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Union Pacific’s response to STB said the railroad “is disappointed by [the] decision invalidating certain chlorinerates covering a few dozen shipments per year. Under STB rules, its task was tochoose between two groups of shipments to determine which group is most like UPchlorine shipments involved in the case. The Board concluded that a group ofshipments consisting entirely of chlorine shipments was less comparable to thechlorine shipments in the case than a group consisting almost entirely of othercommodities that are less hazardous to the public and priced under differentmarket conditions than chlorine.

“Furthermore, the Board chose US Magnesium’s group of mostly non-chlorine shipments on the basis of astatistical analysis that the Board candidly admitted might not bestatistically valid and that resulted in a virtual dead heat between thecompeting groups. This statistical analysis was never discussed by anyone inthe record of the case, had never been proposed by the Board in any othercontext, and does not appear in the Board’s rules. UP believes that astatistically insignificant exercise that produces a toss-up, has no precedentin case law or rules, and contradicts the Board’s own findings that chlorinecarries greater risks and moves in markets distinct from ammonia and otherhazardous products, constitutes the essence of arbitrary and capriciousdecision-making. Accordingly, we plan to appeal.

“The Board sharply criticized UP forusing so-called ‘re-billed movements,’ which are shipments that move over two or more railroads. We respectfully disagree. This is like saying that if you are comparing airline rates from Kansas City to Los Angeles, you would exclude rates to L.A. for passengers who will catch another airline from L.A. to Hawaii—and instead you would select rates for a bus from Kansas City to Phoenix for a ‘comparison.’

"Union Pacific’s top priority is providing safe transport of all goods to the benefit of the communities weserve. Union Pacific is obligated by federal law to carry Toxic InhalationHazard (TIH) materials, which require significantly enhanced and costly safetyand security measures. We believe that the rates we charge to chlorine andother TIH shippers, such as US Magnesium, should reflect the costs and risksassociated with transporting their products.”

The full text of the Board's decision in U.S. Magnesium, L.L.C. v. Union Pacific Railroad Company, STB Docket 42114, and Waybill Data Reporting for Toxic Inhalation Hazards, STB Ex Parte No. 385 (Sub-No. 7), can be found on the Board's Web site,, in the left-hand column marked "Information Center," under "STB News."


--> After winning a rate case against Union Pacific, chlorine shipper U.S. Magnesium LLC could recoup $1 million over the next five years, according to the Surface Transportation Board.The proceeding was handled under the Board’s rules for cases filed under its Simplified Standards for R ...

Christensen Associates Inc., an independent consulting team studying rail competitiveness for the Surface Transportation Board, has issued a new report finding that "rate increases since 2004 were driven by fluctuating fuel prices and other costs and did not appear to reflect a greater exercise of railroad market power over captive shippers."

The updated report re-emphasized the key finding of an earlier report: "Providing significant rate relief to some shippers will likely result in rate increases for other shippers or threaten railroad financial stability." 


The STB said in its summary: "Overall, the updated study painted a portrait of a healthy rail industry that, since 2006, has remained largely revenue sufficient, meaning railroads are able to over their operating costs and earn a rate of return that enables them to attract investment vital to pay for more locomotives, railcars, and make other improvements. The study also found hat the large productivity gains in the 1980s and 1990s--when the railroad shed excess lines, reduced crew sizes, and streamlined operations--are no longer strong enough to offset rising operating costs."

Christensen also noted that since late 2008, railroad traffic has dropped nearly 20% from the levels of 2006 and 2007, and preliminary data show rates fell last year.

The original report was issued in November 2008. The STB ordered it to be updated to reflect shippers' concerns that "the report's study period ended in 2006 and did not include subsequent years of rapidly escalating costs."



--> Christensen Associates Inc., an independent consulting team studying rail competitiveness for the Surface Transportation Board, has issued a new report finding that "rate increases since 2004 were driven by fluctuating fuel prices and othe ...

U. S. rail freight traffic is showing "slight improvement" over 2009 but remains "sharply down" when compared with pre-recession 2008, the Association  for American Railroads said today.

