michael J. Ward. “The dividend increase reflects this team's confidence in its ability to deliver sustained value to its shareholders.”
In stormy weather, NS maintains its momentumDespite “unplanned costs from hurricanes and casualty claims,” Norfolk Southern maintained “strong momentum” in the third quarter, said NS Chairman and CEO David Goode. Operating revenue rose 16% to a record $2.16 billion, railway operating income was up 13% to $528 million, and net income came in at $301 million or 73 cents per diluted share, one penny below the Wall Street consensus estimate.
NS reported major revenue gains in intermodal, up 17% to a new record; coal, up 22% on record volumes (410,000 carloads); and merchandise traffic, up 13%.
The operating ratio was 75.5%, compared with 74.7% in last year's third quarter.
BNSF rolls to new records in third quarter“Demand for rail transportation continues to outpace the rest of the economy,” observed BNSF Railway Chairman, President, and CEO Matthew K. Rose as he announced a record third-quarter performance. BNSF established new quarterly highs for net income, $414 million or $1.09 a share; freight revenues, $3.22 billion; and operating income, $778 million. The operating ratio dropped to 75.8%. (Comparisons with the third quarter of last year are distorted by a net-of-tax charge of $288 million which BNSF took in the 2004 quarter to reflect changed estimates of asbestos and environmental liabilities.) Increased revenue this year resulted from a combination of increased volume, higher prices, and fuel surcharges. All four of the company’s business groups showed improvement, with Consumer Products revenues up 21%, Industrial Products up 17%, Agricultural Products up 25%, and Coal up 6%.
CPR beefs up per-carload revenueCanadian Pacific Railway achieved a 12% increase in revenue per carload in this year’s third quarter—the product of “good service and tight capacity in a high-demand marketplace,” according to CPR President and CEO Rob Ritchie. The railroad reported net income of C$204 million, or C$1.25 per diluted share, compared with C$177 million in the 2004 quarter. “CPR’s ability to execute our Integrated Operating Plan was tested under conditions of high demand for service and limitations caused by track work to expand capacity in the West during the quarter,” said Ritchie. “We met service commitments to customers and hauled a third quarter record workload while keeping the expansion on schedule and on budget.”
As profits soar, Wabtec raises guidance for yearWabtec, Inc., today raised its 2005 earnings guidance to $1.15 per share, up five cents from its previous guidance. Citing stronger sales and improved margins, the company announced per-share earnings of 31 cents for the third quarter, up 55% from the year-ago quarter. Net income was $15.1 million vs. $9.4 million last year.
Wabtec said 2005 third quarter sales were up 26% from the same quarter last year, to $255.9 million—“primarily due to strong demand for locomotive and freight car components, and the CoFren acquisition, which closed in the first quarter of this year.”
Wabtec Chairman, President, and CEO William E. Kassling said the company had experienced “significant impact” from recent “action programs,” including “lower-cost sourcing, internal productivity programs, and applying our traditional lean principles throughout the organization. Based on current market conditions and the results we expect to achieve from internal growth and cost improvement programs, we are optimistic about our prospects.”
Utah orders ties and rail from FosterL. B. Foster and its subsidiary CXT Inc. have won a $17.9 million contract to supply 11,000 tons of 115-pound and 136-pound steel rail and 100,000 concrete ties for the construction of Utah Transit Authority’s new commuter rail line between Weber County and Salt Lake City. The 43 miles of ties and rail will be delivered to locations along Union Pacific’s Salt Lake subdivision between Salt Lake City and Ogden. The rail will begin shipping in November and the ties will follow in January.
BNSF: Mileage-based fuel surcharges as of JanuaryBNSF Railway’s mileage-based fuel surcharge program—the rail industry’s first—will take effect for coal and agricultural products customers on Jan. 1, 2006, as previously announced. An effective date for the mileage-based program for intermodal, automotive and other carload customers will be announced later. BNSF says it is making and testing the changes to its information systems required to implement the mileage-based program, and expects to complete that process later this year. Intermodal, automotive, and carload customers other than coal and agricultural products customers will continue to pay a fuel surcharge based on percentage of their freight transportation bills.
