CN’s operating ratio also was robust, improving by 6.1 percentage points to 61.2%. The improvement came despite the strength of the Canadian dollar relative to its U.S. counterpart, which hindered earnings from operations in the U.S.
“We’ve had very, very strong first-half results and we expect the economy to continue on its gradual course of recovery,” Luc Jobin, CN chief financial officer, said during a conference call. “We do expect the pace of growth to be lower in the second half ... [but] we do not expect a double-dip economic scenario at this point.”
Aided by an $83 million TIGER grant secured last spring, full funding for the first phase is in place. An additional $110 million in other federal funding, $35 million from New York’s Metropolitan Transportation Authority, $14 million from New York State, and $10 million from the Port Authority of New York & New Jersey is also in place. Construction is expected to begin in October.
Phase 2, estimated to cost well more than $1 billion, would involve construction of a train hall in the Farley Building. The U.S. Postal Service has moved much of its heavy operations from the site in recent years, but has pledged to retain its retail sales services on site.
Designed by the famed architectural firm McKim, Mead & White, the Farley Building was built in 1912, closely following the opening of the original Pennsylvania Station in 1910, also designed by McKim, Mead & White. The original Penn Station was demolished in 1964, eventually prompting landmark preservation legislation within New York City that, among other things, helped preserve Grand Central Terminal.
GATX reported mixed results for the second quarter Thursday with the following comment by Brian A. Kenney, president and chief executive officer:
"The North American railcar leasing market continues to be challenging. Although GATX’s absolute lease rates and fleet utilization increased during the quarter, revenue remains under pressure. This is demonstrated by an 18.6% decrease in our Lease Price Index (LPI) during thequarter, which is consistent with our outlook entering the year. Industry participants continue to price aggressively in order to put the large number of idle cars back into service."
GATX reported corporate 2010 second-quarter net income of $21.5 million, or $.46 per diluted share, compared to 2009 second quarter net income of $12.7 million, or $.27 per diluted share. The company said 2010 second-quarter results include a net benefit of $3.3 million or $.07 per diluted share related to the favorable resolution of a litigation matter and a tax accrual reversal, partially offset by negative fair-value adjustments on interest rate swaps at GATX’s European rail affiliate, AAE Cargo (AAE). The 2009 second-quarter results include negative fair-value adjustments of $6.7 million, or $.14 per diluted share, related to the AAE interest rate swaps.
Net income for the first six months of 2010 was $40.2 million, or $.86 per diluted share, compared to $40.3 million, or $.83 per diluted share, in the prior-year period.
Manufacturers reported a backlog of 14,930 freight cars on order and undelivered as of July 1, up from 12,990 on April 1 and 10,462 on Dec. 31, 2009, according to the Railway Supply Institute.
New car orders totaled 4,886 in this year’s second quarter, 5,078 in the first quarter, 2,821 in the fourth quarter of 2009, and 1,890 in the third quarter. These add up to 14,675 cars ordered in the 12 months ended June 30, 2010.
New car deliveries were 2,946 in the second quarter of 2010,2,550 in the first quarter, 3,467 in the fourth quarter of 2009 and 4,126 in the third quarter—adding up to 13,089 deliveries in the 12 months ended June 30.
For comparison purposes, 12-month yearend orders were 8,336 in 2009, 33,235 in 2008, 55,584 in 2007, and 91,269 in 2006.
Twelve-month yearend deliveries were 21,682 in 2009, 59,954 in 2008, 63,156 in 2007, and 74,729 in 2006.
U.S. freight carload traffic for the week ended July 17,2010, was up 5.5% compared with its comparable week in 2009, but still trailed 2008 “pre-recession” levels by 13.8%, the Association of American Railroads reported Thursday.
U.S. intermodal traffic gained 20.1% over the comparable week in 2009, and was down a modest 2.5% from 2008, AAR noted, with container volume up 5.6% from 2008 levels—trailer volume was 32.5% compared with two years ago.
Eleven of the 19 carload commodity groups increased from the comparable week in 2009, with metallic ores, up 208.4%, posting the most significant gain.
Canadian freight carload traffic rose 21.5% for the week compared with a year ago, with intermodal up even more, 24.3%. Mexico’s two major railroads reported freight carload traffic declined 1.9% compared with 2009, while intermodal also fell, off 1.9%.
Combined North American freight railcar volume for the first 28 weeks of 2010 on 13 reporting U.S., Canadian, and Mexican railroads was up 10.3% from last year, with intermodal up 13.8%.
The Federal Transit Administration released a study Wednesday that found transit systems need $77.7 billion to bring their systems to a state of good repair and an additional a $14.4 billion a year to maintain them.
"While most of the $77.7 billion backlog can be attributed to rail, more than 40% of the nation’s buses are also in poor to marginal condition," said the agency.
FTA's National State of Good Repair Assessment Study was requested by Transportation Secretary Ray LaHood as a follow-up to the 2009 Rail Modernization Study report to Congress.
“Transit remains one of the safest forms of transportation, but this report shows the clear need to reinvest in our bus, subway, and light rail systems,” said LaHood (pictured at left). “As a nation, we must lead when it comes to infrastructure development and commit ourselves to rebuilding America.”
“Investment in the nation’s transit infrastructure is important to a healthy economy and most importantly, the safety and well-being of our riders,” stated Administrator Peter Rogoff. “For millions of Americans, having a safe and reliable transit system is the difference between seeing their children before bed or not, making it to work on time or arriving late, or getting to a doctor’s appointment or forgoing it.”
In April, Rogoff announced the availability of $775 million through a competitive State of Good Repair funding program. FTA has received approximately 400 project applications and more than $4.2 billion in requests for the $775 million.
