The most recent freight car building forecast from Economic
Planning Associates calls for assemblies of 16,000 units this year, based on
current backlogs, first quarter assemblies, and anticipation of modest orders
for covered hoppers, tank cars, and coal cars. Next year will see a modest
improvement to 21,500 units, though EPA says this is a very low number “even
with continued improvements in economic activities” due to “the oversupply of
Noting that the ongoing economic recovery has turned a
three-year slide in rail freight traffic into a rebound year, EPA says that it
“was pleasantly surprised by the jump in railcar orders in the first quarter of
this year, amid reports of significant levels of idle equipment at the end of
last year. The 5,078 cars ordered in the opening quarter of 2010 represent the
highest quarterly level since the third quarter of 2008. New equipment demand
was confined to three car types—coal and related product service cars, covered
hoppers, and tank cars. While we are enthusiastic that the AAR is
reporting increasing utilization of previously idled cars, we believe that the
coal service cars are not a reflection of the need to expand fleet capacity,
but rather the replacement of aged equipment.”
Going into more detail, EPA says that “ethanol production
has been accelerating for a number of months, and previously idled cars are
being pressed into service. Given the large increase in ethanol production in
recent months, it is no surprise that the orders for hi-cube covered hoppers
were for DDG (distillers' dried grain) service. And, we suspect that a number
of the tank cars ordered are for ethanol service.”
The carbuilding pace will begin to pick up in 2012, says
EPA: “Far stronger economic activities will provide support for a variety of
certain railcar assemblies. The extremely low levels of deliveries this year
and next will serve to intensify the pressure to replace aging equipment in
various fleets during the longer-term forecast horizon. After three dismal
years, we look for railcar deliveries to advance moderately to 33,500 cars in
2012 and then expand annually to the level of almost 60,000 units in 2015.”
“From this point on,” says EPA, “we are enthusiastic about the
outlook for commodity and intermodal haulings but are cautious with regard to
new equipment demand in the short term due to the still-large amount of idle
capacity in the rail system. Still, the improvements in major commodities
markets will once again stimulate demand for rail equipment during the longer-term forecast horizon. Agricultural exports are rising, ethanol production is
accelerating, the housing market is improving, light vehicle sales are
expanding, manufacturing activities have been revived, and a stronger economy will
stimulate greater production of electricity. These activities will improve
haulings of grain, ethanol and distiller grain, lumber, motor vehicles and parts,
metals and products, chemicals, plastics, and coal. These improvements will
extend into 2011 and beyond.”
CSX Transportation and Canadian Pacific subsidiary Delaware & Hudson Railway have asked the Surface Transportation Board to approve a joint use arrangement in a north-south rail corridor linking the New York City metropolitan area with the international border at Rouses Point, N.Y. The joint-use corridor would include a line operated by D&H between Rouses Point Junction and Albany, N.Y.
As described in a statement Thursday, “D&H would operate all trains between Saratoga Springs, N.Y., and Rouses Point. Both railroads would conduct their own train operations between Albany and Saratoga Springs. Some of this traffic now moves over CSXT’s Massena Line, which runs from Syracuse, N.Y., to Huntington, Province of Quebec. The joint use arrangement would improve the transit time of this traffic to Albany by more than 45%, reduce transit miles by 35% and gross ton-miles by 442 million.”
The plan also calls for CSXT to handle certain D&H freight moving between Albany, N.Y., and the New York City boroughs of The Bronx and Queens, and enables D&H to offer significantly “greater frequency of service between Montreal and metropolitan New York City. D&H also will retain previously STB approved trackage rights between Albany and Fresh Pond (Queens).”
CSXT and D&H said they will continue to serve all current customers, including local shippers on CSXT along the Massena Line.
Union Pacific said late Thursday it is the first railroad to earn the Eastman Chemical Company Supplier Excellence Award for overall company performance. The award signifies consistent performance in providing Eastman with high-quality products and services and working on Eastman’s behalf to improve the company’s efficiency and competitiveness. It represents the highest level of all awards presented in the Eastman Supplier Excellence Program.
“Customer service is paramount at Union Pacific and we are extremely proud to receive Eastman’s Supplier Excellence Award,” said Diane Duren, Union Pacific vice president and general manager—Chemicals. “Our entire UP support team in operations and dispatching, as well as marketing and sales, play very important roles in providing customer value.”
