U.S. senators from Pennsylvania, New Jersey, and New York are vocally backing a 20-year effort to restore passenger rail service along the Lackawanna Cut-Off, a famed rail right-of-way that last saw active rail service in 1981. The Cut-Off this week received a “finding of no significant impact,” or FONSI, from the Environmental Protection Agency, clearing the way for the states to seek funding.
Recent media attention has focused on support from Pennsylvania’s two senators, Arlen Specter and Bob Casey (both Democrats), but any service introduction likely will begin in New Jersey, with New Jersey Transit extending its existing operations west of Port Morris, N.J. New Jersey’s U.S. Senate contingent ,Robert Menendez and Frank R. Lautenberg (also both Democrats), have supported the line’s resumption for many years.
A relative newcomer is U.S. Sen. Charles Schumer (D-N.Y.), who has voiced support for efforts to extend the Cut-Off project north of Scranton, Pa., across the state border to Binghamtom, N.Y, in New York State’s Southern Tier region.
For New Jersey, one factor driving the project is the potential loss of federal highway funds if the state fails to improve air quality under the Clean Air Act. Service on the Cut-Off route would offer a travel alternative to citizens in northwest New Jersey and northeastPennsylvania who now use Interstate 80 as the primary travel option.
Most involved with the project at present presume that NewJersey Transit would be the initial operator of any service, though some have argued that the tristate nature of the larger plan requires Amtrak to play an eventual role.
Lawrence Malski, chairman of the Northeast Pennsylvania Regional Railroad Authority, said the project will be completed in phases to allow for lower funding requests. Though Malski and others suggest that the initial Pennsylvania service from Delaware Water Gap could be up and running in four years, many industry observers, citing the 20 years already logged by project proponents, say such a timetable is optimistic at best.
Theresa Watkins McMillan, deputy executive director of policy for the San Francisco Bay Area Metropolitan Transportation Commission, has been named deputy administrator of the Federal Transit Administration
In announcing the appointment on June 5, FTA noted that McMillan will join administrator Peter Rogoff "in leading a staff of more than 500 in Washington, D. C., and 10 regional offices across the United States and managing an annual budget of approximately $10 billion and $8.4 billion in Recovery Act funds."
"Ms. McMillan brings real world expedience and a history of achievement to FTA," said Secretary of Transportation Ray LaHood. "She will be a valuable asset to the federal transportation program and the Department's senior management team."
At a ceremony Monday in North Bergen, N.J., marking the ceremonial start of construction for a new trans-Hudson rail tunnel, Federal Transit Administrator Peter Rogoff pledged $3 billion in federal funding to fully cover the cost ofthe $8.7 billion project, called Access to the Region’s Core Mass Transit Tunnel.
Rogoff said the FTA would offer a "down payment” toward an eventual commitment of $3 billion by approving a $1.35 billion Early Systems Work Agreement to immediately commence work on the tunnel project. The Agreement includes $650 million in federal funds, including funds from the American Recovery and Reinvestment Act, to be matched by an equal amount of local funding.
“This project has been talked about for decades. Because of New Jersey’s leadership and President Obama’s recovery agenda, today the talk stops and the construction begins,” Rogoff said. “The Obama Administration is committed to being a full partner in this historic investment. It will put thousands of people to work. It will improve the lives of many thousands more by shortening their commute.”
The tunnel will allow New Jersey Transit trains access to a new station in midtown Manhattan, north and east of existing Penn Station. Monday’s ceremony marked construction of a bridge to span U.S. Routes 1 and 9 over the new tunnel’s mouth on the New Jersey side.
The project is targeted for completion in 2016, and is paired with a second $1.7 billion project to replace the Northeast Corridor’s Portal Bridge, which spans the Hackensack River in the New Jersey Meadowlands.
Like all railroads, CSX Transportation is hurting from the deep business slump that saw industry-wide carload traffic drop by 25% in May. But like most railroads, CSX is sticking with a strong capital investment program this year in anticipation of post-recession traffic growth.
In a speech to Cornerstone, the regional economic partnership of Northeast Florida, on June 5, CSX Chairman and CEO Michael Ward renewed his pledge that the railroad will spend about $1.6 billion on capital improvements in 2009, just a little lower than last year's $1.7 billion. It's part of a three-year, $5 billion spending program.
As Ward put it to the Cornerstone group, "We were really doing stimulus before stimulus was cool."
The latest economic forecast calls for a 90% increase in railroad traffic over the next 15 years, due not only to a rise in normal demand but also to an acceleration in the shift of long-distance traffic from trucks to rails.
VIA Rail President and CEO Paul Cote says the passenger railroad is prepared for any role in high speed rail pursued by the Canadian government. While waiting, VIA will continue improving its existing system, tapping new capital investment of C$900 million (about US$800 million) since 2007.
