Toronto-based Fraser Papers, Inc., a shipper served in Maine by the Montreal, Maine & Atlantic Railway, has hailed the action by the Maine state legislature to identify $57.8 million in bonds, including roughly $10 million to purchase 240 miles of MM&A right-of-way. Such action still requires approval by state voters, who will decide this November whether the expenditure is worthwhile.
But Fraser Papers has taken the issue a step further, suggesting that if Maine itself purchases the route, service should be provided with railway companies bidding on the use of the lines, with possibly more than one provider traversing the route—what’s known in the industry as “open access.”
Fraser Papers identified Canadian National and Saint John, New Brunswick-based regional railroad NB Southern Railway as possible competitors to serve the route. NB Southern Railway also serves Maine and Quebec.
Fraser Papers' Edmundston-Madawaska pulp and paper operation, straddling the Canadian-U.S. border, relies on the rail line to ship the vast majority of its paper.
MM&A, which owns track in Maine, Vermont, Quebec and New Brunswick, sought permission in February to abandon the Maine right-of-way, which runs from Madawaska to Millinocket, Maine.
The Surface Transportation Board announced Wednesday that it will ask MM&A officials and the Maine Department of Transportation to discuss formal mediation efforts in Washington. A hearing has been scheduled for April 22 at STB headquarters.
Said STB: “The
Board believes that a meeting between the State and MMA, facilitated by Board
staff, could be very beneficial in this case. While there is much that
separates these parties, they also share some common interests. The State is
interested in acquiring these lines to protect local industries and
communities, while the railroad wishes to relieve itself of the obligation of
owning and operating these rail lines if abandonment authority is granted. In
these circumstances, the Board believes it is in everyone’s best interest to
explore any and all options that may help preserve this rail corridor as part
of the national rail system. We appreciate that the parties already have been
engaged in lengthy discussions toward that end, and we encourage them to
continue to do so. The Board has mediation resources and staff with extensive
knowledge of its abandonment, discontinuance, and offer of financial assistance
(OFA) procedures that may help the parties reach an agreeable resolution of
some of their issues. A meeting
between the railroad and the State under the auspices of Board staff may thus
offer opportunities for the consideration of procedures that could benefit all
the parties in the case.”
The New York Metropolitan Transportation Authority announced Tuesday a new breakthrough in its search for ways to shrink this year's expected operating budget gap of nearly $800 million. MTA said it had renegotiated contracts with 43 vendors and suppliers, saving $18 million in 2010 and more than $70 million over the life of the contracts.
This news came one week after the MTA said it was saving more than $40 million, without affecting services, by eliminating more than half of the planned projects in its 2010 operating budget.
“Companies in financial distress often go back to vendors and ask them to renegotiate contracts and that's exactly what we're doing here,” MTA Chief Operating Officer Charles Monheim said. “We took a new approach asking our suppliers if they could do better and in many cases, the answer was yes.”
The biggest savings, $15.9 million, came from new contracts with paratransit providers, which Monheim said was possible because of increased competition. Renegotiated contracts with IT vendors, parts, and other suppliers resulted in $2.6 million in savings.
Previously, the MTA identified $49 million in savings through a 15% reduction in administrative payroll.
Press reports said the consulting firm Accenture helped develop the savings strategies.
As for vendors that refuse to renegotiate, The New York Times quoted Manheim as saying: “They will be given all the rights any contractor will receive. But we may be less inclined, where we have discretion, to be favorably disposed to them.”
Electro-Motive Diesel, Inc. (EMD) announced that it has established multiple warehouse operations in China to support a growing fleet of 6,000-horsepower diesel locomotives. EMD won a contract in September 2005 to supply 300 locomotives to the China Ministry of Railways.
The new parts warehouses are located in Northeast China close to customer maintenance operations, and are configured to meet both the customer and EMD’s needs. “The customer measures locomotive fleet performance based on the amount of time each locomotive is not available to move freight thus swift and efficient parts supply is necessary to minimize downtime,” noted EMD.
