Takeways from AAR’s Hamberger at Rail Insights

Association of American Railroads President and CEO Ed Hamberger and Railway Age Editor-in-Chief William C. Vantuono discussed a wide range of issues affecting the railroad industry at the third annual Rail Insights conference, held June 7-8 in Chicago. Contributing Editor Jim Blaze offers the following takeaways and observations:

• Intermodal continues to be a possible growth sector for rail freight in North America. Recent weekly 2017 traffic increases for intermodal have seen near- to double-digit increases relative to the same week in 2016. However, 2016 intermodal traffic was a near-decade-low period. Translation? Projecting significant intermodal, as well as overall, freight rail growth remains difficult.

• Is coal coming back? A survey of AAR-member railroad management clearly shows that recently closed coal-fired power plants are not coming back on line. And no new coal-fired power stations are being built. That’s important evidence as to coal’s future.

• As to the Trump Administration’s position on trade (i.e. dismantling NAFTA, imposing tariffs, etc.), a study conducted by AAR Senior Vice President John Gray’s team showed that between one-third and maybe as much as 43% of U.S. rail freight is directly related to foreign trade. Much of this is Canadian and Mexican trade. The largest commodity is grain exports to Mexico. At present there is a great deal of uncertainty regarding Presidential messages about trade.

• The Federal Railroad Administration is still without an Administrator (Patrick T. Warren is the Executive Director of FRA and is serving as the Acting Administrator), and it doesn’t look like there will be an appointment before August. Meanwhile, the FRA is without an official mandate from the Trump Administration.

• Do autonomous trucks pose a threat to railroads? Right now the rail industry is taking a wait-and-see attitude toward development of this technology. The AAR is taking an open stance toward freight industry innovation. The rail industry is going to have to figure out what to do as the competition—and indeed some of rail industry customers—innovate. Right now there is no rail industry attempt to block innovation, at least not within the AAR.

• Rail industry management has a divided opinion as to one-man crews and operational efficiency. CP President and CEO Keith Creel’s view that he isn’t a big fan of one-person main line freight train crews on the CP clearly showsthis. Creel, who opened the conference, said that his concerns with one-person crews are not necessarily safety-related. Rather, they have to do with operations and en-route incidents. CP operates very long consists, as much as 10,000 feet—close to two miles. If there is a mechanical failure en-route (air hose separation, broken coupler knuckle, etc.), how can one person be expected to deal with that—for example, walking back thousands of feet to locate and address problem?

• The AAR is of the opinion that a combination of engineering high kip forces and out-of-standard track geometry tolerances together clearly are predictive of derailments and accidents. The use of big-data-set analytics clearly are going to enable rail management to better make future repair/replace maintenance decisions. That’s a clear improvement.

• The AAR has no formal position on the independently proposed new Chicago bypass freight railroad, the Great Lakes Basin Railway. A pending STB initial review of the application to begin construction is currently awaiting further information and clarification.