February 2016 Railway Age

RailwayAge

February 2016 | www.railwayage.com

Serving the railway industry since 1856

FAST TRACKERS 10 Under 40 Who Are Making A Difference RAIL RENEWAL OPTIONS THE YEAR AHEAD IN WASHINGTON

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RailwayAge

february 2016

visit us at www.railwayage.com Features

18

Fast Trackers

18

Special Report: Legislation 27 M/W Focus: Rail renewal

31

TTCI R&D

36

News/Columns From the Editor

2

Update

10

Watching Washington

16

Short Line/ Regional Perspective

17

Financial Edge

44

Departments Industry Indicators

4

Industry Outlook

6

Market

8

People

38

100 Years Ago

38

Meetings

38

Products

39

Advertising Index

41

Classified

42

31

Cover: Shutterstock/iurii; Top right: William Beecher

27 On the Cover Railway Age’s inaugural Fast Trackers competition celebrates ten individuals under the age of 40 who are making an impact in the industry.

Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 55 Broad St., 26th Fl., New York, NY 10004. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 217, No. 2.

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February 2016 Railway Age 1

From the Editor William C. Vantuono

Editorial and Executive Offices Simmons-Boardman Publishing Corp.

55 Broad Street, 26th Fl. New York, NY 10004 212-620-7200; Fax: 212-633-1863 Website: www.railwayage.com

FAST track to federal court

A

t least one commuter railroad believes that Amtrak is trying to pull a FAST one (pun intended).

The Massachusetts Bay Transportation Authority is suing Amtrak in U.S. District Court for the District of Massachusetts after the two failed to reach agreement on new, vastly increased access fees for MBTA commuter trains operating on the Northeast Corridor between Attleboro, Mass., at the Rhode Island border, and Providence, R.I. The MBTA is asking a federal judge to throw out a claim that it owes Amtrak $28.8 million in annual fees. Amtrak, MBTA’s 26-page court filing says, is “claiming that it is both permitted and required ... under a pair of federal statutes ... [to] demand that MBTA pay it tens of millions of dollars each year for the very services that Amtrak is already obligated by the Attleboro Line Agreement to provide MBTA without charge.”

The existing Attleboro Line Agreement was signed by MBTA and Amtrak in 2003, when Amtrak ceased operating MBTA trains under contract and MBCR (Massachusetts Bay Commuter Railroad) took over. Keolis has been MBTA’s contract operator since July 2014. In exchange for granting Amtrak access to operate its intercity trains on the state-owned portion of the NEC between Attleboro and Boston’s South Station, as well as control train dispatching on the line, Amtrak maintains portions of the right-of-way and provides access for MBTA trains operating between Attleboro and Providence, free of charge.

A fairly simple arrangement, right? Well, following recent legislative developments, not so FAST (again, pun intended).

According to the MBTA’s court filing, Amtrak has cited language in the new FAST (Fixing America’s Surface Transportation) Act and PRIIA (Passenger Rail Investment and Improvement Act of 2008) that established a commission tasked with developing cost-sharing policies to replace the terms of existing contracts between Amtrak and state

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RailwayAge

commuter rail agencies. After the commission promulgated the cost sharing policy in October 2015, “Amtrak repudiated the Attleboro Line Agreement and demanded that MBTA enter a new contract implementing the policy.”

The commission, the Northeast Corridor Infrastructure Operations and Advisory Commission, is named in MBTA’s suit along with Amtrak.

Amtrak, according to the lawsuit, has threatened to file an action before the Surface Transportation Board if the MBTA doesn’t fork over the nearly $30 million.

The MBTA argues that it filed the lawsuit because “the federal law that Amtrak is invoking to justify its demand for nearly $30 million in cost-sharing payments for this year alone is unconstitutional, and because Congress cannot by statute relieve federal agencies, such as Amtrak, from their contractual obligations without putting those agencies into breach of contract. Whether or not Amtrak should have more money for its maintenance responsibilities along the Northeast Corridor, the answer is not to simply take that money from Massachusetts and a few other states in violation of the constitution and their contractual rights.”

The MBTA is asking for declaratory judgments saying that the FAST/PRIIAderived cost-sharing policy violates the U.S. Constitution, and that Amtrak is in breach of contract with the MBTA. According to the lawsuit, under FAST and PRIIA, Amtrak saves $56 million a year on the Northeast Corridor, while requiring Massachusetts (MBTA) to pay $28.8 million, New Jersey (NJ Transit) to pay $90 million, Pennsylvania (SEPTA) to pay $14 million and Maryland (MARC) to pay $1 million.

Perhaps it’s time to take a hard look at fundamentally changing how the NEC is owned, maintained and operated. For more insight, see Watching Washington, p. 16.

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Industry Indicators TRAFFIC ORIGINATED CARLOADS

SHORT LINE AND REGIONAL TRAFFIC INDEX FIVE WEEKS ENDING JAN. 2, 2016

MAJOR U.S. RAILROADS

by Commodity Grain Farm Products ex. Grain Grain Mill Products Food products Chemicals Petroleum & Petroleum Products Coal Primary Forest Products Lumber and Wood Products Pulp and Paper Products Metallic Ores Coke Primary Metal Products Iron and Steel Scrap Motor Vehicles and Parts Crushed Stone, Sand, and Gravel Nonmetallic Minerals Stone, Clay & Glass Products Waste & Nonferrous Scrap All Other Carloads Total U.S. CarLoadS

DEC. ’15 105,553 3,911 45,154 29,171 148,416 62,893 408,127 6,269 13,848 29,856 26,570 18,552 40,443 12,703 80,266 92,618 19,530 32,474 16,134 26,955 1,219,443

DEC. ’14 117,666 4,205 47,077 29,467 147,453 79,133 565,957 7,344 15,436 31,655 43,657 19,721 51,369 17,349 76,291 101,180 20,996 34,957 15,624 18,383 1,444,920

% CHANGE -7.4% -7.0% -4.1% -1.0% 0.7% -20.5% -27.9% -14.6% -10.3% -5.7% -39.1% -5.9% -21.3% -26.8% 5.2% -8.5% -7.0% -7.1% 3.3% 46.6% -15.6%

346,890

398,352

-12.9%

1,566,333

1,843,272

-15.0%

CARLOADS

Chemicals Coal Crushed Stone / Sand / Gravel Food & Kindred Products Grain Grain Mill Products Lumber & Wood Products Metallic Ores Metals & Products Motor Vehicles & Equipment Nonmetallic Minerals Petroleum Products Pulp, Paper & Allied Products Stone, Clay & Glass Products Trailers / Containers Waste & Nonferrous Scrap All Other Carloads

COMBINED U.S./CANADA RR INTERMODAL

FIVE WEEKS ENDING JAN. 2, 2016

MAJOR U.S. RAILROADS

by Commodity TRAILERS CONTAINERS TOTAL UNITS

DEC. 2014 - 356,316 300,000 310,000 320,000 330,000 340,000 350,000 360,000 370,000 380,000 390,000 Copyright © 2015 All rights reserved.