"The current investment of $900 million that the government has allowed us to do will help to continue to build that foundation, because that is the key, when the high speed systems comes into play, if the government goes ahead," said Cote, testified last week before Parliament on high speed rail matters. "The ridership of the franchise needs to be built to achieve that."
Cote told the House of Commons Transport Committee that VIA Rail ridership has increased 33%, and revenue has risen 110%, since 1990 as infrastructure and service improvements have been put in place. "I can assure you that the people at VIA Rail have the competence, the expertise and the motivation (to become a partner in a high speed rail project)," said Cote. "If we are allowed to do this and if the context permits, VIA Rail will be able to show its expertise, quality, and experience developed over all the years."
Cote also said VIA was encouraged by U.S. plans for high speed rail improvements, some of which include rail route directly or indirectly linking with Canadian locales, including Montreal, Vancouver, and Windsor. But Cote said any Canadian HSR approach would be incremental by design. The provincial governments in Quebec and Ontario, along with the federal government, are weighing plans forhigh speed rail linking Quebec City and Windsor that would take a decade tobuild and cost C$18 billion (US$16 billion).
A private consortium of firms, assisted by those governments, is expected to make recommendations in 2010.
"I know that there is some impatience that some people would like it to be faster," Cote said. "But that's the way the governments decided to go. So we will offer our assistance to make it happen and at the end we will have a very well documented story line for high speed rail."
Beginning June 8 for a three-week test period, MTA New York City Transit will operate a “Bronx Express 4” train service southbound, skipping nine stations in the Bronx, in an effort to provide faster service for weekday morning riders bound for Manhattan.
The move leverages New York’s City’s ability, unparalleled by other U.S. urban transit operations, to provide express and local rapid rail services. The new express train will be aided by upgraded signaling, and an upgraded third track along its route in the Bronx.
Officials hope to cut trip time by 3.5 minutes, modest by some measures but “a significant time saving when you are headed out to work in the morning," IRT East Group General Manager David Knight said.
The weekday pilot program will run through June 26, with an express train departing from the No. 4 line’s terminus in Woodlawn every 15 minutes between 7:15 a.m. and 8 a.m. on weekdays. Express services will stop at Moshulu Parkway, Burnside Ave., and 149th Street, then proceed south into Manhattan on its usual express run. Conductors will alert riders that the trains are running express, NYC Transit President Howard Roberts said.
Call it the dreary month of May. The Association of American Railroads reported Thursday that U.S. carloadings sank 24.7% last month, compared with the same month last year. Intermodal traffic fared only a little better, posting a 19.7% loss.
Canadian railroads saw carload traffic drop 32.8%, and intermodal traffic declined 18%.
"May marked the second straight month in which U. S. rail carloads had double-digit declines, a consequence of lower electricity demand and higher coal stockpiles," said AAR Senior Vice President John T. Gray. "Industrial production is still down sharply across the board. That means lower demand for rail service for everything from chemicals and scrap metals to cement and ores. Basically, railroads are in a waiting game—waiting for the economy to turn."
For just the last week of May, carload traffic in the U.S. was down 26.3%, and intermodal volume was down 19.2%. In Canada for the week ended May 30, carloadings were down 30.9% and intermodal declined 20.8%.
The Delaware River Port Authority has scheduled four open houses, beginning next week, to explain current plans to provide rail service from Camden, N.J., through Gloucester County, N.J., southeast of Philadelphia and across the authority’s namesake river.
DRPA last month recommended the use of an active Conrail Shared Assets right-of-way serving the county, which could provide service from Camden to Glassboro, home of Rowan University. The university strongly lobbied for the rail right-of-way choice over two other proposed routes, each of which would have straddled state highways. DRPA’s recommendations for those alternate routes now include enhanced bus service.
Still at issue for the selected rail route is the specific rail mode. DRPA initially entered its study intent on linking any new route to its existing PATCO Hi-Speed line, which employs third-rail rapid transit cars to access central Philadelphia. But the selected route, dubbed “NJ-3” during the study, strongly suggested applying diesel rail equipment, either diesel multiple-unit (DMU) trains or diesel light rail transit (DLRT).
Either diesel option would make direct access to Philadelphia extremely unlikely; passengers instead would transfer at the Walter Rand Transportation Center in Camden if traveling to or from Philadelphia, as passengers on New Jersey Transit’s RiverLINE, a DLRT operation, do at present.
Also still unclear is the planned funding sources and operator(s) to be involved. DRPA, a bistate agency, may not have the political will to advance a New Jersey-based rail extension on its own, and may possibly cede responsibility to NJ Transit. New Jersey, despite its economic crisis, has committed some funds to advance the project, and may opt for a design-build-operate-maintain (DBOM) approach similar to that of the RiverLINE.
