Union Pacific announced Thursday that its diluted earnings per share in this year's first quarter improved 40% to $1.01 on revenue of $4.0 billion, compared with the first quarter of 2009, exceeding Wall Street estimates of 95 cents a share and revenue of $3.8 billion.
Net income increased 43% to $516 million. Operating income totaled $988 million, up 47%, producing an operating ratio of 75.1%, a first-quarter record and 5.3 points better than first-quarter 2009.
“Union Pacific’s record first quarter was a strong start for the year,” said Jim Young, Union Pacific chairman and chief executive officer (pictured at left). “We saw quarterly volume growth on our railroad for the first time in two years, and we leveraged that volume by running a safe, service-focused, and efficient network. These efforts resulted in a best-ever first quarter operating ratio and generated strong cash from operations, setting a solid foundation for future opportunity and growth.”
First-quarter carload volumes grew 13% from the 2009 quarter. Five of six business groups reported quarterly growth, with only Energy volumes declining versus first-quarter 2009. Volume growth contributed to a 16% increase in first-quarter operating revenue of $4.0 billion versus $3.4 billion in the first quarter of 2009.
“ As we believe the case will be for all of the publicly traded railroads, first-quarter 2010 marked UP’s return to year-over-year volume growth,” said Dahlman Rose Director Equity Research and Railway Age Contributing Editor Jason Seidl. “For the western giant, this was the first reported quarterly growth in two years. While this is partly due to easy year-over-year comparisons, the magnitude of such effect has been decreasing, being progressively replaced by real strengthening in market demand. UP’s milestone achievements in volume growth did not occur at the expense of pricing. Core pricing was up 3% in the quarter . . . [and] is already trending near 4% in the second quarter. As in the case of CSX, UP was able to translate a strong top line, which was the outcome of the strength in volumes and pricing, into robust operating profits. We believe this is largely due to UP, and the railroad industry as a whole, possessing a high degree of operating leverage that allows for taking on incremental business without the need for a significant ramp up in operating resources.”
Said Morgan Stanley analyst William Greene, “Both CSX and UP results confirm that our bullish rail thesis is on track. We've argued that rails with the most volume growth and significant (highly lucrative) export franchises (coal or grain) are best positioned to generate significant beats (EPS exceeding Wall Street estimates) during the first quarter.”
International rail exhibition often have shrugged at the relative dearth of participation from North American suppliers and/or paltry attendance figures from the North American continent. But that may change at this year’s InnoTrans 2010 conference, to take place Sept. 21-24 in Berlin, conference organizers say.
“One reason for this is President Obama’s announcement pledging to invest $8 billion . . . in setting up a high speed railway network,” InnoTrans officials say. “Gradually opening up the U.S. railway market, hitherto largely closed to outsiders, is also having a positive effect on InnoTrans 2010. More exhibitors and attendees from the U.S. than ever before are expected to attend.”
InnoTrans currently counts “23 companies on the list of U.S. exhibitors, including major companies such as GE Transportation, Progress Rail Services, Wabtec Corp., Electro-Motive Diesel, and Cisco Systems.”
Other U.S.players, including railroad executives, are also expected in Berlin, according to Matthias Steckmann, director at Messe Berlin. “This year we expect an increased number of attendees from the U.S.A. Thus 500 mostly senior managers, [involved with] construction, design, and maintenance of railway infrastructure, have agreed totake part. Major railway companies such as Amtrak as well as transport companies from New York, Chicago, New Jersey, and Vancouver (in Canada) are sending numerous representatives to Berlin.”
Steckmann adds that U.S. suppliers Timken, L. B. Foster, Railquip, Loram, Magnus, and Miner are among those expected to attend this year’s event. Beyond that, “The fact that the American Railway Engineering and Maintenance-of-Way Association will take part in InnoTrans for the first time rounds off this picture very positively,” he says.
The Association of American Railroads Thursday announced that the nation’s freight railroads in 2009 averaged 480 ton-miles to the gallon, up significantly from the benchmark of 426 ton-miles used by AAR, Class I railroads, and freight rail supporters throughout North America in recent month to bolster the mode’s environmental credentials.
Ton-miles-per-gallon is the railroad measurement for fuel efficiency, like autos use miles-per-gallon. Overall, freight rail fuel efficiency is up 104% since 1980. In 2009, railroads generated 67% more ton-miles than in 1980, while using less fuel, AAR said.
