William C. Vantuono, Editor-in-Chief

William C. Vantuono, Editor-in-Chief

With Railway Age since 1992, Bill Vantuono has broadened and deepened the magazine's coverage of the technological revolution that is so swiftly changing the industry. He has also strengthened Railway Age's leadership position in industry affairs with the conferences he conducts on operating passenger trains on freight railroads and communications-based train control.

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Following Canadian Pacific’s favorable first-quarter 2012 earnings report last week, Pershing Square Capital Management stepped up its attack on CP President and CEO Fred Green (pictured) and his management team with a strongly worded letter to shareholders that some industry observers are calling an obviously self-serving and misleading manipulation of numbers.

The Association of American Railroads today reported that rail carload traffic for the week ending April 7, 2012, fell 7.7% compared to the prior-year week, with U.S. railroads originating 270,974 carloads. Intermodal volume for the week totaled 231,153 trailers and containers, up 1.1% compared with the same week last year.

Nine of the AAR’s 20 carload commodity groups posted increases compared with the same week in 2011, led by: petroleum products, up 33.3%; primary forest products, up 11.8%; and stone, clay and glass products, up 11.2%. The groups showing a significant decrease in weekly traffic included iron, steel and scrap, down 18.1%; grain, down 16.6%, and coal, down 16.1%.

Weekly carload volume on Eastern railroads was down 5.2% compared with the same week last year. In the West, weekly carload volume was down 9.3%, compared with the same week in 2011.

For the first 14 weeks of 2012, U.S. railroads reported cumulative volume of 3,950,064 carloads, down 2.9%t from last year, and 3,159,598 trailers and containers, up 2.4%from last year.

Canadian railroads reported 75,089 carloads for the week, down 3.4% compared with the same week last year, and 50,454 trailers and containers, up 1.6% compared with 2011. For the first fourteen weeks of 2012, Canadian railroads reported cumulative volume of 1,061,371 carloads, up 4.7% from the same point last year, and 683,388 trailers and containers, up 6.5% from last year.

Mexican railroads reported 11,999 carloads for the week, down 16% compared with the same week last year, and 7,141 trailers and containers, up 1.3%. Cumulative volume on Mexican railroads for the first 14 weeks of 2012 is 188,344 carloads, down 6.5% compared with last year, and 121,958 trailers and containers, up 21.2%.

Combined North American rail volume for the first 14 weeks of 2012 on 13 reporting U.S., Canadian, and Mexican railroads totaled 5,199,779 carloads, down 1.6% compared with last year, and 3,964,944 trailers and containers, up 3.6% compared with last year.

Thursday, 12 April 2012 15:24

UP cites safest hazmat shippers

Union Pacific has named 74 companies as annual Pinnacle Award recipients for chemical transportation safety.

Now in its sixth year, Norfolk Southern’s “Train Your Brain” public safety program has reminded more than half a million people “to be smart and alert around highway-rail grade crossings and to avoid trespassing on railroad property,” the railroad notes.

Tuesday, 10 April 2012 13:30

Canadian Pacific proxy battle heats up

The stage has been set for Canadian Pacific’s annual shareholders meeting on May 17, where hedge fund Pershing Square Capital Management will attempt a takeover of CP and replace the railroad’s president, Fred Green, and board of directors with its own candidates.

Regan Smith, driving the no. 78 Furniture Row/CSX Play it Safe Chevrolet, rebounded to a 16th-place finish in the Goody’s Fast Relief 500 Sprint Cup race at Martinsville Speedway on April 1. 

The late-race turnaround “was a result of sound pit strategy, quick pit stops, and a combination of patient and savvy driving,” the team said.

Highlights from Kansas City Southern President and CEO Dave Starling’s remarks upon receipt of the Railroader of the Year Award, Union League Club, Chicago, Ill., March 13, 2012. “Railroading in North America: This Generation to the Next”

Kawasaki Rail Car USA, Inc. is currently assembling the prototype trainset of the Washington Area Metropolitan Area Transit Authority’s (WMATA) new 7000 Series Metrorail rapid transit cars in Kobe, Japan.

Canadian Pacific will be moving additional Bakken crude oil by unit train from a planned industry logistics hub served by its North Dakota network.

 The Van Hook, N.D., facility, to be developed by U.S. Development Group (USD), will handle crude oil and related products from the Bakken formation and will have initial capacity of up to 35,000 barrels per day at eight automated truck unloading positions.