“Customer feedback indicated that while a mileage-based surcharge program is considered more fair and equitable than the current percentage-based program, some customers need more time to make adjustments to their own information systems to accommodate the new program,” said John Lanigan, BNSF’s executive vice president and chief marketing officer. “As announced earlier this year, non-Rule 11 interline shipments also will continue to use the percentage-based surcharge. Currently, the system used by the rail industry to electronically exchange interline billing and settlement information cannot accommodate a mileage-based fuel surcharge.”
For agricultural products, the mileage-based surcharge will reflect rail mileage between origin and destination points according to BNSF’s online rail mileage inquiry tool (http://www.bnsf.com/bnsf.was5/RailMiles/RMCentralController), instead of highway mileage as originally announced. For unit coal trains, the mileage-based surcharge will be based on rail mileage between origin and destination points, as originally announced. Other aspects of the mileage-based surcharge program remain unchanged. More information about BNSF’s fuel-surcharge programs and tables for both mileage- and percentage-based programs are available at http://www.bnsf.com/tools/prices/fuelsurcharge/index.html.
UP purchasing 10 Green GoatsUnion Pacific is purchasing 10 hybrid Green Goat switcher locomotives from RailPower Technologies for its Houston and Fort Worth yards. The Green Goat order is in addition to a previously announced acquisition of 98 RailPower Gen-Set and 13 MotivePower (Wabtec) MP20B-3 low-emission yard and road switchers, all of which will be deployed throughout the Houston, Dallas/Fort Worth, and San Antonio areas. Three Green Goats already are on site, with the remainder expected by year-end. UP’s acquisition is aided by $81 million in TERP (Texas Emissions Reduction Plan) grants administered by the Texas Commission on Environmental Quality.
The Green Goat is designed to cut nitrogen oxide emissions by 80% and reduce diesel fuel consumption by 40%, compared to a conventional diesel-electric switcher locomotive. The hybrid switcher is powered by a battery bank. When energy stored in the batteries is depleted to a pre-set level, a small, low-emission diesel engine automatically starts to power a generator that recharges the batteries. The 10 units are expected to reduce nitrogen oxide emissions by more than 260 tons annually at UP’s yards in Houston and Fort Worth.
Fix switching procedures by Nov. 22 or be fined, says FRAThe Federal Railroad Administration has told railroads they have 30 days to “take specific and immediate steps” to ensure that track-switching procedures are followed in areas not equipped with remote electronic signal monitors.
The reason for the crackdown: nine train crashes, 10 fatalities, and injuries to more than 600 people since January, according to U.S. Secretary of Transportation Norman Y. Mieta. In every case, he said, “the failure to reset the hand-operated switches has led to trains running onto the wrong tracks and derailing or colliding with locomotives or railcars or both.”
The emergency order came yesterday and mandates that railroads retrain and periodically test employees on switch operating procedures and increase communication among crewmembers regarding the switch position. Specifically, employees must be briefed on switch use and provide written documentation each time a switch is moved. Additionally, locomotive engineers must acknowledge that switches are properly set before operating trains.
According to the FRA, any railroad or rail employee found in violation of the order may be liable for a civil penalty of up to $27,000.
“There is absolutely no excuse for a switch to be left in the wrong position,” said FRA Administrator Joseph H. Boardman. “This is dangerous, preventable, and increasingly frequent situation must stop, starting now.”
The nine switch-related crashes in 2005 occurred in Graniteville, S.C.; Bieber, Calif.; Banks, Ala.; Mt. Juliet, Tenn.; Sheridan, Oreg.; Florence, Minn.; Nickerson, Kans.; Heber, Calif.; and Shepard, Tex.
FRA finds “serious safety problems” on DM&EThe Federal Railroad Administration has announced that it has entered into a safety compliance agreement with the Dakota, Minnesota & Eastern to deal with “serious safety problems with track maintenance, employee training, bridge inspections, and highway-rail grade crossing warning systems.” Among other remedial actions, the agreement requires the railroad “to develop and implement a detailed three-year track maintenance plan to address track defects, including fixing broken joint bars,” improve inspection practices, retrain managers on its operating rules, and test employees in areas where FRA found “the most serious noncompliance, such as ensuring proper alignment of track switches and protecting the movement of railcars from one train to another in rail yards.”