“Each of the warehouses is designed to fit within the structure of EMD’s global materials management and finance operations and assuch, each utilizes EMD’s Enterprise Resource Planning (ERP)system,” said EMD. “This system allows for immediate access to inventoryinformation such as the location, and routing of parts.”
As expected, New Jersey Transit’s Board of Directors Wednesday approved fare increases averaging roughly 22% for its rail, light rail, and bus operations. Statewide rail operations suffered the steepest increase, averaging 25%, the target increase initially advanced by NJT earlier this year.
By contrast, increases for intrastate bus and light rail operations were more modest, up about 10%. NJT also restored almost $4 million in bus routes eliminations that were announced in March.
Off-peak rail discount fares will be eliminated. All changes are set to take effect Saturday, May 1.
Aware of the inevitability of the Board’s actions Wednesday, rail advocates attending the meeting at NJT’s Newark, N.J. headquarters still voiced their dissent, with one speaker lamenting the state’s willingness to punish transit riders “for doing the right thing,” while the state’s drivers suffer no comparable fate.
Gov. Chris Christie has vowed not to raise New Jersey’s state motor fuels tax, currently among the lowest in the nation. The state last raised its motor fuels tax, which funds the Transportation Trust Fund, in 1988. The TTF is a primary source of capital for improvements to New Jersey’s rail and highway infrastructure.
For additional perspective on see Railway Age Editor William C. Vantuono’s editorial, “Read my lips: No new gas tax?”
Maine Gov. John Baldacci said Tuesday he has created a watchdog group to oversee the proposed abandonment of about 240 miles of right-of-way and possible state purchase of the property.
Baldacci announced the move one day after state legislators in both houses approved a $57.8 million bond package containing $14 million to purchase northern Maine’s last major rail line, operated by Hermon, Maine-based Montreal, Maine & Atlantic Railway. The measure had sailed through the state House but the state Senate had balked at the proposal, with fiscal conservatives objecting to the potential debt burden passage would place on the state.
“This task force will ensure that [the] abandonment andacquisition process is done openly and in a way that protects the interests of Maine taxpayers,” Baldacci said in a statement Tuesday. “It will also work with the Department of Transportation and other interested parties to develop an operating plan once the railroad is purchased.”
The plan include the creation of a public-private partnership with the state, either MM&A or another carrier, and 22 stakeholders, including some of Maine’s largest manufacturers and businesses, to help acquire federal funding to save rail freight service in northern Maine. On a visit to Bangor, the state capital, earlier this month, FRA Administrator Joseph C. Szabo recommended such a partnership.
CSX Corp. today announced a 22% year-over-year improvementin earnings per share from continuing operations in the first quarter. Earnings rose to $306million, or 78 cents per share, from $254 million, or 64 cents per share, inthe same period last year.
“CSX drove strong efficiencies in its operations andproduced outstanding results as the economy continued to recover,” said MichaelJ. Ward, chairman, president and chief executive officer (pictured). “We areparticularly proud of our excellent safety performance in the quarter, as ouremployees achieved record results in one of America’s safest industries.”
First quarter revenue increased 11% from the prior year tonearly $2.5 billion, with gains in most commodity groups. Higher revenuescombined with increased productivity resulted in a record first quarteroperating ratio of 74.5% and record first quarter operating income of $634million.
“Our focus on safety, service, and productivity haspositioned CSX to produce strong results as the recovery continues,” Ward said.“These results will enable the company to continue investing in its business tosupport the nation’s growing demand for freight transportation, while driving shareholdervalue.”
CSX has invested approximately $5 billion in its networkover the past three years, and is investing another $1.7 billion in 2010.