Railroad employment, Class I linehaul carriers, december 2015 (% change from december 2014)

DEC. ’15 123,483 1,056,424 1,179,907

DEC. ’14 146,036 1,042,373 1,188,409

% CHANGE -15.4% 1.3% -0.7%

3,875 254,791 258,666

7,332 258,485 265,817

-47.1% -1.4% -2.7%

Transportation (train and engine) 64,047 (-10.70%)

127,358 1,311,215 1,260,550

153,368 1,300,858 1,258,209

-17.0% 0.8% 0.2%

Total employees: 160,795 % change from DEC. 2014: (-5.88%)

COMBINED U.S./CANADA RR TRAILERS CONTAINERS TOTAL COMBINED UNITS

Source: Monthly Railroad Traffic, Association of American Railroads

average weekly U.S. Rail Carloads: all commodities (not seasonally adjusted)

% CHANGE -8.7% -16.2% -11.5% -7.4% -15.1% -2.8% -7.5% 57.1% -20.4% -1.2% -25.2% 14.9% -1.6% -0.6% -0.4% -5.3% -8.7%

DEC. 2015 - 333,751

CANADIAN RAILROADS TRAILERS CONTAINERS TOTAL UNITS

ORIGINATED DEC. ’14 44,492 23,922 28,749 11,571 25,640 6,572 9,408 4,657 20,151 8,095 2,789 1,788 18,811 11,839 43,752 9,042 85,038

TOTAL CARLOADS, DECEMBER 2015 vs. 2014

CANADIAN RAILROADS ALL Commodities

ORIGINATED DEC. ’15 45,078 20,052 25,439 10,715 21,769 6,390 8,705 7,314 16,038 7,998 2,086 2,054 18,510 11,770 43,597 8,563 77,673

BY Commodity

Executives, Officials, and Staff Assistants 9,580 (-4.31%)

Transportation (other than train & engine) 6,652 (-0.73%)

Maintenance of Equipment and Stores 30,403 (-1.18%)

Professional and Administrative 14,194 (-0.59%)

Maintenanceof-Way and Structures 35,919 (-3.86%)

Source: Surface Transportation Board

class I employment down in all categories Figures released by the STB show Class I total railroad employment dropped 5.88% in December 2015, measured against December 2014.

All six categories took a hit, with Transportation (train and engine) dropping the most at 10.70%; followed by Executives Officials, and Staff Assistants, which dropped 4.31%; and Maintenance-of-Way and Structures, which dropped 3.86%; and Maintenance of Equipmenr and Stores, which dropped 1.18%, compared to 2014.

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Industry Outlook AAR’s Hamberger sets 2016 priorities, recaps 2015 wins

Association of American Railroads President and CEO Edward R. Hamberger said last month that the industry will be targeting several key issues in 2016, such as maintaining balanced economic regulation at the STB, extending the 45G short line tax credit while laying the groundwork

for overall tax reform, and advancing security/safety legislation or regulation.

With freight railroads facing a deadline later this month to provide the FRA with plans to implement PTC technology, the AAR reaffirmed the industry’s stance that the technology will be fully installed where required by 2018 and all testing for full coast-to-coast operations completed by 2020.

Hamberger’s remarks were made at the 246th regular meeting of the Midwest Association of Rail Shippers (MARS) during a panel titled, “Just what we need, more ‘help’ from Washington.”

The conference focused on challenges and opportunities for shippers, railroads and the supply chain and featured topic-experts such as STB Chairman Daniel R. Elliott III. “The past year brought much excitement and success for the freight rail industry, both from a service perspective and in terms of regulatory and legislative activity,” said Hamberger.

“We take very seriously our mission to deliver our customers’ goods efficiently, reliably and safely and look forward to

our continued partnerships.”

Hamberger also addressed several successes from the past year, including stopping efforts to increase truck weights, pushing for safer tank cars moving flammable liquids like crude oil and ethanol, and achieving common sense reform in environmental permitting.

He also thanked the audience of rail customers for their support in pushing for an extension of the PTC deadline.

“It would have never happened had not freight rail’s customers let Washington, D.C. know the devastating impacts a rail shutdown would have on American businesses and jobs,” he said.

The AAR leader last mentioned a long-term project that will be getting a stepped-up focus in 2016: working with other industries and government to review the rulemaking process and “improve a regulatory system that at times limits innovation and efficiencies.”

Hamberger argued that with a still-soft economy, American industry requires “empirically-driven policy rooted in sound science.”

RSI looks to sustain legislative momentum in 2016 In 2015, the Railway Supply Institute, Inc. (RSI )advocated quite heavily against keeping truck size and weight from increasing. And it was successful on both accounts. Now, according to RSI’s Nicole Brewin, Vice President of Governmental Affairs, intercity passenger rail funding outside of the appropriations process is big on the association’s 2016 agenda.

H.R. 3763, the Surface Transportation Reauthorization and Reform Act of 2015, which would allow heavier trucks on interstate highways in an effort to save shippers time and money, was rejected by the House on Nov. 3, 2015.

The amendment, No. 29, which would increase the current weight limit for a tractor-trailer from 80,000 pounds to 91,000 pounds, was defeated by a vote of 236-187.

Additionally, the U.S. Senate on 6

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February 2016

Nov. 10, 2015 passed an amendment, “Motion to Instruct Conferees of the Highway Bill on Double 33-Foot Trailer Trucks,” opposing the allowance of twin 33-foot trailers on federal highways in a 56-31 vote.

“It was a huge victory for us, especially because everyone was saying to us that even if we’re successful against heavier trucks, we might still have to deal with longer trucks,” Brewin said. “But we pushed it down to the wire and we’re really thankful we did because we were successful on both issues.”

The amendment, however, did not have AAR’s support. “What we found this time is that the strategy shifted,” Brewin said. “Trucking companies made a tactical decision to split the weight/ length issue. And at that point, AAR decided not to take a position.” Brewin

adds that although RSI’s efforts were successful in 2015, “both issues won’t be going away, and we’ll have to be ever-vigilant as the strategy is always shifting.”