CN earnings rise, operating ratio dipsThe third quarter held its challenges for North American railroads, but CN was able to post record net income of C$411 million, up 24% from the corresponding period last year. Revenues rose 6% to C$1.81 billion, primarily due to higher freight rates. Expenses increased 2% to C$1.145 billion. Operating income rose 13% to C$665 million, and the operating ratio declined to 63.3%, a 2.1 percentage point improvement.
CN also reported record nine-month free cash flow of C$1.058 billion, up from C$750 million for the same period of 2004.
CN President and CEO E. Hunter Harrison said the railroad accomplished all of this “despite the headwinds of higher fuel costs, the effects of two hurricanes on our network in the Gulf Coast region of the United States, and unfortunate accidents.”
UP's Linda Marshall named “Woman of the Year”The American Council of Railroad Women (www.acrw.org) has recognized Linda L. Marshall of Union Pacific as its 2005 Woman of the Year for her contributions to the railroad industry. The award, established in 1989, acknowledges those “who have enhanced the reputation of women within the railroad industry and who have made a contribution towards the advancement of women in railroading.”
Marshall--whose job at UP is to analyze accessorial charges and investigate and handle billing and collections to a successful conclusion--has worked in a variety of departments at the railroad. In each of her positions, says the ACRW, “she has been able to find efficiencies and expand her horizons, as well as her usefulness to the company.” Her accomplishments include expanding UP's annual Short Line Workshop, which is said to be an industry benchmark, and serving as editor for various company newsletters.
In addition to her contributions at UP, Marshall was a key committee member in the first Women's Network organization. She is currently a member of the Career and Professional Development Committee of the new Women's Network at UP, LEAD (Lead, Educate, Achieve, and Develop). In this role, she works “to promote an environment where women are successfully recruited and retained, by providing personal and professional support.”
Freight-car backlog hovers near 61,000Despite a slight decline in new orders in the third quarter, the backlog of new freight cars on order and undelivered reached 60,986 on Oct. 1, slightly higher than the 59,416 cars backlogged on July 1. On Oct. 1, 2004 the backlog was 61,052. In this year's third quarter, 17,439 new cars were ordered vs. 19,132 in the second quarter, and 16,987 were delivered vs. 17,914 in the prior three months.
Is Amtrak’s board trying to break up the railroad?Amtrak’s Bush Administration-appointed board of directors on Sept. 22 passed a resolution instructing the company’s management to separate—at least on paper—the 456-mile Northeast Corridor from the rest of Amtrak operations and, by January 2006, set up a wholly-owned NEC subsidiary, transferring the title of the NEC infrastructure to that subsidiary. The resolution was made public only late last week, and is subject to Congressional approval.
The resolution’s language states that creation of the NEC subsidiary “is undertaken for the purposes of facilitating and furthering future capital investment, financing, development, oversight, and operation of the NEC infrastructure with the intent to enhance [its] performance and capacity for the benefit of [Amtrak] and all current and future users of NEC infrastructure.” The subsidiary would be owned and controlled by Amtrak, but would have its own president and management reporting to Amtrak’s board.
This is a structure similar to the “Strategic Business Units” created by former Amtrak President and CEO Tom Downs in the 1990s. The SBUs (which included an NEC SBU) were dismantled by current Amtrak President and CEO David Gunn, who reorganized the company in 2002 along more-traditional railroad lines, centralizing most functions and in the process eliminating about 5,000 management positions, stripping away layers of bureaucracy, and installing financial controls and GAAP-based accounting. Amtrak began Fiscal Year 2006 on Oct. 1 with a $120 million cash carryover from FY 2005, no new debt, a substantial portion of its $100 million RRIF loan paid off, and millions of dollars in state-of-good-repair capital projects completed, with many more under way, Gunn told Railway Age late last week.
The Amtrak board’s action can be interpreted in several ways: 1) It is a prelude to achieving one of the Bush Administration’s objectives—breaking up Amtrak and in the process spinning off the NEC to a multi-state compact that would be responsible for financing most of its operations and maintenance, with little federal support; or 2) a means of making NEC costs clearer so that Amtrak can request higher operating subsidies from states while addressing perceptions that those funds would cross-subsidize the NEC, which accounts for the bulk of Amtrak’s capital and operating expenses. (Under the financial accounting structure and controls set up by Gunn, allocation of funds is already quite clear, and there is no reason to interpret any cross-subsidization, observers say.)
