Support for a healthy national rail network is vital to sustaining more than a million jobs and powering U.S economic recovery, according to numerous freight rail representatives, their passenger rail counterparts, local business leaders, elected officials, and others (including representatives from Railway Age) who canvassed Capitol Hill Thursday as part of industry’s annual “Railroad Day on Capitol Hill” event.
Washington policymakers were reminded that freight railroads generate nearly $265 billion in total annual economic activity and that every freight rail job supports an additional 4.5 jobs elsewhere in the economy.
“Sometimes when new federal polices are formulated, the true impacts on American businesses and consumers are not fully taken into account,” said Association of American Railroads President and CEO Edward R. Hamberger. “Who better to tell members of Congress of these impacts and importance of freight rail, than the employees, businesses, and local elected officials that work hard every day to deliver on freight rail’s vital role in the nation’s economic recovery.”
“The federal government encouraged the creation of short line railroads to preserve freight service, and in doing so has facilitated the industry’s growth to 552 short line railroads that support tens of thousands of jobs,” said Richard F. Timmons, president of the American Short Line and Regional Railroad Association. “Federal policies like the short line tax credit will enable companies to make over $330 million in track upgrades each year, and support thousands of new jobs in the rail industry.”
“Supporting funding for rail is a good investment in America’s future,” said Anne Canby, president of the Surface Transportation Policy Partnership and founding member of OneRail, a coalition advocating for policies for passenger and freight rail. “Improving the nation’s rail infrastructure will create vital jobs, de-congest chokepoints, put more freight and passengers on fuel-efficient trains, and reduce our nation's greenhouse gas emissions.” OneRail brings together freight and passenger rail, transit, environmental, and labor groups. In this vein, Canby urged Congress to continue to make rail-related projects eligible for federal funding, such as infrastructure programs in the jobs bill currently moving through the Senate.
“Our community would not be what it is today without the railroads that connect our local manufacturing plants to global markets,” said Mayor Drew Ferguson of West Point, Ga., one of the 23 representatives of Go21 attending Railroad Day. “Access to railroads was a significant factor in Kia’s decision to locate in West Point.” Go21 comprises more than 1,200 state and local policy and business leaders from across the nation who support freight rail as a solution to problems related to highway congestion and the environment.
Industry representatives urged members of Congress to support the Investment Tax Credit, epitomized by bipartisan House bill H.R. 1806. The bill calls fo ra 25% investment tax credit for targeted spending on locomotives, railroad track, intermodal facilities, and other infrastructure projects that expand rail capacity. The bill outlines that any business that makes these investments wouldbe eligible for the tax credit—not just railroads.
Also sought by the rail industry is the Short Line Tax Credit, advancing through both the Senate and the House as S. 461 and H.R. 1132, respectively. This bill would extend the Section 45G tax credit, which supports over $330 million in infrastructure improvements made each year by short lines, contractors, suppliers, and rail customers. The credit expired on Dec. 31, 2009.
Freight traffic on U.S. railroads was down slightly during the week ended Feb. 20, in comparison with the corresponding week last year, according to the Association of American Railroads. AAR cited “a sharp drop in coal loadings” as a primaryfactor.
U.S. railroads originated 273,999 carloads, down 1.6% compared with the same week in 2009, and down 15.3% from 2008. But intermodal traffic gained sharply in comparison with last year, up 19%, though it still fell 11.1% below the comparable week in 2008. AAR cautioned, though, that the corresponding 2009 week was affected by the Chinese New Year, which has a significant impact on container volume.
West was best for U.S. Class I railroads, where carloads gained 2.2% over 2009, trailing 2008 levels by 10.8%. In the East, carloads fell 7.1% from a year ago, and were 21.5% behind the 2008 period.
Twelve of the 19 carload freight commodity groups were up in comparison with the same week last year. Double-digit increases werereported in loadings of metals (44.6%), motor vehicles and equipment (30.5%), grain (21.9%), metallic ores (17.6%), grain mill products (14.4%), and chemicals (13.7%). Total volume on U.S. railroads for the week ending Feb. 20 was estimated at 29.8 billion ton-miles.
Canadian carloadings were up 9.6% from last year, while intermodal gained 12.5% over 2009 levels. Mexico’s two major railroads reported carload traffic rose 25.3% from the same week last year, while intermodal gained 12.7%.
Combined North American rail volume for the first seven weeks of 2010 on 13 reporting U.S., Canadian, and Mexican railroads totaled 2,442,733 carloads, up 1.8% from last year, and 1,745,653 intermodal trailers and containers, up 5.1% from 2009.
