China is well ahead of the United States in high speed rail, with plans to invest nearly half a trillion (that’s trillion with a “t”) dollars through 2012 on a national network of rail lines, most of which would be dedicated (“true” or “very”) high speed lines with passenger trains operating at speeds up to 220 mph. Some 1,200 miles of HSR will open this year alone, at a cost of $50 billion. The country’s longer-term plans call for high speed routes expanding beyond China’s borders, linking Shanghai to Singapore and New Delhi and connecting Beijing and Shanghai to Moscow, Tehran, Prague, and Berlin. The Beijing to Shanghai system will be finished by early 2012, cutting travel time to four hours from 10 (pictured, a Chinese high speed train on the Zhengzhou-Xi’an line). By comparison, traveling by Amtrak from New York to Chicago on the Lake Shore Limited, a similar distance (about 1,000 miles), takes about 20 hours.
Now, following the Obama Administration’s $8 billion in starter funds for U.S. HSR systems, the Chinese want to leap across the Pacific and export and license their HSR expertise to the U.S., supplying technology, rolling stock, engineers—and financing. They’re attempting a jumpstart in California, where in the 19th century the Union Pacific hired thousands of Chinese laborers to build westward the nation’s first transcontinental railroad. The Golden Spike ceremony of 1869 at Promontory Summit, Utah, is a long time and distance away from San Francisco and Los Angeles, but those two cities, separated by 465 miles, represent an initial, $43 billion HSR link in a statewide system envisioned by the California Rail Authority. The Authority,which received $2.25 billion in federal HSR grant funds, needs up to $12 billion in private financing for this project, and the Chinese Ministry of Railways has taken a first step, signing cooperation agreements with the State of California and General Electric.
The MOR’s deal with GE is described as a framework agreement to license MOR technology. GE says the agreement stipulates that 80% of the content of locomotives and related control systems would have to be sourced from U.S. suppliers, with final assembly occurring in the U.S. The MOR would license its technology and supply engineers as well as up to 20% of the components. This agreement is similar to those that rolling stock suppliers to the domestic rail transit market like Siemens, Alstom, Bombardier, Kawasaki, and Hyundai-Rotem have with U.S. transit agencies.
Described by a World Bank transportation specialist as “engineering driven— they know how to build fast, build cheaply, and do a good job,” the Chinese Ministry of Railways says it is “the most advanced in many fields ... willing to share with the United States.” In an extensive interview with The New York Times, Chinese MOR HSR program chief Zheng Jian said his agency “can provide whatever services are needed. ... HSR requires a lot of high technology—we would send many high-end engineers and high-end technicians.”
The State of California seems highly interested in China’s plans, but at the same time the HSR Authority is looking at other proposals from the railways and suppliers of Japan, Germany, South Korea, Spain, France, and Italy. In these cases, the railways are closely aligned with suppliers—for example, SNCF/Alstom/SYSTRA; Deutsche Bahn/Siemens; or RENFE/Talgo.
But besides domestic content requirements, any effort the Chinese attempt to make in U.S. HSR will be filled with requirements and obstacles they don’t have to deal with in China: elected politicians, labor unions, U.S. Immigration, EPA, OSHA, ADA, etc., etc. Aside from exporting goods on container ships, the Chinese have virtually no experience dealing with U.S. regulatory and political bodies. By contrast, railway suppliers like Bombardier, Siemens, Alstom, Talgo, and Ansaldo already have years of U.S. experience behind them. According to The Times, “Zheng said repeatedly that any Chinese bid would comply with all American laws and regulations.”
Easier said than done.
Then there is the issue of intellectual property. Zehn indicated that all of the HSR technology would be Chinese, but according to The Times, “State-owned Chinese equipment manufacturers initially licensed many of their designs over the last decade from Japan, Germany, and France. While Chinese companies have gone on to make many changes and innovations, Japanese executives in particular have grumbled that Chinese technology resembles theirs, raising the possibility of legal challenges if any patents have been violated.” There is some precedent, as this is similar to a scenario the U.S. freight rail supply community has dealt with in the past. For example, several domestic suppliers have grumbled to Railway Age that, after licensing agreements expired, Chinese suppliers continued manufacturing patented, U.S.-design, AAR-approved freight car components without permission.