Spinning off the NEC to a multi-state compact would relegate Amtrak to an operating company. Supporters of this approach say it is justified because Amtrak operates only about 25% of trains in the NEC, with the majority operated by state transit agencies that pay Amtrak for use of its tracks (though Amtrak accrues the majority of train-miles). Opponents, including Amtrak’s senior management, say it would jeopardize high speed long distance service on the NEC because such trains would no longer have schedule priority.
David Gunn has steadfastly maintained that the NEC is a full-fledged railroad, and that separating its operations and infrastructure would be a huge mistake. Amtrak’s Congressional supporters, such as Sen. Frank Lautenberg (D-N.J.)—cosponsor with Sen. Trent Lott (R-Miss.) of S. 1516, an Amtrak reauthorization bill that provides, among other favorable provisions, a framework of stable long-term funding—are calling the board’s action a first step in the Bush Administration’s misguided attempt to destroy Amtrak and, with it, all intercity passenger rail service in the U.S.
Amtrak Board Chairman David Laney has publicly denied that the board’s action is a first step to breaking up the company. Just a few months ago, he appeared to be in step with Gunn and senior management, saying that separating the NEC would not be “prudent at this time.” Now, it appears that—after Congress sent a message to the Administration that for FY 2006 it intends to fund Amtrak at a level close to what management has determined is necessary—the board has shifted its strategy to be more in step with Bush Administration ideologues who want to dismantle the railroad.
In any case, the board’s plan is not expected to receive much support. The Senate is considering at this time a FY 2006 appropriations bill approved in committee that would fund Amtrak at $1.45 billion. The House has already approved an appropriation of $1.17 billion. Amtrak officials are optimistic that when the appropriations bill moves to House/Senate conference committee, the final number will be at or close to the Senate’s amount. Meanwhile, Amtrak is being funded on a Continuing Resolution at the FY 2005 $1.2 billion level.
YSD closing its doors in JanuaryAfter 81 years in the railway supply business, YSD Industries, a subsidiary of Global Railway Industries, will close its doors “on or about Jan. 12, 2006.” The decision to shut down YSD was announced two weeks after Terry McManaman replaced Michael Kohut as Global’s president and CEO and Phil Ogden, a former Norfolk Southern executive, assumed the title of chairman. The shakeup was tied to the continuing failure of YSD to break into the black.
Global said it will “write off about C$1.l million of deferred developments as well as about C$1.5 million in operation costs related to the plant.”
Founded in 1924, the Youngstown Steel Door Co. built its business on the corrugated steel door for freight cars, which it developed and patented. It became YSD Industries in 1988 after a group of its directors purchased the company from Lamson & Sessions. Global acquired YSD in April 2004.
On the Toronto Stock Exchange around noon today, Global shares traded at $1.7O vs. a 52-week low of $1.50 and a 52-week high of $5.80.
London Underground's Tim O'Toole to speak at Railway Age security forumRailway Age is pleased to announce that London Underground Managing Director Tim O'Toole will serve as keynote speaker at the second annual “Railway Security Forum and Expo” on Jan. 30-31, 2006, in Washington, D.C. He will cover the importance of security in the rail transportation industry today and the lessons learned from the tragedy recently experienced in London.
Presented in cooperation with the Association of American Railroads, American Short Line and Regional Railroad Association, American Public Transportation Association, and Railway Supply Institute, the “Railway Security Forum and Expo” will tackle such issues as:
* What best practices can railroads use to secure vulnerable freight and passenger infrastructure?
* How can railroads work with state, local, and federal governments, and law enforcement officials on emergency preparedness?
* How can hazmat shipments be protected?
* What can be done to safeguard computer and control systems?
* How can the industry achieve vital, interoperable radio communications with emergency responders?
* What new security technologies really work? And how can railroads get the funding to purchase them?
Among the experts onboard to address these topics are MTA Capital Construction President Mysore Nagaraja; CSX Transportation Assistant Vice President-Public Safety and Environment Skip Elliott; J B Hunt Transport Service, Inc., Director of Security and Audits Johnie Wood; AAR Senior Vice President-Government Affairs Obie O'Bannon; and APTA Chief Counsel and Vice President- Government Affairs Daniel Duff.
The "Railway Security Forum and Expo" also will feature table-top exhibits from security technology providers.
For more information, please visit the "Railway Security Forum and Expo" website.
