October 2004
CSX improves operating incomeExcluding special charges, CSX’s Surface Transportation business, which includes CSX Transportation and CSX Intermodal, grew revenue by $115 million to $1.94 billion in this year’s third-quarter, a 6% improvement over the prior-year period. Surface Transportation operating income was $250 million for the quarter, a 12% improvement over the prior-year period. The operating ratio rose by 0.7%, to 87.1%. Third-quarter 2004 was the third consecutive quarter in which CSX posted an improvement in Surface Transportation operating income, and the tenth consecutive quarter of Surface Transportation revenue growth. Separately, CSXT posted third-quarter 2004 operating income of $216 million and an operating ratio of 86.6%. Railroad operating revenue grew from $1.51 billion to $1.62 billion, while operating expenses dropped from $1.56 billion to $1.4 billion.
For the first nine months of 2004, CSX Surface Transportation operating income improved to $678 million, compared to $412 million in the prior-year period. Operating revenues grew by $305 million, to $5.85 billion; operating expenses were up slightly, $5.17 billion compared to $5.13 billion in the prior-year period. The Surface Transportation operating ratio fell from 92.6% to 88.4%. Separately, CSXT operating income improved to $597 million, compared to $334 million in the prior-year period. Railroad operating revenues grew by $279 million, to $4.89 billion; operating expenses increased from $4.28 billion to $4.30 billion. The railroad’s operating ratio was 87.8%.
Overall, CSX Corp. reported net earnings of $123 million for third-quarter 2004, compared to a net loss of $103 million for the prior-year period. For the first nine months of 2004, corporate net earnings were $272 million, compared to $123 million in the prior-year period.
TTA awards DMU contractNorth Carolina’s Triangle Transit Authority has awarded a $90 million contract for 32 diesel-multiple-unit cars to United Transit Systems (UTS), a consortium led by Rotem of South Korea and Sojitz of Japan. The cars will be assembled in Philadelphia using Colorado Railcar suspension systems, to meet buy American requirements. The price is around $16 million under the agency’s estimate and well below Sumitomo Corp. of America’s’s bid of $116 million and a Siemens Transportation Systems bid of $136 million. The cars will be used on a commuter rail line serving the Raleigh-Durham-Chapel Hill area and scheduled to open in 2008. The deal calls for an initial fleet of 24 cars costing $68.7 million with an option for an additional eight cars for $21.3 million.
The TTA board rejected a protest by Sumitomo "after careful consideration and a thorough investigation of all of the issues," according to TTA General Manager John Claflin. "I believe that there is sufficient evidence to support that UTS meets the requirements of the request for proposals. UTS compared favorably to all aspects of the technical requirements, and indicated similar vehicle, training, spare parts, and documentation costs, but provided a much lower cost regarding their design development and project oversight."
UTS is at the center of another railcar procurement controversy. Earlier this year, Philadelphia’s SEPTA had awarded a contract for 104 electric multiple-unit Silverliner V commuter railcars to a UTS consortium of Rotem and Japan’s Nissho-Iwa Ltd., which had come in with the lowest price but also the lowest technical score, rejecting bids by Kawasaki and Bombardier. Kawasaki, which posted the highest technical score and whose price was only slightly lower than that of UTS, filed a formal protest and threatened a lawsuit. SEPTA threw out all bids following a media firestorm and released a new RFP. SEPTA has not indicated when it will award the contract.
Record revenues drive strong KCSR third quarterKansas City Southern Railway (KCSR) operating revenue reached record levels for third-quarter 2004, increasing by 11.9% over the prior-year to $162.1 million, and the railroad’s operating income increased 35.9% to $24.6 million, even with an increase in operating expenses from $126.8 million to $137.5 million. KCSR posted an operating ratio of 84.8% for the quarter, a drop of 3.1 percentage points from 2003. For the first nine months of 2004, KCSR’s operating ratio dropped 4.6 percentage points to 84.6%, based on operating revenues of $462 million and operating expenses of $390.8 million.
Third-quarter consolidated net income for parent Kansas City Southern increased 158% to $11.1 million. Equity earnings from Mexican affiliate Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. (Grupo TFM) increased 19% from the prior-year period to $1.9 million, excluding the impact of the Mexrail transaction. Grupo TFM’s revenues were $174.5 million, compared to $178.2 million for the comparable 2003 period. The decline was primarily due to the impact of peso devaluation to the U.S. dollar quarter-over-quarter.
Record revenues drive CN third-quarter performanceA 21% increase in operating revenue for the third quarter of 2004 helped CN knock more than 2 points off its operating ratio, compared to the prior-year quarter, and drive free cash flow toward the C$1 billion mark, despite a 17% increase in operating expense related mostly to fuel costs and expenses incurred during the Great Lakes Transportation and BC Rail acquisitions.