Union Pacific earned second-quarter net income of $711 million, or $1.40 per diluted share, compared to $465 million, or $0.92 per diluted share, in the same quarter last year. Wall Street had expected per-share earnings of $1.21. UP shares rose 5% in morning trading Thursday.
“Beyond strong earnings growth, the real highlight was achieving a 69.4% operating ratio—our first sub-70 quarterly mark,” said Jim Young, UP chairman and CEO (pictured at left). “We demonstrated great volume leverage, efficiently handling an increase in carloadings at modest incremental cost.”
UP said its total revenue carloads grew 18% from last year’s recession levels, adding that “this is the first time in six years that all six Union Pacific business groups reported volume growth in the same quarter.”
Operating revenue increased 27% in the second quarter to $4.2 billion versus $3.3 billion in the second quarter of 2009.
Driving the increase in addition to volume growth were higher fuel cost recoveries and core pricing gains. The price of fuel rose 46% from an average of $1.57 per gallon in the second quarter of 2009 to an average of $2.29 per gallon in the second quarter of 2010.
“While the pace and direction of the economic recovery is uncertain, we expect and are prepared to handle continued volume growth on our network, both in 2010 and beyond,” Young said. “As carloadings increase, we are focused on meeting the increased expectations of customers and shareholders to move new and existing business safely, efficiently, and more profitably. We’re also planning for tomorrow, investing for growth as we deliver higher shareholder returns.”
Commented Dahlman Rose Director-Equity Researtch and Railway Age Contributing Editor Jason Seidl, “Indeed, UP is continuing to show it can take on freight at strong incremental margins. After reporting less-than-stellar pricing in 1Q10 due largely to negative intermodal pricing, that very segment helped carry core pricing in 2Q10. The company indicated that with major domestic legacy deals behind it, intermodal joined the other five groups in posting core price gains. Overall, core price improved about 5%. We still believe that 1Q10 represented the bottom of Union Pacific and overall railroad pricing. Indeed, the company said it was very positive about pricing outlook for the rest of 2010 and beyond. We are increasing our earnings estimates to reflect UP’s sound execution and a still improving freight market. We believe UP remains well positioned to benefit further from the ongoing freight recovery and still has a good degree of operating leverage to be exercised in the second half of 2010.”
Princeton, N.J.-based ALK Technologies, Inc. Wednesday announced its release of PC*MILER Web Services 24. This hosted interfacing application provides industry-standard PC*MILER map data and functionality quickly and efficiently to customers, regardless of the IT infrastructure, via an XML/SOAP interface developed in Microsoft® .NET, packaged as a Web Service.
The company says the product is “a standardized way ofembedding PC*MILER’s truck-specific routes, mileage, maps, and reports with third-party Web Services, and .NET applications.
PC*MILER Web Services incorporates all of the features and benefits of PC*MILER 24, an essential tool to predict and manage operating and transportation costs.”
PC*MILER 24 encompasses 627,000 new and updated North American truck restrictions and 21,700 miles of new and updated truck-restricted roadway. The recently updated map data includes 3.52 million commercial truck restrictions, such as bridge heights, clearances, and load limits.
PC*MILER Web Services is hosted in a tier-one data center to ensure stability and reliability. Users can choose their Feature Option Level to gain access to the features of choice: Lite, Standard, or Premium.
An ALK-designed, hosted and maintained Graphical User Interface (GUI) is also available that includes the service’s features and functionality, eliminating the need to develop a graphical interface on one’s own.
The company says new features and enhancements include: least-cost routing that generates optimal routes based on custom fuel efficiency and operation cost settings.; calculation of estimated greenhouse gas (GHG) emissions per route; comparison reports to evaluate different routes, or the effect of different routing options on the same route; display of multiple routes on the map at the same time; and free quarterly updates of U.S. ZIP codes.
Hub Group, Inc. reported Wednesday that second-quarter intermodal revenue rose 26% to $320 million compared with the same period last year, an increase attributable to a 25% volume increase and an 8% increase for fuel, partially offset by a 7% decrease for price and mix.
The company’s two other units also prospered. Truck brokerage revenue increased 21% to $86 million and second-quarter Unyson Logistics revenue was up 38% to $52 million.
Hub Group reported income of $9.6 million for the quarter, an increase of 16% compared with the second quarter of 2009.
“The return of a robust freight market coupled with the retention of our long-standing customer relationships and success in the bids this year helped drive our impressive volume and earnings growth this quarter,” said David P. Yeager, chairman and chief executive officer. “With the additional density, we have improved our drayage efficiencies and equipment utilization and look forward to meeting what we expect will be healthy demand in the second half of this year.”
A $1.5 million fund to assist small businesses in St. Paul was announced Tuesday by the Metropolitan Council, in a move to “minimize any disruptive effects of building the Central Corridor light rail transit line.” The interest-free loan program aims to ameliorate negative impacts of LRT construction.
The fund, announced at a news conference by Metropolitan Council Chair Peter Bell, St. Paul Mayor Chris Coleman, and Minneapolis Mayor R.T.Rybak, includes $1 million from Met Council and $500,000 from the Central Corridor Funders Collaborative. The fund was described as part of a “Ready for Rail” package of services to aid small business as LRT is built.
The loan program will be administered by the city of St. Paul. It was created following discussions with the Asian Economic Development Association and input from other business groups concerned about potential negative impacts small businesses might face during the construction of the Central Corridor.
“The Council and our project partners are doing everything we can to reduce the disruptive impacts during construction,” said Bell. “Through our Ready for Rail initiative, we want to help businesses prepare to survive construction and to thrive once it is completed in 2014.”