Edmonton orders more Siemens LRVsEdmonton, Alta., which 27 years ago became the first North American customer for Siemens light rail vehicles, has ordered an additional batch. The new order, for 26 SD160 a.c. traction vehicles, is worth $84 million. The cars will be designed and built at Siemens Transportation’s plant in Sacramento, Calif. Each will be equipped with an advanced CCTV surveillance system. Delivery is scheduled to begin in May 2008. Edmonton currently operates a fleet of 37 Siemens-Duewag U2 d.c. traction LRVs delivered between 1978 and 1983.
Happy 25th birthday, Staggers!Twenty-five years ago today, President Jimmy Carter signed the Staggers Rail Act of 1980, substantially deregulating the railroads and setting into motion one of the great business turnarounds in American history. The Surface Transportation Board will mark the anniversary with a special hearing in Washington, D.C. on Oct. 19 at which railroads, shippers, and other interests will relate how they have fared under deregulation.
Airlines and the trucking industry as well as railroads were deregulated during the Carter administration. President Carter sent his rail deregulation proposal to Congress in March 1979 with the warning that railroads faced a crisis that could have “grave consequences for our economy,” adding: “Only a complete overhaul of our nation’s rail system, leading to higher labor productivity and more efficient use of plant and equipment, may be able to reverse current unfavorable trends.”
Without regulatory change, said the president, the nation would experience a “catastrophic series of railroad bankruptcies, sharply declining services, and massive federal expenditures.”
Coal shipper opposition to ratemaking provisions of what came to be known as the Staggers Bill (after Congressman Harley Staggers of West Virginia) almost scuttled the legislation in June 1980. President Carter led an intense lobbying effort to resurrect the bill after a key House committee killed it; Carter personally made 10 phone calls to Congress on one critical night.
In its final form, the bill retained a provision protecting coal shipments to San Antonio, Tex., from rate increases for six years. That’s why Burlington Northern was the last Class I holdout against Staggers. (BN CEO Richard Bressler was so incensed that he threatened to pull BN away from the coal-hauling business.)
Carter characterized his signing of the Staggers Rail Act on Oct. 14, 1980 as “the capstone of my efforts over the past four years to get the federal government off the backs of private industry.”
Railroads and their customers have bickered endlessly over the degree to which Staggers has preserved (or was even intended to preserve) competition. There’s less argument over how well Staggers has met its productivity goals. A key productivity gauge is revenue ton-miles per constant dollar of operating expense. By this measurement, overall rail productivity rose 172% in the 25 years after Staggers. Rail labor productivity rose 128%, locomotive productivity rose 131%, track productivity rose 163%, and fuel efficiency increased 64%.
Signing Staggers was one of Jimmy Carter’s last major acts as president. Three weeks later he was voted out of office and Ronald Reagan was voted in.
UP “going green” in a big wayAided by $81 million in TERP (Texas Emissions Reduction Plan) grants administered by the Texas Commission on Environmental Quality, Union Pacific has awarded contracts to two builders—RailPower Technologies and Wabtec Corp. subsidiary Motive Power Industries—for 111 low-emission, low-horsepower locomotives. By mid-2007, UP plans to deploy 56 units in Houston, 46 in Dallas/Fort Worth, and nine in San Antonio. The locomotives are expected to reduce nitrogen oxide emissions by up to 80% while using as much as 40% less fuel. Terms of the contracts were not disclosed.
RailPower gets the bulk of the order—98 RP Series road switchers, consisting of 80 triple-genset (generator-set) units and 18 twin-genset units. The gensets are 700-hp diesel engines (similar to those used in over-the-road trucks) turning a generator that supplies power to the traction motors. The twin-genset locomotives are hybrids, operating on the diesel engines as well as a battery bank that provides additional power. UP began evaluating genset locomotives in 2002.
The 98 locomotives gives RailPower a backlog of approximately 175 units and “fills our production schedule through 2006 and part way into 2007,” according to President and CEO Jim Maier. The relatively new RP20 Series “was specifically designed to reduce high fuel usage in road and branch line switching operations, where locomotives use up to three times the amount consumed by yard switchers.” RailPower’s expansion into road switcher/branch line locomotives “is a natural evolution of our product range,” he said. RailPower is best known for its Green Goat hybrid switcher.
MotivePower’s share of the UP order is for 13 MP20B-3 switchers, which are powered by 2,000-hp Caterpillar engines.
