London-based Freightliner Group Ltd. and GE Transportation announced Monday that Freightliner has taken delivery of the first PowerHaul locomotives—introducing what the companies describe as state-of-the-art technology to the U.K.’s rail freight market. The locomotives (pictured below) represent Erie-Pa.-based GE Transportation’s entry into the British and European marketplace.
The locomotives are designed to provide greater hauling capacity and significant improvements in fuel economy. They will undergo commissioning before entering service and complementing Freightliner’s existing fleet of more than 160 locomotives, the companies said in a joint statement.
“I am extremely proud to see the first two PowerHaul locomotives arrive in the U.K. This product is a culmination of two years of hard work and partnership with GE, in order to produce a locomotive that will increase our haulage capabilities and bring further reduction to our carbon emissions,” said Tim Shakerly, Freightliner Group Ltd. engineering director.
Brett BeGole, general manager of Global Locomotive Operations for GE Transportation, said, “We are excited today with the arrival of the first PowerHaul locomotives as this represents GE Transportation’s entry to the U.K. and European marketplace. The PowerHaul Series is GE’s most technologically advanced, fuel-efficient and low-emissions diesel-electric freight locomotive to date.”
A poll conducted for the Railway Association of Canada found that 86% of those surveyed would either “strongly” or “somewhat” support establishment of high speed rail in Canada.
The survey, conducted by Ottawa-based EKOS Research Associates, Inc., surveyed 1,647 Canadians, 16 years old and older, from Oct. 23 to Oct 28 for the poll that was released last week at a North American HSR summit organized by the association, which represents companies and stakeholders in the Canadian railroad industry. The association held the conference to raise awareness of HSR opportunities.
The poll also found that 68% of respondents said all levels of government should be involved in funding high speed rail; 29% said the federal government should provide funding by itself, while 3% said it should be solely up to provincial governments.
Railcomm Monday said CSX has placed RailComm’s DOC® Yard Automation System “into production” at its Selkirk, N.Y., facility (outside of Albany). RailComm’s Domain Operations Controller (DOC®) server-based control system provides wireless remote control from the yard tower to 48 GETS HydraSwitchTM machine locations.
The company says the DOC® System features eNtrance and eXit(NX) routing and stacked route planning capability, providing the tower operator with complete control of all routes within the yard. RailComm’s 2.4GHz RADiANTTM data radios provide a wireless communications network to link the office with the field locations, including pre-existing switch heater locations.
The Association of American Railroads reported that for the week ended Oct. 31, U.S. railroads originated 275,439 carloads, down 13.7% from the same week in 2008 and down 18.2% from 2007. (In order to offer a complete picture of the progress in traffic, AAR is now reporting 2009 weekly rail traffic with year-over-year comparisons for both 2008 and 2007.)
U.S. intermodal traffic totaled 203,860 trailers and containers in the latest week, down 11.1% from a year ago and 15.5% from 2007.
While 15 of the 19 carload freight commodity groups were down from last year, there were increases in grain mill products (9.9%), chemicals (3.6%), waste and scrap metal (0.7 %), and nonmetallic minerals (0.3%).
Total volume on U.S. railroads for the week ending Oct. 31 was estimated at 31 billion ton-miles, down 12.7% compared with the same week last year and 13.2% from 2007.
Canadian railroads reported 71,023 carloads for the week, down 8.7 % from last year, and 42,869 intermodal units, down 12.2%. Mexican railroads reported originated volume of 12,952 cars, down 17.2% from 2008, and 7,087 trailers or containers, down 0.5 %.
Combined North American rail volume for the first 43 weeks of 2009 on 13 reporting U.S., Canadian, and Mexican railroads totaled 14,633,769 carloads, down 18.3% from last year, and 10,168,924 trailers and containers, down 16.2%.
BNSF and the Brotherhood of Locomotive Engineers and Trainmen have reached a tentative agreement on wage and work rules issues that BLET says gives its members "the security of a five-year agreement, additional income and additional time off without a single giveback or rule change." Details of the agreement were not announced. It does not cover health and welfare issues, which will be addressed in industry-wide negotiations that will begin Jan. 1, 2010.
Stephen Speagle, BLET vice president assigned to work with BNSF, said, "The agreement is not all we wanted, no agreement ever is, but in this time of economic troubles and hardship, it is an honor for me and for the four BLET general chairmen to be able to present" the proposal.
