Canadian National Monday reported second-quarter profit fell 16%, reflecting the falloff in freight rail traffic, with net income at C$387 million (US$350 million), or 82 Canadian cents per diluted share, compared with C$459 million, or 95 Canadian cents per diluted share, in the comparable 2008 quarter. Operating income fell 18% to C$583 million.
CN revenue declined 15% to C$1.8 billion (US$1.6 billion). Operating expenses fell 14% due to cost-containment measures and a “significant reduction” in fuel prices compared with the comparable quarter, CN said. CN's operating ratio increased by one percentage point to 67.3%.
The strengthening of the U.S. dollar affected the conversion of the company's U.S.-dollar-denominated revenue and expenses, increasing second-quarter 2009 net income by C$15 million, or C$0.03 per diluted share, the railroad said.
But E. Hunter Harrison, president and chief executive officer, said, "I think we've seen the bottom. "
"The second quarter of 2009 saw a continuation of significant weakness in most of our commodity groups as a result of the current recession in North America and difficult global economic conditions, with all groups but coal registering double-digit declines in carloadings," Harrison said. "The biggest declines were in metals and minerals shipments, principally on account of a sharp reduction in short-haul iron ore movements in northern Minnesota, and in automotive and forest products traffic. Intermodal, grain and fertilizers, and petroleum and chemicals saw lesser declines. Coal was a bright spot, however, as a result of higher U.S. shipments resulting from our acquisition" of the Elgin, Joliet & Eastern Railway.
"CN's solid pricing has limited its top and bottom line slide," Dahlman Rose Director Equity Research and Railway Age Contributing Editor Jason H. Seidl noted. "While volumes based on carloads declined 22%, top line results came in just 15% below the prior year as average revenue per carload increased by 9% due in part to the continuing 4-5% increases in pure price gains, positive changes in traffic mix and FX (foreign exchange). While volume declines were significant, the operating ratio was 67.3%, vs. an operating ratio of 66.3% in 2Q08. On the balance sheet, the company maintains a strong cash position with $238 million increase in free cash flow year-to-date over 2008. While we believe that CN’s optimism regarding solid pricing and a potential bottoming of the market may be well founded, we believe that volumes will continue to decline in the near term and that any turnaround in the market is likely to be slow and gradual. [Yet,] we reiterate our Buy rating as CN continues to be a way for investors to own a 'best in class' company that continues to generate strong free cash flow in a difficult operating environment. CN's prospects for the long-term are favorable despite the ongoing freight recession. The company noted that it sees some signs of improvement in the environment and that business volumes may have reached a bottom. Specifically, the company cites optimism regarding possible improvements in the merchandise business, auto production, steel production, chemicals, petroleum and forest products. We note that these last four industries are expected to enjoy positive growth rates over the next 6-12 months according to our recently published proprietary rail shipper survey."
Seattle's Sound Transit light rail transit ridership Monday, the first day of revenue service, was reported to be light on the 14-mile line. The line made its debut this past weekend, when approximately 92,000 people were given free rides during the two-day period. One-way fares range from $1.75 to $2.50.
The heaviest ridership so far has occurred close to downtown, according to Martin Young, a manager helping with Monday's startup. The 600-space park-and-ride lot at Tukwila International Boulevard Station, one of the few park-and-ride lots provided by the new line, was reported to be about 25% full.
Sound Transit projects 26,600 per weekday by the end of the first year; ridership on Monday appeared to fall short of that projected target. "It's a Monday morning, on a brand new system, on a really nice sunny summer day in July," Sound Transit spokeswoman Linda Robson pointed out.
Sound Transit also has yet to adjust its bus routes to offer transfer opportunities; many bus routes will be adjusted this fall. Sound Transit LRT also will be extended two miles to Seattle-Tacoma International Airport by the end of the year; a shuttle bus from Tukwila Station currently connects the new line to the airport.
New Jersey officials, led by Gov. Jon Corzine, Saturday announced that light rail transit was the preferred rail option to serve the CSX Northern Branch, traversing the eastern portion of Bergen County, New Jersey’s most populous county.
NJT Executive Director Rich Sarles, participating in the press conference held Saturday in Ridgefield, N.J., to announce the decision, said preliminary engineering could begin in 2010, with groundbreaking in 2011, and revenue service beginning in 2014.
The decision in effect extends the existing Hudson-Bergen Light Rail Transit (HBLRT) line north 11 miles from its current terminus in North Bergen (Hudson County), N.J., to Tenafly, in Bergen County, making the HBLRT moniker more accurate.
The move also reverses efforts by many to implement a diesel multiple-unit (DMU) shuttle service on the 11-mile stretch, with passengers transferring to and from existing HBLRT operations (shown at left). The DMU proposal itself was advanced beginning in 2003; prior to that, New Jersey Transit had given strong indications that it would extend light rail into Bergen County.
CSX currently operates a light freight schedule on the Northern Branch, cited by some to justify the DMU option to comply with Federal Railroad Administration safety regulations. LRT proponents countered that temporal separation measures, such as those used within New Jersey by both Newark Light Rail and RiverLINE diesel light rail transit operations, could be used equally effectively to address safety concerns.
New Jersey Transit says it has submitted a revised Draft Environmental Impact Statement to the Federal Transit Administration for approval for public release, expected shortly. Public hearings on the DEIS are scheduled to be held in Northern Branch communities this fall. Those communities include Ridgefield, Palisades Park, Leonia, Englewood, and Tenafly.
A National Transportation Safety Board investigator says it appears that the operator of a San Francisco Municipal Railwa (MUNI) light rail car switched fromautomatic to manual control just prior to a crash injuring 48 passengers. The train operator also was injured; none of the injuries was considered life-threatening.
