January 2007
$178 million Swiss order goes to BombardierSwiss Federal Railways has awarded a $278 million contract to Bombardier Transportation for the supply of 140 low-floor passenger coaches for regional service. Exercise of an option for an additional 48 vehicles would bring the value of the order to $234 million. Developmental work will take place at Bombardier sites at Zurich and Villeneuve, Switzerland, with assembly at Villeneuve. Deliveries will take place between July 2008 and July 2012.
CPR expects continued growth in 2007Despite a softening in some segments of the economy, Canadian Pacific says “rail fundamentals remain strong” and its outlook for earnings per share in 2007 remains in the range of $C4.30 to $C4.45, an increase of 9% to 13% over 2006 earnings. CPR expects revenues to grow 4% to 6% this year. Capital spending will be in the range of $C885 million to $C895 million.
Excluding special items, the railroad today reported 2006 diluted earnings per share of $C3.95, up 20% from 2005. Operating income reached a full-year record of $C1.129 billion, up 13%. CPR’s 2006 operating ratio declined 180 basis points to 75.4% last year. For the fourth quarter, the operating ratio was 73.1%.
With inclusion of a $C176 million benefit resulting from decreased federal and provincial income taxes, CPR’s net income for 2006 came to $C796 million, a 45% increase over 2005.
As fleet grows, GATX sees continued strength in earningsWith its fleet utilization at 99% as of Jan. 1, GATX Rail looks back on a year of strong earnings and ahead to continued growth. “Despite signs of increasing weakness in certain segments of the freight car market, we expect Rail’s income contribution to increase significantly in 2007,” said GATX President and CEO Brian A. Kenney as he reported net income of 116.4 million for 2006 vs. $81.7 million in 2005.
“Average lease rates in Rail should continue increasing, and we will work hard to continue extending average lease terms,” said Kenney. “We invested $534 million in rail assets in 2006, a 33% increase over 2005 investment of $403 million. This is encouraging given the historically high price for new railcars and intense competition in the secondary market.”
On Dec. 31, 2006, GATX’s rail fleet contained more than 110,0000 cars, a net increase of 2,300 during the year after sales and retirements.
Union Pacific: Record earnings, plunging operating ratioUnion Pacific’s operating ratio dropped to below 80% in fourth-quarter 2006—a quarterly best, among other records set in that quarter and for the full year.
In the fourth quarter of 2006, Union Pacific reported net income of $485 million, or $1.78 per diluted share, compared to $296 million, or $1.10 per diluted share, in the prior-year period. Operating income of $810 million, compared to $533 million in 2005, was a 52% improvement and an all-time quarterly record. Commodity revenue grew 9% to a fourth-quarter-best $3.8 billion, with five of the six business groups posting increases. The main growth component was an 8% increase in average revenue per car from yield improvements and fuel surcharge programs. Actual business volumes, measured in total carloads, grew 1% to 2.4 million. The operating ratio dropped 5.7 percentage points, from 85.3% in 2005 to 79.6%. Quarterly average train speed, as reported to the Association of American Railroads, was 22 mph, up 1.5 mph from the prior-year quarter. Terminal dwell time improved 13% to 25.9 hours vs. 29.8 hours reported in 2005. Fuel consumption, measured in gallons per thousand gross ton-miles, was a fourth-quarter best rate of 1.27 vs. 1.30 in 2005. The average quarterly fuel price including transportation and taxes was $1.94 per gallon, compared to $2.08 in 2005.
Full-year 2006 “was a great year for Union Pacific,” said President and CEO Jim Young. “Our network management initiatives and capacity expansion programs helped us move record volumes for our customers. We significantly improved our return on invested capital and laid the foundation for further operational and financial improvement.” 2006 net income was $1.6 billion or $5.91 per diluted share, vs. $1.0 billion, or $3.85 per diluted share, reported in 2005. (2005 results included a non-cash income tax expense reduction of $118 million after-tax, or $.44 per diluted share. Excluding the tax item, net income would be $5.91 per diluted share vs. $3.41 per diluted share, a 73% increase.) Railroad commodity revenue of a record $14.9 billion, a 15% increase, was based on average revenue per car of $1,509, an 11% increase resulting from yield improvements and fuel surcharge programs. Carloads increased 3% to a record 9.9 million. The operating income was a record $2.9 billion, a 61% increase from $1.8 billion in 2005, and the operating ratio improved 5.3 points to 81.5%, compared to 86.8% in 2005. Fuel consumption dropped to 1.28 vs. 1.30 in 2005; the average yearly fuel price rose 16%, from $1.77 per gallon to $2.06. Average system speed, as reported to the AAR, was 21.4 mph, up 0.3 mph. Average terminal dwell time improved 5%, to 27.2 hours vs. 28.7 hours.
“While economic indicators are mixed, we are optimistic about what we see ahead for Union Pacific in 2007,” Young said.
Ex-Congressman leads rail reform efforts at CUREGlenn English, a former Oklahoma congressman who is now CEO of the National Rural Electric Cooperative Association, has been named chairman of CURE, a coalition of freight customers pushing for rail reform legislation. CURE—formerly known as Consumers United for Rail Equity—claims that “the railroads’ failure to deliver coal on time has forced some power companies to import foreign coal and turn to more expensive alternative solutions.”
“The nation’s rail system needs increased competition and federal oversight to meet the economic needs of this country,” said English. “If the Surface Transportation Board won’t do it, then Congress must.”
Federal action advances NJ Transit tunnel project“This is a critical step toward getting a shovel in the ground in 2009,” commented New Jersey Gov. Jon S. Corzine after the Federal Transit Administration gave NJ Transit the go-ahead in mid-January to schedule public hearings on a Draft Environmental Impact Statement on a planned, $7.2 billion trans-Hudson commuter rail tunnel. These hearings will clear the way for a Final Environmental Impact Statement and federal funding.
New Jersey Democratic Senator Frank R. Lautenberg pledged to use his recent appointment to the Senate Appropriations Committee “to make certain this critical project continues to receive the utmost attention and effort from the federal government.”