Third quarter operating income was C$591 million—a 30% year-over-year increase—based on operating revenues of C$1.71 billion and operating expenses of C$1.12 billion. The operating ratio dropped to 65.4% from 67.9%.
For the first nine months of 2004, CN’s operating ratio is 67.6%, the best in the industry, and its free cash flow is C$754 million, 65.7% higher than the prior-year period.
CN has also announced a share repurchase program of up to 14 million (approximately 5%) of common shares outstanding. The share buy-back program will start Nov. 1, 2004, and end no later than Oct. 31, 2005.
Special charge offsets record BNSF revenuesBurlington Northern and Santa Fe posted an all-time quarterly record of $2.74 billion in operating revenues in this year’s third quarter, a 16% increase over the same 2003 period, but posted a special pre-tax charge of $465 million "to reflect changes in the way [we] estimate asbestos and environmental liabilities." The special charge accounted for the railroad posting $2.69 billion in operating expenses and an operating ratio of 96.3%—nearly 17 points higher than without the special charge. Last year’s third-quarter operating ratio was 81.8%. Year-to-date operating revenues are $7.97 billion, a 15% increase over the first nine months of 2003. BNSF’s year-to-date operating ratio is 87.0%, including the special charge.
The special charge translates to $0.76 per share after tax, which means BNSF earnings for the third quarter will be $0.01 per share. BNSF said it "is currently in discussions with the staff of the Securities and Exchange Commission concerning the charge recorded in the third quarter. . . . The company believes its accounting for the charge is appropriate. Regardless of the outcome of these discussions, the company believes there will not be a material impact on the ongoing results of its operations or liquidity."
Canadian Pacific posts earnings increaseVolume gains in six of seven business lines helped Canadian Pacific Railway post an 8% gain in operating income for third-quarter 2004, compared to the prior-year period. The operating ratio rose four-tenths of a point to 77.9%. Third quarter operating income of C$218.9 million included an after-tax gain of C$73 million on foreign exchange on long-term debt. Third quarter operating revenues increased C$85 million to C$989.7 million; operating expenses rose C$70 million to C$770.8 million.
For 2004’s first nine months, CPR’s operating ratio is 80.7%. Net income rose 25% to C$283.7 million.
CPR said a 9% rise in intermodal volume indicates it "is on pace to become a C$1 billion business line this year."
KCS partners with Missouri on grade crossing programKansas City Southern Railway and the Missouri Department of Transportation have entered into a public/private partnership to improve safety at 75 public, at-grade crossings over approximately 100 miles of railroad in Missouri. Sixty-eight of the crossings are located between Grandview and Mulberry, with the remaining seven between Mexico and Centralia. The partnership with KCS is one of five railroad corridor projects that MoDOT has under way in the state.
The three-year, $3 million program has MoDOT investing approximately $800,000 annually to improve crossing warning devices or close crossings, with KCS contributing $200,000 annually.
Bus Rapid Transit scores two firsts in ClevelandBus Rapid Transit (BRT), which is being touted as a low-cost alternative to light rail, is breaking new ground in Cleveland. A ceremony on Oct. 19 marked the official beginning of construction on seven miles of BRT along Euclid Avenue, a $200 million project with an $80 million assist from the Federal Transit Administration.
There will be a dedicated transit lane in each direction, with 36 bus stations dotting the median strip. These stations will be served at five-minute intervals by a fleet of 60-foot, hybrid-electric, articulated buses, which are being called "Rapid Transit Vehicles."
The Greater Cleveland Regional Transit Authority said the project is "historic" because (1) "it is the first BRT project in the nation to be funded from the Federal New Starts pot--a much sought-after pool of money that usually goes to fund rail construction," and (2) "it is the first project in the nation to utilize all the features of BRT."
Strong car market boosts Wabtec earningsWabtec sales grew to $202.9 million in the third quarter, compared with $167.2 million in the prior-year quarter, and net income climbed to $9.4 million from $5.55 million. "We expect to finish the year strongly, as it appears that railroad traffic volumes will continue to grow," said Wabtec Chairman, President, and CEO William E. Kassling. "In addition, we were encouraged by the industry’s third quarter freight car order rate of slightly more than 20,000 units, which puts the backlog at just over 61,000 units, its highest level since 1968. We believe this is a sign that freight car production will continue to ramp up during the next few quarters."