Brewin also commented on the recent passage of the five-year FAST Act, and how RSI was happy to see Congress provide clarification on tank car requirements, as well as Amtrak reauthorization.

In 2016, big on RSI’s agenda is funding intercity passenger rail in a “dedicated, long-term way,” Brewin said.

“How do we get to a point where we don’t have to pull from other resources?

We think it’s possible but a lot of groundwork still needs to be done.”

Other areas of importance for RSI include PTC funding, TIGER grants, the FTA New Starts program, and research and development initiatives.

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The new technology of the APT1500RL made by Plasser & Theurer is the first flash-butt welding machine that can weld rails fully automatically without manual interaction. Thanks to the integrated capability of the APT1500RL to perform automatic closure welds, a separate rail pulling device is not needed. Main features of the new rail welding robot are: fully automatic alignment of the running edge and top of the rail, pulsation welding to achieve a high-quality weld in shorter time and with less burn-off as well as automatic evaluation and documentation of the weld.

Market Calgary Transit unveils Siemens S200 LRV Calgary Transit (CT) unveiled its new S200 LRV on Jan. 15, 2016 at the Oliver Bowen Maintenance Facility. The high-floor vehicles are being designed and manufactured

by Siemens at its Sacramento, Calif. plant and include new features that allow for full accessibility, increased energy efficiency, new passenger comfort and safety provisions, improved operator and maintenance systems, and specific adaptations for Calgary’s climate.

Siemens will be delivering a total of 63 vehicles by early 2017 for the CT LRT as part of a contract announced in September 2013.

CT expects the new vehicles to begin operation this spring.

North America BNSF Railway: Has selected MOBI as its partner to provide more efficient mobile device management across its network of employees and machines.

Metropolitan Transit Authority of Harris County Texas (METRO): Has partnered with INIT for a MOBILEPERDIS bidding, time-keeping and dispatching software solution. The new software will give METRO the ability to streamline labor and time intensive tasks, as well as better manage the agency’s nearly 1,600 vehicles.

the passenger service with its ONTIME and FLEET optimization solutions, allowing for timetable generation and rolling stock utilization planning, as well as creation of special timetables or service adjustments for unexpected events.

Worldwide: Ansaldo STS: Has awarded Siemens a subcontract to electrify two lines of the Lima, Peru Metro currently under construction.

RailComm: Has been selected to replace an obsolete yard control system with its DOC® system at a Class I yard in Buffalo, N.Y.

Eversholt Rail (Britain): Has signed contracts with Arriva Rail and CAF to finance and procure 281 multiple-unit vehicles for a new nine-year Northern franchise, which begins in April.

VIA Rail Canada: Has selected SISCOG, a Portugal-based software company that specializes in solutions for optimized planning and management of resources in transportation companies, to provide

Jernbaneverket (Sweden): Awarded the first contract for the electrification of the 106-km (66-mile) TrondheimHell-Storlien Meråker Line when it signed an NKr 26.9 million ($3 million) deal with Swedish engineering

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February 2016

consultancy Sweco, which will carry out detailed planning for the NKr 3 billion project.

Pakistan Railways: Has awarded CRRC Corporation subsidiary Jinan Railway Vehicles Equipment Company (JRVEC) an Rs 3.92 billion ($37.5 million) contract to supply 800 hopper cars.

Tarmac (Britain): Has awarded fiveyear contracts to four rail freight operators as it seeks to increase the volume of aggregate and other materials it moves by rail.

Transitio (Sweden): Has awarded Motala Train a contract to carry out heavy maintenance on its fleet of 25 class X11 EMUs, which are primarily used by regional operators Krösatågen and Norrtåg.

Wabtec Corp: Has begun deliveries of brake system equipment to Alstom, which is building up to 3,600 commuter railcars for the Passenger Rail Agency of South Africa (PRASA).

Siemens Whispering Car Retarders® So quiet you may forget you need hearing protection Rail Automation Efficient, reliable, and safe rail yards demand optimal solutions. At humps in marshaling yards, retarders function as very important elements for controlling the speed of hump yard operations.

In the classification zone of humps, Siemens’ Trackguard Retarder TW-F/W-E can be used to keep a safe distance between various running cars, thus boosting hump efficiency.

Benefits • 50% reduction in emitted noise levels due to patented Whispering Retarder® Brake Shoe Inserts • Large functional scope • Low operating costs • Good controllability • Low emission levels • Good operational, on-site adjustability • Retarders scalable to the respective application • Little need for maintenance • Discontinuation of hazardous workplaces

usa.siemens.com/rail-automation

Update Supply Briefs Greenbrier posts record fiscal first quarter The Greenbrier Companies, Inc. on Jan. 7, 2016 reported record financial results for its first fiscal quarter ended Nov. 30, 2015.

Net earnings for the quarter were a record $69.4 million, or $2.15 per diluted share, on record revenue of $802.4 million.

Adjusted EBITDA for the quarter was a record $161.8 million, or 20.2% of revenue. The new railcar backlog as of the quarter’s end was 36,000 units with an estimated value of $4.14 billion (average unit sale price of $115,000), compared to 41,300 units with an estimated value of $4.71 billion (average unit sale price of $114,000) as of the close of the company’s 2015 fiscal year (Aug. 31, 2015).

Greenbrier received diversified orders for 500 new railcars during the quarter, after which orders for an additional 2,100 railcars were received. The aggregate value of the cumulative orders for 2,600 new railcars is nearly $250 million, or an average sales price of approximately $96,000 per railcar. New deliveries totaled 6,900 units for the quarter, compared to 6,200 units for the prior quarter.

Trackmobile LLC receives ISO 9001:2008 certification Trackmobile LLC, a Georgia-based builder of bi-modal railcar movers, achieved ISO 9001:2008 certification by American Systems Registrar (ASR). As a global manufacturer responsible for “the design, manufacture, and service of machines for moving railcars and locomotives,” certifying Trackmobile’s operation under a quality management system in conformance with international quality system standards was imperative, the company says.

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NS accelerates long-term strategic streamlining plan

Norfolk Southern Chairman, President and CEO James A. Squires.

S

peculation that Canadian Pacific and its largest shareholder, Bill Ackman, will abandon their hostile pursuit of Norfolk Southern hasn’t deterred NS from undertaking “a strategic plan to streamline operations and drive profitability and growth.” NS says its plan includes cost reductions and improved operational efficiencies that are expected to achieve annual productivity savings of more than $650 million by 2020, with approximately $130 million to be realized in 2016, resulting in an operating ratio below 70% this year and below 65% by 2020.