The project, part of the Access to the Region’s Core program, has widespread support throughout the New York metropolitan area. “Construction of the commuter rail tunnel under the Hudson River is as important today as the building of the Lincoln Tunnel and the George Washington Bridge was to earlier generations,” said Anthony J. Corsica, chairman of the Port Authority of New York and New Jersey, which has already committed up to $2 billion for the project. “We will continue to support this critical project, as history will demonstrate that this was a crucial investment and the turning point for creating a truly regional economy.”
NS continues its record paceNorfolk Southern, reporting fourth-quarter and full-year 2006 financial results, set records in quarterly operating revenues, operating and net income, and diluted earnings per share; and in annual operating revenues and operating and net income.
Fourth-quarter 2006 net income of $385 million was an increase of 6%, compared with $362 million for fourth-quarter 2005. Earnings per diluted share were $0.95, up 9% compared with $0.87 per diluted share in the prior-year period. Operating revenues were $2.3 billion, a 3% increase. Operating income also increased 3%, to $614 million. Operating expenses were $1.7 billion, up 3% compared to fourth-quarter 2005. The fourth-quarter operating ratio improved marginally, to 73.5%, compared with 73.7% for the same period in 2005.
For full-year 2006, NS’s net income was a record $1.5 billion, or $3.57 per diluted share, an increase of 16% compared with net income of $1.3 billion, or $3.11 per diluted share, in 2005. The prior-year figure included a benefit of $96 million from the effects of Ohio tax legislation that increased diluted earnings per share by $0.23. Excluding this item, net income for 2006 would have been 25% higher. Operating revenues of $9.4 billion were the highest of any year in NS history, improving 10% compared with 2005. Operating income increased 21% to $2.6 billion for the year. Operating expenses of $6.9 billion were an increase of 7%. The 2006 operating ratio 72.8% was a 2.4 percentage-point improvement over 2005.
For both periods, all commodity groups except automotive reported revenue growth. NS said the quarterly increase “reflected higher average revenues, which offset lower volume. For the year, the increase resulted from higher average revenues, including increased fuel surcharges.” Chairman, President, and CEO Wick Moorman said the railroad is “clearly facing a softer economy, at least in terms of some of our important markets and the overall surface transportation marketplace. Overall carloadings are experiencing downward pressure, especially in automotive and metals. But our traffic volumes are still at levels close to our all-time highs, evidence that the railroad renaissance is still alive and well.”
NS’s strong showing didn’t satisfy Wall Street, as its quarterly earnings of 95 cents a share were off by a penny from what analysts on average had expected. As of 1:00 p.m. EST today, NS stock was down 4.56%, at $51.28 a share.
CN’s operating ratio continues to fallCN’s operating ratio—the lowest in the industry and the lowest in its history—continued its downward trend in 2006, improving by 3.1 points to 60.7% for the year. “2006 was a strong year for CN, with the company generating record revenues and free cash flow and its best-ever annual operating ratio,” said president and CEO E. Hunter Harrison in a statement announcing CN’s financial results for fourth-quarter and full-year 2006.
Including deferred income tax recovery, CN’s quarterly net income rose 16% to C$499 million, with diluted earnings per share rising 22% to C$0.95. Excluding this adjustment, quarterly net earnings were C$472 million, or C$0.90 per diluted share, a 10% increase in adjusted net income and 15% rise in adjusted diluted EPS. Fourth-quarter operating income rose by 5% to C$756 million, while the operating ratio for the period was 61.1%, an 0.7-percentage point improvement. Fourth-quarter 2006 revenues increased 3% to C$1.942 billion. Operating expenses increased 2% to C$1.19 billion.
For full-year 2006, including the deferred income tax recovery, CN’s net income increased 34% to C$2.09 billion, with diluted earnings per share rising 41% to C$3.91. Adjusted 2006 net income, excluding the deferred income tax recovery, was C$1.81 billion, or C$3.40 per diluted share. Operating income for the year grew by 15% to C$3.03 billion.
NS, UP expand L.A.-Southeast intermodal serviceNorfolk Southern and Union Pacific announced that on Feb. 19 they will add a sixth-morning-delivery intermodal train between Los Angeles and the Southeast, complementing the existing fifth-morning-delivery BlueStreak service. At the same time they will trim nearly half a day from the BlueStreak service between Los Angeles and Atlanta, introducing fourth-evening delivery.
NS and UP also announced that they will begin shifting domestic and international traffic to a new, shorter route over the Shreveport, La., gateway as early as third-quarter 2007, with completion of the first phase of improvements over Kansas City Southern’s Meridian Speedway. This will eliminate almost 150 miles from the current route.
CSX operating ratio drops below 80%CSX says strong pricing and improved customer service helped produce record fourth-quarter 2006 operating income and a full-year operating ratio that dropped below 80% for the first time in nearly a decade. Fourth-quarter earnings came to $347 million, or 75 cents per share, including an 18-cent per share benefit from hurricane insurance recoveries and other special items. Excluding these items, earnings were 57 cents a share, up 10% from the same quarter of 2005.
“Strong pricing and reliable customer service delivered record fourth-quarter financial results in our Surface Transportation businesses,” said CSX Chairman and CEO Michael Ward.
For the full year, CSX earnings per share from continuing operations were $2.82, including the special items. Excluding these, earnings were $2.22 a share, 31% better than the prior year’s comparable results.
BNSF posts high earnings, unveils $2.75 billion capital programBNSF Railway today issued an earnings report that exceeded Wall Street expectations. BNSF announced plans to spend $2.75 billion on capital improvements in 2007, including $750 million for capacity expansion projects.
“We are able to sustain increases in our capital commitment program to meet both the current demand for freight rail transportation as well as forecasted future volume growth because of continuous improvement in our returns,” said BNSF Chairman, President, and CEO Matthew K. Rose. He said return on invested capital in 2006 was a record 11.4%, up from 10.1% in 2005 and 7.9% in 2004.
“For 2007, BNSF currently expects to spend more than $1.6 billion to keep our infrastructure strong by refreshing track, signal systems, structures, rebuilding rolling stock, and implementing new technologies—an increase of about $50 million over 2006.”