China is well-stocked with capital and appears ready to bring it to the U.S. HSR table. According to The Times, “China’s mostlystate-controlled banks had few losses during the global financial crisis andare awash with cash now because of tight regulation and a fast-growing economy.The Chinese government is also becoming disenchanted with bonds and looking to diversify its $2.4 trillion in foreign reserves by investing in areas like natural resources and overseas rail projects. [The MOR] has already begun building HSR in Turkey, Venezuela, and Saudi Arabia, and is looking for opportunities in seven other countries, notably a route sought by the Brazilian government between São Paulo and Rio de Janeiro.”
Interestingly, an automobile assembly plant that until late last week turned out Japanese and American cars—the General Motors/Toyota NUMMI (New United Motor Manufacturing Inc.) joint venture in Fremont, Calif., which produced the Toyota Matrix/Pontiac Vibe sport-compacts plus other Toyota models—is shutting down after 25 years, eliminating nearly 5,000 jobs. One idea under consideration is converting the factory to the assembly of HSR equipment, according to California HSR Authority Board Member David Crane, who is also a member of the state’s Economic Development Commission. Instead of Japanese auto parts, Chinese-sourced rail equipment components would arrive through thenearby Port of Oakland.
Regardless of how the Chinese interest in U.S. HSR pans out, swapping automobiles for high speed trains is something the State of California and the Obama Administration would love to see happen.
—William C. Vantuono, Editor
U.S. railroads continued to notch gains in both carload and intermodal traffic during the week ended April 3 compared with levels of a year ago, the Association of American Railroads reported Thursday.
Carload traffic rose for the sixth straight week, up 10.7% from the year-ago week, though still down 11.8% compared with the comparable period in 2008. Intermodal traffic rose for the 12th straight week, up 6.2% from last year’s levels, though still trailing the comparable 2008 week by 9.4%. Good Friday, which is observed as a holiday on many railroads, occurred during the 2010 week but not in the comparison weeks from 2009 and 2008, AAR noted.
Total volume for the week was estimated at 31.3 billion ton-miles, up 11% from last year, though down 9.3% compared with the comparable week in 2008. Seventeen of 19 carload commodity groups showed gains from a year ago, with the largest coming from products associated with metals: metallic ores, up 104.2%;metals, up 84.1%; scrap, up 39.8%; and coke, up 30.3%. Motor vehicles and equipment rose 21.3%.
Canadian carload traffic for the week ended April 3 was up 14.8% from last year, while intermodal rose 6.1%. Cumulative volume on Canadian railroads has been ahead of year ago levels every one of the first 13 weeks this year.
Mexican carload traffic gained 4.3% over comparable 2009 traffic, while intermodal edged up a modest 0.4%.
Combined North American rail volume for the first 13 weeks of 2010 on 13 reporting U.S., Canadian, and Mexican railroads was up 5.2% from last year, with intermodal up 8.8% during the same span.
Los Angeles County Metropolitan Transportation Authority Wednesday offered a media briefing on its proposed light rail transit “Regional Connector,” which would unite Los Angeles LRT operations by linking them through downtown.
LACMTA said the Regional Connector would eliminate some existing transfers, allowing through-center city travel on LRT from Pasadena to Long Beach or from East LA to Culver City. The agency offered as an option an underground route through Little Tokyo, but some critics note the Regional Connector would generate a new transfer point within Little Tokyo itself.
The agency said the Regional Connector would generate about 17,000 new riders and boost ridership on several existing lines, including some double-digit projected increases.
Trip times also would be reduced significantly, LACMTA said: a trip from East LAto USC, now estimated to take 44 minutes, would be only 31 minutes with the connector. At present, riders can bridge the gap by using LA's Red Line between Union Station and 7th Street Metro Center stations (see map).
LACMTA plans to complete its Draft Environmental Impact Statement and Report (DEIS/R) this summer, and will hold another round of public hearings following its release.
