In a stunning move certain to affect the rail supply industry within North America and beyond, London-based Balfour Beatty plc, Britain's biggest builder, has agreed to buy construction and infrastructure-services provider Parsons Brinckerhoff Inc., a U.S. powerhouse, for $626 million.
Balfour Beatty said Friday it plans a $583 million rights offer to provide the majority of funding for the acquisition. New York-based PB, which is employee-owned, had annual sales of $2.34 billion in fiscal year 2008, which ended in October.
PB’s prominence in the U.S. likely will aid Balfour Beatty as the U.S. market for rail solutions grows, particularly in the passenger rail segment, now being bolstered by the federal stimulus package. Balfour Beatty already has considerable U.S. rail experience and exposure, observers say, and roughly 30% of its overall sales are generated within the U.S.
Balfour Beatty CEO Ian Tyler acknowledged the potential U.S. market. "We've been looking to develop over a long time the weight and depth of our U.S. business," Tyler said in an interview. "This really does create a very strong and powerful business there."
Industry observers, however, suggest to Railway Age the more significant impact may be the opportunity PB offers Balfour Beatty for entry into potentially lucrative markets in Australia, India, China, and South Africa. Tyler also acknowledges the potential of these markets, including rail but also encompassing electrical and mechanical design, airports, and other construction segments.
In a conference call with Morgan Stanley analysts William Greene and Adam Longson, former Surface Transportation Board Chair Linda Morgan anticipated a draft version of rail legislation to be introduced by Sen. Jay Rockefeller (D-W. Va., pictured at right) “very soon," and likely before the month ends. Morgan Stanley foresees a “compromise bill” resulting as Congress seeks to handle a potentially contentious issue.
Morgan told the Morgan Stanley duo a focus on other issues, including healthcare and climate, has delayed rail legislation, but Congress is likely to act now and not wait for 2010, a congressional election year. “If a rail bill is going to pass by year-end, the end of September is likely a critical deadline for introducing draft legislation,” the analysts said in a note.
“The mere introduction of rail legislation will create headline risk for rails, and the recent appreciation in shares makes the stocks increasingly vulnerable to a near-term correction,” Greene and Longson warned. “There are three key areas the proposed legislation is likely to address: 1) provisions to strengthen the STB, giving it more authority, resources and commissioners; 2) provisions to help increase customer access to the rail networks; and 3) reforming review process on rail rates and service.”
Added Morgan Stanley, “Significant compromise is the most likely outcome, in our view. Any rail bill will need consensus to ensure it passes with little debate, given the proposed timeline. The rails may support a compromise bill to avoid potentially more onerous legislation, while shippers may accept a compromise to avoid potentially walking away with nothing.
“We don't think a compromise bill will lead to a wholesale change in rail economics. While far from the best-case scenario, this is more favorable than antitrust legislation or re-regulation, which could affect rail profitability in a materially negative way,” Greene and Longson wrote.
A planned $4 billion Transbay Transit Center in downtown San Francisco took a big step forward Thursday when the U.S. Department of Transportation's Credit Council recommended the approval of a $171 million Transportation Infrastructure Finance and Innovation Act (TIFIA) loan for the project. The loan will help fund 14% of the Phase I capital cost. A combination of federal, state, and local sources is funding the project.
“We are very grateful to the council for this unanimous recommendation of approval,” said Maria Ayerdi-Kaplan, executive director of the Transbay Joint Powers Authority (TJPA). “This important step will help us move the project forward and bring to fruition the largest, fully approved transportation project in the country.”
The Joint Powers Authority submitted a letter of interest to the DOT in October 2003 and the application was submitted in October 2008. Following the Credit Council's recommendation, the next step is for the Secretary to approve a term sheet and loan agreement. The Joint Powers will bring the agreement to its board of directors for approval by November.
TIFIA was established to create a Federal credit program for eligible transportation projects of national or regional significance.
The Transbay Transit Center will replace the existing Transbay Terminal with a multi-modal facility, and centralize the region’s transportation network by accommodating nine transportation systems under one roof. The project also involves extending the Caltrain rail line 1.3 miles into the heart of the Financial District and redeveloping the surrounding area with 2,600 new homes, parks, and a retail main street.
The project broke ground on the temporary terminal in December 2008 and demolition of the current bus terminal is scheduled for February 2010.
Phoenix-area sports fans headed for a scheduled event of the NBA Suns or WNBA Mercury basketball teams at US Airways Center can present their game tickets as a valid light rail fare, Valley Metro announced Thursday. The program begins October 1 and will run through Sept. 30,2010.
Other events at US Airways Center, including concerts and family shows, are also included in the package, billed as the Rail Ride Event program. The 20-mile, $1.4 billion Metro light rail line, serving Phoenix, Mesa, and Tempe, Ariz., opened for revenue service Dec. 27, 2008.
"This program will encourage use of the system as a great way to get to and from events at US Airways Center," said Tom Simplot, vice mayor of Phoenix and chair of the Metro Board of Directors. "The Rail Ride Event program will encourage new riders who will soon discover how convenient, efficient and safe the system is."