Rose said that in addition to cash commitments totaling $2.4 billion, BNSF plans to lease 200 locomotives at a cost of $350 million.
BNSF reported earnings of $1.42 per diluted share for fourth-quarter 2006, a 26% increase over fourth-quarter 2005. Total earnings for 2006 reached $5.10 per share, up from $4.01 in the prior year.
BNSF’s operating ratio for the fourth quarter of 2006 fell to 75% as quarterly operating income rose 18% to $942 million.
In a conference call with analysts, Rose said first-quarter 2007 earnings should be close to the $1.00 per share earned in last year’s first quarter, despite lower coal volume to date due to bad weather and a slowdown in construction materials. He added that BNSF expects demand for coal, ethanol, and Asian imports to produce growth this year.
George Smathers, an early dereg warrior, dies at 93Former Florida Democratic Senator George A. Smathers, who led a successful fight for pro-railroad legislation in Congress 50 years ago and later, as a private citizen, advised the railroads on deregulation strategy, died Jan 20 at the age of 93.
Smathers was a key architect of the Transportation Act of 1958, which contained language daring at the time—for example, a mandate that “rates of a carrier shall not be held to a particular level to protect the traffic of any other mode of transportation.”
While the “Smathers Act,” as it came to be known, was a beginning, the railroads did not win substantial deregulation until the Staggers Act of 1980. Smathers helped lay the groundwork for that legislation when he headed up a railroad-sponsored group known as ASTRO (America’s Sound Transportation Organization) that waged a wide ranging information campaign on the desirability of deregulation.
Amtrak’s FY07 off to a strong startAmtrak ended FY 2006 with both ridership and revenues on the rise, and the trend continued and strengthened in the first month of the new fiscal year. In October 2006, system-wide ridership of nearly 2.14 million trips was 5% ahead of the prior October and revenues of $123.5 million were up 13%.
Acela Express train operations in the Northeast Corridor were largely responsible for the October improvement. Acela’s performance and ridership and revenues were up 25% and 27%, respectively, from last year. Aggressive advertising and marketing, improved ontime performance, faster service, some diversion from regionals due to higher regional fares, and “much improved customer satisfaction” were all part of the Acela picture, said Amtrak. NEC Spine regional ridership in October was 3% below the prior year while revenues rose 6%.
Elsewhere, other shorter distance trains posted increases of 4% in ridership and 8% in revenues. Long-distance train ridership was up 77%, with ticket revenues up 12%.
Total Amtrak ontime performance in October was 70% vs. 67% a year earlier. Long-distance ontime performance rose to 43% from 28%. Acela ontime performance was 89%.
Safety advisory issued for yard movementsA fatal Dec. 14, 2006, railyard switching accident in Manlius, N.Y., caused by what the Federal Railroad Administration says was human error in a locomotive remote control operation, has resulted in the FRA issuing a Safety Advisory.
In the December accident, railcars being moved by a remote control locomotive struck a pickup truck backing up over a yard grade crossing, killing the driver, a railroad employee. "The remote control operator did not maintain continuous supervision of the movement, resulting in a fatal accident instead of a minor incident," FRA said. "Compounding the incident was a radio communications failure involving other yard personnel who were attempting to notify the operator to stop the movement."
The advisory recommends that railroads "assess their existing rules addressing safety at yard grade crossings," FRA said. The agency also "urges railroads to review, or as necessary, amend, their rules governing yard movements to clarify what actions employees must take under various circumstances to fully adhere to operating procedures." FRA said that, should railroads and employees fail to take these steps, "it may take additional more stringent actions or corrective measures under its regulatory authority."
Ethanol transport is growth business for railroadsAs ethanol demand mounts, ethanol producers are busily adding new facilities. Pacific Ethanol, Inc., of Fresno, Calif., announced this week that it expects to begin production by mid-February on a new 50-million-gallon per year ethanol plant in Burley, Ida., served by Union Pacific. The company already operates an ethanol facility in Madera County, Calif., is building a second plant in Boardman, Ore., and owns a 42% interest in a plant in Windsor, Colo. The ethanol building surge extends over much of the Midwest and West.
In Washington, the BioFuels Security Act of 2007 was introduced on the first day of the new Congress by a bi-partisan group of senators. It calls for increasing ethanol and biodiesel production to 30 billion gallons annually by 2020, and doubling that to 60 billion gallons annually by 2030.
Ethanol production in 2005 was estimated at four billion gallons. Most ethanol is transported in railroad tank cars, often in unit trains.
A. Stucki Co. acquires RJ Rail Services, LLC, receives international marketing awardA. Stucki Co. will soon have a new division: American Industries Midwest. The company announced today that it has acquired Kansas City, Mo.-based RJ Rail Services, LLC, which will be integrated into its American Industries subsidiary.
A. Stucki President Bill Kiefer explained that the move allows his company to expand its “very successful American Industries business into the Midwest by offering reconditioning services for freight car components, as well as serving as a distribution center for other A. Stucki Co. products.”
RJ Rail Services Founder and President Randy Haan becomes general manager of American Industries Midwest, responsible for all sales and services at the new facility.
In other news, A. Stucki Co. also announced today that it has received awards for a 2006 advertising campaign as well as a corporate capabilities information kit. The International MarCom Creative Awards recognized A. Stucki with a Platinum award for its “Look What We’ve Become” advertising campaign. From a pool of 5,000 entrants, A. Stucki was one of only 750 recipients of the competition’s highest award. The company also was awarded a Gold for its information kit work, which was said to “exceed the high standards of the industry norm.”
“We are extremely honored and proud to have our marketing and communications initiatives be recognized by such an important organization,” said Vice President-Sales and Marketing Jeff Vodar. “We made some significant changes in our marketing approach this year, and this validates the decision was the right choice.”
Both carload and intermodal traffic dropThe second week of 2007, like the first, saw a decline in railroad traffic. The Association of American Railroads reported today that U.S. carload traffic in the week ended Jan. 13 was down 5.9% from the comparable week last year, and intermodal volume was down 0.7%. Estimated ton-miles dropped 4.4%.