So long, ClockersA commuter rail service started by the Pennsylvania Railroad that has lasted into the Amtrak era on the Northeast Corridor will come to an end on Oct. 28 when Philadelphia-New York Clocker trains turn their last wheels, about nine months ahead of schedule. In their place, NJ Transit will be adding four Trenton-New York limited-stop trains, beginning with the Oct. 30 schedule change. The new service will most likely be the first to get NJ Transit’s new Bombardier multilevel cars when they enter revenue service in fall 2006. Until then, passengers will be using single-level commuter coaches with 3-2 seating—not nearly as comfortable as the Amfleet cars Amtrak operates on the Clocker trains. The multilevels have 2-2 seating and are much more spacious and comfortable than the single-level cars.
UP recording non-cash tax expense reductionUnion Pacific announced that its third-quarter financial report would include a non-cash income tax expense reduction of $118 million, or 44 cents per diluted share, as the result of a re-evaluation of its estimated deferred tax assets and liabilities. “This tax item does not impact near-term cash flows or subsequent income tax expenses,” UP pointed out. From ongoing operations, the company has estimated third-quarter earnings at the mid to lower end of its original guidance range of 88 cents to 98 cents per diluted share.
GAO criticizes uncoordinated rail security planningIn a new report, the Government Accountability Office (GAO) is critical of what it says is a lack of coordination between four federal agencies responsible for rail security: the Transportation Security Administration, the Homeland Security Department’s Office for Domestic Preparedness, the Federal Railroad Administration, and the Federal Transit Administration. Coordination with transit agencies is also poor, said GAO. At midyear, 15 months after the Madrid commuter rail bombings, TSA had not completed a risk assessment for passenger rail and had failed to collect essential information from the passenger rail operators, according to GAO.
The transit agencies have not been idle. GAO said a survey of 32 transit systems that together carry 11 million passengers a day showed that 29 of them were using new or upgraded closed-circuit TV for security purposes, 23 had devised systems to control access to sensitive areas, 22 had banned trash receptacles where explosives could be concealed, and 18 had installed or upgraded phone communication systems.
GE Rail Services adds key executivesGE says its Rail Services unit serves the petroleum and chemical industries with more than 185,000 railcars, as well as financing, and is in a growth mode. To this end, it has added two key executives. One is Todd Emro, formerly senior vice president and chief commercial officer of PLM Transportation Equipment Corp., who will lead all petrochemical sales and services for the GE unit. The other is Tim Schitter, formerly senior vice president of sales at Trinity Rail, who has been named account manager for GE Rail Services’ food, agricultural and minerals business segment.
A new short line comes to lifeStartup short line Arkansas Southern Railroad, a wholly owned subsidiary of Watco Companies, Inc., began revenue service on Sunday, Oct. 9. The ARS consists of approximately 65 miles on two former Kansas City Southern branches—a northern branch running east from Heavener, Okl., to Waldron, Ark., and a southern branch running northeast from Ashdown to Nashville, Ark. The railroad interchanges with KCS at Ashdown and Heavener and with the UP at Nashville. The ARS ships agricultural products including corn and soybeans and industrial products such as bauxite and sulfuric acid.
Watco, a Pittsburg, Kan.- based company, operates the Arkansas Southern Railroad and 14 other short lines in 13 states. In addition to the ARS, Watco operates the Appalachian & Ohio, Eastern Idaho, Great Northwest, Kansas & Oklahoma, Kaw River, Mission Mountain, Mississippi Southern, Palouse River & Coulee City, Pennsylvania Southwestern, South Kansas & Oklahoma, Stillwater Central, and Timber Rock and Yellowstone Valley Railroads. During the next 30 days, Watco will take over operations of the Alabama Southern. The company also operates industrial switching locations and mechanical and locomotive shops across the U.S.
Motorists respond to UP crossing safety initiativeUnion Pacific announced the completion of a $16 million program to install high-reflective crossbuck signs at 18,000 crossings not protected by flashing lights or gates throughout its 23-state system. Each sign contains its own Department of Transportation number, along with a toll-free number for the railroad's Response Management Communications Center. “Through the first eight months of this year,” according to UP, “RMCC received 1,381 calls from motorists who were able to report a problem and their location based on information provided on the signs.”