Reflecting such uncertainty, DRPA CEO John J. Matheusen said, "We need to hear what the public thinks before plans are finalized.”
The open house meetings, all beginning at 6:30 p.m., will be held at Rutgers University Campus Center, Camden, June 10, at Woodbury High School June 11, at Camden County College in Blackwood June 17, and at Rowan University’s Chamberlain Student Center, in Glassboro, June 18.
Vice President Joe Biden joined Secretary of Transportation Ray LaHood and state governors at the White House Wednesday at a conference that DOT called "a unique opportunity for state leaders to share their ideas with the Obama Administration about the future of high speed trains in America."
At stake for the states is the allocation of $13 billion as a down payment on "the world-class railroad system" that President Obama has called for. This includes $8 billion in stimulus funds and $5 billion in the President's budget request.
Secretary La Hood (photo at left) said the Administration is also seeking guidance from "Congress, labor, industry, rail experts from countries with working high speed rail networks, and other key stakeholders."
Vice President Biden opened the conference with a strong statement on the Administration's dedication to the high speed rail program.
"Everybody knows I’m a big believer in our nation's rail system--I've devoted a big part of my career doing what I can to support it--and I'm proud that this Administration is about to transform that system fundamentally," said Biden (pictured at right).
"Thanks to an $8 billion investment from the Recovery Act, we're going to start building a high speed rail system that will loosen the congestion suffocating our highways and skyways, and make travel in this country leaner, meaner, and a whole lot cleaner," Biden said.
Analysts from two firms, Dahlman Rose & Co. and Morgan Stanley, signaled satisfaction with the long-term outlook for the rail freight industry’s economic prospects following Norfolk Southern’s Investor Day conference June 3. The two firms differed slightly on NS’s own short-term outlook, but both said the Norfolk, Va.-based Class I railroad would share the excellent long-term prospects of the overall industry.
At Dahlman Rose & Co., Director Jason H. Seidl (photo at left) noted, “We came away from the meeting with a renewed sense of confidence in the direction that NS is headed as a company. Although near-term economic conditions remain uncertain, we believe that NS will be well positioned to reap the benefits of a more robust freight market once conditions improve.”
Seidl added, “We continue torate the company a 'Buy' and recommend the shares for long-term-oriented investors who wish to have exposure to the railroad group.”
Morgan Stanley research analyst William Greene says his firm “heard nothing that would cause us to question our favorable long-term view on the industry. Though [NS] management did not offer guidance, the company reaffirmed our conviction in a number of themes which are likely to drive rail outperformance vs. other freight transports over the coming years.”
From both companies’ point of view, the specter of rail reregulation may in fact be overstated. “Consistent with our view that compromise legislation is the most likely outcome, management views shipper-backed rail legislation moving through Congress as having limited rail risk,” Morgan Stanley’s Greene said. Seidl, at Dahlman Rose, noted, “It appears that a compromise is being struck between the industry and those that wish to increase governmental oversight. More specifically, CEO Wick Moorman stated that rail industry has been engaged in discussions with the Senate Commerce Committee and that these discussions have been positive.”
Commenting on NS specifically, Seidl at Dahlman Rose said, “We believe management is taking the proper approach as railroading is a long-cycle business where maintaining the proper balance is critical. Management at NS believes that it can return to historic margin levels even if the economy continues in a prolonged economic malaise. While this will not be done quickly, they expressed confidence in their ability to implement structural changes that should be able to hold even when the economy does pick up.
Seidl (who also is Contributing Editor to Railway Age) cited NS’s ongoing capital investment plans as key to long-range productivity and earnings gains. “In taking the long view NSC is still focused on developing some of its key projects, namely the Heartland Corridor, the Meridian Speedway, the Crescent Corridor, and the CN-NS MidAmerica Initiative. The Heartland Corridor project is 75% completed and should be finished by mid-2010.
In slight contrast, Morgan Stanley’s Greene was less enthusiastic about NS’s short-term prospects, pointing out that “recent trends have only vaguely shown signs of stabilization,” and emphasizing that NS “continues to suffer relative to peers due to its outsized export coal exposure, greater natural gas competition in the East, and heavy industrial portfolio.”
Still, Green also signaled the green light for NS’s long-term prospects, saying, “We believe after posting the worst EPS trend in2009, NSC is likely to grow faster than peers in 2010+ on volume recovery and realization of growth and productivity initiatives.” Greene also noted, “We heard nothing during the investor day which would suggest that the long-term rail pricing story is at risk.”
Dahlman Rose’s “buy” recommendation of NS stock was not echoed by Morgan Stanley’s Greene, who nonetheless observed, “We aren't against owning NSC—especially for investors with a multi-year time frame.”