Sixteen of the 19 commodity groups registered losses, with loadings of motor vehicles and equipment down 30.0%, lumber and wood products down 26.5%, and metallic ores down 22.7%. Coke loadings were up 4.5% and coal carloads increased 1.4%.
In Canada, carload traffic was off 14.5% in the week ended Jan. 13 and intermodal volume was down 6.4%.
On Mexico’s largest railroad, Kansas City Southern de Mexico, carload traffic was down 14.2% and intermodal traffic was up 2.9%.
4:14:34 PM
Trinity railcar backlog at record high Trinity Industries reported today that its Rail Group had a backlog of 38,850 cars on Dec. 31, 2006, an all-time record, following five consecutive quarterly increases. The previous high of 32,300 cars was set on Sept. 30, 2006. The current backlog is up 90% from the 18,700 cars on order on Dec. 31, 2005.
During the fourth quarter, Trinity received orders for approximately 10,000 cars and shipped 6,300. During 2006, orders totaled 42,200 and deliveries 25,250.
“Orders during the fourth quarter reflect our workforce’s ability to produce a broad line of products and to shift production as necessary to meet market demand for certain railcar types,” said Trinity Chairman, President, and CEO Timothy R. Wallace. “This competency enhances our ability when pursuing various orders."
4:12:57 PM
2006 freight car orders soarWhile North American freight car orders were down in fourth-quarter 2006, orders for the year came in 13.6% higher than 2005, according to figures released today by the Railway Supply Institute’s American Railway Car Institute Committee. For full-year 2006, manufacturers took orders for 91,466 new freight cars. They delivered 74,943 cars--9.2% more than the prior year. For the three months ending December 31, orders came in at 15,819--falling 26.3% from third-quarter 2006 and 40.5% from fourth-quarter 2005--and deliveries, at 17,927--a drop of 5.7% from third-quarter 2006, but on par with fourth-quarter 2005’s 17,975. The committee reported a backlog of 85,826 cars in the fourth quarter, which was comparable to third-quarter 2006’s 88,116 (down just 2.6%) and up significantly from fourth-quarter 2005’s 69,408 (26%).
9:19:27 AM
Lautenberg and Lott—Act IIWith the Bush Administration’s plan to zero-fund Amtrak and parcel it out for privatization dead and the Democrats in control of both houses of Congress, legislation affecting intercity passenger rail appears to be taking a more positive direction.
Yesterday, Sen. Frank Lautenberg (D-N.J.), the newly anointed chair of the Subcommittee on Surface Transportation and Merchant Marine, and his erstwhile sidekick, Sen. Trent Lott (R-Miss.), announced a reconstituted bill— S. 294, the Passenger Rail Investment and Improvement Act. S. 294 is similar to S. 1516 in the last Congress, except for changes in dates and technical amendments, and also includes the rail security package that the Senate has passed unanimously three times, most recently as H.R.4954, the SAFE Port Act.
S. 294 authorizes appropriations of $3.335 billion for Amtrak Operations for fiscal years 2007 through 2012 and $6.312 billion for capital. Among many provisions, a percentage of the funding is required to be made available for capital grants to states. The bill authorizes $5 million per year for a rail research program, $5 million per year for a Next Generation Corridor Train Equipment Pool Committee, and requires Amtrak, DOT, and the Treasury Department to enter into negotiations with the holders of Amtrak’s debt to restructure it in ways “that will result in significant savings.” Money to retire the principal on debt is authorized to be appropriated. It defines a national passenger rail system as consisting pf the Northeast Corridor, USDOT designated High Speed Rail corridors, Long Distance Routes that exist at the time of enactment, and short distance corridors operated by Amtrak or another carrier. It “does not preclude Amtrak from restoring, improving, or developing additional non-high speed intercity passenger rail services.” It also adds the Amtrak President to the board of directors and mandates that the seven individuals appointed by the president “are required to have experience in business, transportation, freight and passenger rail transport, travel, hospitality, cruise line, air transport, or be representatives of the users of passenger rail transportation.”
“This is neither a partisan issue nor a regional one,” Lautenberg said. “We have a chance to get Amtrak back on track. . . . This bill is my top priority.”
3:00:00
Prototype new-design tank cars scheduled for 2008Union Tank Car, Union Pacific, and Dow Chemical Company—principals in the Next Generation Rail Tank Car project—today signed a memorandum of understanding with the Federal Railroad Administration to move forward on design and production of a new hazmat tank car for carrying chlorine, anhydrous ammonia, and other TIH (toxic inhalation) chemicals. Development of this new car is tied into the FRA’s intent to issue a Notice of Proposed Rulemaking on federal tank car design standards by May 2007, with a final rule issued in January 2008.
Union Tank Car says a prototype of the new car should be ready to roll by 2008 and in production in 2009. The carbuilder has already blocked out space in its production line to manufacture the new vehicle, which will feature improvements in coupler, anticlimber, and valve and fitting designs as well as shell and head construction using improved, stronger steels. CEM (Crash Energy Management) and other design and construction techniques will be incorporated. No timeline for national TIH fleet replacement has been proposed and no federal funding is imminent at this point.
The Next Generation Rail Tank Car project is closely aligned with the Chlorine Rail Tank Car Development Coordination Panel, which consists of four major chemical manufacturers—Occidental Chemical Corporation (OxyChem), The Dow Chemical Company, US Magnesium LLC, and Bayer MaterialScience. These companies, with tank car builders and railroads, participate in the Responsible Care® program, the U.S. chemical industry’s initiative to reduce emissions and improve worker safety. Also involved are the Chlorine Institute Tank Car of the Future Task Force, the Railway Supply Institute Committee on Tank Cars, which oversees activities of an AAR/RSI tank car safety project, TTCI, and the U.S. DOT’s Volpe Transportation Center.
12:20:48 PM
Cost-of-capital hearing scheduled Feb. 15 The Surface Transportation Board will hold a public hearing on Feb. 15 for the presentation of views on what changes, if any, should be made in the methodology used in determining the railroad industry's estimated cost of capital. That determination is used each year to establish the revenue adequacy of railroads.