Hazmat incident triggers safety advisoryThe Federal Railroad Administration issued a safety advisory on Oct. 5 requesting that “all railroads conform to a recently updated railroad industry standard that identifies a list of 20-day and 30-day time-sensitive hazardous materials, and requires specific action to speed up movement of such cars if they are delayed in transit.”
A hazmat incident on RailAmerica's Indiana & Ohio short line in Cincinnati, Ohio, in August triggered the advisory. Around 800 people were evacuated from the area when a car filled with the chemical styrene began to vent. The car had been misrouted and lay undelivered for some time.
RailAmerica reduced its third-quarter earnings estimate from 25 cents a share to 19 cents s share on Oct. 5 to reflect the estimated $2.3 million cost of the incident.
Trespassers skew rail safety pictureRailroad incident/accident rates so far in 2005 are showing a marked improvement over 2004, with a single exception--the rate at which trespassers on railroad property are being killed or injured. That rate increased 2.07% in this year's first seven months compared with the corresponding period last year.
The total accident/incident rate in January-July 2005 was down 13.4% from last year. By category, decreases were recorded in the rate of train accidents, -11.16%; yard accidents, -14.5%; other track, -8.52%; highway-rail, -10.6%; employee on duty, -17.7%; and passengers on trains, -14.4%.
Accident/incident rates take into account exposure to risk as well as the number of actual occurrences. The trespasser rate, for example, is the number of reported fatalities and injuries times one million divided by total train miles.
The FRA posts updated railroad safety statistics on its website around the first of each month.
Railroads flex their musclesClass I railroad traffic and Class I railroad stock prices were both up as the third quarter ended.
In September, carload traffic rose 2.5% and intermodal traffic increased 6.9% over September 2004, despite storm-related disruptions. For the third quarter, carloadings were up 1.0% and intermodal volume rose 6.3%.
“U.S. freight railroads have done a tremendous job getting most of their operations back on line following Hurricanes Katrina and Rita,” said Association of American Railroads Vice President Craig R. Rockey. “As the affected regions rebuild, railroads will be a critical part of the reconstruction and relief efforts, and they will be up to the task.
“Intermodal is the other big story,” said Rockey. “The top three highest-volume intermodal weeks in history for U.S. railroads occurred in September.”
Investors were paying attention. During Wall Street trading on Sept. 30, shares of each of the seven major North American railroads reached a 12-month high.
NS reopens New Orleans facilitiesNorfolk Southern has reopened two facilities in New Orleans that had been closed since Hurricane Katrina struck the Gulf Coast Aug. 29.
The NS intermodal on Florida Ave. is now accepting inbound and outbound shipments at the gate, but only between 8 a.m. and 4 p.m., Monday through Friday, due to local curfews. “The restoration of intermodal service will assist with the transportation of reconstruction and relief materials to the Gulf Coast region,” said Bob Huffman, vice president intermodal operations. “We are working closely with our customers to coordinate our start-up plans with the goal of resuming regular service quickly and safely.”
Oliver Yard Terminal, on Ferdinand St. is now operating. The yard serves local industrial customers and interchanges freight with the New Orleans Public Belt Railroad, which serves the Port of New Orleans.
New locomotives for GO TransitToronto’s GO Transit has awarded the MotivePower division of Wabtec Corp. a contract for 27 new MP36PH-3S commuter locomotives worth $112 million. The contract includes a $105 million option for 26 additional locomotives. The locomotives will be built at MotivePower’s Boise, Idaho, facility, with work scheduled to begin in the first half of 2006 and deliveries scheduled for 2007-08. They will contain a number of components produced by other Wabtec subsidiaries, including braking equipment, air dryers, air compressors, brake shoes, and radiators.
GO Transit is the fourth commuter rail agency to order the MP36PH-3S. The locomotives are now in use in Chicago (Metra) and California (Caltrain), and will soon be in service in Albuquerque, N. Mex., on the Mid-Region Council of Government’s new Rail Runner system.
NS appoints Moorman CEONorfolk Southern President Charles W. “Wick” Moorman has added chief executive officer to his title, succeeding David R. Goode, who will remain as chairman until his retirement early next year.
NS also named James A. Hixon executive vice president-law and corporate relations, with responsibility for the law, government relations (formerly public affairs), and corporate communications (formerly public relations) departments.