Established in 1991 bythe Kingsport, Tenn.-based company, Eastman Chemical's Supplier Excellence Award is based on a supplier’s ability to meet the highest level of reliability and quality.
Recipients are selected by virtue of their outstanding contributions in working to create value for the company. In addition to these standards, a company's corporate image and overall stewardship are considered, as well as its history of service to its customers.
WLRoss-Greenbrier Rail Holdings, which was formed by WL Ross & Co., a private equity firm, and The Greenbrier Companies, announced Friday that it has acquired a lease portfolio of nearly 4,000 railcars valued at approximately $230 million.
The new company is owned by affiliates of WL Ross for the purpose of acquiring railcar assets to be managed by Greenbrier, which will receive management and other fees and incentive compensation tied to performance.
WLR–GBX said it intends to seek additional opportunities to acquire railcar lease portfolios.
William A. Furman,president and CEO of Greenbrier, said, “The formation of WLR–GBX and this portfolio acquisition are consistent with our stated strategy to use the WL Ross relationship with Greenbrier as a platform to pursue growth in less cyclical, higher margin, after-market opportunities. The pursuit of these opportunities through structured transactions, which Greenbrier helps originate and manage and in which WL Ross makes a direct investment, leverages our core competencies. The transaction will be accretive to earnings and presents the potential for the company to participate in significant upside.”
Wilbur L. Ross, Jr., chairman and chief executive officer of WL Ross, said, “The company is well-positioned for the expected rebound in demand for freight cars and the long-term growth resulting from rail’s fuel efficiency compared with motor freight.”
A short line plots land use development and alternative energy options, along with acquiring a right-of-way, to best advantage—and beats recessionary odds.
Parsons Brinckerhoff has appointed Richard A. Schrader chairman, succeeding Keith J. Hawksworth, who is retiring after 33 years with the firm.
In his new position, Schrader, currently Executive Vice President and Chief Financial Officer, “will provide broad policy oversight for PB,” the company said. PB has begun an executive search process for a CFO to succeed Schrader, who has been with PB for 27 years and has been a member of the firm’s Board of Directors since 1992.
Prior to joining PB in 1983, Schrader served on active military duty in the U.S. Army Corps of Engineers for 11 years with assignments on military construction projects, including command of an engineer company in Germany.
He has also served on the faculty of the United States Military Academy at West Point as Assistant Professor in theDepartment of Social Sciences. He has a bachelor’s degree from West Point, a master’s degree from The Johns Hopkins University School of Advanced International Studies, and an MBA from Long Island University.
Hawksworth, who joined PB in1976, served as CEO from December 2007 through December 2009 and during that time led a strategic planning process that resulted in PB’s October 2009 merger with Balfour Beatty, the international infrastructure group operating in professional services, construction services, support services, and infrastructure investments.
Prior to his appointment as CEO, Hawksworth was Chief Operating Officer of PB’s International division. He also served as head of PB’s Asia-Pacific operation and was PB’s Principal-in-Charge on many of the firm’s largest international projects.
“I look forward to having Rich as a partner in guiding PB going forward,” said PB President and CEO George J. Pierson. “I will continue to rely on Rich’s extensive expertise in financial management and will look to him for assistance in determining PB’s strategic direction.”
Schrader will also undertake additional duties in service of Balfour Beatty Group.
New York City Transit's subway and bus system will eliminate 1,722 jobs—by layoffsor attrition—by July 4, according to information filed with state authorities.
The planned elimination of the V and W subway routes and dozens of bus lines is responsible for the latest round of layoffs. These will cost the jobs of 122 subway car inspectors and 500 bus drivers.
New York Metropolitan Transportation Authority Chairman Jay Walder earlier announced plans to lay off 500 subway station agents and to eliminate 600 administrative positions through layoffs or attrition.
The staff reductions will make a dent, though not a big one, in MTA's looming $800 million operating budget deficit.
Both U.S. carload freight and intermodal traffic showed strength in the week ended April 24, the Association of American Railroads reported Thursday. Carload volume was at its highest level since the first week of December 2008, while weekly intermodal volume reached its highest level this year, AAR said.
U.S. carload freight was up 14.6% from the corresponding week in 2009, while still down 10.8% from the comparable week in 2008. U.S. intermodal traffic rose 15.1% from last year but trailed the 2008 total by 5.4%.