For the week ending Jan. 23, 2010, U.S. railroads originated 277,420 carloads, up 3.9%  from the same week in 2009 and down 11.1%"from the same week in 2008. Intermodal traffic totaled 200,807 trailers and containers, up 2.9 % from a year ago and off  4.4% from 2008.

The AAR said that 13 of the 19 carload to commodity groups were up from last year,  with 10 of them posting double-digit increases. ranging from  5.5% for grain to 103.8% for nonmetallic minerals. Declines  ranged from 25.7% for the catch-all category "all other carloads" to 3.1%  for coal.

Total volume on U.S. railroads for the week ending Jan. 23, 2009 was estimated at 30.2 billion ton-miles, up 4.9 percent from  last year and down 7.9 %to from 2007.

Canadian railroads reported  73,354 carloads for the week, up 13.5% from last year, and 44,295 trailers or containers, up 7.4%.

Mexican railroads reported originated volume of 14,867 cars, up 29.8% from the same week last year, and 6,960 trailers or containers, up 41.6%.

Combined North American rail volume for the first 3 weeks of 2010 on 13 reporting U.S., Canadian and Mexican railroads totaled 1,032,527 carloads, up 1.7 % from last year, and 750,539 trailers and containers, up 2.3 %.

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L.B. Foster Co. today reported net income of $3.9 million or $0.38 per share in the fourth quarter of 2009, compared to net income of $5.7 million or $0.55 per share in the fourth quarter of 2008.

Fourth quarter 2009  sales declined 31.8% to $98.0 million compared to the same quarter last ear. Selling and administrative expenses were down $2.8 million or 23.9%.

"All of our segments posted significant declines in net sales for the fourth quarter; however, cost controls and pay for performance incentive plans mitigated the negative impact to income. While we have won several large orders this quarter, business activity continues to be inconsistent in our Rail and Construction businesses and very weak in our Tubular divisions," said Stan Hasselbusch, President and CEO.

"Bookings for the quarter were $114.7 million compared to $99.5 million last year, a 15.3% increase while year-to-date bookings were down 15.9%," said Hasselbusch. "Backlog was $172.7 million, an increase of 30.2% over the prior year; however, the gross margins associated with that backlog are lower than the prior year due to decreased pricing and an increased competitive environment across all product lines."

Hasselbusch also commented:: "We won several attractive awards in 2009 that were related to the federal stimulus legislation, primarily in our transit and precast concrete building businesses. While we expect a significant portion of those 2009 awards to be reflected as sales in 2010, we also anticipate that the volume of new stimulus-related opportunities will slow in 2010."

For the 12 months ended December 31, 2009, L.B. Foster reported net income of $15.7 million or $1.53 per d share compared to net income of $27.7 million or $2.57 per  share in 2008.

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With business  expected to be "flat or slightly up," Wabtec Corp. today  issued 2010 earnings per share  guidance of $2.35-$2.50. The company had not previously issued 2010 guidance.

Wabtec also updated its 2009 guidance to $2.37-$2.41 per share on revenues of about $1.4 billion. This  guidance, which is in line with the company's previous guidance, now includes a  fourth-quarter charge of $3.9 million, or six cents per diluted share, for an arbitration ruling.

Wabtec plans to report 2009 results on Feb. 23.

"In light of very challenging economic conditions, Wabtec's 2009 performance demonstrated the strength of our diverse business model and strategic planning process, the leadership of our management team and the hard work of our employees throughout the company," said Albert J. Neupaver, Wabtec's president and chief executive officer. "In 2010, market conditions will continue to be challenging, but we expect that benefits from our restructuring actions in 2009 and other growth initiatives will offset the decline in U.S. locomotive and freight car production, and the completion of a major transit contract."

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President Barack Obamaand Vice President Joe Biden announced that the U.S. Department ofTransportation is awarding $8 billion to states across the country to developAmerica's first nationwide program of high-speed intercit ...

In last year's fourth quarter, Kansas City Southern earned $32.0 million, or 33 cents ashare, on $406.8 million in revenue. While earnings declined 17.5% from the prior-year quarter, they exceeded the 29 cents that was the consensus estimate of analysts.


"KCS management is cautiously optimistic that the company will be able to maintain the positive volume and revenue growth momentum that it experienced in the second half of last year throughout 2010," Chairman and CEO Michael R. Haverty said.

