During the “Great Recession,” the railroads have been ableto retain their pricing power, though at a reduced level. As business begins to pick up, there are strong indications that this momentum will continue, a new shipper survey says.
According to Dahlman Rose & Company’s fourth-quarte r2009 Rail Shipper Survey, railroad shippers “anticipate an average base rate increase of 3.8% over the next six to 12 months. Current expectations are modestly above the 3.2% expected increase in our 3Q09 Shipper Survey and are above where they were a year ago at 3.5%. While the railroads have been able to maintain greater pricing power throughout the recession than their trucking counterparts, railroad pricing expectations did fall fairly significantly from pre-recession levels of 5-6%. Indeed, our recent surveys show that shippers’ expectations for rate increases have stayed under 4% since their steep fall in 4Q08."
Adding to Dahlman Rose’s generally upbeat analysis, rate case actions should not pose a major threat in 2010: "According to our 4Q09 survey, 96% of shippers indicated that they did not plan to file any rateaction against a railroad over the next 12 months. This is largely inline with the 98% and 94% results in our 3Q09 and 2Q09 surveys and higher than the 88% reported in our 1Q09 survey. This suggests that shippers feel pricing will come in on its own or that current pricing practices are not egregious.”
The hope for a recovery is more pronounced,” said DahlmanRose. “Shippers expect their respective businesses to grow approximately 6.3% over the next 12 months vs. 3Q09, 2Q09, and 1Q09 survey responses of 5.9%, 4%, and 1% respectively. We believe this optimism is largely driven by the modest improvement in the economy in the fourth quarter and the widespread belief that the worst is behind us. In order of magnitude, the outlook for metals, petroleum products, chemicals, building products, and transportation showed improvement over 3Q09, while expectations from forest products, consumer goods, and agricultural products shippers declined slightly.”
days on the job, New York Metropolitan Transportation Authority Chairman and
CEO Jay H. Walder wonders if MTA really needs 92 different phone numbers for
customer information and six calling centers.Does an agency running a $400
million deficit really need to pay $550 million a year in overtime? Is it smart
to spend 15 cents to collect and process every dollar collected in fares?
just few areas in need of attention that Walder identified in a report, “Making
Every Dollar Count,” that he released to mark his first three months in office.
Walder acknowledged that much has been done by his predecessors to tackle the
bureaucratic inefficiencies that persist at MTA and to
deliver better service to customers. But a streamlined,
and cost-effective approach to operating the nation’s largest public transportation
agency remains a distant goal.
that distance will be a little more difficult than Walder first thought.
started in October, I expected this report to talk about plans for finally
starting to catch up with the rest of the world, and it does,” said Walder.
"But I barely had my feet on the ground when the state’s economic crisis
hit the MTA hard. It’s clear that my first priority right now must be
to attack the
MTA’s cost structure and ensure we are using every dollar effectively. At the
same time, we must find affordable ways to improve service for customers who have
been waiting far too long.”
Here are some
of the things Walder has in mind:
• “In 2010, Customer Information Signs
will be activated in 75
stations. In 2011, this same information system will be operational at all of
the stations on the 1-6 subway lines.
• “By the end of 2010, we plan to test
bus arrival information
several vendors, to enable rollout of a system beginning in mid-2011.
• “By March 2010, next commuter train
information will be available “on line”—via smart phone and web—for service to
and from all LIRR and main line Metro-North stations.
• “We are moving forward with plans to
that allows all motorists to pay tolls without stopping at the Henry Hudson
• “In 2010, the MTA, New Jersey Transit
and the Port Authority of New York and New Jersey, in partnership with
MasterCard, will pilot new technology that will eliminate the need to swipe a
farecard, will cost less to operate and eventually will provide subway, bus and
commuter rail customers with other benefits, including faster bus boarding,
regional interconnectivity, and the ability to select among unlimited ride and pay-per-ride
options via the web and telephone.”
report is available, along with a video, on the MTA's new website at
New York State Comptroller Thomas DiNapoli issued a report Thursday describing how deeply the recession has eroded ridership onthe trains, buses, bridges, and tunnels operated by the New York Metropolitan Transportation Authority. In the first 10 months of 2009, said the report, MTA lost 75 million riders and $100 million in fares compared with the same period in 2008.