NS’s projected expense reductions and “disciplined cost control initiatives” are in the categories of compensation and benefits, purchased services and rents, materials and fuel. NS has begun implementing the plan and expects associated net benefits to begin appearing in financial results beginning in the first half of 2016.

Service and efficiency improvements, consolidation and network rationalization will enable NS to reduce headcount in 2016 and beyond, building on initiatives begun in 2015 to “right-size” the workforce. This is expected to result in $420 million in annual expense savings by 2020. NS expects to reduce

headcount by 2,000 employees by 2020; decrease overtime by 50% from 2015 levels; reduce employee levels in areas affected by lower coal traffic by “rightsizing” its coal infrastructure; consolidate operating regions from three to two; halt or reduce operations in several hump or secondary yards in 2016, reducing manpower needs and locomotive fleet requirements and consolidating traffic on fewer, larger trains; and dispose of or downgrade 1,500 miles of secondary lines by 2020, including 1,000 miles in 2016, as traffic is rerouted onto higher-density lines and some parts of the system are more economically operated in collaboration with short lines.

Projected efficiency improvements and network rationalization should enable NS to realize annual savings of $70 million by 2020 by reducing the size of the car fleet and lowering equipment rental and lease costs, along with maintenance expenses for that equipment; reducing the use of third-party switching terminals by leveraging the recently completed expansion of Moorman Yard in Bellevue, Ohio; and reducing trackage and haulage rights payments.

Projected efficiency improvements should enable NS to reduce expenses another $80 million per year by 2020.

NS expects to decrease locomotive maintenance expenses by reducing active fleet size by 300 units in 2016 and another 100 units by 2020 through improved velocity, line, yard, and localswitching-network rationalizations; reduce overhaul and maintenance expenses and improve locomotive reliability by replacing older, less-reliable units; and conserve capital while enhancing the efficiency and reliability of the locomotive fleet by continuing its 6-axle rebuild strategy, which includes DC to AC conversions.

Fuel efficiency initiatives should allow NS to reduce fuel consumption by $80 million per year by 2020.

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Update BNSF 2016 capex: Still extremely robust at $4.3 billion

BNSF last month announced a $4.3 billion 2016 capital expenditure plan that “will focus on helping to ensure the company continues to operate a safe and reliable network this year and beyond. This year’s capital program reflects BNSF’s success in adding capacity to support customer demand while bringing investment more in line with current volumes,” the railroad said.

The largest component of this year’s plan is approximately $2.8 billion “to replace and maintain BNSF’s core

network and related assets to keep our railroad infrastructure in top condition,” BNSF said. “These projects will go toward replacing and upgrading rail, rail ties and ballast. Keeping the railroad well maintained helps ensure trains can run safely and helps limit the need for service outages that can slow down the network and reduce capacity.”

While this year’s overall plan is $1.5 billion less than what was spent in 2015, it includes more than $300 million for continued implementation

of Positive Train Control (PTC) and more than $600 million for locomotives, freight cars and other equipment acquisitions. Approximately $500 million os for expansion, including a continuation of projects that were started in 2015, such as installing a new bridge and second track to cross the Pecos River, and double track near Fort Sumner, N.M. This year’s projects also reflect various other double-track work and additional Centralized Traffic Control (CTC) signaling that will add capacity and improve efficiency in constrained parts of the network.

“Our railroad is in the best shape it has ever been,” said Carl Ice, BNSF President and CEO (Railway Age’s 2016 Railroader of the Year). “Maintenance of our network continues to drive the majority of our annual investments and helps ensure we continuously operate a safe and reliable network.”

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Railway Age

February 2016

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Reading & Northern: Record-breaking volume and revenue Regional railroad Reading & Northern achieved record-breaking carload volumes and revenue in 2015.

R&N, which handles a diverse mixture of commodities including wood pulp, paper, metals, food products, plastics, forest products, chemicals, minerals and anthracite coal in 2015 handled 28,940 carloads, a 19% increase from the previous record achieved in 2014 —more than 4,500 carloads. This helped R&N attain record-breaking freight revenues that exceeded past revenue levels by more than 30%. R&N said the growth is largely from new transloading and warehouse businesses.

R&N did well in all commodity areas except its Marcellus Shale business, which fell by two-thirds. “However, unlike other regional railroads, which saw their overall traffic decline, we were able to achieve spectacular growth due to our emphasis on customer

service and entrepreneurial focus,” said CEO and owner Andy Muller, Jr. “Our record-breaking volumes for 2015 prove that our decision to offer our customers guaranteed service windows does grow the business. And in 2016 we are taking this commitment one step further by improving our already excellent service by hiring more crews and running more trains, and faster.”

“We could not have achieved this growth without the hard work of the 200-plus men and women in the Reading & Northern family” said President Wayne Michel. R&N increased employment almost 8% in 2015 and is hiring more employees at this time.

Michel also stressed that much of the railroad’s growth was due to taking entrepreneurial risks to develop more traffic. “In 2015, we got into the warehouse business in order to serve customer demand,” he said. “This

follows our recent successful move into the transload business to better serve our customers. In addition, some of our customers needed to store their railroad cars as a result of market shifts.

We reopened long-dormant tracks and were able to store thousands of cars.”

February 2016 Railway Age 13

Update Siemens completes first Brightline coach carshell

Brightline, the higher-speed passenger rail service being developed by Florida East Coast Industries subsidiary All Aboard Florida, and Siemens Rolling Stock announced on last month that the first stainless steel carshell for the new service has been completed.

Described as “a major construction milestone,” the carshell is part of the first of Brightline’s initial five four-car, 240-passenger trainsets, with more trainsets to follow as the service

expands. Siemens is also supplying the locomotives, which will be its Charger 125-mph diesel-electrics.

More than 70 employees at the Siemens manufacturing facility in Sacramento, Calif., work on building the 85-foot long carshells, using more than 50,000 welds to construct it. Siemens is employing first-of-its-kind stainless steel spot-welding technology, and these coaches will be the only carbody with a flat sidewall of this type in the U.S. market. The completed coach shell will now go through a finishing process, preparing it for final assembly.

To support the skills needed for the advanced welding techniques, Siemens has launched a workforce development and training initiative, partnering with local community colleges and the Sacramento Employment and Training Agency (SETA). Siemens has also developed “a robust and diverse base of U.S.

rail suppliers to support the nextgeneration of rail manufacturing for Brightline, including components from more than 40 suppliers in more than 20 states with additional suppliers still being added.”