Despite record volume, UP earnings sink Union Pacific operating revenues rose to a record $3.1 billion in the third quarter of 2004, up 4% over the corresponding period of 2003, but continuing service problems and soaring fuel prices held net income to $202 million, down 36% from the 2003 quarter. This year’s earnings of 77 cents a share were in line with or slightly above Wall Street estimates. UP said average system speed in the third quarter was 0.5 mph higher than in the prior quarter but 1.1 mph below the third quarter of 2003.
NS trims 5.8 points from operating ratioIn this year’s third quarter, Norfolk Southern set new records in operating revenue ($1.9 billion, an increase of 16% over the same period last year) and railway operating income (up 51% to $469 million). Net income, excluding a non-cash gain of $55 million from the Conrail corporate reorganization, grew 32% to $225 million. NS also brought its operating ratio down to 74.7%, 5.8 percentage points better than the 80.5% posted in the third quarter of 2003.
"By any measure, this was an extremely strong quarter for our company," said NS Chairman and CEO David R. Goode as he announced quarterly results on Oct. 20. "We demonstrated uniform strength in the face of a robust peak traffic season, and our people and network performed well."
NS reported strong third-quarter gains in general merchandise revenues, which rose 1.0% to $1.0 billion; intermodal revenues, up 28% to a record $404 million; and coal revenues, which improved 20% to $447 million.
FRA funds video-camera crossing safety researchThe Federal Railroad Administration is joining the North Carolina Department of Transportation and the Norfolk Southern Railway in federally-funded research to analyze real-time data of actual grade crossing collisions and trespasser incidents captured by locomotive-mounted digital video cameras.
In announcing a $482,000 grant for the project on Oct. 19, FRA said "this type of data has never before been available for research purposes."
North Carolina DOT has installed video cameras on its "Piedmont" passenger trains operating between Raleigh and Charlotte. Norfolk Southern has mounted RailView cameras on about 850 locomotives operating system-wide. "RailView technology has tremendous public safety benefits," said John M. Samuels, NS vice president-Operations Planning and Support.
FRA also announced a grant of $795,000 toward the design and construction of a pedestrian underpass in the town of Clayton southeast of Raleigh. FRA sees this as "a model of how a smart investment can dramatically improve rail safety. Not only will pedestrians be separated from train traffic along a section of track with a history of trespass incidents. It will also increase safety at other locations by allowing for the closure of three additional grade crossings."
CN, CPR partner to increase capacity at VancouverCN and Canadian Pacific announced Oct. 19 that they have entered into co-production agreements that will "increase capacity on key sections of track in the Vancouver area to improve the fluidity of rail operations over existing infrastructure." Jim Foote, CN’s executive vice president-sales and marketing, called the move "a remarkable example of two highly competitive railways cooperating to solve a pressing demand for more efficient rail operations for shippers brought about by a rapid expansion in North American trade."
The announcement listed five main provisions of the agreements: (1) Improved access for CPR to intermodal facilities at Fraser Surrey Docks using a shorter route over CN’s main line. (2) Reciprocal access to the North and South shores, giving CPR potash trains direct access to Neptune Terminals and CN sulfur trains direct access to Pacific Coast Terminals. (3) The option for CPR to operate longer, heavier trains to Vancouver’s North Shore under existing access agreements. (4) A reciprocal interchange at CN’s Thornton Yard and CPR’s Coquitlam Yard that replaces a less efficient interchange arrangement. (5) Further exchange enhancements for North Shore freight traffic that include BC Rail traffic.
Freight car order backlog soars on third-quarter surgeOrders were placed in the third quarter of 2004 for 20,315 new freight cars, bringing orders for the year so far to 58,382 and the undelivered backlog to 61,052. With production still constrained by a tight supply of castings, 11,970 new cars were delivered in the third quarter, compared to a little over 10,000 in each of the preceding two quarters, according to figures compiled by the American Railway Car Institute committee of the Railway Supply Institute.
CN sells remote control business to CattronConsolidation continues in the rail supply industry, as Canadian National has sold its remote control business to a competitor in that field.
Sharpesville, Pa.-based Cattron Group, Inc., parent company of Cattron-Theimeg, announced today it has acquired CN’s Beltpack business, including Canac Remote Control Technologies, Inc, formerly Vectran Corp. Canac Remote Control Technologies and Beltpack products include the BELTPACK® and CANTRAC® radio remote control systems for locomotives. Also included are the former VECTRAN remote control systems for industrial applications. The BELTPACK®, CANTRAC®, and VECTRAN products will become part of Cattron Group, Inc.’s existing product line. Headquarters for the combined companies will be in Sharpsville. Terms of the transaction were not disclosed.
