September 2003
BC Rail buys wireless car repair billing systemWabtec announced Sept. 30 that its Wabtec Global Services division had won a contract from BC Rail for a wireless system that collects car inspection and repair data from field locations. The system has already been installed and is working well, according to Thomas Aydon, the railroad’s supervisor, mechanical systems. "We expect that billing revenues will increase by approximately 10% and billing errors will be virtually eliminated," said Aydon.
In an earlier announcement, Wabtec said its wireless hand-held system "has been licensed by several Class I railroads and other customers." The system developed for BC Rail, said Wabtec, incorporates Wireless Railcar Maintenance and Billing and the new Back Office application, first used by BC Rail. The Back Office "responds to the AAR’s desire for electronic standards and programs. The system automates many of the labor-intensive, administrative tasks of car-billing, such as insuring that a repair is billable, identifying the owner to be billed, discerning AAR or special-agreement pricing, and generating paper and electronic invoices. The system also automatically audits repairs and generates invoices for work performed on BC Rail’s freight cars by other railroads."
Truck tonnage "on upward path," says ATAThe American Trucking Associations (ATA) announced Sept. 29 that the Truck Tonnage Index dropped 9.5% to 140 (1993=100) in August, more than erasing July’s 5.0% gain. But ATA chief economist Bob Costello said that truck tonnage "is on a recovery path." He based his optimism on "very lean inventories throughout the supply chain, and new orders for manufactured goods." According to ATA, trucks hauled 67.9% of all tonnage carried by all modes of domestic freight transport in 2002, and collected revenues of $585 billion, "87% of total revenues earned by all transport modes."
Austerity budget further delays DART rail expansionDallas Area Rapid Transit has adopted an FY 2004 operating and capital budget of $308.5 million, 6% below FY 2003’s $328.2 million. The budget reflects an anticipated shortfall of $20 million in receipts from a DART one-cent sales tax. This is the third straight year of declining sales tax revenues, which pay for 81% of DART’s operating expenses. DART said the budget includes "an additional one-year delay in the rail expansion to Farmers Branch, Carrollton, Las Colinas, DFW airport, Deep Ellum, Fair Park, South Dallas, Pleasant Grove, and Rowlett through 2014." DART eliminated 102 full-time salaried positions. Adjustments to DART rail and bus and Trinity Railway Express services, based on rider demand, go into effect Oct. 6.
RailPower seeks change in switcher inspection ruleRailPower Technologies wants the Federal Railroad Administration "to determine if the currently mandated 92-day inspection period for switchers can be lengthened without compromise to safety because of technology improvements."
That was one of three objectives cited by RailPower as it announced that it had entered into an agreement with the Washington-based firm of Seneca Group LLC. RailPower developed the mainly-battery-powered Green Goat switcher and its offspring the Green Kid.
President and CEO Jim Maier said Seneca would also "help us develop our overall marketing strategy [and] help lead us effectively into the short line and regional railroad markets, transit, and ports."
"We believe that a one-year maintenance free period can be achieved for hybrid switchers," said Maier. "This could considerably enhance the already substantial value proposition our technology offers in railyard switching operations."
Seneca’s majority investor is the highly regarded government relations firm of Chambers, Conlon & Hartwell. One of that firm’s seven partners is Ray B. Chambers, who is well known in Washington for his lobbying and other efforts on behalf of regional and short line railroads.
Did self-sufficiency mandate cripple Amtrak?The Congressional Budget Office (CBO) has issued a harsh judgment on a congressional mandate six years ago that Amtrak must achieve operating self-sufficiency by December 2002. Noting that "legislation governing Amtrak often has unintended consequences," the CBO cited that mandate as an example.
"Although lawmakers were by no means unanimous in desiring that goal or in considering it realistic, Amtrak set out to show that it was on a ‘glide path’ to self-sufficiency by narrowing the gap each year between operating expenses and operating revenues," said a CBO report issued in late September. "But it did so in ways that, at least in retrospect, were counterproductive. The focus on that accounting objective led to ill-considered short term measures that plunged Amtrak into more serious financial trouble."
The report concluded: "Seeking a consensus about long-term federal policy toward passenger rail may be unrealistic. If policy makers cannot reach agreement about passenger-rail issues, then Amtrak is likely to limp along as it has for the past 33 years: not quite satisfying anyone, nor providing the most valued rail service per dollar, but not costing very much relative to the size of the economy and the federal budget."