“With the completion of the first carshell, we are bringing our vision for a truly unique train service that will transform travel in Florida one step closer to fruition,” said Brightline President Mike Reininger. “The Siemens team has been working diligently, and we are thrilled to mark this milestone as the finishing of this car progresses and the manufacture of additional cars continues.”

“We’re thrilled to be marking this production milestone with the Brightline team and also recognizing the highly-skilled work taking place at our Sacramento plant,” said Siemens Rolling Stock President Michael Cahill.

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Railway Age

February 2016

Freight car construction sector continues to hold its own The Railway Supply Institute last month published its railcar industry order, delivery and backlog statistics for fourth-quarter 2015, and overall, the sector looks solid, according to Steve Barger, Managing Director and Equity Research Analyst with KeyBanc Capital Markets Inc. Orders in the quarter increased to 9,169 cars from 7,374 cars in thirdquarter 2015. Deliveries of 20,296 cars (8,341 tank cars and 11,995 non-tank cars) compared favorably with the previous quarter’s “strong” delivery figure of 20,476. The backlog now stands at 111,019 cars, down 9.4% from the prior quarter’s 122,591, “though still at historical highs,” notes Barger.

Tank car orders totaled 1,176 vs. third-quarter 2015 orders of 1,463.

“While the order number is modest, we think it could be better than concerns warranted, and likely represents demand

trends for non-energy tank cars,” says Barger. Non-tank-car orders totaled 7,993 in the quarter, vs. 5,911 non-tank cars in third-quarter 2015. Covered hoppers, which showed the largest order concentration, totaled 5,453, about 60% of the total and well above third-quarter 2015’s 51%, with small-cube covered hoppers representing the majority at 2,850 cars, vs. zero small-cube cars ordered in third-quarter 2015. Orders for mid-cube and large-cube covered hoppers were 1,138 and 1,465 cars in the quarter, respectively, vs. 672 and 3,113, respectively, in third-quarter 2015. Together, tanks and covered hoppers accounted for more than 72% of total orders in the quarter, about even with 71% in third-quarter 2015.

“Industry book-to-bill came in at 0.5x, slightly better than 3Q15’s figure of 0.4x,” notes Barger. “In the quarter, respective book-to-bill for tank and

non-tank activity was 0.1x and 0.7x, respectively. We think the weak bookto-bill for tanks is primarily attributable to customers delaying orders as they continue to assess their fleet for DOT compliance in the midst of volatile oil prices.”

Tank car deliveries were down 6% sequentially, “implying an annual capacity of 33,000-35,000 cars,” says Barger.

“If that range is correct, it implies the industry enjoys approximately 3.5 quarters of tank backlog visibility.”

“On current deliveries, we think the backlog of 111,019 units implies approximately 5.5 quarters of theoretical production visibility,” notes Barger.

“The tank car backlog decreased approximately 20% sequentially to 30,789 cars, or 28% of the total backlog, vs. 31% in third-quarter 2015. The non-tank backlog moderated to 80,230 railcars, down from the prior quarter’s 84,137.”

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Watching Washington Frank n. wilner

Is Robert Serlin Amtrak’s Merlin?

B

oston to Washington, D.C. It’s a megalopolis of technology innovators, prestigious universities, corporate headquarters, a global financial hub, a score of professional sports teams, tourist attractions, Congress and a maze of executive branch and independent regulatory agencies—a region of 56 million whose productivity and quality of life depend significantly on efficient intercity transportation.

Within this megalopolis are eight of the nation’s 26 busiest airports; I-95, whose auto traffic grows persistently; and Amtrak’s 457-mile Northeast Corridor (NEC), carrying some 12 million passengers annually.

While Amtrak dominates the air/rail market, a dozen intercity bus operators are poaching significant numbers of Amtrak passengers with lower fares, more frequent departures, competitive trip times and more convenient service.

Almost 70% of NEC bus riders are between the ages of 18 and 34, whereas Amtrak’s NEC riders are predominantly older.

Improving Amtrak’s NEC appeal to a broader demographic is constrained by budget limitations, choke points and timid initiative. A $52 billion price to lift NEC rail infrastructure to a state of good repair—new tunnels, bridge replacement, renewal of catenary, smoothing the washboard ride—depends on a reluctant congressional majority.

It doesn’t help that recent legislation requires cash-strapped Northeast states shoulder more of the NEC rail infrastructure cost burden. Their 7,500 daily commuter trains—vs. some 1,200 for Amtrak—may make them the predominant NEC user, but squeezing from them significantly more money is a long-run fool’s errand.

All is not despair. Some 19 years ago, a congressionally created study group 16

Railway Age

February 2016

suggested a public-private partnership separating NEC rail infrastructure from Amtrak passenger train operations, returning Amtrak to as it was when created in 1971. Not until 1976 was ownership and the financial burden of the NEC transferred to Amtrak.

After Congress failed to implement the study group’s proposal, a participating Wall Street banker enlisted leadership from Robert Serlin— Wharton School MBA, background in regional development and experience in railroad finance—whose American Intercity Rail Network for the 21st Century (AIRNet-21)

AIRNet-21, as some believe, is not a Republican attempt to demolish Amtrak. proposes that Amtrak-owned infrastructure be spun off into a separate federally owned National Railroad Infrastructure Corp. (NRIC).

The NRIC would be funded and managed by a private-sector infrastructure management organization (IMO) that would acquire a 50-year revocable lease to improve and maintain NEC infrastructure and dispatch its passenger, commuter and freight trains.

Amtrak would be freed of its infrastructure burden, which Serlin says “accounts for the majority of Amtrak’s financial losses and poses a major threat to the sustainability of a national rail passenger network.”

A $30 billion private-sectorguaranteed loan from the Railroad Rehabilitation and Improvement

Financing (RRIF) fund—with no impact on the federal budget—would partially fund NEC infrastructure renewal and track expansion to serve five airports directly.

An additional $30 billion—none through congressional appropriations— would be invested in the NEC over 50 years, allowing faster and more frequent passenger trains, many operating nonstop, point-to-point, with shorter trip times and competitive ticket prices.

Amtrak would receive from the NRIC a one-time $1 billion for equipment and service enhancement.

“The IMO would charge for use of NEC operating slots and stimulate growth through a host of new rail services on top of the current center-city to centercity model,” Serlin says. “Commuter access fees would not exceed avoidable costs. The for-profit IMO will earn its return by doubling NEC train miles within 15 years and creating new transportation opportunities.”