CN sold its Canac, Inc., subsidiary in April 2004, but retained the remote control portion. With today’s transaction, CN says it is focusing "on what it does best—railroading," according to Claude Mongeau, executive vice president and chief financial officer.
"The combined strengths make Cattron Group and the Beltpack business a natural fit due to our complementary service offerings and customer-focused cultures," said Tom McFall, chairman of Cattron Group, Inc. "The combined organization will offer a greater range and depth of services to our customers."
4.3-cent fuel tax: On the way out?The 4.3-cent per gallon tax on diesel fuel that railroads have been paying for years—and which the industry has been fighting to repeal for years—will be phased out over a two-year period beginning Jan. 1, 2005, provided President Bush signs into law H.R. 4520, a $140 billion corporate tax package passed by Congress in conference. The Senate voted 69-17 in favor of the bill; the House had passed the conference measure by a vote of 280-141 on Oct. 7. According to the Railway Supply Institute, the White House has stated that the President will sign the bill.
The 4.3-cent tax, which according to RSI has cost the railroads $170 million annually in excise taxes directly paid into the U.S. Treasury general fund toward "deficit reduction," will be reduced by one cent effective Jan. 1, 2005, two cents by July 1, 2005, and then fully repealed on Jan. 1, 2007.
"We commend members of the House and Senate for their support of this measure and we urge President Bush to sign it into law," AAR President and CEO Edward R. Hamberger said in a statement. "Railroads and barges are currently the only modes of transportation that pay a fuel tax into the general fund. Fuel taxes paid by other modes go to support their right-of-way while fuel-efficient, environmentally-friendly railroads pay virtually all of the costs to maintain and improve their infrastructure."
H.R. 4520 also contains a provision of great importance to short lines and regionals: a tax credit for track maintenance expenditures. The credit is available to any Class II or Class III railroad as well as shippers using Class II or Class III rail facilities. It is limited to 50% of the amount of qualifying railroad track maintenance expenditures and is capped at $3,500 per track-mile owned or leased by the railroad. Among qualifying expenditures are roadbed, bridges, and related track structures, and wayside signaling equipment.
Security funding moves through CongressThe Senate has approved, and President Bush is expected to sign, a $32 billion Department of Homeland Security Fiscal Year 2005 appropriations bill that "contains important provisions for the railroad industry, particularly security grants for rail and transit, and funding for the protection of critical infrastructure," according to the Railway Supply Institute
Among the provisions affecting rail security:
o $1.2 billion in first responder assistance for high-density urban areas, including $150 million for rail security and $150 million for port security.
o $9.8 billion for border protection and related activities to support next generation technology to screen high-risk cargo coming through land and seaports; an expansion of cargo inspection at foreign ports; improvements to supply chain security; implementation of the Maritime Safety and Security Act (MTSA); and immigration security.
o Funding for research and development of next generation technologies to inspect baggage, passengers, and cargo, including $12 million for rail security inspectors and explosive detection canines.
o $16 million for container security R&D.
o $855 million for the Information Analysis and Infrastructure Protection (IAIP) Directorate’s work to protect critical infrastructure and key assets, including efforts to complete an inventory of critical infrastructure.
The Senate has also passed S. 2273, a separate security bill sponsored by Sen. John McCain (R-Ariz.). It authorizes $180 million in grants to railroads and state and local governments to upgrade security across the U.S. rail network, plus $128 million to Amtrak for security programs.
Under the measure, the Under Secretary of Homeland Security for Border and Transportation Security can provide grants to freight railroads, the Alaska Railroad, hazardous materials shippers, owners of freight cars used in transport of hazardous materials, universities and colleges, research centers, state and local governments (for passenger facilities and infrastructure not owned by Amtrak), and Amtrak for full or partial reimbursement of costs incurred preventing or responding to acts of terrorism, sabotage, or other intercity passenger rail and freight rail security threats.
Examples include:
o Security and redundancy for critical communications, computer, and train control systems essential for secure rail operations
o Cargo or passenger screening equipment at the Mexican and Canadian borders.
o Rail hazmat security.
o Secure intercity passenger rail stations, rolling stock, and infrastructure.
o Structural modification or replacement of railcars transporting hazmat to improve resistance to acts of terrorism.
o Employee security awareness, preparedness, passenger evacuation, and emergency response training.
o Public security awareness campaigns for passenger train operations.
o Sharing of intelligence and information about security threats.
o Coordinated train tracking and interoperable communications systems.
o Additional police and security officers, including canine units.
RSI 2005 Board namedThe Railway Supply Institute has elected new board officers, who begin their terms effective Jan. 1, 2005:
o William P. O'Donnell, Vice President-Marketing, Sales and Product Development, ASF Keystone North America—Chairman of the Board.
o Richard A. Mathes, Chairman and CEO, Standard Car Truck Company—Vice Chairman.
o Robert S. Hulick, Senior Vice President, TTX Company—Secretary/Treasurer.