Norfolk Southern again downsizingMore voluntary separations of non-union employees are being sought by Norfolk Southern. In an announcement on Sept. 26, NS gave no target number of acceptances. The separation program is open to employees with at least two years of service. It’s designed to achieve "a reduction in overall staff and an internal restructuring" to increase efficiency.
The severance package includes three-weeks’ salary for each year of service, free health insurance for one year, and up to 90 days of outplacement assistance. NS said most of the separations will be effective on Oct. 31.
Five more months for "expired" TEA-21TEA-21, the six-year surface transportation funding act, expires on Sept. 30, but Congress is ready to extend the legislation’s provisions for five months. That will ensure an uninterrupted flow of funds to highway and transit programs while a six-year reauthorization is worked out. The extension will be on a pro rata basis. For example, the guaranteed authorization for FY 2003 was $7.226 billion, so the five-month extension reauthorization will be $3.043 billion.
As it approved the extension, the leadership of the House Transportation and Infrastructure Committee said it planned to introduce a $375 billion bill by the end of this year. Proposed Senate legislation calls for $311.5 billion. The Bush Administration has proposed a $247 billion bill.
The House unanimously approved the TEA-21 extension on Sept. 25. Senate action was expected the following day.
KCS gets an extensionThe Mexican Competition Commission has extended its prior authorization of Kansas City Southern’s purchase of all of the shares of Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. from Grupo TMM, S.A. for a period of six months. The Commission acted at the request of KCS, and did not place any conditions on the extension, according to a statement released by KCS.
Amsted spins off Brenco QBS/Airbrake DivisionGraham-White Manufacturing Company has purchased the assets of Amsted Industries Brenco/QBS Airbrake Division, Sparks, Nev. Graham-White will assume operations immediately.
Graham-White, a manufacturer of locomotive products and a provider of remanufacturing services including 26L air brakes, will operate air brake reconditioning businesses at Sparks, Nev., and Salem, Va., while servicing all current QBS Airbrake customers and honoring all existing supply agreements.
Railway Age publisher named RSSI presidentRobert P. DeMarco, Publisher of Railway Age, was elected president of Railway Systems Suppliers, Inc., the trade association representing suppliers in the railway signaling and communications field, for 2003-2004. Elected executive vice president, first vice president, and second vice president, respectively, were James Huntley, North American Sales Director, Erico Rail Products; James Higginbottom, Executive Consultant, The Okonite Company; and George Kline, President, Safetran Systems Corp.
DeMarco is Senior Vice President of Simmons-Boardman Publishing Corp. and publisher of the company’s Rail Group magazines, which include Railway Age, Railway Track & Structures, and International Railway Journal.
Dermody named LIRR presidentThe New York Metropolitan Transportation Authority has appointed James Dermody president of the Long Island Rail Road. Dermody, an LIRR employee since 1958, was named acting president in March following the retirement of Ken Bauer.
Dermody began his LIRR career as a ticket clerk. Early in his 45-year career, he served as an agent/operator at the railroad’s Montauk branch in Mastic, N.Y. He worked his way up through LIRR’s ranks to become chief transportation officer before assuming the acting president’s post.
KCS will pursue "all legal means"The Kansas City Southern board of directors has instructed the company’s management "to pursue all legal means" to enforce provisions of the acquisition agreement between KCS and Grupo TMM, S.A. for TMM’s interest in Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. while pursuing direct negotiations with TMM.
KCS delivered a notice of dispute to TMM dated Aug. 29, 2003 in accordance with the dispute resolution provisions of the acquisition agreement, initiating a 60-day negotiation period between. "If the parties are unable to resolve the disputes within that period of time, KCS intends to initiate a binding arbitration in accordance with the terms of the acquisition agreement," said KCS in a statement. "[We] maintain that the acquisition agreement is still valid and in effect until Dec. 31, 2004. Under that Agreement, TMM and its affiliates are precluded from initiating or participating in any negotiations or discussions with anyone other than KCS for the acquisition or purchase of all or a substantial portion of the assets of Grupo TFM or any equity interest in GTFM." KCS has filed a complaint in the Delaware Court of Chancery seeking a preliminary injunction to preserve the parties’ positions while KCS and TMM carry out dispute resolution provisions.
In a related matter, the U.S. Surface Transportation Board issued a decision finding no need to rule on the transfer back to TFM of the 51% interest in Mexrail that KCS acquired on May 9, 2003. "The effect of the decision is to allow TFM to reacquire the shares in accordance with the Mexrail stock purchase agreement, and KCS will abide by that agreement," said KCS.