Jacksonville, Fla.-based RailAmerica, Inc. Thursday reported a fourth-quarter earnings loss of $12.5 million, or 24 cents per share, compared with the company’s earnings of $6.0 million, or $0.14 per diluted share, for the comparable quarter of 2008. Total net loss, which includes discontinued operations of the company’s Ottawa Valley Railway (OVR), was $6.9 million, compared to net income of $8.9 million for the fourth quarter of 2008.
The results still beat the estimates of Morgan Stanley analysts William Green and John Godyn, who observed that the company’s “operating income of $22.8 million (adding back $6.3 million in non-cash IPO charges and $2.3 million of OVR discontinued operations) exceeded our forecast of $21.4 million.” But, they cautioned, “the combination of RA's OVR sale (and plans to report discontinued operations income), stale consensus estimates, and presence of other below-the-line adjustments in 4Q09 creates downside risk vs. consensus (though frankly we're not sure how consensus will treat all of these adjustments yet).”
Dahlman Rose & Co. Director Equity Research and Railway Age Contributing Editor Jason Seidl believes that
RailAmerica’s long term growth prospects “remain favorable as industry
volumes continue to recover and the company makes forward steps towards
external growth opportunities in a fertile short line acquisition
market. [However], in order to build investor confidence,
RailAmerica, with its highly capable management team, must prove sound
and timely execution by delivering solid results in its existing
businesses. While the company has set a 70% operating ratio target for
the next few years, we believe that leaves many questions unanswered
regarding 2010 and 2011. Hence, it is a question of when the company
will be able to reach its aggressive goal. As such, we remain on the
sidelines pending further operational improvements, more definitive
outlook, and/or a more compelling entry point.”
In a statement, RailAmerica President and Chief Executive Officer John Giles said, "In the fourth quarter we posted solid financial results as we increased Adjusted EBITDA 1% to $33.5 million in a challenging economic environment. Excluding the $6.3 million IPO-related charge our operating income was up 7% for the quarter to $20.5 million. This was a result of our continued focus on running safe railroads and driving operating efficiencies. With the completion of the IPO and the OVR transaction, we have strengthened our balance sheet and are well positioned to pursue external growth opportunities. We will apply the same discipline to strategic investments that we have used over the past three years to improve the company's operational and financial performance."
Giles continued, "Although still evolving, we are encouraged by the recent growth in carloads and have positioned RailAmerica for strong performance as volumes improve. This year, we plan to maintain a sharp focus on our three strategic priorities: delivering organic growth and efficiency gains, strengthening our balance sheet, and capitalizing on external growth opportunities."
Chicago Transit Authority labor leaders have reacted strongly to CTA management demands for “givebacks,” and have filed work-rule complaints while promising to follow up with lawsuits if necessary.
The move by the Amalgamated Transit Union, representing CTA bus and rail employees, ended any hope of quickly resolving any service cut issues that affect numerous bus routes, seven of eight rail lines, and more than 1,000 transit employees who lost their jobs and benefits earlier this month. CTA faces a projected $95.6 million budget deficit.
The union filings seeking arbitration on 10 alleged work-rule violations by the CTA will be followed by state and federal lawsuits this week, said Joseph Pass, an attorney for the bus drivers and bus mechanics union, Local 241 of the Amalgamated Transit Union. If the class-action lawsuits are successful, the CTA would be on the hook to pay "millions of dollars" to CTA employees who were required to undergo training without pay, Pass said. The CTA's actions violate the federal Fair Labor Standards Act,he said.
CTA says the charges are unfounded. Employees sign a workbook if they are available to work overtime, CTA spokeswoman Noelle Gaffney said. "In other words, employees basically volunteer," she said.
Amtrak President and CEO Joseph Boardman says the National Railroad Passenger Corp. will require similar liability protection that Florida has offered Class I railroad CSX Corp. if Amtrak is to continue serving central Florida while SunRail regional rail service is established.
In a letter mailed Monday to the Florida Department of Transportation, Boardman said he was terminating a previous agreement Amtrak had with the state to share tracks with SunRail. In an interview Tuesday ,Boardman voiced concerns over liability if Amtrak and SunRail were involved in an accident. Boardman wants the state to shield Amtrak from some potential lawsuits and claims. "Amtrak can't take the business risk," he said.
The proposed $1.2 billion regional rail service would include six central Florida counties, with Orlando serving as the hub city. Florida has continued to work with CSX in advancing the regional rail service, which has survived several attacks from opponents within the state legislature. Under the proposal, CSX would sell roughly 61 miles of right-of-way to the state, retaining trackage rights for freight rail operations.
FDOT officials see Boardman's statements a negotiating ploy. So does Rep. John Mica (R-Fla.), who said Amtrak is "nudging" the state to come to some sort of an agreement. "It's a reminder that this has to be dealt with," said Mica, who has been critical of Amtrak in the past but does believe Amtrak truly might need an improved liability agreement.