Frank D. Lester, President, Union Tank Car Company, and Paul V. Wilson, President and CEO, Loram Maintenance of Way, Inc., become Board members. James Huntley, President, Erico, Inc., becomes a Special Director for a term of one year. John Gable, President, Gable Enterprises and current Chairman of the RSI Board, remains on the Board in his capacity as Immediate Past Chairman.
APTA releases new rail transit standardsMore than 90 voluntary rail transit standards were released at the American Public Transportation Association’s annual meeting in Atlanta this week. The prescriptive- and performance-based standards cover vehicle crashworthiness, operating practices, grade crossings, and vehicle inspections, among other areas. With input from 200-plus transit professionals and following public comment and formal review processes, APTA developed the standards over a four-year period.
"With the help of standards, transit systems can improve the quality and performance of their services and encourage more innovation in the transit industry, while also controlling costs," said APTA President William W. Millar.
Some 250 standards and best practice guidelines have been developed to date in five separate programs: Passenger Rail Equipment Safety Standards (PRESS), Rail Transit Standards, Bus Transit Standards, Universal Transit System Fare Collection Standards, and Intelligent Transportation Systems (ITS) Standards.
AAR presents environmental awardsRick Nath, manager of environmental programs for CSX Transportation and 24-year veteran, has received the Association of American Railroads Environmental Excellence Award for Professionals. The award was presented at the AAR’s annual Railroad Environmental Conference at the University of Illinois in Urbana.
Nath was cited for his work on a variety of environmental issues: asbestos and lead paint management; clean air; transformer management; the American Chemistry Council's Responsible Care Partner Program; environmental awareness training; and water well closure. "One of his notable achievements was implementation and management of CSXT's formal Public Safety & Environmental Management System, and becoming a Certified Environmental Systems Manager to more effectively manage it," said AAR. "He has also been actively involved in environmental awareness training of employees for more than a dozen years and developed the company's first Environmental Multi-Media computer-based training for transportation, engineering, mechanical and non-operating employees."
Three other railroad industry environmental professionals were cited today for their achievements: Mick Hardin, manager of environmental remediation at Burlington Northern and Santa Fe, San Bernardino, Calif.; Ed McNutt, manager of environmental field operations for Union Pacific, Fort Worth, Tex.; and Richard Mohlenhoff, senior environmental coordinator for Amtrak in New York.
Hardin, a 38-year railroad industry veteran, was involved in large-scale remediation activities at former shop facilities in California and Arizona and has directed, consultants and fellow employees in emergency response situations. McNutt, a 13-year UP employee, manages six waste water treatment facilities that have a 100% compliance record, and has also developed a low-cost method of building underflow dams to separate spilled diesel from storm drains and creeks by using UP bridge timbers and corrugated metal pipe. Mohlenhoff, with Amtrak for 10 years, has been responsible for numerous remediation efforts involving PCBs and other hazardous materials, among them a program at Sunnyside Yard, Queens.
BNSF building new transload centerBurlington Northern and Santa Fe plans to open a new transload center in Southern California late next year.
Construction of BNSF’s Logistics Center-Fontana at the Kaiser Commerce Center, about 13 miles west of San Bernardino, will begin later this year. When completed in third-quarter 2005, the 38-acre dimensional and bulk transload operation will provide transload services for dimensional commodities such as lumber and steel, commodities that require warehousing such as consumer goods, and bulk commodities, which are loaded directly from rail to truck or truck to rail. In addition, ProLogis, a provider of global distribution facilities and services, will develop an 849,000-square-foot rail-served warehouse adjacent to the center.
Logistics Center-Fontana will be located near other existing rail-served facilities and on a dedicated spur with direct access to the BNSF main line.
UP cites evidence of "sustainable progress"Union Pacific moved a record volume of freight in September at an average train speed of 22.3 mph, an increase of nearly one-mph over August, according to Jack Koralski, executive vice president-sales and marketing. In a letter to customers Oct. 11, he also said key terminal dwell was down slightly in September. "We believe we are seeing sustainable progress," said Koralski. "While there will be occasional setbacks, they should be fewer, more isolated, and have less effect on our operations."
The hiring of additional train serviced employees continues to reduce the number of hours trains are held for crews, said Koralski "Our critical manpower constraint remains locomotive engineers, and we are continuing to add training resources to alleviate this issue," he said. UP received 47 new locomotives in September and expects 52 new units in October.