Russian railway reform passes a milestonePrime Minister Mikhail Kasyonov signed a decree on Sept. 23 creating a new joint stock company, Rossiiskiye Zheleznye Dorogi (Russian Railways). The decree named Railways Minister Gennady Fedeyev to head the company. The ministry’s public relations and advertising center explained that this action is part of a restructuring under which "the functions of state regulation and economic management of railway transport are being separated."
U.S. intermodal traffic at record highThe Association of American Railroads announced on Sept. 22 that U.S. railroads carried 206,943 containers and trailers in the week ended Sept. 13, surpassing the previous weekly record of 206,454 set in the week ended Sept. 21, 2002.
In this year’s first 37 weeks, U.S. intermodal volume was 6,942,640 units, up 5.2% from the same period last year.
Canadian railroads, while posting a 1.5% drop in intermodal traffic in the week ended Sept. 13, reported a 5.7% increase for the first 37 months. Mexico’s TFM railroad has achieved a 21% increase in originated trailers and containers so far this year, though intermodal loadings were down 0.3% in the week ended Sept. 13 from the corresponding week in 2002.
Governors adopt pro-Amtrak policyThe Western Governors Association has approved a policy resolution stating that "the most critical need" of an Amtrak federal-state partnership is "a new, separate, stable, and dedicated federal program to fund capital investment--infrastructure and equipment--to maintain and enhance regional passenger service."
The policy statement also said: "The governors strongly urge the federal government to stabilize intercity passenger rail in the short term, work with the states to determine the structure of the system for the long term, and provide funding and leadership in the future of national intercity passenger rail."
Bombardier wins Montreal orderMontreal’s Agence Metropolitaine de Transport (AMT) has placed a $44 million order with Bombardier Transportation for 22 bi-level commuter cars for the Dorion-Riguad line. Bombardier says that more than 700 of its bi-levels are in service in 10 cities in Canada and the U.S. The AMT cars will have 150 seats and standing room for an additional 215 riders.
Romney approves MBTA commuter extensionThe Massachusetts Bay Transportation Authority’s 18-mile, $479 million Greenbush commuter rail extension has finally won the approval of Governor Mitt Romney. The project was on hold for seven months while costs and benefits were debated. It still needs a wetlands environmental permit. The Boston-to-Scituate route is part of the former Old Colony system.
EU approves Alstom bailout package Tottering on the brink of bankruptcy, Alstom has been pulled to safety by a $3.67 billion rescue package put together by the French government and the company’s creditor banks. The plan won the approval of the European Union on Sept. 22. The Brussels-based EU had turned down an earlier plan because it would have involved the French government’s purchase of a one-third interest in the company, in violation of EU’s state-aid and merger rules. Alstom, whose best-known products are Europe’s high speed TGVs, employs 110,000 workers to build trains, power equipment, and cruise ships. Alstom collaborated with Bombardier to build Amtrak’s Acela trains.
Amsted sells ASF-Keystone friction draft gear product line to Hansen Inc.Amsted Industries has sold the friction draft gear product line of its ASF-Keystone subsidiary to Hansen Inc., the parent company of A. Stucki Company and Independent Draft Gear. The sale includes ASF-Keystone’s K25 (AAR specification M901E) draft gear, K250 (M901E) and K2500 (M901G) elastomeric draft gears; the Keystone draft gear reconditioning business; and ASF-Keystone's McPherson, Kan., manufacturing facility. It also includes a long-term supply agreement in which Independent Draft Gear will provide ASF-Keystone with friction draft gears for resale as part of a "system" offering. IDG, which will continue to offer reconditioned draft gears to the worldwide market, will now be able to participate in the new-car market as a result of the expanded product line.
Racketeering charges "unfounded," says BoydByron A. Boyd, Jr., international president of the 125,000-member United Transportation Union, branded as "unfounded" allegations in a federal indictment charging him with racketeering. "I have every intention to pursue this matter to a final and full conclusion that completely exonerates me," said Boyd in a statement on Sept. 15.
In Houston, Tex., on the same day, U.S. Attorney Michael Shelby announced that an indictment was returned on Sept. 12 charging Boyd and three current or former UTU officers with "racketeering conspiracy, mail fraud, wire fraud, and commercial bribery." The others mentioned in the indictment were Charles Little, former UTU president, of Leander, Tex.; John Russell Rookard, of Olalla, Wash., special assistant to President Boyd; and Ralph John Dennis of Boone, Iowa, who was director of insurance for the UTU Insurance Association before resigning from the union in July.