Dallas Area Rapid Transit will close its Union Station light rail stop for roughly 45 days, beginning April 12, to adjust platform heightsto facilitate boarding and exiting of its light rail vehicles. DART hopes to complete the work by May 26.
Alternate bus service will be offered to riders linking Union Station and LRT stops at Dallas Convention Center and in the West End.
DART has plans to modify platform heights at several stations to better serve its low-floor “C” unit railcar retrofits now being placed within its existing Kinkisharyo rolling stock. The adjustments will expedite passenger flows and make boarding and departure easier as well, DART says.
LaGrange, Ill.-based Electo-Motive Diesel Inc. this week marked its fifth year as an independent manufacturing company since being spun off from General Motors Corp. in April 2005. The locomotive builder celebrated the occasion at its headquarters and manufacturing facility along with Reps. Dan Lipinki (D-Ill.) and Judy Biggert (R-Ill.), McCook, Ill., Mayor Jeffrey Tobolski, and Countryside, Ill., Mayor Robert A. Conrad.
Said EMD President and CEO John S. Hamilton, “Five years ago there were feelings of uncertainty regarding the future of the organization. Employees who had worked their entire careers at GM did not quite know what to expect as there were many challenges facing the company.” He added, “There is little doubt that had EMD remained under GM ownership that the story today would be quite different.” Hamilton went on to describe EMD as arguably the most successful of all GM spinoffs despite the effects of the great recession.
The company says in that five-year span, it has increased investment in R&D, nearly tripled capital expenditure,s upgrading its factories with state-of-the-art equipment, doubled revenue, increased exports five-fold, and grew its labor force and supplier base significantly.
Hamilton said, “EMD is an iconic American high-technology manufacturing company that has transformed itself into one of the true success stories in heavy manufacturing.”
“EMD’s ability to successfully navigate through a period of extraordinary economic turmoil is a testament to the talent and hard work of the investors and managers who have revitalized this once-dominant company since purchasing it from General Motors,” Congressman Lipinski said. “EMD’s performance over the past five years furnishes yet more proof that with dedication, foresight, and the proper investment, American manufacturing has what it takes to thrive in today’s global economy. I congratulate EMD and its employees, and I look forward to watching it build on its storied past and continue growing as a major employer in the Third District for many years to come.”
“It’s exciting to celebrate this special anniversary with all the dedicated employees whos eingenuity and hard work have made Electro-Motive Diesel such a success,” said Congresswoman Biggert. “In just a few short years, the company has positioned itself as an industry leader, bringing advanced and efficient designs to our rail yards, expanding exports, and creating good jobs right here in suburban Chicago. I congratulate John Hamilton and his staff on their anniversary, and I look forward to seeing EMD continue to grow, innovate, and prosper.”
EMD also noted it and South Africa’s Transnet RailEngineering (TRE) completed delivery last month of 50 Class 39-200 locomotives to Transnet Freight Rail (TFR). The completion of the entire order took less than a year once production started. The delivery marked the first new diesel locomotives ordered by TFR in more than 20 years. EMD cultivated more than 300 South African suppliers to give the Class 39-200 locomotive 67% local South African content.
EMD last month also signed a Memorandum Of Understanding with the Mohawarean Group in Saudi Arabia to form a joint venture, under which EMD would “provide expert service training and technical support to the maintenance and operational personnel for the entire fleet of locomotives in the region.”
TieTek LLC, a manufacturer of composite railroad ties,recently filed for Chapter 11 bankruptcy protection. The company’s assets are for sale and the deadline for bids is 5:00 CDT on Friday, April 16, 2010, according to Robert Fowler, president of VR Mergers & Acquisitions, whichis handling the bankruptcy sale.
VR is the Bankruptcy Court-approved broker for TieTek, LLCand its parent companies, TieTek Technologies, Inc., and North American Technologies Group, Inc. TieTek, LLC is based in Marshall, Tex., and has manufactured and sold more than 1,000,000 composite railroad ties made from recycled materials including plastics and rubber from discarded tires. The company’s 2008 revenues topped $32 million in 2008. Some of its customers have been BNSF, Chicago Transit Authority, CSX, Long Island Rail Road, Norfolk Southern, and Union Pacific. It also has sold its railroad composite ties in the United States, Australia, Bangladesh, Brazil, Canada, India, and Japan.