Tuesday’s announcement by Berkshire Hathaway, Inc. and Burlington Northern Santa Fe Corp., presaging the former’s full acquisition of the latter, drew widespread general media attention to the U.S. freight railroad sector as few stories have in recent times. Analyst comments were also in abundance. Both the New York Times and Wall Street Journal covered the story with front-page headlines. A sampling of the reporting and/or commentary follows.
“Buffet Bets Big on the Future of Railroads. America's best-known investor, Warren E. Buffett, is making his
biggest bet yet on the nation’s economic future by buying, of all
things, a railroad.”
--The New York Times
“While this action has been widely viewed as a massive vote of confidence from one of the most respected investors of our time, we do not believe it will spark any further transactions in the rail space. More important, however, is the fact that we believe this could signal a more positive position for the rail industry in regards to pending legislation from capital hill. Indeed, we do not believe such an astute investor as Warren Buffett would have made his largest acquisition to date if he thought overreaching regulation was around the proverbial corner. . . . Berkshire Hathaway’s acquisition of BNSF brought to light the positive long-term prospects of the rail industry, while Union Pacific’s new agreement with Pacer and Norfolk Southern’s intermodal agreement with JB Hunt helped alleviate some of the concern about pricing pressures.”
--Dahlman Rose & Co. Director-Equity Research and Railway Age Contributing Editor Jason H. Seidl
“Christmas may have come early for Burlington Northern Santa Fe Corp. shareholders, but the company’s board came up short in extracting maximum value.”
“Warren Buffett is finally taking his own advice. The billionaire wrote an op-ed piece for The New York Times in October 2008, urging readers to buy U.S. stocks. Oddly enough, though, Buffett continued to play it safe with the cash held by his own company.”
"Is Warren Buffett’s $26 billion purchase of Burlington Northern Santa Fe railroad a bet on a 19th-century industry or the 21st-century economy? Neither, it seems—it’s the perfect hedge.”
"Berkshire Hathaway Inc.’s $44 billion deal to buy Burlingon Northern Santa Fe Corp. is basically a huge bet on coal, a fuel that powers Warren Buffett’s power plants at his MidAmerican Energy utility and plays a major role in the railroad business.”
“[A] $100 price implies mid- to long-term operating profit growth of about 11.4% annually ... the market was pricing for roughly 8% EBIT growth. However, we do not believe that 3-5 year profit growth of 11% is unreasonable. ... This kind of profit growth potential (vs. what is reflectedin the stocks) is one of the reasons we have been bullish on the railroads.”
“Seems to me that the bet that properly priced carbon will boost railroad freight doesn’t work so well when what the railroad happens to be carrying is a whole lot of coal. Maybe Buffett just likes playing with trains?”
--Andrew Leonard, Salon
“Isn’t it ironic that Buffett’s deal is sparking a lot of discussion about how railroads are an eco-friendly industry when much of Burlington Northern [Santa Fe’s] revenue comes from hauling coal? (The fossil fuel accounted for almost half the tonnage that the railroad hauled in the first nine months of the 2009). It is possible that carbon pricing would hurt not only truckers, but Buffett’s coal hauling railroad, too.”
--WSJ Deal Journal (blog)
“Montana political and agricultural leaders hope Berkshire Hathaway’s planned purchase of the Burlington Northern Santa Fe railroad will lead to lower shipping costs in Montana, but they doubt much will change. Gov. Brian Schweitzer, a farmer and rancher, said Tuesday he had spoken to both Warren Buffett, chairman of Berkshire Hathaway, and Matthew Rose, BNSF’s chairman, president and CEO. ‘I said to both of them that I look forward to working with both in the future to improve service and shipping costs for our farmers, our miners, and our merchants,’ Schweitzer said. U.S. Sens. Jon Tester and Max Baucus said they also are concerned about shipping rates for Montana farmers and other businesses."
Railway Age Managing Editor Douglas John Bowen was asked Tuesday by National Public Radio whether Berkshire Hathaway’s purchase of BNSF was “a big bet; hasn’t the recession hurt shipping?” Replied Bowen, ‘If you believe the future of American freight transportation extends beyond overreliance on rubber-tired vehicles, rail is the way to go; Mr. Buffett seems to believe that's the case.”