The indictment alleges that "the defendants devised and executed a scheme to defraud and to deprive the membership of the UTU of their honest services by soliciting and receiving over $477,000 in cash from various attorneys . . . performing services for the union membership as designated legal counsel."
BNSF Logistics acquires brokerage/freight forwarderBNSF Logistics, LLC, a wholly-owned subsidiary of Burlington Northern Santa Fe Corp., has acquired MRS Companies, a Godfrey, Ill.-based brokerage and freight forwarder that serves retail, furniture, and consumer packaged goods companies nationwide. Terms of the acquisition were not disclosed.
MRS, which employs 34 people, was formed in 1985 by Michael R. Solomon. He becomes vice president-marketing and sales, reporting to BNSF Logistics Vice President and General Manager Eric Wolfe. MRS will operate as a unit of BNSF Logistics Transportation Execution Services division.
BNSF Logistics now has four product lines: TES, Modal Solutions, Supply Chain Services, and Consulting. Since its formation in August 2002, BNSF Logistics has expanded and now has operating personnel in Arkansas, Alabama, Pennsylvania, Tennessee, and Illinois, serving shippers and carriers nationwide.
BNSF Logistics provides customers with supply chain services ranging from management and execution of single-shipment transactions to daily management of distribution and sourcing networks. Typical services include truck, rail, and intermodal; analysis and optimization of distribution networks; and redesigns of customer supply chains.
KCS, TMM attempting to reach agreementKansas City Southern says that negotiations with Grupo TMM, S.A. have begun under the dispute resolution process contained in the Acquisition Agreement between KCS and TMM for TMM's interest in Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. Representatives of both companies met on Sept. 11 for the first of what are expected to be "numerous meetings," said KCS Vice President-Corporate Affairs Warren Erdman.
KCS delivered a notice of dispute to TMM dated Aug. 29, 2003, in accordance with the dispute resolution provisions of the Acquisition Agreement. This initiated a 60-day negotiation period between the parties. "If the parties are unable to resolve the disputes within that period of time, KCS intends to initiate a binding arbitration in accordance with the terms of the Acquisition Agreement," KCS said in a statement. "KCS maintains that the Acquisition Agreement is still valid and in effect until Dec. 31, 2004. Under that Agreement, TMM and its affiliates are precluded from initiating or participating in any negotiations or discussions with anyone other than KCS for the acquisition or purchase of all or a substantial portion of the assets of Grupo TFM or any equity interest in Grupo TFM." KCS has filed a complaint in the Delaware Court of Chancery seeking a preliminary injunction to preserve the parties’ positions while KCS and TMM carry out the dispute resolution provisions provided for in the Acquisition Agreement. "We remain very committed to this process and believe the Acquisition Agreement is valid and in effect," said Erdman. "We plan to pursue this for as long as it takes."
In April, KCS and TMM signed agreements that would place TFM, Texas-Mexican Railway Company, and Kansas City Southern Railway Company under the common control of a single transportation holding company, NAFTA Rail, to be headquartered in Kansas City, Mo. Under the Acquisition Agreement, TMM Multimodal, S.A. de C.V., a subsidiary of TMM, would receive 18 million shares of NAFTA Rail representing approximately 22% (20% voting, 2% subject to voting restrictions) of the company, $200 million in cash (or a combination of cash and KCS common securities), and a potential incentive payment of between $100 million and $180 million based on the resolution of certain future contingencies. In May, KCS completed financing totaling $200 million through its offering of Redeemable Cumulative Convertible Perpetual Preferred Stock in a private offering.
But on Aug. 18 TMM shareholders rejected the sale agreement. This happened not long after a Mexican court ruled that TFM was eligible for a federal tax rebate valued at between $750 million and $1 billion. KCS said the TFM sale agreement "was negotiated and signed by TMM Chairman Jose Serrano, who is also the controlling shareholder of TMM. Based upon TMM’s filings with the Securities and Exchange Commission, KCS believes that Jose Serrano controls over 80% of the voting shares."
Thompson heads Bush nominees to Amtrak boardLouis S. Thompson, a retired railways adviser to the World Bank, heads up a slate of three candidates President Bush has nominated to the board of directors of Amtrak.
Thompson is the only nominee with railroad experience. Earlier in his career, he served as director of the Northeast Corridor Improvement Project at the Federal Railroad Administration. Thompson earned a degree in chemical engineering from the Michigan Institute of Technology and an MBA from Harvard. He resides in Maryland.