“I’m pleased to report on Earth Day that the nation’s freight railroads notonly haul the goods that America depends on every day, but they do so while benefiting the environment and reducing our dependence on foreign oil,” said AAR President and CEO Edward R. Hamberger.
While environmental benefits from moving more people and goods by rail are important advantages, fuel efficiency is where it all starts, Hamberger noted, citing the federal government’s finding that railroads are four times more fuel-efficient than trucks. “Railroads are moving more while consuming less fuel, which means we’re emitting fewer greenhouse gases and easing highway congestion.”Railroads use sophisticated on-board monitoring systems to gather and evaluate information to provide engineers with real-time “coaching” and calculate the speed that maximizes fuel savings. Railroads also use innovative freight-carand locomotive designs that cut down fuel consumption, AAR says. “America can save even more fuel by shipping more by train. If just 10% of the long-haul freight currently moving on our crowded highways was moved by rail, annual fuel savings would exceed 1 billion gallons,” Hamberger said. Among other things, railroads have invested billions of dollars in thousands of new, more fuel-efficient locomotives and on overhauling older units to makethem more fuel-efficient. Research also is under way on hybrid long-haul locomotives.
The Investors' Guide to Railroad Freight Cars and Locomotives was created in response to requests submitted to RailSolutions, Inc. for industry specific data related to the equipment employed by North American freight railroads. RailSolutions has announced publication of the 2010-2011 edition.
RailSolutions says it “has compiled a broad baseof railroad industry and equipment-related data which we use in providing general advisory services and in conducting equipment appraisals. We have made aneffort to organize and present this information in a manner which is general enough to cover a broad variety of railroad industry and equipment-related factors,and at the same time, is specific enough to address investment issues related to 14 generalservice and specialty railcar types, and 17 of the most widely used locomotive models.”
The Investors' Guide covers: Equipment descriptions, ownership profiles, age distribution, traffic statistics, historic valuation data, estimated netrental rates, and estimates of future market value.
Copies are availablefrom for $1,600; subscribers to the 2008-2009 edition are entitled to a 20% discount. Company checks can e mailed to RailSolutions, Inc., 1684 Grovedale Court, Suite 200, Alexandria, Va. 22310. For more information, contact RailSolutions at (703) 922-3080; email: email@example.com; website: www.railsolutionsinc.com.
L.B. Foster Co. and Portec Rail Products, Inc. say they are reviewing their options following a judge's action Wednesday enjoining the completion of L.B. Foster's tender offer to acquire all of Portec's issued and outstanding common stock.
The Court of Common Pleas of AlleghenyCounty, Pa., issued the preliminary injunction. Several class action suits have been filed opposing the transaction.
L.B. Foster manufactures and distributes products for the rail, construction, and utility/energy markets at approximately 30 locations throughout the United States.
Portec supplies rail anchors, spikes, friction management products and systems, rail joints, wayside data collection and data management systems, and freight car securement systems. Portec also manufactures material handling equipment.
BNSF Wednesday “introduced” its new Memphis Intermodal Facility in a grand opening ceremony, following a $200 million expansion and rebuilding effort. The facility now will double BNSF’s lift capacity in the Memphis market and improve efficiency while also reducing emissions and helping to improve air quality.
The facility covers 185 acres and will offer a capacity to handle 1 million lifts per year at “full build out,” BNSF says.
Among other intermodal features, the facility is equipped with eight widespan, electric, rail-mounted gantry cranes, which produce zero emissions on site and will significantly reduce the number of hostler trucks needed to move containers within the yard. It also includes a streamlined automated gate system for trucks as they enter and exit, which uses digital cameras to record images of containers, chassis, and tractors. Drivers are also identified using a biometric system. These enhancements have increased security, while improving throughput, reducing truck idling time and emissions by 50%.
“BNSF greatly appreciates the support of all of the political and business leaders who worked with us to make this day possible. That support is an important part of the reason why Memphis has developed into one of the most strategic transportation hubs in the Southeastern U.S.,” said John Lanigan, BNSF executive vice president and chief marketing officer. “BNSF’s significant investment in this new facility will not only make this one of the most efficient and environmentally-friendly intermodal facilities in the country, it will also help improve Memphis’s position in the global supply chain by offering our customers more capacity and service options.”