Austin, Tex.’s Capital Metropolitan Transportation Authority has set March 1 as a target date to begin test runs of its oft-delayed 32-mile Austin-to-Leander rail line and diesel multiple-unit (DMU) equipment built by Stadler.
CapMetro said it expects to begin revenue service later in the month. In anticipation, the agency has worked to alert area residents to the impending train traffic, including safety presentations at all school campuses within two miles of the route.
FRA representatives will be on hand to observe and inspect the rail operations, CapMetro spokesman Adam Shaivitz said.
Bombardier Transportation said Wednesday it had won a tender for the new regional double-deck trains organized by the French Railways (SNCF) on behalf of the French Regions. The framework contract calls for design and manufacture of 860 double-deck electrical multiple units (EMUs) for approximately 8 billion euros ($11 billion), subject to exercising some technical options.
SNCF also signed a first firm order for 80 trains valued at approximately 800 million euros ($1.1 billion), financed by the Regions, Bombardier said. So far, six Regions have placed orders, which they will finance: Aquitaine, Bretagne, Centre, Nord-Pas de Calais, Provence-Alpes-Côte d’Azur, and Rhône-Alpes.
First deliveries of the initial order are scheduled to takeplace in June 2013 and will continue until December 2015.
Bombardier says it developed a new double-deck train platform especially for this tender at its facility in Crespin, France. It includes: a modular concept to meet the Regions’ various needs in terms of suburban, regional, and intercity services; wide-body cars to offer unmatched capacity and a high level of comfort; and an articulated architecture and wide connectors which create transparency throughout the length of the train and an increased sense of security.
“We thank the Regions and SNCF for their trust in this large-scale project for which Bombardier Crespin teams have demonstrated their creativity and engineering excellence. These teams are now on the starting blocks to implement this important project,” said Jean Bergé, president of Bombardier Transportation France. “The solution created by our engineers is a train which stands out by its width, capacity, comfort, and polyvalence. It will become a reference product, and will support the regional rail transport development in our country.”
A report released Wednesday by the Surface Transportation Board shows that Class I railroad employment fell to 145,609 in mid-January 2010, a loss of 8.72%, or 13,902 jobs, since January 2009.
The biggest loser was the train crew category transportation (train and engine), where employment declined 11.57% to 55,876, a loss of 7,311 jobs.
Other employment groups also declined: executives, officials, and staff assistants (9,029), down 10.79%; professional and administrative (13,256), down 3.61%; maintenance of way and structures (32,729), down 4.99%; maintenance of equipment and stores (28,186), down 8.16%; and transportation other than train and engine (6,533), down 10.65%.
Total January 2010 employment was down 0.78% from December 2009, indicating a continuing downward trend.
The STB report showed that the January 2010 employment index (based on 1967 as 100) was 23.7% vs. 25.9% in January 2009 and 26.5% in January 2008.
The U.S. Senate Monday voted 62-30 to end debate on the Hiring Incentives to Restore Employment (HIRE) Act, ending the threat of a filibuster and clearing the way for potential passage—which could ensure additional public transit, according to the American Public Transportation Association.
APTA said the Senate is expected to vote on the bill Wednesday. The HIRE Act extends the authorization of the federal surfacetransportation program through December 31, 2010. If enacted, the Federal Transit Administration will be able to allocate the remaining 58% of formula funds that have already been appropriated for fiscal year 2010.
The HIRE Act also provides a transfer of $19.5 billion ofgeneral funds to the Highway Trust Fund, including $4.8 billion to the Mass Transit Account. This transfer is expected to ensure the solvency of the Mass Transit Account through the end of FY 2011. The Senate Finance Committee based the transfer on restoring interest payments to the Highway Trust Fund. The HIRE Act would also expand the Build America Bonds program, allowing states and local governments to borrow at lower costs to finance more infrastructure projects.
Should the Senate pass the measure, the House of Representatives could pass its version of the bill later in the week before the current extension ofsurface transportation programs expires on February 28. But, APTA notes, the House passed a larger jobs bill late last year that included an extension of The Safe, Accountable, Flexible, Efficient Transportation Equity Act: ALegacy for Users (SAFETEA-LU) through FY10, which ends Sept. 30. The House could decide whether to accept the Senate bill “as-is,” or attempt to amend it to address some of their differing priorities. APTA says it believes either action is preferable to no action at all.
APTA noted that Monday’s vote included support from five Republican Senators: Kit Bond (R-Mo.), Scott Brown (R-Mass.), Susan Collins(R-Maine), Olympia Snowe (R-Maine), and George Voinovich (R-Ohio). Nebraska Sen. Ben Nelson was the only Democrat to vote against the cloture motion.