The other two nominees are Robert L. Crandall, of Texas, the former chairman and CEO of AMR Corporation and American Airlines, and Floyd Hall, of New Jersey, a former chairman and CEO of Kmart. Crandall is a graduate of the University of Rhode Island and earned his MBA from the University of Pennsylvania's Wharton School. Hall attended Southern Methodist University.
US&S wins LIRR interlocking contractMTA Long Island Rail Road has awarded a contract to Union Switch & Signal for a vital microprocessor-based signal system for the New Jamaica Interlocking. US&S said the contract includes the design of the Microlok® II system to control the complex Jay, Hull, and Dunton interlockings, as well as a PC-based centralized supervisory control system for these interlockings. For wayside elements of the project, US&S will furnish engineering and other services to support LIRR’s replacement of existing Model 14 interlocking machines. The new solid state interlocking system will replace 70-year-old equipment. More than 400 commuter trains pass through these interlockings daily.
No. 3985 will pull UP’s rodeo specialUnion Pacific’s "Challenger" No. 3985 will steam through Nebraska Sept. 24-25, pulling a train of elected officials and civic leaders to Omaha for the River City Roundup (RCR) rodeo. The world’s largest operating steam locomotive will start its journey at Gering, Neb., on Sept. 24 and will make numerous stops on its way to Omaha. While in the area, it will be on public display in Omaha and Council Bluffs, Iowa.
Built in 1943 for fast freight service, the 4-6-6-4 articulated "Challenger" is 122 feet long, weighs more than a million pounds, has six-foot-diameter drive wheels, and can hit a top speed of 70 mph. Retired in 1959, it was restored to running condition in 1981 by UP employee volunteers for special events.
This will be the first time in 12 years that UP has operated an RCR special. An RCR train ran from 1982 to 1991, pulled by steam locomotives or special diesel units. This year will be only the second time No. 3985 has hauled the rodeo special. Former RCR trains were hauled seven times by UP’s other steam locomotive, No. 844, a 4-8-4 "Northern" type.
PATH to procure new subway carsThe Port Authority Trans-Hudson rapid transit system has one of the oldest transit car fleets in the U.S. The average PATH car is 31 years old. Of PATH’s 340 cars, the newest are 94 Kawasaki-built vehicle delivered in 1986.
Over the next seven years, PATH plans to spend up to $809 million to replace its 246 oldest cars, overhaul the Kawasaki cars, and replace its signal system, possibly with communications-based train control. The existing automatic block/trip-stop system dates to the 1960s, when the Port Authority of New York & New Jersey acquired the bankrupt Hudson & Manhattan Railroad from the Pennsylvania Railroad, but some of the components are 90 years old.
An RFP is expected to be issued next month; the first new cars are expected to enter service by year-end 2006. PATH is specifying a 30-year design life.
Meanwhile, PATH is preparing to open in November a temporary station at the World Trade Center in Lower Manhattan to reactivate the one that was destroyed exactly two years ago in the 9/11 terrorist attacks. The trackwork being constructed is permanent; the temporary station’s platforms will accommodate eight-car trains. When a permanent station is built as part of a massive redevelopment/rebuilding of Lower Manhattan’s transit hub also incorporating MTA New York City Transit subway lines, the platforms will be expanded to accommodate 10-car trains. The Exchange Place Station across the Hudson River in Jersey City, N.J., which connects with the WTC facility, reopened in June.
To improve security, the revamped PATH system will also be equipped with chemical and biological agent detection systems, and an onboard video recording system with live camera feeds.
CSXT’s Ward assumes COO responsibilitiesCSX Corp. Chairman, President, and CEO Michael J. Ward, who is also president of CSX Transportation, is now assuming the responsibilities formerly handled by Allen Crown, the railroad’s chief operating officer. Ward announced Crown’s retirement on Sept. 11.
"Because CSX is now largely a rail-based company, I will be getting even closer to our operations, our customers, and our employees," said Ward. "We are going to sharpen our focus on service to our customers, productivity, and process improvement. Working together, we will return to and ultimately surpass our best historical service levels."
Ward praised Crown’s "many important contributions" during his 37 years of service with the company. "He was instrumental in turning rail operations around after the Conrail integration. Al’s commitment and energy, especially his dedication to safety, are widely known and respected," said Ward.
CANAC takes a stake in hybrid locomotivesRailPower Technologies Corp. has signed a memorandum of understanding with CANAC to develop and promote Green Goat and Green Kid hybrid locomotives with integrated remote control systems for the North American and international switcher locomotive markets.