Alstom, Chinese partners win orders worth $1.25 billionChina’s Ministry of Railways has awarded orders for regional passenger train and freight locomotives worth a total of $1.25 billion to Alstom and two Chinese partners. Changchun Railway Co. will join in the production of 60 eight-car EMU trainsets valued at $775 million; 51 will be built in China. A $475 million order for 180 double-unit locomotives will be produced in conjunction with Datong Electric Locomotive Co.; 168 are to be built in China. Both orders involve technology-transfer agreements.
BNSF sells more rail linesIllinois RailNet is acquiring nearly 25 miles of track from Burlington Northern and Santa Fe on Oct. 9. It will operate two additional Illinois-based lines between Oregon and Mt. Morris, and Zearing and La Salle.
The transaction "will benefit the customers on the lines by providing them with the flexible local service options provided by Illinois RailNet while continuing to provide the long haul reliability of BNSF," said Rob McKenney, chairman and CEO of the short line.
Interchanges with BNSF will be at Oregon and/or Flag Center for traffic originating or terminating between Oregon and Mt Morris, and at Zearing for traffic originating or terminating between Zearing and La Salle.
AAR selects Virginia Tech for new rail labThe Association of American Railroads has selected the Virginia Tech College of Engineering at Blacksburg, Va., to host a Railway Technologies Laboratory. The agreement includes an annual grant of $200,000 from the AAR. Mehdi Ahmadian, a professor of mechanical engineering, will be director of the new lab. The AAR also supports affiliated labs at Texas A&M and at the University of Illinois, Urbana-Champaign.
BNSF special charge equals estimated quarterly earningsBurlington Northern Santa Fe Corp. has recorded a non-cash charge of $288 million, or 76 cents a share, in the third quarter to reflect changes in the way it estimates asbestos and environmental remediation liabilities. At the same time BNSF revised upward to 75-77 cents its estimated per-share earnings for the quarter. The consensus forecast of Thomson First Call analysts had been 70 cents. BNSF said its new earnings guidance reflected "strong revenue growth and expense control."
North Carolina set to buy Korean-Japanese DMUsThe finance committee of North Carolina’s Triangle Transit Authority is recommending the acquisition of 32 diesel-multiple-unit cars from United Transit Systems, a consortium led by Rotem of South Korea and Sojitz of Japan. Board approval is expected late in October. The cars would be assembled in Philadelphia using Colorado Railcar suspension systems to meet Buy American requirements.
The agreed-upon price of $90 million is around $16 million under the agency’s estimate and well below Sumitomo’s bid of $116 million and a Siemens bid of $136 million. The cars will be used on a commuter rail line serving the Raleigh-Durham-Chapel Hill area and scheduled to open in 2008. The transit agency could place the car order by the end of this year if a final federal commitment to pay around 60% of the project’s $695 million cost is approved as expected. The deal calls for an initial fleet of 24 cars costing $68.7 million with an option for an additional eight cars for $21.3 million.
Train accidents drop but fatalities riseA preliminary report by the Federal Railroad Administration shows that there were 7,843 train accidents and incidents in this year’s first seven months, a 3.7% drop from the January-July period of 2003. This year’s 511 fatalities were up 7.8% from the 2003 period. Trespasser fatalities led the list at 266, down 1.8% from last year. There were 220 deaths at grade crossings, up 20.9% and 14 employee fatalities, an increase of 40%. Derailments rose 3.8% to 1,306 in January-July this year. Collisions increased 33.4% to 140.
Rail industry will reexamine "paper barriers"A railroad industry initiative announced Oct. 7 "should go a long way toward improving operations between large and small carriers," said Surface Transportation Board Chairman Roger Nober. He was referring to a decision by the Association of American Railroads and the American Short Line and Regional Railroad Association to expand the Rail Industry Agreement which they adopted in 1998 to deal with rate, route, service, and interchange issues that had arisen between small railroads and their Class I connections.
A long-standing issue is that of "paper barriers" which limit interchange options. "As part of the expanded agreement, a Rail Industry Working Group will become a formal part of the Rail Industry Agreement, and provisions describing what constitutes ‘paper barriers’ will be clarified," said the announcement, which was made at STB’s offices in Washington.
GE sending 200 locomotive kits to KazakhstanWith the support of a $121.7 million long-term loan guarantee from the Export-Import Bank, General Electric is exporting 200 locomotive kits to Kazakhstan. This follows GE’s sale last year of 54 similar kits to the former Soviet republic, whose national railway, Kazakhstan Temir Zholy (KTZ), has undertaken an ambitious modernization and expansion program. The 2003 transaction was backed by a $33.1 Ex-Im Bank loan guarantee.