Dahlman Rose & Co. Director-Equity Research and Railway Age Contributing Editor Jason Seidl sees CSX's results as an indicator of overall rail industry strength: “CSX, which grappled with historically high utility coal stockpiles and harsh winter weather conditions, delivered revenues of $2.50 billion, beating both our and consensus estimates of $2.40 billion and $2.37 billion. Despite a mere 5% growth in carloadings, revenue jumped 11% year over year as the pricing environment remained strong and fuel surcharges increased. More important, the solid top line performance trickled down to the bottom line. We believe that CSX’s ability to accommodate incremental business without having to significantly ramp operating resources is a manifestation of the existence of operating leverage in the rail industry. CSX achieved overall core price increases around 5% in the quarter, which is at the high end of the company’s previous full year guidance, above our expectation. We are raising our earnings estimates to reflect a strengthening freight recovery, improving coal outlook, solid pricing, and high incremental margins. We continue to rate shares of CSX a buy as we believe there is ample upside for investors who wish to have exposure to the Class I railroad sector.
Norfolk Southern and Electro-Motive Diesel, Inc. have entered into
a joint venture to test blended biodiesel locomotive fuel. In what both parties
are describing as “one of the most extensive testing programs to date on the
use of biodiesel fuel for locomotives, ten units—eight EMD SD70M-2 road units
and two EMD MP15, all owned by NS, will run in regular service for uo to 11
months to evaluate of performance over a wide range of operating and
environmental conditions. Biodiesel’s effect on emissions, fuel consumption,
performance, and durability will be evaluated. The fuel blends will range from
B10 (10% biodiesel) to B20 (20%).
“Biodiesel fuel, a renewable resource, has been shown to reduce
emissions of greenhouse gases, hydrocarbons, and particulate matter, while
essentially eliminating exhaust emissions of sulfur oxides and sulfates,” said NS
Vice President Real Estate and Corporate Sustainability Officer Blair Wimbush. “Norfolk
Southern is committed to exploring ways to conduct our business using renewable
resources. Our work with EMD will hopefully result in an environmentally sensitive,
domestically-produced fuel option for the rail industry.”
“This demonstration is a part of EMD’s work in further reducing
emissions and improving the efficiency of our locomotives and our environmentally
friendly two-stroke engine.” said EMD President and CEO John S. Hamilton. “We
look forward to working with NS on efforts to positively impact the environment
and decrease U.S. dependence on foreign oil.”
Two companies that operate a total of 102 short line and
regional railroads—RailAmerica and Genesee & Wyoming (GWI)—have reported
solid gains in freight traffic for March.
RailAmerica’s 40 railroads, which operate over approximately
7,400 miles of track in 27 U.S. states and three Canadian provinces, carried
75,295 carloads of freight in March, up 8.7% from March 2009. These results exclude
the discontinued Ottawa Valley Railway operation.
RailAmerica reported increased shipments in six out of 12
commodity groups in March. Much of the increase was in shipments of
agricultural products, chemicals, and metallic ores and metals. The largest
declines were in coal and the catch-all “other” commodity group.
Genesee & Wyoming’s 60 railroads, operating over 9,400
miles of track in the U.S., Canada, Australia, and the Netherlands, carried 74,923
carloads in March, an increase of 6.9% over March 2009.
The strongest growth was in steel shipments in GWI’s New York/Ohio//Pennsylvania
and Southern regions, and in grain shipments in the Australia Region.
Railroad customers will turn the spotlight on such urgent industry issues as Positive Train Control and re-regulation at the 2010 North American Rail Shippers annual meeting. The sessions will be held at the Mayflower Renaissance Hotel in Washington, D.C., May 26-28.
"Both PTC and re-reg will impact customers and rail carriers alike," notes NARS President Allan Roach. "PTC is estimated to cost $10 billion. If the government doesn't subsidize that in some way and the railroads still have to do it, who's going to pay?"
"There are two sides to re-regulation," adds Roach. "Some shippers believe it will reduce transportation expenses, while railroads say it will force them to curtail capital spending—just when they are expected to carry more of the nation's freight."
A key NARS feature is the railroad chief marketing officers' panel, followed by breakout sessions where shippers can discuss their concerns with railroads individually.
U.S. Department of Transportation Secretary Ray LaHood has been asked to give the opening address, followed by Association of American Railroads and Norfolk Southern Chairman Charles W. Moorman.