"The MTA's ridership is inextricably linked to the economy of New York City--especially ridership to the central business district, where the majority of jobs are located," said the report. "New York City lost 110,000 jobs (2.9%) between October 2008 and October 2009, which has caused a sharp drop in utilization of the MTA's transit facilities (e.g., subways, buses, and bridges and tunnels)."
The big loser in ridership was New York City's subways which, after growing 17.5% between 2000 and 2008, posted a decline of 3.2%, or 44 million riders, through October 2009. The decline began to ease in October.
On the Long Island Rail Road, ridership dropped 5.5% during the first 10 months of 1009, a loss of four million riders compared with the prior-year period.
Metro-North Railroad ridership declined 4.8% during last year's first 10 months, a loss of 4.3 million riders.
The Las Vegas Monorail Co., though formed as a not-for-profit company, filed Wednesday with federal bankruptcy court due to falling ridership, attributed to the economic recession. The company oversees the roughly 4-mile elevated service connecting hotels on the Las Vegas Strip withthe Convention Center.
Since the overwhelming majority of North American public transit operations rely on some form of government support, the bankruptcy may be a telling indicator of how "private-sector" options, often advanced by those opposed to government support for rail and public transit, may nonetheless be vulnerable to fluctuations in economic conditions.
"The decline in the monorail's operations is tied directly to the decrease in gaming revenues in Nevada, and particularly along the Las Vegas Strip," Chief Executive Curtis Miles said in the courtfiling.
Operations will continue during the bankruptcy process, with no reduction in frequency of service or service hours anticipated. But the filing exposes bond insurer Ambac Financial Group Inc. to as much as $1.16 billion in liability, the filing said. Ambac Assurance Corp. insured $451 million of tax-exempt bonds used to finance Las Vegas Monorail's purchase of the rail line from MGM Grand-Bally's Monorail LLC in 2000, according to the filing.
Las Vegas Monorail’s largest creditor is Bombardier Transportation Inc., according to the court filing. The monorail owes $293,450 to Bombardier, which operates and maintains the trains. Other creditors listed in court documents include NV Energy, Allegiance Direct Bank, and Anthem Blue Cross Blue Shield.
Subway cars ordered by the Toronto Transit Commission face unexpected delivery delays due to the bankruptcy late last year of Montreal-based Curtis Doors, a supplier to Bombardier Transportation, which is handling the car order.
TTC notes a prototype set of the new equipment originally was scheduled to be making test runs by this time. Current expectations are for the prototype equipment to begin operation in two-to-three months.
"Certainly the trains are delayed because of the issue with the doors," said TTC spokesman Brad Ross. TTC is urging Bombardier to deliver the trains as soon it can.
For its part, Bombardier acknowledges the delay “due to some issues and some lateness from some of our key suppliers, and I would not point fingers at anyone," said company spokesman Talal Zouaoui. "We're on a good track," he added.
Washington Metropolitan Area Transit Authority General Manager John Catoe says he plans to retire April 2, following three years heading WMATA, a span that included several high-profile safety-related incidents.
“I have decided that it is time for me to channel my future in new directions and provide this organization an opportunity to move beyond the current distractions,” Catoe said. “Good leaders know how to impact change. Great leaders know when it’s time for leadership change. I hope I fall into the latter category.” Said WMATA Board Chairman Jim Graham, “We appreciate his stewardship during this difficult time and we will miss his leadership. While we regret his decision, he continues to have the full confidence of the Board of Directors.” Graham said a search for a successor would begin promptly.