Three Class I railroads—Union Pacific, Norfolk Southern and CSX—and Berkshire Hathaway, parent company of BNSF Railway, have been named by Fortune magazine as among the world’s “Most Admired Companies” in 2011. UP, NS, and CSX were ranked No. 1, No. 3 and No. 6, respectively, among transportation, logistics, and trucking firms, while Berkshire Hathaway was named No. 3 overall on the 50 most admired companies. Together, UP, NS, CSX, BNSF comprise the “Big Four” Class I’s.

Fortune describes its Most Admired list “the definitive report card on corporate reputations. The industry rankings reflect the opinions of executives, directors, and analysts who are asked to rate companies in their own industry on nine different criteria. These aspects include innovation, people management, use of corporate assets, social responsibility, quality of management, long-term investment, financial soundness, quality of products and services, and global competitiveness.” To arrive at the top 50 overall, Fortune’s research partner, the Hay Group, asked 4,100 executives, directors, and securities analysts to select the 10 companies they admired most. The survey included 673 companies from 32 countries.

How far our “bricks and mortar” industry has come in the space of a few years! Is it any surprise? Not to this magazine!

Wednesday, 29 February 2012 17:35

CSX recognizes Wheeling Development Partnership

CSX Transportation has presented its Partnershipping Award to the Regional 
Economic Development Partnership (RED) in Wheeling, W.Va., for its efforts 
in locating three energy-related projects that will be served by CSX.

Monday night’s rain-delayed Daytona 500, the season-opening event in the NASCAR Sprint Cup Series, marked a milestone for CSX Transportation, the first Class I railroad to sponsor a Sprint Cup team.

DAYTONA BEACH, FLA.: The 54th running of the Daytona 500 is scheduled to take place tonight (Monday Feb. 27), after heavy rains forced postponement of The Great American Race from yesterday.

Wednesday, 22 February 2012 17:09

RRIF loan will finance 30 KCSR locomotives

Kansas City Southern Railway Company (KCSR) has taken out a $54.6 million Federal Railroad Administration-administered Railroad Rehabilitation and Improvement Financing (RRIF) Program loan to purchase 30 new General Electric ES44AC diesel-electric locomotives.

Last weekend was the start of Speed Week, which hopefully culminates on Monday night , Feb. 27, with the rain-postponed running of The Great American Race, the Daytona 500.

Tuesday, 08 November 2011 10:13

BNSF challenges report questioning security

BNSF said Tuesday it was “extremely disappointed” by a news media investigative report questioning freight train security measures, as well as operations, in Washington state.

The report, issued Monday by Seattle’s KOMO News 4 TV and KOMO Newsradio, said its “Problem Solvers” team in essence found “so many Burlington Northern Santa Fe Railway trains for the taking,” some idling for hours without any security presence nearby. KOMO also relied on two BNSF anonymous engineers who expressed concern over current operations and supposed lax safety measures.

KOMO also reported the “Federal Railroad Administration … has now opened a formal investigation into what the Problem Solvers found.”

bnsf_logo.jpgIn response, BNSF on Tuesday chastised KOMO for its “sensationalized accusations and exaggerated hypotheticals to attack rail safety and security. BNSF takes safety and security very seriously.

“The report failed to recognize that there are numerous ways to immobilize aparked train such as removing essential equipment, tying down handbrakes orisolating electrical fields on the locomotive.,” BNSF said in a statement.

BNSF said a voluntary audit for last Friday “found that every lead locomotive in the area was properly secured.” In addition, it said, “Most of BNSF’s high volume main line track is controlled by what is called Centralized Traffic Control (CTC). On CTC track, a train cannot move on the track, nor can a switch from a siding be thrown to allow a train to move onto the main line without the dispatcher seeing it on their computer screen.”

Monday, 25 August 2008 19:00

Manage the pendulum

If a ship springs a leak, it's a problem. If the passengers all run to one side thinking to save themselves, the ship will capsize. Now it's a disaster.

Monday, 25 August 2008 20:00

No trouble, no learning

You'd think, from reading or viewing the general media coverage of economic issues, that bankers are a bunch of fools, crooks, greedy so-and-so's, or all three. Bankers are a convenient and popular target. Even in the best of times, bankers are rarely seen as heroes. Not collectively, anyway. So you have to steel yourself-or put on a Teflon shell-during this difficult period, and take satisfaction from the good things you help accomplish.