“Greater entrepreneurial inventiveness would be encouraged,” Serlin says, “stimulating Amtrak to respond creatively to competition from other rail passenger operators.” Legally binding safeguards will preserve Amtrak’s existing labor arrangements.

This is not a Republican ploy to demolish Amtrak. Democrat Jim Florio, a former House Transportation Subcommittee chairman and New Jersey governor, advises AIRNet-21.

Frank Mulvey, a former economics adviser to House Rail Subcommittee Democrats, most recently an STB member, a frequent NEC bus rider and unaffiliated with AIRNet 21, calls the plan “transformational.”

As Congress renews debate on the size of the public purse, the AIRNet-21 proposal may gain traction. Amtrak’s survival as “America’s Railroad” may depend on it.

Perspective: Short Line & Regional Linda Darr

FAST Act creates cause for celebration

A

fter many short term delays, Congress delivered, and President Obama signed on Dec. 4, 2015, a five-year $305 billion transportation authorization—Fixing America’s Surface Transportation Act, termed the FAST Act. The signing of the Act into law has provided a sense of relief for businesses engaged in transportation. Projects and initiatives can move forward, unhindered by repeated pending short-term deadlines. That’s good for short lines, good for our customers, and good for our economy.

We expect that short line railroads will find much in this legislation to celebrate, particularly with respect to funds made available for rail.

Short lines already re-invest significant capital on an annual basis to keep their operations moving efficiently, and most importantly safely. Building new track, railyard improvements, or major projects with other transportation partners to take advantage of new business opportunities are often beyond their ability to self fund. For the smaller railroads, traditional financing is difficult to obtain, and the process to obtain grant funding has been cumbersome.

The FAST Act provides several opportunities for our small railroads to access funds for improvements and new projects, including new dedicated freight funding with lower minimum grants, and refined RRIF and TIFIA processes making them more accessible to smaller railroads.

The FAST Act contains several provisions focusing on the efficient movement of goods including two forms of dedicated freight funding — The National Highway Freight Program (NHFP) “Formula” funds totaling $6.3 billion with up to 10% or $630 million, which may be used for rail or port projects and the Nationally Significant Freight and Highway Projects

(NSFHP) competitive grant funds ($4.5 billion) including $500 million identified for intermodal projects such as rail and port related projects.

Of note for short lines, minimum grants can be as low as $5 million.

Another source of revenue is the Highway Transportation Fund, which can allow for up to $500 million to be diverted to freight rail over the next five years.

With funds expressly identified for rail, and smaller grant awards available, we are looking forward to showcasing how short lines may put government monies to good use.

We expect short lines to find much in this legislation that will prove to be beneficial.

The FAST Act makes significant changes to two existing financing programs: Transportation Infrastructure Finance and Innovation (TIFIA) and Railroad Rehabilitation Investment Financing (RRIF).

TIFIA has been modified to include many soft costs such as subsidy and administrative costs of TIFIA loans, and at USDOT’s discretion, the cost of independent financial advisors and bond counsel for small and rural projects.

TIFIA loan eligibility has been broadened to projects as small as $10 million, and provisions have been made for an expedited application process.Finally, states may use loans from the TIFIA program to capitalize state infrastructure banks, which may enable a wider population of small and medium sized

projects to be funded in those states.

The RRIF program, for eligible freight, commuter, and intercity or passenger rail projects, has also been streamlined. The FAST Act streamlines the USDOT’s approval processes and includes language that modifies general authority to provide direct loans under RRIF to include at least one of the eligible applicants in a joint venture.

We are encouraged that these combined changes will make TIFIA and RRIF loans more accessible, and more attractive to our short line railroads.

Technology is a rapidly advancing component of operations and safety.

There are so many possibilities that it is difficult for even the most informed railroads to keep track of the benefits, including the ROI of all the permutations out there.Having relevant research and testing available is essential in assisting small railroads in making the best decisions, and guiding implementation.

Not many short line railroads have research professionals and testing time available within their current operations, and so they rely upon other entities to develop and guide implementation.The FAST Act provides funding to assist in making the adoption of new technologies affordable and for research and planning for future applications via Intelligent Transportation Systems (ITS) Research.

Rail is explicitly considered in research, pushed by a directive that federal transportation research planning be multimodal whenever possible and coordinated by the Secretary’s office to prevent duplication of effort and identify opportunities to apply research across modes.

Research funded at appropriate levels will assist the entire industry in evaluating the ROI and public safety benefits of technology, while keeping data safe.

February 2016 Railway Age 17

10

under

40

Railway Age’s inaugural Fast Trackers­— 10 Rising Stars Under 40, are ten individuals under the age of 40 who have made an impact in their respective fields or within their company.

A

fter nearly three months and 57 entries later, Railway Age editors, along with judges Nick Little, Managing Director of Michigan State University’s Railway Management Program and Ronald L. Batory, President and Chief Operating Officer of Consolidated Rail Corporation, have selected the winning 10 in Railway Age’s inaugural Fast Trackers—10 Under 40 contest. Representing the “best of the best,” these rising stars are making an impact in their respective fields.

“I enjoyed taking part in the judging and am impressed to see so many good, younger people in the industry today; it bears well for the future,” said Little, adding that a common thread among the winners is their management style, which is “centered on mentoring others with open communication to engender trust, yet supported by decision-making capability and responsiveness to internal and external ‘customer’ requirements. Alignment with their organization’s business model and values is also a recurring theme. Support for both 18 Railway Age February 2016

the railroad community and the society in which they live comes through in a surprising number of activities these young people are able to do, yet they still accomplish making an impact in their jobs.”

Entries, who had to be under the age of 40 as of Jan. 1, 2016 and located within the 50 states, Washington, D.C., Canada and/or Mexico, came from freight or passenger railroads, suppliers and consultants/contractors and were judged on criteria that included industry experience and education, leadership skills, industry contributions, and community service involvement.

This year’s 10 finalists will be recognized at the annual Railroader of the Year Dinner, which will take place on March 15, 2016 at the Union League of Chicago, honoring Railway Age’s 53rd Railroader of the Year, BNSF President and CEO Carl R. Ice. You can read more about Railway Age’s Fast Trackers, as well as our two judges, in the next few pages.

Shutterstock/iurii

By CAROLINA WORRELL, Managing Editor

FAST TRACKERS Joe Brosseau, 34 Principal Investigator II, Transportation Technology Center, Inc.