J.B. Hunt Transport Services, Inc. announced Thursday that it has reached an agreement with Norfolk Southern Corp. to develop a new intermodal transportation contract to provide both parties a platform to accelerate the conversion of traditional truck traffic to cost-effective, environmentally friendly intermodal transportation with service that is competitive with truckload moves.
"This multi-year agreement,” said the trucking giant, "will further establish the parties as the leading providers oftranscontinental and local intermodal service in the eastern half of the United States."
“Given the enormous confidence we have in the Norfolk Southern’s ability to provide the best intermodal service in the Eastern half of the U.S. and the obvious commitment NSC has made by the significant investments in their corridor development, we are delighted to have the opportunity to elevate our joint services into the future,” said Kirk Thompson, CEOof JBHT. “This new agreement will provide unparalleled intermodal service and value for U.S. shippers. The conversion of highway freight to the more efficient, cost-effective, safer and more environmentally friendly services that we jointly provide, will not only benefit shippers and the general public, but JBHT and NSC shareholders alike.”
“Our new services with J.B. Hunt will provide shared incentives to grow volume and revenues by converting substantial volumes of freight from highway to rail,” said Norfolk Southern CEO Wick Moorman. “We look forward to working with the J.B. Hunt team to offer new, high-speed, reliable, premium services to domestic intermodal customers over ourentire network, including our new Crescent Corridor route, from New England, northern New Jersey and Pennsylvania south to Memphis and New Orleans. This strengthened relationship between NSC and JBHT will offer significant benefits to shippers, communities, states, and the country by reducing highway congestion, fuel consumption, and emissions.”
Returning to familiar territory, Thomas Prendergast has been named the new president of MTA New York City Transit, MTA Chairman Jay Walder announced Thursday. Prendergast will start Dec. 1, succeeding Howard Roberts, who announced his resignation Wednesday.
Prendergast previously served as president of MTA Long Island Rail Road, and also was senior vice president of subways for NYC Transit. He arrives back in the New York metropolitan area after serving as CEO of TransLink, the expanding transit system serving metropolitan Vancouver, British Columbia.
Virginia Railway Express officials have denied Amtrak's challenge to a plan to have an international company operate the commuter rail service's trains. Amtrak is contesting VRE's plan to award a five-year, $85 million contract to Keolis Rail Services America to operate VRE trains, succeeding Amtrak, which held the operations contract for 17 years. Keolis would assume operations next July.
Amtrak says some "improper scoring" may have occurred when VRE reviewed the four applications for the operation and maintenance contract that the regional rail agency put out to bid in May. VRE Chief Executive Dale Zehner reviewed the procurement process and found Amtrak's challenge to have no merit, VRE spokesman Mark Roeber said.
Amtrak also failed to challenge the Oct. 16 decision within the 10 days allotted in VRE's request for bids, according to a letter Zehner sent to Amtrak on Nov. 2.
In a letter to commission members and other Virginia officials, the Federal Railroad Administration’s chief counsel said that, although the agency has no opinion on the suitability of Keolis, it is concerned about maintaining safety .It said the company selected for the contract must be able to communicate not only with Amtrak, which dispatches trains in and out of Amtrak’s Union Stationin Washington, D.C., but also with Norfolk Southern and CSX, landlords of the rail lines used by VRE. Amtrak also has filed a Freedom of Information Act request last month asking VRE to turn over copies of Keolis's proposal and evaluators' notes and score sheets. Zehner said in his letter that the request would be met once the two commissions vote on the contract.
The Rail Group of The Andersons Inc. had an operating loss of $1.1 million in the third quarter of 2008, down sharply from the $5.2 million it earned in the third quarter of 208.
In an earnings statement Thursday, the company said, "The group continues to be impacted by the double-digit declines in rail traffic." It added, "Gross profit from the leasing business was significantly less due mainly to lower utilization rates and the corresponding increase in storage expense from idle assets. The group now has approximately 24,000 cars and locomotives. The average utilization rate in the quarter was 74.4% in comparison to 93.3% for the same period last year."
The Andersons reported a corporate profit of $1.3 million in the third quarter on revenue of $601 million. Its best performer was the Grain & Ethanol Group, with operating income of $8.9 million, compared to year-earlier results of $9.4 million. Losses were reported by the Plant Nutrient Group and the Turf & Specialty Group.