In announcing the hearing on Jan. 12, STB commented: “The board uses the Discounted Cash Flow (DCF) methodology to calculate the cost of equity, which in turn is used to calculate the cost of capital. Parties participating in this hearing should discuss any changes in the underlying railroad economic conditions and whether those changes suggest the need to change the methodology used by the board. The board invites information on the shortcomings of any proposed methodology and the current DCF method used in calculating the cost of capital.”
3:03:53 PM
UP Powder River coal moves in record volumesUnion Pacific announced today that it moved a record 194 million tons of coal out of the Southern Powder River Basin in Wyoming in 2006--895 more trainloads than in 2005.
Trainloads also got heavier last year. In the fourth quarter, UP's SPRB trains averaged over 15,000 tons each, 200 tons more than the prior year's average.
UP noted that late last year, the Energy Information Administration of the U.S. Department of Energy released data showing that coal inventories at electric utilities nationwide were expected to end 2006 with their heaviest coal inventories in four years.
In December, the North American Electric Reliability Council removed the SPRB from its reliability watch list.
3:02:35 PM
CN-Auto Workers agreements avert strikeThree collective agreements were announced today by CN and the Canadian Auto Workers (CAW), which represents more than 4,000 of the railroad's shop workers, truck drives, and clerical staff. Union members last week authorized a strike if questions involving wages and outsourcing were not resolved. If ratified, the agreements will be retroactive to Jan. 1, 2007.
“I'm extremely pleased that CN and the CAW negotiated these new agreements without labor disruption,” said CN President and CEO E. Hunter Harrison. “I credit company and union negotiators for reaching settlements that will advance the interests of both parties and develop a better foundation for our future relationship. Now we can focus our energies on containing to run the railway.”
3:00:50 PM
CSXT records significant safety and service gainsCSX Transportation reported 20% fewer employee injuries and 23% fewer Federal Railroad Administration-reportable train accidents in 2006 than in 2005, Tony Ingram, the railroad’s executive vice president and chief operating officer, said today.
Ingram also said there were significant service improvement last year although traffic was at record levels. On-time train departures improved 49% and on-time arrivals improved 56%, while car dwell times at terminals were reduced about 14%.
3:46:17 PM
Rail traffic dips in year’s first weekU.S. railroad carload traffic in the week ended Jan. 6 was down 7.2% from the corresponding week in 2006 and intermodal volume was down 1.8%. Estimated revenue ton-miles declined 6.1%, according to the Association of American Railroads.
In Canada, carload volume was down 0.4% in this year’s first week and intermodal volume was off 7.3%.
Mexico’s largest railroad, Kansas City Southern de Mexico, reported a 25.8% drop-off in carload traffic, with intermodal loadings down 2.0%.
3:45:06 PM
Ethanol producer acquiring 1,970 Trinity cars Under an agreement announced today, Trinity Industries will construct 1,970 covered hopper and tank cars for lease to Ethanex Energy, Inc., a company based in Basehor, Kan., that says its mission is to become the ethanol industry’s lowest-cost producer. The cars--920 6,351-cubic-foot covered hopper DDG cars and 1,050 30,145-gallon tanks--are to be delivered between this year’s fourth quarter and the end of 2008. TrinityRail will also provide railcar fleet management services, including regulatory compliance, maintenance, and repairs.
“TrinityRail was able to meet Ethanex’s plant requirements in a very tight railcar market,” said Al Knapp, president and CEO of Ethanex.
In announcing the agreement with Trinity, Ethanex said it is currently developing three ethanol production facilities in the Midwest with an annual production capacity of around 400 million gallons a year.
10:56:19 AM
Warrington resigns from NJ TransitGeorge Warrington will be leaving his post as New Jersey Transit Executive Director after five years, effective the end of March. The former president of Amtrak, who started his career in public transportation with NJT in the early 1980s, said he was leaving his $289,000 job “to pursue other opportunities.”
Warrington’s announcement appeared to come as a surprise to state officials. He is known to have a close relationship with New Jersey Governor Jon Corzine, a strong supporter of Warrington’s focus over the past five years—the $7 billion Trans-Hudson Express Tunnel into Manhattan—and members of the Corzine administration. New Jersey Transportation Secretary Kris Kolluri told the Star Ledger, a daily statewide newspaper, “We're going to have an expedited process to find his replacement. . . We haven't even started the search.”
In announcing his resignation, Warrington listed a few of what he calls his achievements. Among them are adding 100 daily commuter trains for an increase of 10,000 seats, expanding 50 bus lines, overseeing the debut of double-decker railcars (NJT’s first), and providing about 16,000 new parking spaces at rail stations and bus park-and-rides.
UNION PACIFIC VICE PRESIDENT ENGINEERING BILL WIMMER NAMED RAILWAY AGE RAILROADER OF THE YEARBill Wimmer, vice president Engineering of the Union Pacific Railroad, has been named 2007 Railroader of the Year by Railway Age.
“Union Pacific is the gold standard in railroad engineering, largely due to the efforts of Vice President Engineering Bill Wimmer,” said Railway Age Editor William C. Vantuono. “He works tirelessly, planning and directing the maintenance and improvement of UP’s superb physical plant, building up a railroad that is carrying an unprecedented amount of rail freight traffic. Bill’s engineering contributions to the industry during a career that has so far spanned 50 years are known and respected on railroads around the world. His accomplishments in just the past few years amount to what many railroad chief engineers would consider a lifetime of achievement.”
“I am truly honored to be selected for this prestigious award and greatly appreciate the support of many Union Pacific colleagues over the years,” said Wimmer.
Wimmer is the 44th recipient of Railway Age’s Railroader of the Year Award, which was started by Modern Railroads magazine in 1964 as the “Man of the Year” award. Railway Age acquired Modern Railroads in 1991 and has presented the award annually since then. Wimmer follows his legendary mentor and 1978 award recipient, the late Union Pacific Chief Engineer Robert M. Brown, as only the second chief engineer selected to be named Railroader of the Year. Wimmer will receive the award, one of the most prestigious in the railroad industry, on March 20, 2007, at Chicago’s Union League Club.