Early opening announced for Hiawatha’s newest lineThe second leg of Minneapolis’ $715.3 million Hiawatha Light Rail system will start revenue service Dec. 4--four weeks ahead of schedule. The line will span four miles to link the Minneapolis/St. Paul International Airport with Bloomington’s Mall of America.
Edward Hunter, assistant general manager-Transit System Development for operator Metro Transit, told Railway Age last summer (RA, August 2004, p. 33) that he anticipated such a move due to swift progress in track, tunnel, and station construction. "We would like nothing more than to say, ‘Catch the train to the Mall of America for your holiday shopping,’" he said shortly after the June 26 opening of the first 11-mile segment connecting downtown Minneapolis and Fort Snelling.
MT is required to open the full system by Dec. 31 to comply with terms of its $334 million funding agreement with the Federal Transit Administration.
The new segment will offer five stations and include service to a 600-car park-and-ride lot at 28th Avenue Station (east of the mall) and a 43-acre mixed-use development planned by McGough Construction and the City of Bloomington near Bloomington Central Station.
Greenbrier board backs Furman management teamThe Greenbrier Companies board has elected a new chairman, Benjamin Whitely, to succeed Alan James, whose ten-year agreement to serve as chairman expired Aug. 31. An announcement on Oct. 6 said James will continue to serve on the board "but is no longer an employee." The announcement also said the board "reaffirmed its support for the company’s president and CEO, William J. Furman, and authorized its compensation committee to negotiate an extension of Forman’s contract subject to full board due diligence and approval." The board noted that during Furman’s tenure the company "has grown from a very small railcar leasing company to a publicly held company with revenues which will exceed $700 million for the fiscal year ended August 31, 2004, and a market capitalization in excess of $350 million."
Ames, who says he owns more than 29% of Geenbrier’s common stock, has been openly critical of the company’s corporate governance.
Amtrak backs away from new Metrolink contract Amtrak says it has been "disqualified" from seeking a new contract to operate Metrolink regional rail service for the Southern California Rail Authority in the Los Angeles area. The reason, said Amtrak, was that it could not accept "loosely written liability language" that would have put its core business and its insurance at risk. Amtrak said it has been receiving $16-18 million a year for operating SCRRA’s trains and making a modest profit. SCRRA ruled out Amtrak at a "Best and Final Offer" meeting with the three contenders for the contract. Amtrak had been short-listed along with Transit America LLC and Connex Railroad LLC. Amtrak has successfully operated Metrolink trains for 12 years.
Mexico approves KCS bid for TFM majority interestMexico’s Foreign Investment Commission (FIC) has approved a new application by Kansas City Southern for authority to buy Grupo TMM’s 48% interest in the TFM railroad. KCS already owns about 37% of TFM and wants to make it part of a NAFTA rail system. In the decision announced Oct. 6, FIC effectively reversed its ruling in mid-September against the transaction. KCS Chairman, President, and CEO Michael R. Haverty called the new ruling "an important step forward." TFM is Mexico’s busiest rail freight carrier.
BNSF leases Carlsbad Subdivision Southwestern Railroad, a subsidiary of The Western Group L.C., is leasing Burlington Northern and Santa Fe’s 263-mile Carlsbad Subdivision. The line runs between Loving Junction and Clovis, N.M., with an interchange at Clovis.
Formed in June 1990 with lines purchased from the Santa Fe Railway, a BNSF predecessor, SWRR is "pleased to bring the benefits of that relationship" to its new customers, said Ron Lindsey, general manager. SWRR has separate operations in Hurley, N.M. (Whitewater Branch) and the Texas-Oklahoma Panhandle (Shattuck Branch).
BNSF’s lease decision stems from its routine network reviews to ensure "the most efficient use of assets" and provide "the most effective service for its customers," according to Pete Rickershauser, vice president-Network Development. "We believe SWRR has the operating flexibility and local business development focus to serve and benefit the customer base in southeastern New Mexico," he added, while "continuing to offer customers the network reach and marketing opportunities which BNSF provides."
Bill Schmidt, a former Railway Age editor, dies at 90William H. Schmidt, Jr., whose career in the railroad industry spanned half a century, died at his home in Washington, D.C., on Oct. 2. He was 90. Schmidt’s first railroad job was as a maintenance worker on the Milwaukee Road in 1936. He joined Railway Age in 1942 and served successively as transportation editor, western editor, and executive editor. He left the magazine in 1956 to join the Baltimore & Ohio Railroad; he was assistant to the president, Jervis Langdon, when he resigned to take a research position at the Federal Railroad Administration, from which he retired at the age of 75. Early in his career, he taught English and public speaking at his alma mater, Rutgers University, and later became well known for after-dinner speeches that combined a ready wit with a profound understanding of the railroads’ potential for delivering first-class transportation. He is survived by his wife, Alice; their daughter; Carolyn; and their son, Peter.