Under terms of the agreement, RailPower will work with CANAC to integrate CANAC’s BELTPACK® locomotive remote control system into the 2,000-hp Green Goat and 1,000-hp Green Kid and offer CANAC products and services to RailPower railroad customers. CANAC will supply to RailPower remote control systems as an OEM for industrial customers and convert two of its 60 industrial switcher locomotives to Green Kid hybrids. Other locomotives that would be suitable candidates for conversion to hybrid power will be identified at a later date.
Additionally, RailPower customers will receive online support from CANAC’s 24-hour Helpdesk and access to related web-based training programs; CANAC will provide field support for RailPower’s hybrid locomotives. RailPower will examine the possibility of using CANAC’s Montreal facilities for the assembly of some of its Green Goat and Green Kid locomotives.
The Green Goat and Green Kid use large banks of lead-acid batteries to supply traction motor electrical current. The batteries are continuously charged by a small diesel-powered generator, or "genset." RailPower says they "feature very low maintenance requirements and cut diesel fuel use 50-80%, and NOx and dangerous particulates 80-90%, when compared to average performance of conventional yard switchers in the same power range."
Following a two-week trial with Southern Railway of British Columbia, which partnered with RailPower to build the locomotive, the Green Kid entered a demonstration lease at the Marine Corp Logistics Base, Barstow, Calif., the largest railhead in the U.S. Department of Defense. The trial is being conducted over a 30-day period to assess the feasibility of converting several aging Marine Corps switchers to hybrids. The switchers move Army and Marine Corps units between the National Training Center-Fort Irwin and Marine bases throughout Southern California. Rail logistics personnel from the Navy, Army, and Air Force are observing the trial. "A successful outcome, could, therefore, impact favorably in a much wider context within the DOD," says RailPower.
The Green Goat completed a demonstration on Pacific Harbor Line at the Ports of Los Angeles and Long Beach. The locomotive "performed well beyond our expectations," says RailPower. "In some of the various duty cycles, the Green Goat operating alone was able to replace two conventional 1,200-hp diesel-electric switchers." The Green Goat operated in PHL intermodal and yard service, successfully logging single eight-hour shifts. However, in continuous eight-hour shifts, the locomotive was able to generate the traction required, but its 90 kW genset was not powerful enough to keep the batteries at optimum levels of charge throughout the entire second shift. RailPower is installing a more powerful genset as well as making other modifications and improvements "to ensure that the battery pack is adequately charged for 24/7 continuous operation in the heaviest of switching applications." This more-powerful unit will be called the "Green Goat Plus." PHL is expected to test the upgraded unit in November.
As Washington "dithers," Gunn presses forward"I am not going to stop the progress we are making while policy makers continue to dither about Amtrak," said President and CEO David Gunn in a letter released yesterday to employees. "So, while these ‘grand policy debates’ about reforming Amtrak go on in Washington, do not get distracted because the real reform, the most meaningful reform at Amtrak, is what each and every one of us is doing to bring it back to a state of good repair."
Gunn was referring to activity in the House and Senate that will largely determine Amtrak’s financial status, at least for the short-term. The Fiscal Year 2004 amount that will eventually be hammered out in Conference Committee should fall somewhere between the $1.35 billion set by the Senate Appropriations Committee, and the $900 million set by the House Appropriations Committee (the amount requested by the Bush Administration) as part of a FY 04 Transportation/Treasury Appropriations bill. Both amounts fall short of the $1.8 billion Gunn says "will allow us to complete the first year of our capital plan and to continue operation of the existing national system," as well as repay a $100 million DOT RRIF loan. Gunn, however, called the Senate amount "encouraging."
"Where we end up is anyone's guess," Gunn told employees. But he elaborated on "what it will mean to Amtrak if we receive less than $1.8 billion."
"If fully funded, at the end of five years, our railroad will be at a state of good repair," said Gunn. "In other words, whatever the difference is between our request and what Congress finally appropriates to Amtrak will determine what does or does not get done next year--or, if we're funded at the House Appropriations level, whether we continue to operate." At $900 million, said Gunn, Amtrak would eventually run out of cash, thus forcing another shutdown crisis and last-minute bailout scenario.