VR points out that TieTek and North American Technologies Group jointly own a complete set of patents that cover the formulas and processes for making composite railroad ties. In 2008, the Society of Plastic Engineers awarded TieTek its 2008 Achievement Award for “Sustainabilityand Recycling for a Greener Environment.”
Among the railroads, Positive Train Control has been characterized as a $15 billion unfunded mandate that will ultimately divert capital dollars away from other programs, and that offers an unattractive cost:benefit ratio of 22:1. At the same time, the railroads all confirm that they will meet the federal statutory deadline of year-end 2015 for PTC implementation.
The railroads can now say that PTC is a “mostly-unfunded”mandate, following the Federal Railroad Administration’s announcement of its new $50 million Rail Safety Technology Program, a grant program designed to provide funds “for the deployment of PTC collision avoidance systems and complementary advanced technologies.”
FRA will begin accepting grant applications on April 9, 2010. Eligible applicants include passenger and freight rail carriers, railroad suppliers, and state and local governments. The program requires that the funded PTC projects or related systems be ready for deployment within 24 months of the grant award. FRA says it will give preference to “collaborative projects sponsored by multiple railroads and public authorities that satisfy one or more specific objectives, particularly interoperability. Those seeking funds for PTC under the program must have either received FRA approval of a Technology Implementation Plan and PTC Implementation Plans or successfully demonstrate to FRA that they are currently developing them.”
The new grant program was authorized under the Rail SafetyImprovement Act of 2008 and has an 80/20 cost-sharing requirement. FRA says applications will be reviewed immediately following the July 1, 2010 filing deadline. Selection announcements will be made on or around September 3, 2010.
In the latest demonstration of voters willing to tax themselves to secure rail passenger service stability, even amidst recession, St. Louis County citizens Tuesday approved Proposition A, a half-cent sales tax increase to support Metro light rail and bus service.
Unofficial returns showed 63% of those voting supported the tax. Turnout, however, was light.
The approved measure is designed to provide up to $90 million per year to pay for operations and capital expansion of the transit system, including growth in light rail routes serving the bistate St. Louis metropolitan area.
Metro officials had claimed failure to pass Proposition A would have triggered personnel layoffs and significant cuts to LRT and bus service. Opponents of Proposition A said defeating the measure would prompt much-needed reforms within Metro.
Metro President and CEO Bob Baer said that, with the passageof Proposition A, bus and light rail routes and service cut last year will berestored. “Instead of a loss of 600 jobs, we'll be adding 125,” he added.
Passage of Proposition A also triggers a previously passed 0.25% tax increase in the city of St. Louis.
Banyan Rail Services Inc. announced that its subsidiary, Wood Energy Group, Inc., has completed construction of a tie grinding facility in Shreveport, La. Wood Energy reclaims railroad ties and then disposes of them to the energy co-generation or landscape markets.
At its new Shreveport facility, Wood Energy is providing the reclaimed product to International Paper.
Kansas City Southern recently signed an agreement with Wood Energy to deliver ties to the plant in Shreveport.
Banyan Rail Services is headquartered in Boca Raton, Fla.
Though expressing some caution with the pace of the company’srecovery, KeyBanc Capital Markets Inc. analyst Steve Barger believes Greenbrieris on track. “The weaker than expected quarter does not derail our positiverailcar and GBX thesis,” Barger wrote, adding that Keybanc is “maintaining our ‘Buy’rating” for the company’s stock.
Barger added, “We are encouraged that GBX plans to restartrailcar production in its Concarril facility (Mexico) beginning in fiscal 4Q10.In our view, this suggests order inquiries have likely accelerated recently,providing GBX with ample visibility to restart production.”
Greenbrier also announced Wednesday that it had filed a $300 million universal shelf registration statement on Form S-3 with the Securities and Exchange Commission to offer $300 million in stock. But “we currently have no plans to offer or sell securities under this registration statement,” stated Mark Rittenbaum, executive vice president and chief financial officer. If approved by the SEC, the shelf registration statement would remaineffective for three years.