U.S. freight rail traffic in the early days of 2010 remained mired in the minus column when compared with the same period of 2009 and 2008, the Association of American Railroads reported Thursday.
The 236,796 carloads originated by U.S. railroads for the week ending Jan. 9 represented a decline of 12.4% from 2009, when the recession was already well under way, and a drop of 28% from the non-recession week of 2008.
The intermodal count--196,788 trailers andcontainers--was down 3.6% from a year ago and 17.4% from 2008.
Eleven of the 19 carload freight commodity groups were up from the same week last year, ranging from 5.5% for lumber and wood products to 94% for metallic ores. Declines ranged from 36.6% for crushed sand, stone, and gravel to 0.1 % for the "all other carloads" category.
Total U. S. rail freight volume for the week ending Jan. 9 was estimated at 25.5 billion ton-miles, down 12.4% from the same week last year and also down 25.9% from 2008.
Canadian railroads reported a weekly and cumulative volume of 67,333 cars for the first week of the year, up 20.4% from last year, and 43,033 trailers or containers, up 0.2% from 2009.
Mexican railroads reported a weekly and cumulative volume of 12,123 cars for the first week of the year, up 32.1% from last year, and 5,722 trailers or containers, up 44.4%.
U.S. Secretary of Transportation Ray LaHood says the DOT will ease the standards for spending economic stimulus funds in order to accelerate the construction of new transit projects. He specifically cited streetcar lines as candidates for such accelerated activity.
"We want to base our decisions on how much transit helps the environment, how much it improves development opportunities, and how it makes our communities better places to live in," said LaHood (pictured at left) in announcing the change Wednesday in a speech to the Transportation Research Board in Washington, D.C.
He noted that the Bush administration devised a formula in 2005 to approve projects based mainly on transit times and costs. To this he would add "livability," measuring the effect of transportation choices on urban development and promoting a friendly environment.
Citing streetcar projects as one such option, LaHood said the federal government will soon award $1.5 billion in economic stimulus funds to "innovative" projects nationwide. This is in addition to $8 billion soon to be awarded to high speed passenger rail projects.
"More than 30 rail industry manufacturers and suppliers have promised to establish or expand their base of operations in the United States if they're chosen by the states to build America's new high speed rail lines," LaHood said.
LaHood also urged Congress to move head with a new jobs bill that includes major investments in transportation (including $800 million for Amtrak). Called the "second stimulus" bill, it passed the House of Representatives in December and is awaiting action in the Senate
The Association of American Railroads Wednesday said 2009 total carload traffic on U.S. railroads notched the lowest levels since at least 1988, when the AAR’s data series began. AAR’s January Rail Time Indicators report notes 2009 carload traffic was down 16.1% compared with 2008, and down 18.2% when compared with 2007.
AAR noted December carloads offered more mixed news. Though rail carloads were down 4.1% compared with December of 2008 and down 17.6% compared with December 2007, those declines were attributed mainly to declines in coal carloadings. Had coal been excluded, rail carloads would have been 6.9% higher in December 2009 than in December 2008. Moreover, 12 of the 19 major commodity categories tracked by the AAR saw higher carloads in December 2009 than in December 2008. U.S. rail intermodal traffic was down 14.1% compared with 2008, and down 17.7% compared to 2007. Last year saw the lowest intermodal traffic levels since 2002.
“Railroads are happy to have 2009 behind them,” said AAR Senior Vice President of Policy and Economics John Gray. “Last year saw declines, most of them quite steep, in every major category of rail carload traffic as well as intermodal. However, we’re seeing signs that the economy is improving. We’re hopeful that 2010 will be a much better year for the economy and for railroads.”
The Rail Time Indicators report, available at www.aar.org, comprises monthly rail traffic data framed with other key economic indicators to show how freight rail ties into the broader U.S. economy. Both the monthly Rail Time Indicators report and a video summary are available on the AAR web site.