"Since I came to Amtrak, I have made a number of changes to the organization to get us back to a more traditional railroad," said Gunn. "As a result of these changes and tighter financial management, we have been able to bring some stability to Amtrak. However, our infrastructure and equipment is in such dire need of repair and investment that on any given day something could fail--as it already has--and large parts of the system could be shut down or the necessary consists for trains could not be met. We cannot go on like this. We cannot be forced to limp along each year hoping just to make it to the end. We have got to fix the railroad and bring it up to a state of good repair so that we do not have to worry each and every day if we are to do what is expected of us. The capital plan does that."
Gunn noted some of the progress being made. "Beech Grove . . . is producing rebuilt cars for the first time in many years," he said. "The production lines at Bear and Wilmington, in terms of wreck repair, are ahead of schedule and below budget. By the end of September, the track-laying machine will have rebuilt nearly 40 miles of high speed rail [on the Northeast Corridor]."
Amtrak has a lot of support in Congress, as indicated by attempts by several Congressmen and Senators to introduce amendments providing Amtrak the full $1.8 billion. Senate Subcommittee Chairman Richard Shelby (R-Ala.) intended to fund Amtrak at $900 million, but before the bill went to the Appropriations Committee, Sens. Patty Murray (D-Wash.), Arlen Specter (R-Pa.), and Kay Bailey Hutchison (R-Tex.) were able to increase the amount to $1.35 billion, with repayment of the RRIF loan deferred for another year.
Meanwhile, in the House, Rep. Jack Quinn (R-N.Y.) introduced an amendment to increase Amtrak funding to $1.8 billion. He was joined by Reps. Mike Castle (R-Del.), John Sweeney (R-N.Y.), and Sherwood Boehlert (R-N.Y.). However, no vote was taken, and Quinn’s amendment was withdrawn. A similar amendment was offered by Rep. John Olver (D-Mass.), which would have increased funding to $1.4 billion. This amendment was also withdrawn.
Amtrak officials have expressed hope that, as the weeks-long process continues and the bills are brought to the Senate and House floors and then finally sent to Conference Committee, its supporters will be able to secure funding that would at least come close to $1.8 billion.
CN opens new Winnipeg intermodal terminalCanadian National today officially opened its new $16 million Winnipeg Intermodal Terminal at Symington Yard on the eastern side of the city. The new terminal, which has been handling traffic since the end of July, was completed in less than one year from the date CN announced plans to relocate its Winnipeg intermodal facilities from south Winnipeg.
The new terminal can handle 100,000 lifts per year, an increase of nearly 20% from the 85,000 lift-per-year capacity of the older terminal, and can be expanded to accommodate future growth. It’s part of a network of 20 intermodal terminals and satellites across North America, providing daily train service across Canada and to the U.S. and Mexico. The fully paved site, adjacent to CN’s main line and within the boundaries of Symington Yard, features two pad tracks totaling 9,400 feet for loading and unloading traffic, and four support tracks.
"The new Winnipeg Intermodal Terminal is a more efficient, customer-friendly facility than the one it replaces," said CN Senior Vice President-Western Canada Region Keith E. Creel. "Intermodal traffic is CN’s fastest-growing business segment, and this new facility will enable CN to meet the growing needs of our Winnipeg customers."
Train accidents up, casualties downThe Federal Railroad Administration reports that there were 1,375 train accidents in this year’s first six months, up 4.4% from the same period of 2002. But total reported casualties dropped 33.1% to 4,511 (395 fatal) in January-June this year, a decline of 33.1% from the 6,742 casualties (468 fatal) in the comparable period a year ago. Trespasser fatalities declined 17.2% to 226, and grade crossing fatalities were down 9.9% to 152. There were 2.57 employee casualties per 200,000 man-hours in January-June this year, a drop of 11.4% from 2002.
For CN, more rate increasesCiting a desire to continue combating "the negative effects on its financial performance of the continued strength of the Canadian dollar relative to the U.S. dollar, as well as higher costs," CN has imposed a 4% rate increase applicable to about 40% of its open tariffs, effective Oct. 1, 2003. CN started increasing open tariff rates on Jan. 1, 2003, with some rates rising as much as 10%.
Traffic: A sluggish August, a flat eight monthsAnyone looking for evidence that the recession is over—or, for that matter, that it isn’t over—won’t find it in the latest railroad traffic statistics, cautions the Association of American Railroads. In August, the AAR reported on Sept. 4, U.S. railroads hauled 23,356 fewer carloads than they did in August 2002, a drop of 1.7%, though they carried 5,744 more trailers and containers, an increase of 0.7%.
"Significant declines in carloadings of metallic ores, motor vehicles, and coal depressed overall carloadings in August," commented AAR Vice President Craig Rockey. "On the other hand, 10 of the 19 commodity categories we track, including chemicals and grains, saw increases."