The Surface Transportation Board said Wednesday that it had directed Canadian National “to come before the board and explain the significant differences between information on street-crossing blockages in the Chicago area that the railroad has provided to the board and the results of an independent audit conducted by the board.”
STB noted that as a condition of CN’s 2008 acquisition of the Elgin, Joliet and Eastern, it required CN to report every street-crossing blockage of 10 minutes or more. “In its November and December 2009 monthly reports, the railroad reported a total of 14 blockages caused by stopped trains,” said STB. “But an independent audit conducted on behalf of the Board by its third-party consultant, HDR Inc., found 1,457 instances during that same period of crossings blocked for 10 minutes or more by stopped or slowly moving trains.”
STB asked CN and HDR to appear at a hearing in Washington April 28 to explain why CN's submissions differ from data automatically reported by its own crossing gates and “why the railroad did not disclose that it had such information.”
It ordered CN in future reports to list all crossing blockages of 10 minutes or more, “whether as a result of stopped trains or slow-moving trains.” The Board also directed the railroad to supplement any previous reports that omit data for lengthy delays caused by slow-moving trains.
STB said it acted after “numerous complaints by community and elected leaders.”
The Railway Tie Association has unveiled a series of educational videos on tie grading, with nine modules containing instructional highlights of the RTA's most successful training event, its annual Tie Grading Seminar. The modules capture the essence of the classroom instruction and makeevendifficult terms and concepts accessible to every tie producer's and railroad's employees, RTA says.
The first six modules condense three days of the most important lectures on Wood Species Identification, Learning Specifications and Tie Defects, Quality Control, Proper Seasoning and Handling of Ties, and Wood Preservation into less than four hours of quality video instruction.
Modules 7 through 9 are designed to place the viewer in the tie grading station at a wood preservation plant. The first ofthese non-narrated, graphically illustrated videos offers the student an opportunity to see how tie graders do their jobs. The remaining videos are tests, some with keys and written narratives.
A 30-day or one-year license to view the series is available for purchase by the public. RTA members receive a significant discount off of non-member rates. As an added bonus, once an order is placed for the series, the purchaser can download RTA's Visual Guide to Tie Defects and Specifications. This executable file is an interactive guide with many higher resolution example photos illustrating tie defects and how they relate to tie specifications. There are just-for-fun and real tests included as well.
Access to the streaming video modules and bonus Visual Guidecan be found at www.rta.org/Default.aspx?tabid=164.
The H Street-Benning Road streetcar line in Washington, D.C., now under construction, could be extended to provide a link to Union Station, under a plan being advanced by the District Department of Transportation. DDOT is recommending use of an underpass to allow streetcars to traverse Union Station property underneath existing rail infrastructure.
DDOT officials will seek federal funding for extension. The current H Street-Benning Road work, funded by the city, is now scheduled to open in 2012 after numerous setbacks. It likely would utilize three Inekon streetcars only recently arrived from the Czech Republic, originally purchased for use on another city streetcar project, the Anacostia Line, which began construction last year.
Last week city Councilman Jim Graham urged the H Street link be given priority over the oft-delayed (and partially rerouted) Anacostia Line. But DDOT spokesman John Lisle said, “We are accelerating the timetable for the H Street/Benning Road line to be operational, and we expect it and the Anacostia Line to begin service in 2012.” Lisle added, “They are both priorities.”
The H Street-Benning Road route has its own problems, as it would enter the federal historic portion of the city that bans overhead catenary wire. Continued clashes with some preservationist groups has prompted DDOT to explore hybrid streetcar options. A dual-mode streetcar, utilizing catenary power or battery power, is under consideration to mollify preservationist groups. (Some of those groups appear determined to thwart streetcar development regardless, rail advocates assert.)
Bombardier Transportation has won an order valued at $54 million from Poland's Koleje Mazowieckie for 11 TRAXX electric locomotives. Delivery is scheduled for summer 2011. It's the first purchase of electric TRAXX locomotives for passenger transport in the Polish market.
The new two-cab electric TRAXX P160 DC locomotives operate at speeds of 160 km/h (100 mph). They will haul Koleje Mazowieckie's37 Bombardier-built double-deck coaches in push-pull operation.
Ake Wennberg, president of Bombardier Transportation'sLocomotives and Equipment Division, said that to date more than 1,450 TRAXX locomotives have been ordered for operation throughout Europe. The car bodies for all TRAXX locomotives are manufactured at a plant in Wroclaw, Poland.