The accident occurred July 18 as a westbound L train struck a K train that was sitting at a boarding platform in the West Portal Station, the western end of MUNI’s busy, underground LRT conduit running beneath the city’s Market Street. Investigators have found that the L-Taraval outbound train was switched from automatic to manual mode while still inside the tunnel approaching the platform. Normal MUNI procedure is to wait until the train enters the station to switch to manual.
The MUNI operator reportedly told investigators he blacked out shortly before the accident.
This incident is the latest of several rail accidentsoccurring in recent weeks, including an accident May 9 involving two Massachusetts Bay Transportation Authority (MBTA) Green Line light rail transit trains that injured 49, and the deadly crash June 22 on Washington’s Metro RedLine, resulting in nine fatalities.
In the MBTA incident, the operator was suspected of text messaging against regulations, similar to the suspected actions of a Metrolink engineer last September, among the dead after his train ran a red signal and crashed into a Union Pacific freight train in Chatsworth, Calif.
A flaw in the automatic train control system, not operator error, appears the likely cause of the Washington MetroRail crash.
Norfolk Southern CEO Wick Moorman described to the National Governors Association on Saturday how public-private partnerships “can create additional capacity in our rail transportation network, with public benefits of jobs creation, less highway congestion, lower environmental emissions, and fuel savings.”
Addressing a meeting of the association at Biloxi, Miss., Moorman (pictured at left) cited two public-private ventures – the Heartland Corridor between the Port of Virginia and Columbus, Ohio, and Chicago, and the Crescent Corridor linking New Jersey to New Orleans and Memphis, Tenn. – as examples.
He said the Crescent Corridor alone will create 41,000 “green jobs over the next decade and shift more than a million trucks a year off the highways and onto rails, saving more than 150 million gallons of fuel annually as well as reducing carbon emissions by nearly two million tons a year.”
It will take more strategic initiatives like these, Moorman suggested, to prepare the railroads to handle their share of freight volumes that transportation economists predict will grow 86% by 2035.
“Our nation’s transportation network is a complex, interdependent system that demands our combined creative efforts to operate it most efficiently,” Moorman said. “Our experience at Norfolk Southern has shown that by working together in public-private partnerships, we can achieve far more in far less time and with far greater public benefits than any of us can by working alone.”
The state of Wisconsin will purchase two 14-car train sets from Las Rozas, Spain-based Patentes Talgo SA to replace current equipment used in Amtrak’s Hiawatha Service between Milwaukee and Chicago. The agreement includes an option to buy two more trains if the state gets federal stimulus money to extend rail service from Milwaukee to Madison, the state capital.
An inaugural shuttle train will depart New Jersey Transit’s Hoboken Terminal July 20 bound for a new station at the Meadowlands Sports Complex in East Rutherford, N.J. Dignataries, including Gov. Jon Corzine and NJ Transit Executive Director Richard Sarles, are scheduled to be joined by Robert Wood Johnson IV, owner of the New York Jets, and counterpart New York Giants owner John K. Mara, on the inaugural run.
The train will travel on existing NJ Transit right-of-way from Hoboken to NJT’s Pascack Valley Line in Bergen County, diverging onto a new 2.3-mile J-shape spur looping back to the sports complex and terminating at the new Meadowlands Rail Station, where a ribbon-cutting ceremony will be held.
Denver's Regional Transportation District and BNSF have reached agreement for RTD to acquire part of BNSF's Denver-Cheyenne, Wyo., route for regional passenger rail use. The segment stretches from Denver Union Station to 72nd Street in Westminster, Colo.
RTD will pay $93.7 million for the acquisition, plus roughly $32 million in relocation expenses; BNSF will be required to relocate a yard and some tracks.
RTD will use the route for its Northwest Rail Corridor and for the Gold Line along BNSF's Front Range Subdivision. The purchase is part of RTD's FasTracks transit expansion program implementing regional rail service, and expanding light rail operations, in the Denver area, using Denver Union Station as a hub.
RTD recently concluded a similar agreement with Union Pacific, acquiring part of a UP route to form the planned North Central Corridor line.
“This agreement represents yet another significant milestonefor FasTracks,” said RTD General Manager Cal Marsella.
“BNSF is pleased to have concluded thisMemorandum of Understanding with RTD, and we look forward to reaching a formalpurchase and related agreements with RTD as it continues to develop FasTracks,”said Jeff Wright, BNSF’s region vice president, Central Operations.
Secretary of Transportation Ray LaHood and Federal Railroad Administrator Joseph Szabo announced Thursday proposed rules designed to prevent train collisions through the use of Positive Train Control (PTC). The Notice of Proposed Rulemaking (NPRM) prescribes how railroads must use PTC systems to prevent train-to-train collisions.
DOT and FRA noted that under the Rail Safety Improvement Act of 2008, major freight railroads and intercity and regional rail operators must submit their plans for PTC to FRA for approval by April, 16, 2010. PTC systems must befully in place by the end of 2015. The proposed rules will specify how the technically complex PTC systems must function and indicate how FRA will assess a railroad’s PTC plan before it can become operational.
“These proposed rules give railroads the framework to use this life-saving technology,” said LaHood (at right). “We believe this is an important step toward making freight, intercity and commuter rail lines safer for the benefit of communities across the country.”
“FRA is setting the bar high interms of design, construction, and oversight of PTC technologies among different railroads,” said FRA Administrator Szabo. “FRA will continue to advocate for ways to strengthen safety standards in the railroad industry.”
FRA is coordinating efforts with the Federal Communications Commission to make a sufficient amount of radio frequency spectrum available, which it said is essential for PTC technology to function properly. DOT and FRA said this development will allow PTC technology to send and receive a constant stream of wireless signals regarding the location and speed of passenger and freight trains moving along rail lines.