In this year’s first eight months, carload traffic was essentially flat, down 0.3% from the same period last year, while intermodal volume increased 5.4%.
For just the week ended Aug. 30, U.S. carload traffic was up 0.2% compared with the same week last year, and intermodal volume rose 0.6%.
Canadian carload traffic dropped 4.7% in August this year while intermodal traffic increased 2.0%. For the week ended Aug. 30, carload volume was down 1.0%, with intermodal up 5.7%. In the first eight months of 2003, carload traffic dropped 1.5% as intermodal volume rose 8.3%.
Mexico’s TFM railroad—currently the object of a tug of war between Grupo TMM and Kansas City Southern—reported a 10.3% drop in conventional carloadings and a 4.0% decline in trailer/container originations in August. For this year’s first eight months, TFM carload traffic increased 0.3% while intermodal traffic rose 22.6% from 2002 levels.
KCS opens new plastics facilityKansas City Southern opened a 10-acre TransLoad Center for plastics at its Coburg Yard in Kansas City, Mo., on Sept. 1. With 80 unloading spots and capacity to store 90 more cars, the new facility replaces one in downtown Kansas City with 65-car capacity that was built in the mid-1980s.
Tech Titan award goes to BNSFBurlington Northern and Santa Fe has won the Tech Titan-Corporate Horizon award in competition with leading technology companies having at least 100 IT employees. The award was presented by the Metroplex Technology Business Council in Dallas, Tex., on Aug. 22. BNSF was nominated for its data warehouse project, which "tracks every piece of equipment and the revenue behind every equipment move, providing a single view of enterprise information by giving 8,000 users access to near-real-time information and the power to ask questions any time via ad-hoc and pre-defined inquiries."
KCS seeks court orders in disputed saleKansas City Southern on Sept. 2 asked the Delaware Court of Chancery for a preliminary injunction to "preserve the parties’ positions" while KCS tries to settle a dispute with Mexico’s Grupo TMM over the future of the TFM railroad, which is 80% owned by KCS (37%) and TMM (43%).
KCS filed a complaint with the same court on Aug. 29 seeking a final order requiring TMM "not to sell TFM or take other actions outside the ordinary course of business, so as to preserve the assets and business of the Mexican railroad while the parties follow the dispute resolution procedures provided for in the Acquisition Agreement."
Under that agreement, announced in April, KCS was to buy TMM’s interest in the TFM railroad for $412 million in cash and stock and merge the Mexican rail carrier into a new railroad to be called NAFTA Rail. The new company would also include the Kansas City Southern Railway and the Texas-Mexican Railway (TexMex).
But on Aug. 18 TMM shareholders "unanimously" rejected the sale agreement. This happened not long after a Mexican court ruled that TFM was eligible for a federal tax rebate valued at between $750 million and $1 billion.
KCS said the TFM sale agreement "was negotiated and signed by TMM Chairman Jose Serrano, who is also the controlling shareholder of TMM. Based upon TMM’s filings with the Securities and Exchange Commission, KCS believes that Jose Serrano controls over 80% of the voting shares."
TFM serves the busy Nuevo Laredo-Monterrey-Mexico City corridor and accounts for around 40% of the country’s rail freight traffic.
Earlier, KCS said it would deliver a written "notice of dispute" to TMM in accordance with the provisions of the acquisition agreement. This would initiate a 60-day period of negotiations between the two parties. Should these negotiations fail, KCS said it would ask for binding arbitration, again in accordance with the acquisition agreement.
Meanwhile, Grupo TMM announced on Aug. 27 that TFM would exercise its option to repurchase the 51% interest in Mexrail, Inc. that it sold to KCS when the larger agreement was being negotiated. The repurchase price, $32.7 million, is the same as the sale price. Mexrail owns the Texas-Mexican Railway, a key link on the NAFTA Rail map.
Metro Rail strikes gold in PasadenaThe Los Angeles County Metropolitan Transportation Authority says it’s carrying 25,000 to 30,000 passengers a day on its new 13.7-mile Metro Gold Line from downtown L.A. to Pasadena. The highest numbers are being posted on weekends, which is not unexpected, said an MTA spokesman, since Pasadena is a popular tourist destination. The new line, which opened July 31, brings the Metro Rail system to 73.1 miles. The Gold Line is expected to eliminate more than 8,000 daily auto trips along the congested Pasadena and Foothill freeways.