About Union Pacific
Union Pacific Corporation owns one of America’s leading transportation companies. Its principal operating company, Union Pacific Railroad, links 23 states in the western two-thirds of the country and serves the fastest-growing U.S. population centers. Union Pacific’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad offers competitive long-haul routes from all major West Coast and Gulf Coast ports to eastern gateways. Union Pacific connects with Canada’s rail systems and is the only railroad serving all six major gateways to Mexico.
About Railway Age
Railway Age is a monthly magazine circulated at the management levels of North American freight and passenger railroads. Founded in Chicago, Ill., in 1856, it is the transportation industry’s oldest trade magazine. Railway Age is published by the Simmons-Boardman Publishing Corp., New York, N.Y.
Contacts:
James Barnes
Director-Media Information
Union Pacific Railroad
(402) 544-3560
jebarnes@up.com
William C. Vantuono
Editor
Railway Age
(212) 620-7240
wvantuono@sbpub.com
U.S. rail operators withdraw from EstoniaBaltic Rail Services (BRS), an investor group that includes U.S.-based RDC and Rail World, Inc., has sold its 66% stake in Eesti Raudtee (Estonian Railways) (EVR), completing renationalization of the company after five years of private management.
An RDC announcement out of Pittsburgh said the sale “ends years of bitter disputes between BRS and the Estonian State over regulations that were imposed subsequent to its privatization in August of 2001.”
RDC Chairman Henry Posner III commented, “Not only do we leave behind a railway that is in substantially better condition than before our investment, but we also leave a cultural legacy. A safety culture has evolved at EVR, manifesting itself in not only a 75% reduction in the personal injury rate, but EVR-sponsored Operation Lifesaver Estonia has facilitated reduction in level-crossing incidents despite increased train traffic and increased vehicle ownership.”
Rail World is headed by Edward A. Burkhardt.
Cause sought in death of two track workers in MassachusettsHuman error is being investigated as the possible cause of an accident that killed two members of an m/w crew and seriously injured a third in Woburn, Mass., on Jan. 9 when a Massachusetts Bay Commuter Railroad (MBCR) train mistakenly entered a track where the crew was working.
The Brotherhood of Maintenance of way Employes Division of the Teamsters Rail Conference issued a statement on Jan. 10 in which it said that “there have been four BMWED roadway worker fatalities on the MBCR since Dec. 6, 2003, yet the railroad has not taken significant steps to improve roadway worker safety.” Previously, Amtrak operated the Boston area commuter service.
Timken furnishes bearings for additional high speed TalgosTimken announced that it is supplying 480 bearing assemblies to Bombardier Transportation for use on the 60 locomotives Bombardier is building to power an additional 30 high speed trains that RENFE, the Spanish state railway, has ordered from Talgo. The trains will operate at speeds up to 250 mph between Madrid and Barcelona. Bombardier also used Timken bearings and housings for its first order from Talgo in 2003.
Wabtec increases earnings guidance for 2007Wabtec said today that it expects revenue growth in the 10-12% range in 2007 with earnings rising to about $2.10 a share, excluding restructuring expenses of five cents a share. That is slightly higher than analysts’ recent estimates of 2007 earnings of $2.07.
The company also affirmed its 2006 guidance for earnings of about $1.70 to $1.73, excluding restructuring expenses of nine cents s share, on revenues of $1.06-$1.07 billion.
“We are set for another strong performance in 2007, our fifth consecutive year of revenue and earnings growth,” said Wabtec President and CEO Albert J. Neupaver. “Driving this performance will be continued strength in our core markets, the ramp up of several long-term contracts, benefits from strategic growth initiatives, integration of our 2006 acquisitions, and our diversified business model. In addition, we expect to see higher operating margins and continued excellent cash generation from ongoing application of the Wabtec Performance System and internal cost improvement programs.”
RSI scholarship deadline: March 16The Railway Supply Institute is offering college scholarships for the 2007-2008 academic year. Since its establishment in 1989, the program has contributed to the education of 78 students.
RSI will award four $3,000 scholarships to the most qualified candidates whose parents, stepparents, grandparents, or guardians are employees of RSI member companies or individual members of one of the Coordinated Mechanical Associations sponsored by RSI. All applicants must be enrolled as full-time students in a four- or five-year Bachelor’s degree program and expect to achieve at least sophomore status by the beginning of the 2007 fall term. Winners of 2006 scholarships are ineligible. Applications are due by March 16.
For details, contact RSI at: 29W140 Butterfield Road, Suite 103-A, Warrenville, IL 60555; Phone: (630) 393-0106; Fax: (630) 393-0108; E-mail: rsupplya@aol.com; Website: www.rsiweb.org
Greenbrier lowers car delivery and earnings expectationsGreenbrier Companies President and CEO William A. Furman said today that the company has lowered “new railcar delivery and margin expectations for the year.” That statement came in a press release in which Greenbrier announced net earnings of $1.9 million, or 12 cents per diluted share, for its fiscal first quarter ended Nov. 30, 2006, compared to net earnings of $8.0 million, or 52 cents a share, for the prior-year quarter.
The company had previously indicated that first-quarter earnings would be weakened by failure to achieve operating efficiencies and address production difficulties.
In today’s announcement, Furman said that “events in the first quarter coupled with operating in a less certain economic environment have made us more cautious about our financial performance and forecasting this performance for the remainder of this year. This is particularly the case in new railcar manufacturing, where we have open production space. In the near term, our customers are moderating their demand for certain new railcar types, including intermodal and mill gondola cars from what we previously anticipated. Due to all of these factors, we have withdrawn our earlier guidance and are lowering our full-year guidance to $2.15 to $2.40 per diluted share.”
Furman was optimistic for the longer term. “In fiscal 2006, we took several strategic steps to improve our competitive position and build a stronger company that can perform more consistently through various economic cycles,” he said. “As we enter a less certain economic environment with growing signs of a possible economic slowdown, we continue to believe that secular forces will favor the railroad industry and that our recent strategic decisions were on target. Our diversified business units should serve us well in this environment over the long-term. For example, roughly $500 million of annual revenue is anticipated to be derived from our expanded marine barge manufacturing, railcar refurbishment and parts, and leasing and service operations. Our European new railcar operations currently provide about another $100 million in annual revenues.”