All 19 carload commodity groups were up from last year, led by gains in commodities associated with the steel industry: metallic ores, up 163%; metals, up 80.2%; waste and scrap, up 59.7%; and coke, up 12%.
Other notable increases included 25.3% for motor vehicles and equipment; 45.% for primary forest products; 22.8% for lumber and wood products; and 13.1% for chemicals.
Canadian carload freight for the week ended April 24 was up 22.5% from the comparable period in 2009, while intermodal traffic rose 10.1%. Mexico’s two major railroads reported carload freight rose 27.3% from the comparable 2009 week, while intermodal inched up 4.8%.
Combined North American rail volume for the first 16 weeks of 2010 on 13 reporting U.S., Canadian, and Mexican railroads was up 7.6% from last year, while intermodal advanced 9.9% from a year ago.
American Railcar Industries late Wednesday reported a first-quarter net loss of $7.0 million, or 33 cents per share, on revenue of $52.3 million, compared with earnings of $2.7 million, or 13 cents per share, in the comparable quarter of 2009.
The company attributed the lower revenue to lower railcar shipments and decreases overall average railcar selling prices, due to pricing pressures and a change in product mix. It noted such decreases were partially offset by increased railcar repair volumes due to completed facility expansions and the utilization of its railcar manufacturing facilities for railcar repair projects.
“The railcar industry, while still at a low point of the economic cycle, appears to be picking up momentum with reports showing that railcar loadings have increased and many stored railcars are returning to service,” said President and CEO James Cowan. “Along with this modest improvement, which may or may not continue, we have received an increased number of requests for quotations and have been successful in securing several orders in 2010. Both of our railcar manufacturing facilities have maintained production throughthe downturn, albeit at low levels. In spite of the weakness in new railcar manufacturing, our railcar services segment has been strong with 36% growth in revenues, year-over-year, to $16.7 million for the first quarter of 2010. This growth resulted from higher volumes driven by repair plant expansions and repair work performed at our railcar manufacturing plants.”
Cowan added, “We are also pleased to announce that the financing for Amtek Railcar Industries Private Limited, our Indian joint venture, was completed and a facility is currently under construction to manufacture railcars to service the Indian markets.”
During the first quarter, ARI shipped approximately 340 railcars as compared to approximately 1,490 railcars in the same period of 2009. Its backlog as of March 31 totaled approximately 500 railcars.
Trinity Industries, Inc. late Wednesday reported first-quarter revenue of $454.0 million, down from $793.5 million for the samequarter of 2009. Net income of $2.0 million, or $0.07 per common diluted share, included pretax transaction expenses related to the acquisition of Quixote Corp. that totaled $4.3 million. Net income for the same quarter of 2009 was $33.9 million, or $0.43 per common diluted share.
The company noted that its Rail Group had revenue of $73.6 million with an operating loss of $7.9 million in the first quarter, compared with revenue of $283.9 million and an operating loss of $5.8 million in the year-ago period. And one Wall Street analyst noted that the company’s earnings per share beat analyst expectations.
Trinity said its railcar backlog had increased during the quarter compared to the fourth quarter of 2009. As of March 31, TrinityRail’s order backlog totaled approximately $250 million, representing approximately 2,980 railcars, compared with a backlog of approximately $195 million, representing approximately 2,320 railcars at December 31, 2009. TrinityRail shipped approximately 500 railcars and received orders for approximately 1,150 railcars during the first quarter.
“We were encouraged during the first quarter by the orders we received in our rail, barge, and structural wind towers businesses that increased their backlogs since year-end, as well as the continued improvement in the utilization of our railcar lease fleet,” said Timothy R. Wallace, Trinity’s chairman, CEO, and president. “We were pleased during the first quarter to complete the acquisition of Quixote Corporation and the integrationis going very smoothly. We maintained strong liquidity during the first quarter, with $522.8 million in unrestricted cash and short-term marketable securities which contributed to a total liquidity of $1.2 billion at March 31, 2010.”
Steve Barger, director, Industrial Manufacturers, for KeyBanc Capital Markets, Inc., said the company’s optimism was justifiable. “In our view, TRN continues to execute very well through the downturn, and we continue to believe its diversified business model will allow it to stay EPS [earnings-per-share] positive through this cycle. Of note, TRN enjoyed its first positive book-to-bill ratio in its Rail Group “since the second quarter of 2008,” Barger wrote.