“Suns fans who used light rail to travel to games last year told us that being able to avoid traffic and parking issues, as well as the ease and convenience of the trip, resulted in an experience that enhanced their enjoyment of attending a game,” said Phoenix Suns President and CEO Rick Welts. “We appreciate the willingness and creativity the leadership at Metro light rail demonstrated in developing this program for all US Airways Center events.”
“Special event and recreation-oriented trips are already asignificant portion of our ridership,” said Valley Metro CEO Richard Simonetta. "Teaming up with the Suns and a great venue like US Airways Center just takes it to the next level.”
Said US Airways General Manager Ralph Marchetta, “Whether attending a Suns or Mercury game, a concert, the Ringling Brothers Circus, or a Disney on Ice Show, we believe having a ticket that includes round-trip transportation on Metro light rail will actually result in more people attending events at US Airways Center.”
U.S. carload freight traffic for the week ended September 12 was down 19.8% compared with the same week in 2008, the Association of American Railroads reported. AAR noted part of the decline could be attributed to the 2009 Labor Day (September 7); last year’s corresponding week 36 did not include the holiday.
All 19 carload freight commodity groups measured by AAR were down from last year. Farm products not including grain fell a modest 1.5%; metallic ores plunged 52.3%.
U.S. intermodal traffic also fell 25.8% from the same week last year. Container volume fell 20.9% and trailer volume dropped 43.9%.
Canadian railroads reported volume fell 22.1% for the weekcompared with last year; intermodal volume declined 27.5%. Mexico’s two major railroads reported originated volume down a modest 1% from the same week last year, while intermodal registered a gain, up 8.4%.
Combined North American rail volume for the first 36 weeks of 2009 on 13 reporting U.S., Canadian, and Mexican railroads was down 19.2% from last year. Combined intermodal volume fell 16.9% during the period measured against the comparable 2008 span.
The Metropolitan Washington Council of Governments Transportation Policy Board, a regional transportation board, Wednesday approved plans to help fund CSX efforts to expand and improve freight capacity in the District of Columbia, Maryland, and Virginia. The Board approved a letter supporting federal grant applications to help cover the estimated $160 million cost.
Concern remains within the board that CSX has not supported improvements to passenger rail needs within the board’s territory, prompting the board to add language in its letter seeking commitments from the Class I carrier. CSX track is used by Amtrak, Virginia Railway Express, and Maryland MARC trains.
CSX has stated that the 13 planned improvement projects in the area would benefit freight and passenger operations. Many of the projects raise clearances for double-stack trains, potentially relieving current bottlenecks and resultant congestion for both freight and passenger moves, CSX has said.
Train crew employment on U.S. railroads in mid-August stood at 57,167, an increase of 353, or 0.62%, over July, although the transportation (train and engine) group trailed August 2008 numbers by 15.86%.
Also registering improvement in August was the transportation (other than train and engine) category, which at 6,685 was up 2.12% over July and 1.27% higher than in August 2008.
Total Class I employment in August at 150,064 was off 0.22%, or 336, from July and down 8.65% from August 2008.
The Metropolitan Washington Council of Governments'Transportation Policy Board, a regional transportation board, Wednesdayapproved plans to help fund CSX efforts to expand and improve freight capacityin the district, Maryland, and Virginia. The Board approved a letter supportingfederal grant applications to help cover the estimated $160 million cost.
Concern remains within the board that CSX has not supportedimprovements to passenger rail needs within the board’s territory, promptingthe board to add language in its letter seeking commitments from the Class Icarrier. CSX track is used by Amtrak, Virginia Rail Express, and Maryland MARCtrains.
CSX has stated that the 13 planned improvement projects inthe area would benefit freight and passenger operations. Many of the projectsraise clearances for double-stack trains, potentially relieving currentbottlenecks and resultant congestion for both freight and passenger moves, CSXhas said.
Pittsburg, Kan.-based Watco Transportation Services, Inc. has announced an agreement with Rio Grande Pacific Corp. to acquire 36 miles of track from the Idaho Northern & Pacific Railroad. Watco plans to file with the Surface Transportation Board to operate the line through the Boise Valley Railroad (BVRR), to be headquartered in Boise, Idaho.
BVRR will operate two branches. One is the 11-mile Wilder Branch linking Wilder and Caldwell, Idaho. The second branch, 25 miles long, rungs from Nampa to just southeast of Boise, the state capital. The agreement also includes trackage rights from Nampa to Caldwell, Idaho.
Watco said BVRR has entered into a lease-purchase agreement with the Idaho Northern & Pacific Railroad (INPR), a Rio Grande Pacific Corp. subsidiary, which currently leases the segments from the Union Pacific.
BVRR currently serves 84 customers, some of which are also customers of Watco subsidiaries Eastern Idaho Railroad, Great Northwest Railroad, and Yellowstone Valley Railroad. “This fits in well with our existing infrastructure in Idaho,” said Ed McKechnie, Watco’s chief commercial officer. “We look forward to serving the customersand expanding opportunities to help to grow their businesses.” He added, “We love doing business in Idaho and believe this railroad can grow and continue to be a strong part of the Boise economy.”
“On behalf of the Watco team, we want to welcome the Boise Valley into our growing company,” said Watco CEO Rick Webb. “We have a great deal of respect for the Rio Grande team and look forward to building on their good work in Boise.”