Railway Age’s Short Line/Regional Railroad of the Year competition: Enter now!Railway Age is now accepting entries for its annual Short Line/Regional Railroad of the Year awards. The 2007 winners will be awarded specially designed plaques at the American Short Line and Regional Railroad Association Annual Convention in Baltimore, Md., this April. Articles describing their achievements will appear in Railway Age’s April issue, which will be distributed at the show.
Short line and regional carriers are invited to submit entries describing what they deem to be outstanding achievement in one or a combination of areas. These include, but are not limited to, turnaround situations; consistent excellence; innovation in operations or maintenance; marketing; customer service; enhanced productivity; community relations; safety improvement; and ingenuity in dealing with the unexpected.
Each of the more than 500 smaller roads in Mexico, the U.S., and Canada is eligible for an award and may nominate itself. Size is not important. In the past, awards have gone to carriers ranging from 20 miles to nearly 2,000 miles. In some years, separate awards are given for regional and short line carriers.
Entries should be submitted to: Marybeth Luczak, Executive Editor, Railway Age, 345 Hudson Street, 12th Floor, New York, N.Y., 100l4. E-mail: mluczak@sbpub.com. Fax: (212) 633-1863. Entries should contain the name, position, and contact information of the nominator and an approximately 500-word description of the achievement(s) of the nominated railroad. (Longer and short descriptions are admissible; 500 words is only a guideline.)
Entry forms are not essential, but may be obtained from Luczak by fax or e-mail. The entry deadline is Friday, Feb. 23, 2007.
Railway Age works with the winners to publicize the awards in online and national media.
MBTA budgets $310 million for commuter fleetThe Massachusetts Bay Transportation Authority announced that it plans to purchase 75 double-deck commuter coaches estimated to cost $190 million and 38 commuter rail locomotives valued at around $120 million. MBTA will seek worldwide bids and may place the order as early as this fall. A shortage of serviceable equipment has at times adversely affected service on the nation’s fifth largest commuter-rail network, which carries 40 million riders a year.
FRA says BNSF can start implementing ETMS, launching “a new era of rail safety”The Federal Railroad Administration and BNSF Railway jointly announced today that FRA had approved a Product Safety Plan to allow BNSF to begin implementing the Electronic Train Management System (ETMS) on portions of its network.
“This is a significant safety milestone for the rail industry,” said BNSF President and CEO Matthew Rose. “ETMS is the first approved automatic control system that prevents train collisions and over-speed accidents, meeting the criteria of one of the National Transportation Safety Board’s most wanted list.”
FRA Administrator Joseph Boardman called it “a major achievement that marks the beginning of a new era in rail safety.”
Rose said a pilot ETMS project operated in a 135-mile corridor between Beardstown and Centralia, Ill., “was instrumental in proving the value and safety of this technology.” Wabtec installed ETMS on 50 BNSF locomotives. Starting in October 2004, more than 2,000 revenue service train trips were operated with these locomotives and ETMS passed every test, said today’s FRA/BNSF announcement.
In May 2006, FRA gave BNSF permission to test ETMS on a 300-mile corridor between Alabama City, Kan., and Fort Worth. Union Pacific freight and Amtrak passenger trains as well as BNSF trains operate over parts of that route. Implementation is to begin in the second quarter of 2007.
FRA attached some conditions to its approval of BNSF’s Product Safety Plan, mostly related to record keeping, operations testing, and reporting. Once these are met, BNSF will be ready to extend ETMS to other parts of its network.
“ETMS works as a safety overlay,” explained today’s announcement, “through a train control program that assesses critical train control movement information, such as movement authorities, speed restrictions, and switch position, to a digital communications network that displays the information on a computer screen inside the locomotive cab. The onboard computer, with location information provided via the Global Positioning System (GPS), will warn and then automatically initiate braking action if the crew fails to respond appropriately to the warnings. ETMS operates with existing train control systems and operating rules as the primary means of maintaining train separation.”
FreightCar America names new CEOFreightCar America announced that Christian Ragot, 48, will succeed John E. Carroll, Jr. as president of the company on April 30. Ragot, who will join FreightCar America Jan. 29 as chief operating officer, has spent the last seven years at Terex Corp., where his positions included that of president of president of Terex Utilities and Roadbuilding.
Camillo M. Santomero, III, chairman of FreightCar America’s board of directors, expressed the board’s appreciation to Carroll “for his years of dedicated service. John skillfully guided FreightCar America’s transition from a private company to a public company, and the company posted record sales and earnings under his world-class leadership.”
Rail ton-miles up 2.5% in 2006Total U.S. railroad freight volume in 2006 amounted to an estimated 1.7 trillion ton-miles, 2.5% higher than the previous record set in 2005. Carload freight was up 1.2% and loadings rose 5%, according to the Association of American Railroads.
Coal accounted for 42% of all non-intermodal carloadings last year, and chemicals accounted for 9%, said the AAR.
The year also had its losers. “The difficulties in the housing and automotive sectors led to reduced rail carloadings in several sectors," said AAR Vice President Craig F. Rockey. Carloads of lumber and wood products were down 9.1% in 2006, and carloads of motor vehicles and equipment were down 6.0%.
UP moving salt trains to ColoradoUnion Pacific says it’s moving more than 15,000 tons of salt from Utah to Colorado to replenish stockpiles diminished by two major snowstorms within a week. An initial delivery of 50 carloads of salt was made today outside Denver. Three to four additional salt trains will be operated in coming weeks. The salt is stockpiled for melting ice and maintaining roads.
"Because of the severity of these storms, the stockpiles of salt in Colorado were pretty much depleted,” said Randy Blackburn, UP's regional vice president, Northern Region. “Union Pacific employees performed yeomen efforts to quickly move empty railcars to Utah for loading and a return trip to Colorado. Our employees were also instrumental in quickly reopening rail lines and working to resume normal operations despite back-to-back winter storms.”
