August 2003
New York’s farebox cost-recovery ratio drops In this year’s first five months, the New York MTA’s three rail agencies posted declines in the percentage of operating expenses covered by passenger revenues. The 2003 period included the first month of fare increases that went into effect May 1. The best performer was MTA Metro-North Commuter Railroad, with a cost-recovery ratio of 58.8%, compared with 60.6% in the same period last year. MTA Long Island Rail Road came in with a ratio of 42.0% vs. 44.4% in 2002. At MTA New York City Transit, the ratio dropped to 52.2% from 54.4%.
NYCT was able to cut its operating deficit for January-May 2003 to $643.9 million, down from $672.7 million in the 2002 period. Metro-North’s operating deficit rose to $179.3 million this year from $162.3 million in 2002, and LIRR’s increased to $272.2 million from $245.6 million.
NJ Transit adopts $1.34-billion capital budgetA major item in NJ Transit’s 2003-2004 capital budget is implementation of a High Density Interlocking Signal (HDIS) system designed to add 25% rail capacity between New Jersey and New York. The planned $1.34 billion in capital outlays will also add 5,900 new parking spaces and "aggressively" advance an environmental analysis for the Access to the Region’s Core (ARC) project. NJ Transit also adopted a $1.3 billion operating budget for the new fiscal year that among other things will cover the launch of three new services: the Secaucus Transfer Station, the Southern New Jersey Light Rail System, and southern and northern extensions of Hudson-Bergen Light Rail services.
STB increases 47 user feesThe Surface Transportation Board’s fee for processing a major financial transaction—a merger, for example—will increase by $11,900 on Sept. 24. STB’s smallest user fee increase will be $1. The board announced its 2003 user fee update on Aug. 25. Forty-seven of 114 user fees have been increased. STB said the new schedule of fees complies with a congressional directive, included in the FY 2003 transportation appropriations legislation, requiring the board to raise $1 million in fees to cover part of its budget.
UTU workers in northern Minnesota ratify CN contractMembers of the United Transportation Union employed by Canadian National’s former Duluth, Winnipeg & Pacific Railway unit in northern Minnesota have ratified a new labor agreement.
In contrast with traditional railroad mileage- and rule-based wage systems, this three-year agreement, effective Sept. 1, 2003, provides for an hourly wage, job guarantees, and more flexible work rules, said CN. The UTU represents 80 locomotive engineers, conductors, and brakemen on the former DW&P.
CN has similar hourly-based collective agreements with train and engine employees on its former Illinois Central and Wisconsin Central properties in the U.S.
Worm bores a hole in CSXTA so-called "worm virus" similar to those that have compromised the systems of other major companies and agencies in recent days hit CSX Transportation’s information technology systems yesterday. CSXT said it experienced "significant slowdowns" in its IT network.
"The infection resulted in a slowdown of major applications, including dispatching and signal systems," said CSXT. "As a result, passenger and freight train traffic was halted immediately, including the morning commuter train service in the metropolitan Washington, D.C., area. Contrary to initial reports, the signal system for train operations was not the source of the problem. Rather, the virus disrupted the CSXT telecommunications network upon which certain systems rely, including signal, dispatching, and other operating systems."
CSXT said its technology and operating personnel "immediately began aggressive and comprehensive efforts to restore the computer system and service to rail passengers and freight customers. Many key systems had been restored as of midday, allowing for resumption of substantial operations as the company works toward full system capability." CSXT added that, though it notified VRE, MARC, and Amtrak of the problem and began contacting state and federal agencies to inform them of the situation and expected impact, passengers with questions about service and schedules were instructed to contact those agencies directly.
CSXT said it "has confronted increasingly sophisticated computer viruses, like ones that have penetrated some of the most secure sites in the country in recent days. The company will continue to work to counter the effects of these viruses and to prevent intrusion. CSXT shares the frustrations of the affected passengers and, as it moves forward, will remain firmly committed to providing the level of service that they require."
TMM shareholders reject KCS bid for TFMIn what could be a major setback to Kansas City Southern’s efforts to create a new railroad, NAFTA Rail, through common control of Transportacion Ferroviaria Mexicana and the Texas-Mexican Railway, shareholders of Grupo TMM S.A. have rejected the sale of TMM's interests in Grupo TFM S.A. de C.V. to KCS.
KCS released a statement saying it "is concerned about the TMM shareholder action and is exploring its rights under the agreements between the parties, and its legal options under U.S. and Mexican law. Jose Serrano, chairman of Grupo TMM, who signed and obligated TMM to the transaction agreements with KCS and who, in his capacity as a director of TMM, recommended approval of the transaction to TMM shareholders, is the controlling stockholder of Grupo TMM. KCS intends to pursue all appropriate legal or administrative action against any persons or entities involved in interfering with KCS and its agreements with TMM. KCS remains committed to completing the transaction."