TEA-21 reauthorization remains on holdWhile agreement on a six-year TEA-21 reauthorization package couldn’t be reached in a House/Senate conference, an eight-month extension for funding highway, public transportation, and road safety programs has been approved.
According to the American Public Transportation Association, the temporary extension--through May 31, 2005—"authorizes transit programs at a level equal to eight-twelfths of the $7.758 billion included the Senate Appropriations Committee-passed FY 2005 appropriations bill, and it guarantees funding at an annualized level of $7.265 billion, the level set in the draft FY 2005 budget resolution conference report." Also, the bill includes language that any six-year reauthorization should guarantee funding for the FY 2005 transit program at the authorized level of $7.758 billion.
"Congress could still consider a long-term extension of TEA 21 in a lame duck session," APTA points out, "but it seems more likely that TEA 21 reauthorization will be dealt with during the next Congress."
CP and NS move forward on streamlining planAfter announcing June 30 that they had signed trackage rights agreements to "improve operational efficiency and enhance rail service in the U.S. Northeast," Canadian Pacific and Norfolk Southern have now gone to the Surface Transportation Board for approval.
In their Oct. 1 filings with the STB, NS sought authority to operate its trains over CPR subsidiary Delaware & Hudson tracks between Saratoga Springs, N.Y., and Binghamton, N.Y. This arrangement would provide NS with a shorter route to Quebec and the Maritime provinces. CPR sought to discontinue trackage rights under which D&H currently operates its trains on NS trackage between Binghamton and Buffalo, N.Y. Instead, NS will move CPR traffic between the cities. In addition, CPR will carry NS traffic between Rouses Point, N.Y., and Saratoga Springs.
Along with the trackage rights, yard switching services will be consolidated. NS will provide switching for CPR in Buffalo, N.Y. and CPR will provide it for NS in East Binghamton.
The two Class I’s also announced in June that CPR will operate over a new NS route between Detroit and Chicago. Slated to open in 2005 using existing rail lines, the route will provide CPR with a "faster, lower-cost lane."
CPR announced in 2003 that it would restructure its northeastern U.S. operations and was looking for proposals to "increase freight volumes, reduce operating costs, and improve earnings."
"CPR’s challenge remains to take this part of our network to a level of profitability that will make it self-sustaining," President and CEO Rob Ritchie has said. "We are prepared to examine additional measures that, in concert with our NS agreement, will further optimize our assets and drive up profitability."
UP buying 315 "Tier 2"-compliant locomotivesUnion Pacific has placed an order for 315 low-emission locomotives from GE and EMD for delivery in the first half of 2005. UP announced Sept. 30 that the new units will satisfy Environmental Protection Agency "railroad Tier 2" emission regulations that become effective Jan. 1, 2005. More than one-third of the railroad’s existing fleet of 7,861 locomotives are certified under EPA Tier O and Tier 1 emission regulations.
The new locomotives produce about the same horsepower as existing units, but reduce emissions by 40%. "A substantial number" of them will come from EMD, according to Curt Swensen, director-market development and communication at EMD.
UP had announced earlier that it was testing five GE Evolution Series units and two EMD SD70ACe units and was discussing manufacturing capacity with both builders.
UP orders prototype diesel truck-engine switcherUnion Pacific announced that it has placed an order for a prototype low-emission switcher locomotive using two diesel engines designed for large, over-the-road trucks. The TES (truck-engine switcher) is being developed by National Railway Equipment Co. for medium- to heavy-duty switching. "The truck-engine diesels will power a generator in the same manner as conventional locomotives and will provide electricity to run the traction motors," said UP.
The railroad also said it is leasing a newer version of the RailPower Technologies hybrid Green Goat® switcher for light to medium switching. The Green Goat uses batteries to power its traction motors. The batteries are recharged as necessary by a 300-hp diesel-engine driven generator.
RailAmerica to unload E&N subsidiaryRailAmerica expects to "dispose" of its British Columbia-based E&N Railway by mid 2005. After experiencing declining carloads over the past two years, it "is no longer viable," said RA CEO Charles Swinburn during the announcement. The short line holding company acquired the 181-mile line from Canadian Pacific in 1999 for $11 million, and is now "reviewing several alternatives" for unloading it. Because of this decision, RA will take a pre-tax, non-cash charge of approximately $12 million to $13 million (or $7 million to $9 million, after taxes) in this year’s third quarter.