Brosseau currently leads the largest research and development program in North America for the development, improvement, simulation and testing of the industry’s $10 billion Positive Train Control (PTC) implementation initiative. He and his team have contributed significantly to this monumental effort through a number of key research programs, as well as through the development of a test facility for the technology and all of its elements at TTCI, while working with stakeholders, both public and private. Brosseau specifically led the development and evaluation efforts for an operationally efficient braking enforcement algorithm for PTC, one of the key technological challenges for this initiative. He is also TTCI’s leading expert in Train Operations and Energy Simulator modeling and provides important industry leadership and expertise whenever this type of analysis is called for. Brosseau has established himself as the “go to” resource for this technical function and has often been called upon to provide clarity and guidance in decision-making.

Anthony Fazio, 36 Manager of Track Design, SEPTA

Fazio has always led an extensive construction and maintenance program to ensure the railroads he has been employed by stay in a state of good repair. He is involved with AREMA and was involved in the construction of NJ Transit’s Hudson-Bergen Light Rail line.

During his time at Amtrak, he led a team that developed a new temporary passenger platform for stations on Amtrak’s Northeast Corridor and implemented this design in the field.

Fazio leads by example and is the first person to be out with the workforce in all types of weather to make sure that jobs are done safely and properly. He has always responded to any railroad emergency. After Superstorm Sandy hit New York, Anthony was the lead manager responsible for pumping out the East River Tunnels and worked around the clock with his crew for four days to ensure that the tunnels were cleared.

Fazio was nominated for the Amtrak President’s Award for his efforts. Additionally, at Amtrak, Fazio worked with his crew to increase Portal Bridge’s reliability rate from 80% to an unprecedented 99%.

Josh Connell, 36 General Manager, Genesee & Wyoming (Puget Sound & Pacific Railroad and Cascade & Columbia River Railroad)

Connell has proven results in both Class I and short line environments. He began his railroad career as a conductor with CSX and moved up through the ranks, earning managerial responsibility for groups as large as 368 people and budgets well over $3 million. He now oversees two Genesee & Wyoming railroads. Since joining Genesee & Wyoming in 2011, Connell has worked injury-free. Under his leadership, the Puget Sound & Pacific Railroad has remained injury-free for more than 1,000 days, while the Cascade & Columbia River Railroad has gone more than 1,100 days without a single reportable injury. In addition, Connell was able to significantly reduce operating costs at Puget Sound & Pacific through October of 2015. Connell is also an active volunteer for Operation Lifesaver (OLI), working diligently to educate the general public on rail crossing safety. This year alone, he and his team have shared the OLI message with more than 1,000 people in the area.

Dave Hill, 30 Assistant Division Engineer, Amtrak B&B, Mid-Atlantic Division

Hill began his career in the Amtrak managementtraining program and has worked diligently to bring the railroad’s 100-year-old-plus infrastructure to a state of good repair. One example would be the extensive work being done to maintain the Civil War-era Baltimore & Potomac (B&P) Tunnel. Hill has been giving back to his railroad community by mentoring new hires and insuring that they are familiar with and working safe along the right-of-way. Hill, a licensed civil engineer with a degree from the University of Pittsburgh, says his goals are to achieve promotions and to eventually become the Vice President of Operations at Amtrak. He leads a workforce of about 85 skilled workers, each of whom he knows personally, and his number one priority is their safety.

Hill is one of a handful of very young managers who had to prove himself by working harder and smarter. This has made him become very proficient and respected in his current position.

February 2016 Railway Age 19

FAST TRACKERS Erich Leonard, 35 Manager Locomotive Systems Development, New York Air Brake

Leonard has contributed to the rail industry at large—and to rail safety in particular—in several noteworthy ways. First, he has made significant engineering contributions at NYAB, specifically as lead system engineer on the development of a new brake system for passenger locomotives, where he developed and personally oversaw the system’s successful installation and track testing on the first Amtrak vehicles. He also led the effort to adapt this same system for the India locomotive market, introducing the system’s various innovations to a global market. Leonard also developed a new rubber component for the NYAB locomotive braking system, which led to the successful extension of a federally mandated overhaul interval for an important customer. Additionally, Leonard developed a new engineering calculation tool on his own initiative, greatly simplifying the work required to apply brake systems to locomotives. Leonard has been awarded one U.S. patent and is a primary inventor on three pending U.S. patents, including one for a Configurable Locomotive Brake Controller.

Torrey Swan, 33 Director, Marketing & Pricing, Energy, Chemicals, Canadian Pacific

By coordinating with internal and external stakeholders in the development of CP’s frac sand franchise from 2012 to 2014, Swan worked diligently to place the railroad in a position to capitalize on the movements of frac sand with the increase of demand in the energy sector. His ability to move the business from single car loadings to unit train loadings put both the shipper/ customer and CP in a position to capitalize on efficiencies, thus allowing both parties to be more competitive in their marketplaces. Swan is a firm believer in an efficient supply chain and takes every opportunity to speak at industry conferences relating what he has learned. Swan’s leadership was also evident prior to joining CP. While working on his Master of Business Administration degree, Swan received both the Alberta Graduate Award and the Dr. G. Barry Melon Graduate Award. He also recieved the Global Energy Management and Sustainable Development Scholarship program, which earned him $10,000 towards his education.

20 Railway Age February 2016

Daniel Lyons, 26 IT Support Specialist, Consolidated Rail Corporation

Lyons has designed and built a mobile workforce to enable employees to work remotely from multiple platforms. He is an influential team member of Conrail’s PTC Design and Implementation Team and has helped to upgrade the Conrail network, which included security and reliability resulting in up-times of close to 99.8%. Lyons runs IT training seminars at every level of the company and has created an IT disaster recovery plan for continued train operations in case of an emergency. He holds two Cisco certifications and a continuing education degree in Railway Management from Michigan State University. Lyons is well organized and goal-oriented.

He is currently earning an MBA from LaSalle University, with the goal of advancing his career. His commitment makes it clear that he wants to lead Conrail into the next generation of technology. Lyons expresses a passion to keep up with industry standards to ensure Conrail is equipped with the most effective technology and has expressed a desire to one day lead the company’s IT department.

Katie Theis, 38 Project Manager/Lead Planner, HNTB

Believing rail-based initiatives have a unique opportunity to profoundly impact community development, Theis focuses on leveraging the value of rail, at both the local station area level and as part of a greater regional system, to provide meaningful change. She brings that perspective to all of her projects. This is evident in her role in managing the Port Authority of New York and New Jersey’s PATH Extension to the Northeast Corridor Rail Link Station. Theis established a bi-weekly stakeholder steering committee meeting and with her perspective and experience, she will ensure that the project improves the region’s robust transit infrastructure and transit connectivity, increases rail capacity, provides transit redundancy and opens access and economic opportunities to locally disadvantaged communities.