Monday, 25 August 2008 20:00

Responsibility. Now there

Somewhere along the line most of us were advised to brush regularly, floss, avoid too many sweets, etc. Whether we heeded that advice was, and is, our choice, and the consequences of not doing so are ours as well.

Tuesday, 19 January 2010 07:26

Financial Edge: Gauging the Buffett effect

By Tony Kruglinski, Financial Editor

anthony-kruglinski-web.jpgIf you are like this writer, during the past weeks and months you have been pummeled by kith and kin concerning Warren Buffett’s BNSF strategy and what it may mean “for” and “to” you. It’s pretty clear that we are getting these questions because our friends and family don’t understand exactly how we make a living in this industry and now (they think) they have something to discuss with us! God bless them. But I would suggest that we need to go beyond the easy “Buffett” answers that we give friends and relatives . . .

“It’s a vote of confidence for the American economy and an important industry that supports it.”

“He recognizes the long term role railroads play and the long term growth that is possible for the knowledgeable investor.”

. . . and ask some serious questions that need asking, which have nothing to do with Mr. Buffett’s investing wisdom.
We should ask, for instance, how Warren Buffett’s very public endorsement of the future of the railroad industry in North America will, in-and-of-itself, affect us? Let’s start with some basics:

• Savvy industry participants know all about the vibrant future freight railroading will have when the economy rebounds.

• Investors in railroad stocks are now benefiting from the “rising tides lift all boats” result of Warren Buffett’s BNSF strategy.

• Railroad industry wannabe investors have been sitting on the sidelines looking for opportunities to jump into a depressed market for rail equipment (in particular), but have found their options severely limited due to the absence of sellers willing to take a haircut on prices.

Will the spotlight Mr. Buffett has put on our industry suggest to potential investors (who have been on the sidelines, studying the industry for months or years) that waiting for better opportunities may just cause them to miss the proverbial train? We think that’s a good possibility. Everything in life needs to be taken in context with what’s happening and what can be perceived as likely to happen.

For instance, in the second half of 2008, several large railcar operating lease portfolios were (formally and informally) offered for sale. We are told that none sold because potential buyers were unwilling to offer pricing at or close to the sellers’ book values. The only sale that occurred was a small 3,000-plus fleet that sold (for a discount of about 25%) when its parent entered liquidation.

Every indication is that one or more operating lease fleets could be on the market in 2010 if the interest and pricing rebounds in the marketplace. Both CIT and AIG are possible candidates for sale. There could be others. If buyers continue to hold back, waiting for a “deal” on discounted assets, these potential sales will only occur if the seller hits a wall of some sort and absolutely has to sell.

But what if, keying on Mr. Buffet’s view of the long-term investment value represented by the railroad industry, some of these buyers decide that the time to invest is now before the train leaves the station? We think that possibility is a real one. Residential real estate sellers and buyers ultimately reach agreement based on mutual perceptions as to the state of a moving market. We believe it is very possible that efforts to market existing operating lease portfolios of equipment in 2010 may be more successful than in the past simply because Warren Buffett has started playing face-up poker regarding his long-term view of our industry. (A side issue: Debt markets need to rebound to lend into these potential acquisitions.)

Now, who will these likely buyers be? We think that many of the new investors that took a look—and a pass— at buying operating leasing fleets will be back and, perhaps, may be more willing to realistically consider the seller’s minimums. Remember, investors who invested side-by-side with Mr. Buffett in BNSF are now due to earn a premium materially larger than any discount sought by potential lease fleet investors in 2008!

Timing is everything.

What about the stocks of railcar builders that have been depressed due to the miserable market for new car sales? Here, we are not sure that any Buffett vote of confidence will be able to boost stock prices unless and until order books begin filling up. Unfortunately, hundreds of thousands of parked freight cars would suggest that is not about to happen.
How about investments in other rail industry suppliers? We believe that there will be increased investor interest due not only to Mr. Buffett, but also to passenger rail funding coming from Washington. (Arguably, federal largesse has already started M&A activity in this sector.)

I’ll steal a page from Marilyn Monroe’s serenade to JFK on his 45th Birthday (Sung to “Thanks For The Memory”):

“Thanks, Mr. Buffett.
For all the things you’ve done.
You’ve invested by the ton.
You’ve led the way.
You’ve sold the Street
To us you’re number one.
We thank you so much!”


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