CSXT names performance improvement chiefFrederick J. Favorite, Jr., has been named senior vice president-performance improvement at CSX Transportation. CSX Corporation Chairman, President, and CEO Michael J. Ward, who is also president of CSXT, announced the appointment on Aug. 7, effective immediately. Favorite formerly held the positions of senior vice president finance and vice president-planning and analysis at the railroad. Ward said Favorite’s "commitment to our company’s core values of ‘fact-based’ and ‘right results, right way’ will help to ensure the success of our performance improvement efforts, ultimately resulting in improved value for our customers and shareholders."
The year so far: Carload traffic flat, intermodal up In this year’s first seven months, U. S. rail carload traffic was essentially level with the corresponding period last year: 9,949,454 units, down 0.1% or 10,991 carloads from 2002. But intermodal traffic rose to 5,772,723 trailers and containers, an increase of 6.0% or 328,653 units over the 2002 period. The AAR estimated total U.S. volume through July at 877.1 billion ton-miles, up 0.6% from the first 31 weeks of 2002. For the month of July, carload traffic was down 1.6% and intermodal traffic was up 4.3% from July 2002.
In Canada, carload traffic in the first seven months of 2003 totaled 1,896,277 units, down 1.1% or 21,330 carloads from the same period in 2002. Container/trailer traffic added up to 1,279,829 units, an improvement of 9.2% or 107,379 units over 2002. In July, Canadian carload traffic was up 2.3% and intermodal traffic rose 54.7% from July 2002.
Trinity backlog at three-year highTrinity Industries President and CEO Timothy R. Wallace said Aug. 7 that the company’s North American freight car backlog has reached its highest level in over three years and "reflects signs of an industry-wide recovery." He added that "year over year, the company’s second quarter railcar backlog revenue grew 82%."
In announcing Trinity’s second-quarter results, Wallace pointed to a $25 million transaction that he said "reflects our strategy of pursuing new markets for railcars by designing new products which are introduced through our leasing company and eventually sold to other leasing companies." The transaction involved the sale of "newly designed, jumbo hopper cars which were developed specifically for transporting a lightweight grain product that is a by-product of the ethanol market."
Wallace said Trinity Industries broke into the black in the second quarter with a profit of $3.5 million on revenues of $365.8 million, compared to a loss of $5.7 million on revenues of $366.0 million in the same quarter last year. Trinity cut its first-half loss to $11 million on revenues of $654.9 million, compared to a loss of $14.3 million on revenues of $750.3 million in last year’s first half.
In addition to the Rail Group and the Railcar Leasing and Management Services group, Trinity Industries has three other principal business segments: the Inland Barge Group (which posted a 43% increase in barge backlog revenue in the second quarter), the Construction Products Group, and the Industrial Products Group.
Another hurdle is cleared for NAFTA RailThe U.S. Department of Justice will allow the proposed transaction between Kansas City Southern and Grupo TMM, S.A. to place TFM, S.A., de C.V under common control of a new company called NAFTA Rail to proceed without a request for additional information under U.S. antitrust laws outlined in the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The 30-day waiting period under the Act has expired without a formal request from DOJ for additional information and documentary material.
While the transaction has cleared the regulatory waiting period under the Act for antitrust review in the U.S., it must still be approved by the Foreign Investment Commission in Mexico, the shareholders of both companies, and TMM bondholders. The transaction has already received approval from the Mexican Competition Commission, which looks at antitrust issues in proposed transactions in Mexico.
In a separate but related proceeding, KCS Chairman, President, and CEO Mike Haverty and Executive Vice President and Chief Operating Officer Gerald Davies testified before the U.S. Surface Transportation Board at a public hearing on KCS's plans to place The Kansas City Southern Railway Company, Gateway Eastern Railway Company, and The Texas Mexican Railway Company under common control of KCS. KCS had earlier purchased 51% of Tex Mex's parent company, Mexrail Inc., for $32.7 million but placed those shares in an independent voting trust pending an STB final decision. The STB has ruled this transaction as "minor" and has published a procedural schedule that would result in a final decision by Oct. 17, 2003.
New PATH station for Lower Manhattan under wayThe Port Authority of New York & New Jersey has entered into contract negotiations with the Downtown Design Partnership, a joint venture of DMJM+Harris and STV, Inc., for design and construction of a permanent World Trade Center PATH terminal that will replace the facility destroyed in the 9/11 terrorist attacks. Other consortium members include Parsons; William Nicholas Boduova & Associates; Severud Associates Consulting Engineers, P.C.; Jaros, Baum & Bolles; and Mueser Rutledge Consulting Engineers.
The consortium’s principal designer is architect Santiago Calatrava, S.A. According to the Downtown Design Partnership, "Architect, engineer, and artist Santiago Calatrava has won critical and popular acclaim worldwide for his visionary, yet pragmatic work. Among his notable recent projects are the celebrated Milwaukee Art Museum and the Oriente Station in Lisbon, Portugal, that has redefined transit architecture."