AAR's Hamberger to speak at Railway Age security forumAssociation of American Railroads President and CEO Edward R. Hamberger will address Railway Age’s 2007 Railway Security Forum and Expo on Jan. 22, during a special security outlook session. Hamberger will be among the top security leaders discussing today's security challenges as well as how information sharing is improving, what funding is available for rail security efforts, and how railroads are ensuring that employees are up-to-date on training to handle emergencies. Also onboard is William Millar, President of the American Public Transportation Association, and Kerry Thomas, Director-National Preparedness Programs for the Department of Homeland Security's Office of Grants & Training.
For Hamberger, who has served for nearly a decade at the AAR's helm, safety and security has always been the industry's goal. "It's what we care about most," he told Railway Age in a recent interview. "The focused effort that went into our security plan--that kind of response and feeling of obligation to employees and communities to get the job done--really sets us apart." As a result of that plan--adopted in December 2001--freight railroads enacted more than 50 permanent security-enhancing countermeasures. For example, access to key rail facilities and information was tightened, and cyber-security procedures and techniques strengthened. Security awareness briefings were given to railroad employees, who were instructed to maintain high awareness and to immediately report suspicious activity. In addition, the plan defined four progressively higher security alert levels and details a series of actions to be taken at each level. "Railroads are proud of the success they have achieved in enhancing security while keeping our nation's vital rail network operating efficiently and safely," Hamberger announced last fall, "and employee training is part of the reason for that success."
Presented in cooperation with AAR, APTA, the American Short Line and Regional Railroad Association, and Railway Supply Institute, the third-annual Railway Security Forum and Expo will tackle such issues as:
o How resilient is the rail industry?
o Are you prepared for an emergency?
o What have we learned from tragedy and handling major events?
o How can you tap into the security funds available?
o What are the latest developments in container security?
o Is security standardization in your future?
o What best practices can you use to secure vulnerable infrastructure and rolling stock?
o How can you protect tunnel operations?
o What passenger/baggage screening technologies really work?
o Is tracking and tracing technology the answer to managing hazmat security?
Among the other experts onboard to address these topics are Subash Ranjan Thakur, Adviser (Commercial), Railway Board, Indian Railways; Asa Hutchinson, former Under Secretary for Border and Transportation Security at the Department of Homeland Security (2003-2005) ; Michael P. DePallo, Director/General Manager, Port Authority Trans-Hudson Corp.; Mysore Nagaraja, President, MTA (New York) Capital Construction; Skip Elliott, Vice President-Public Safety and Environment, CSX Transportation; William Heileman, BNSF General Director, Police and Protection Solutions; August Greiner, Chief of Police, Morristown and Erie Railway, Inc.; Henry Ward, Director-Transportation Safety and Security, Dow Chemical; Stephen Gardner, Democratic Professional Staff, Subcommittee on Surface Transportation and Merchant Marine, U.S. Senate Commerce Committee; Jaime Ramsay, Program Manager, U.S. Customs and Border Protection; Paul Lennon, General Manager-Mass Transit Security, Transportation Security Administration; Ed Pritchard, Director, Office of Safety Assurance and Compliance, FRA; and Peter Roe, Branch Chief-Surface Transportation Security Inspections, Transportation Security Administration.
The 2007 Railway Security Forum and Expo also will feature table-top exhibits from security technology providers.
For more information, please visit the 2007 Railway Security Forum and Expo website.
Reuter retiring from NYC TransitLawrence G. Reuter, MTA New York City Transit’s president for the past 10 years, will be retiring from the agency effective Feb. 9. He is joining Parsons Brinckerhoff as an executive in the worldwide engineering firm’s Miami, Fla., office.
Reuter’s tenure at NYC Transit was his second. He was originally with the world’s largest transit agency from 1982 to 1990, leaving as senior vice president-operations. From 1990 to 1996, he was general manager of the Washington Metropolitan Area Transit Authority.
Reuter’s retirement announcement comes at the same time that the New York MTA’s new executive director—Elliott Sander, a former DMJM Harris executive and an appointee of Elliott Spitzer, New York State’s new governor—takes office. Michael A. Lombardi, NYC Transit’s senior vice president-subways, has been appointed acting president until a permanent replacement for Reuter is found.
“It has been my privilege to serve as your president for the past decade,” Reuter said in a letter to NYC Transit employees. “I am leaving NYC Transit in an excellent position to continue the forward momentum that has made it the premiere transit system in the world. The opportunity to join a large engineering firm and be closer to my grandchildren was too appealing to turn down. I look forward to the challenges of my new position and the proximity of my family when I relocate to Florida early next month.”
Iowa Interstate acquires Lincoln and SouthernIowa Interstate Railroad, Ltd. (IAIS) has received Surface Transportation Board approval to purchase the 31-mile Lincoln & Southern (L&S) from PolyOne Corp. L&S runs between Henry, Ill., and Peoria, Ill., and has one online customer, which ships sand to Chicago and other markets. Terms of the deal were not disclosed.
IAIS, a Railroad Development Corp. subsidiary, has used L&S to handle unit coal and grain trains to Cedar Rapids and Peoria, respectively. The newly acquired short line now will also provide IAIS access to the Illinois River.
“The purchase of L&S is another step in solidifying the Iowa Interstate Railroad’s long-term plans and strengthening our franchise,” IAIS President and CEO Dennis Miller said during the announcement. Miller is looking to bring more customers online and plans to upgrade track to handle 286,000-pound loads.
Trespassing deaths rise againRailroads operated with extraordinary safety in the first 10 months of 2006 except in the one area over which they have almost no control--trespassing. Trespassing caused 452 deaths in the January-October period of last year, a 13.3% increase over the 399 trespassers killed in the corresponding period of the prior year. In another area where railroads have relatively little control, highway/railroad grade crossings, fatalities reached 287, one more than in the prior-year period.
In contrast, there were 12 employee fatalities in the first 10 months of last year vs. 22 the year before, and one train-accident death vs. 32.
The larger picture showed that there were 10,751 accidents and incidents in January-October 2006, down 7.3% from the prior year period; 2,361 train accidents, down 13.4%; 173 collisions, down 24.1%; and 1,744 derailments, down 9.7%. Yard accidents were down 18% to 1,232.