KCS reported fourth-quarter 2009 revenue of $406.8 million, a 4% decrease from the same quarter in 2008; operating income of $91.9 million, an increase of 1%; and an operating ratio of 77.4%, compared with 78.5% in 2008.

"Operating expenses for the fourth quarter 2009 were $314.9 million, a decrease of 5% year-over-year," said KCS. "Decreases were achieved in each categorywith the exception of compensation and benefits. Year-over-year fourth-quarter compensation and benefits expense increased as a result of non-cash foreign exchange rate impacts on the Mexico statutory profit sharing obligation, and lower capitalized labor due to the reduced capital program in 2009. Offsetting these compensation increases were lower salary and wage expenses resulting from reduced employee levels. Purchased services fell 17% as a result of reduced locomotive repair expenses and savings from the opening of the Victoria-Rosenberg line. Fuel expense for the quarter was down 14% on decreased average fuel prices and the efficiency of the fleet."

Operating income for the fourth quarter was $91.9 million compared with $91.2 million last year, a 1% increase. The fourth-quarter 2009 operating ratio was 77.4% compared with 78.5% a year ago.

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Cost controlhelped Canadian Pacific Railway Ltd report a fourth-quarter 2009 profit thatafter special items amounted to 94 Canadian cents a share, beating Wall Streetexpectations of 88 cents The Wall Street estimate is based on an analyst pollby Thomson Reuters.

In a downmarket, CP shares were running fractionally higher Thursday morning.

"Earningswere driven by a strong performance in operations that improved the overalloperating ratio despite an appreciating Canadian dollar, a higher price of oil,and fuel surcharge lag," said Macquarie Capital analyst Avi Dalfen in anote quoted by Reuters.

CP said netincome in the fourth-quarter was C$194 million, a 3% increase fourth-quarter2008.

Total fourthquarter revenues were C$1.1 billion, down 16 %; operating expenses were C$853million, down 17 %; operating income decreased 12% to C$269 million ; andthe  operating ratio improved 120basis points to 76.0%.

"We havecome through an extraordinary year of economic challenges and we met these withfocused productivity initiatives that have delivered sustainableimprovements," said Fred Green, President and CEO. "Markets remainuncertain and we will continue to drive efficiency while delivering a reliableservice. We are positioned with assets and resources to respond to changes inour customers' demand."

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28 January 2010

Waging a defensive war

The battle between railroads and their price-sensitive customers over legislation that would re-regulate the railroads has become open warfare. Price-sensitive customers like to call themselves captive shippers; perhaps that makes them objects of sympathy, something that gigantic companies have a ...

For fourth-quarter 2009, Norfolk Southern today reported net income of $307 million,or $0.82 per diluted share (slightly below Wall Street’s estimate of $0.84), vs. $452 million, or $1.21 per diluted share, a 32% decline from the same quarter of 2008. Revenue fell 16% to $2.1 billion.


NS’s fourth-quarter operating ratio was 73.9% compared with 67.5% in the same period last year. For the year, the operating ratio was 75.4% vs. 71.1% for 2008.

“We expect to build upon the sequential volume gains we experienced in the third and fourth quarters driven by anticipated improvement in economic conditions combined with project growth,” said CEO Wick Moorman. “We plan to invest about $1.4 billion, slightly higher than our 2009 capital spending, in our rail network in 2010, including leveraging technology to improve operational efficiency and service, and support the business growth we expect in future years.”

Fourth-quarter merchandise revenue was $1.1 billion, down 9% compared with fourth-quarter 2008. Coal revenue was $580 million, down 27%. Intermodal revenue was $407 million, off 15% from the prior-year period. For the full year, intermodal revenue was $1.5 billion, down 26% compared with 2008. Railway operating expenses were $1.6 billion for the quarter, 8% lower compared with fourth-quarter 2008.

--> For fourth-quarter 2009, Norfolk Southern today reported net income of $307 million,or $0.82 per diluted share (slightly below Wall Street’s estimate of $0.84), vs. $452 million, or $1.21 per diluted share, a 32% decline from the same quarter of 2008. R ...
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