The new PATH terminal is described as "serving as a major regional transportation hub as well as a significant cultural and retail destination. An integral component of the master plan for the World Trade Center site, it will be a downtown gateway for commuters, workers, residents, and visitors."
The Downtown Design Partnership will work within the framework of the World Trade Center Site Master Plan, which is under the auspices of the Lower Manhattan Development Corp. and Studio Daniel Libeskind. The latter, in collaboration with other architects and engineers, is designing the office towers that will be built where the WTC’s Twin Towers once stood. The centerpiece of that project is expected to be what will become the world’s tallest building, the "Freedom Tower," a structure that, with a communications antenna, will reach 1,776 feet.
Norfolk Southern honors Paul HeymannPaul Heymann, the Norfolk Southern officer who nominated the winners of Railway Age’s 2002 Regional and Short Line Railroad of the Year Awards, has himself been honored by his company. NS presented the 2002 Thoroughbred Award to Heymann, product manager construction, "for working closely with customers Berks Products and Silica, along with two connecting short lines, Winchester & Western Railroad in Bridgeton, N. J., and Reading Blue Mountain & Northern in Port Clinton, Pa., to move construction materials in the Philadelphia metropolitan area." It was a move that brought NS and the smaller roads new business and took trucks off the highway. Railway Age honored W&W and RBM&N at last year’s American Short Line and Regional Railroad Association annual meeting.
TTX chief optimistic for continued growthTTX President and CEO Anthony F. Reardon says the company’s "strong capital growth plan" is supported by intermodal traffic so far this year "together with our expectations for further economic growth in the second half and in 2004." He noted that TTX has placed orders exceeding $1 billion for equipment to be delivered this year and in 2004.
"Train tracks don’t end at the state line"The Bush administration’s scheme to give the states responsibility for intercity passenger trains went to Congress on July 28. It did not fall on deaf ears.
"If you turn Amtrak over to the states, it’s gone," said Texas Senator Kay Bailey Hutchison. "Train tracks, just like our highways and airways, don’t end at the state line."
On July 30 she was joined by three other Republican Senators—Trent Lott of Mississippi, Olympia Snow of Maine, and Conrad Burns of Montana—in pressing for legislation that would not only preserve Amtrak but give it $12 billion in federal operating subsidies over a six-year period plus $48 billion for capital improvements, of which the states would pay only 20%. All four are members of the Senate Commerce, Science and Transportation Committee.
Sen. Lott called the Administration’s proposal "a total non-starter [that] for the most part will get almost no consideration in the Senate, which is what it richly deserves."
Senator John McCain (R-Ariz.), chairman of the Appropriations Committee, was among those applauding the move to put intercity trains on a thinner federal diet. "Since 1970, American taxpayers have invested $26 billion in Amtrak, which still has less than a 1% share of the intercity travel market and continues to operate routes with losses of over $400 a passenger," said McCain.
The Senate as a whole, though, has been friendlier to Amtrak than the House, whose Transportation Appropriations Committee reported out a bill in July giving Amtrak only $900 million in FY 2004. That’s the amount the Administration is willing to give Amtrak in a business-as-usual scenario. Amtrak President David Gunn has asked for $1.8 billion.
Gunn said he was neither consulted nor briefed on the plan. In a statement, he underscored Amtrak’s immediate need for money to maintain reliable operations in the Northeast Corridor. He cited recent equipment and catenary failures as well as looming bridge failures in Connecticut that could interrupt service between New York and Boston.
"The gravity of this immediate need to maintain Amtrak’s reliability vastly overshadows any debate over the plan introduced today," he said. "The Bush Administration, which is represented on Amtrak’s board of directors, has averted crisis over the past 12 months, even when this approach has taken us to the eleventh hour."
The plan that DOT Secretary Norman Minetta transmitted to Congress is essentially a fleshing-out of one proposed 18 months ago by the Amtrak Reform Council (RA, Feb. 2002, p. 12.) It envisions a six-year transition period during which Amtrak would morph into three entities:
o "A private passenger-rail company that would operate trains under contract to states and multi-state compacts—just as the current Amtrak operates trains under contract to commuter train agencies.
o "A private rail infrastructure company that would maintain and operate the infrastructure on the Northeast corridor under contract to a multi-state Northeast Corridor Compact. Title to Amtrak’s current tracks, stations and other infrastructure on the Northeast Corridor will be held by the federal government and leased to the Northeast corridor Compact.
o "The National Passenger Rail Corporation, which would continue as a government corporation that would retain Amtrak’s current right to use the tracks of the freight railroads, and the Amtrak corporate name. Both the track access rights and the Amtrak brand would be provided under contract to states and multi-state compacts for qualifying passenger rail service they sponsor."