Theis’s career has been centered upon creating sustainable communities through the integration of transportation and urban planning. She is co-chair of the American Planning Association’s Metro Chapter Urban Design Committee and a founding member of HNTB’s Women’s Outreach Network.

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FAST TRACKERS Roquita ColemanWilliams, 38 Solutions Manager, CN Railway

Caroline Woyer, 31 Assistant General Solicitor, Norfolk Southern Corporation

Williams is celebrating her 18th year as a logistics professional. She began her career with UPS, where she served in various sales and marketing management roles. In 2008, Williams joined the CN’s Supply Chain division, a unique and progressive team focused on international supply chain innovation. In 2011, she extended her career to serve as the first African American President of the Memphis World Trade Club. She has been recognized nationally as a Rising Star of North American Railroads and Next Generation of Freight Leaders. Most recently, Williams was appointed by former Memphis Mayor AC Wharton and the Memphis City Council to the Memphis Area Transit Authority’s Board of Commissioners. She is responsible for governing policy for a $60 million public transit system that in undertaking a major overhaul of its historic Memphis trolleys and developing its Central Station. Williams is a frequent volunteer, mentor and motivational speaker whose wish is to encourage and motivate the next generation.

Woyer is part of a team that helps defend Norfolk Southern (NS) when all manner of suits are filed against the company so that the railroad can continue to provide safe and efficient transportation to its customers. She is responsible for managing and overseeing a litigation docket in which millions of dollars can be at risk and must exercise keen judgment and make hard decisions regarding litigation strategy and valuation to protect NS assets. Woyer works closely with NS’s mechanical and transportation departments regarding event recorder data and systems/processes for capturing and retaining the data; specifications for new PTC event recorders; and training for road foreman. She was designated as the key lawyer for grade crossing matters and works closely with the railroad’s operating and labor relations departments to ensure the company is in compliance with the Federal Railroad Safety Act’s whistleblower provisions. Woyer was recently elected as the 2015-16 Eastern Vice President of the National Association of Railroad Trial Counsel.

JUDGES Ronald L. Batory President & Chief Operating Officer, Consolidated Rail Corporation

Batory has more than 44 years of field and system experience in the railroad industry. He spent the first 23 years of his career working for eastern and western Class I railroads in addition to assisting a courtappointed trustee’s successful oversight of a regional railroad bankruptcy. In 1994 he was appointed President of The Belt Railway Company of Chicago, a jointly owned switching and terminal subsidiary of the then-nine competing Class I carriers. His leadership in serving BRC’s owner railroads in the Chicago Gateway led to CSX and NS later recruiting him to Conrail in preparation of the STB approved partitioning of eastern carrier and establishing what is now commonly known as the Shared Assets Areas. Accomplishment of providing a plane of equality for joint competition later favored him in being appointed to his current position.

22 Railway Age February 2016

Nick Little Managing Director of Michigan State University’s Railway Management Program & Assistant Director of Executive Education Programs, Eli Broad College of Business in East Lansing, Mich.

While in high school in Britain, Little started his career with clerical and operating internships at Plymouth on British Rail’s Western Region in the early 1970s. He won a scholarship program with the British Railways Board that gave him a supply management degree plus training in all aspects of BR’s organization. Little then spent 15 years with BR in many locations including Derby and London. In 1995, Little came to MSU, initially for a year on loan to work on a research program, but he stayed to follow his passion of helping to develop future generations of expert managers and leaders with deep business knowledge and experience. He took charge of MSU’s Railway Management Certificate Program in 2013.

FAST TRACKERS RUNNERS UP:

Technology (Harsco) Joshua Bendyk, Operations Specialist,VHB Derick Call, Team Leader, Mechanical Engineering, NewYork Air Brake Michael Childs, Mgr. Intermodal Sales, Florida East Coast Railway Hayden Cornish, Rail Industry Director, Schenck Process Nicholas Croce, Deputy Chief Engineer, ATC,WMATA Elizabeth Dauble, Asisstant Division Mgr., Railroad Construction Company Nick Delmonico, Sales Account Executive, Encore Rail Systems, Inc. Michael DiArenzo, Mgr. of Asset Planning and Administration, Conrail Arber Doci, Train Control Systems Engineer, M.C. Dean Inc. HONORABLE MENTIONS: Neil Finn, GM, Union Tank Car Company Maeghan Albiston, Director Investor Cody Fischer, Engineer in Training, Locomotive Relations, Canadian Pacific Systems Engineering, Canadian Pacific Railway Ameer Alghusain, President, American Railways Deryk Gillespie, Assistant VP Planning & Jacob Asbell, President, Jeff Asbell Excavating Analysis, Canadian Pacific & Trucking Inc., Meridian Oil & Equipment, Ryan Gottsch, Mgr. Special Projects, Mechanical, Compliance 1 Environmental Services, Union Pacific Railroad DF Rail Group, Asbell Trucking, Alpha Air Casey Haddock, Project Mgr., Alstom Michael C. Bast II, President, Allentown Jessica Havens, CEO, Diesel Supply Company & Auburn Railroad Barry Johnson, Road Foreman, Engines, LIRR Shannon Bailey, Vice President, Protran Bradford Kelley, Associate Attorney, Slover & Benjamin Banks, Mgr. Industrial Products, BNSF Rachael Crandley, Associate Director of Business Development and Planning, Conrail Sarah Drane, Mgr., Union Pacific Timothy Francis, Vice President of Marketing, Herzog Zachary Garner, President & CEO,VisioStack Inc. Brian Hadley, Director, Safety & Security, Herzog Steve Hart, Assistant Mgr., Conrail Darrell Krueger, Engineer II, Lab and Testing Services, BNSF Nicole McGann, Safety Compliance Analyst, Metra Justin Vonashek, Chief Safety, Security, Emergency Preparedness, and Regulatory Compliance, Keolis Commuter Services

Looking for the perfect candidate or job in the rail industry?

Visit the Railway Age Job boARd http://bit.ly/railjobs

Loftus LLP Korey Lester, Mgr., Mechanical Engineering, BNSF Railway Amiee Marie Martelle, President, CEO and CFO, Riverport Railroad LLC Fred Mattison, System Train and Engine Compliance Officer, NJ Transit Kylie McLaughlin, GM,Western NewYork & Pennsylvania Railroad, LLC Joel McNeil, Vice President of Business Development, Brookville Equipment Corporation Max Medlin, Operations Mgr., North Shore Scenic Railroad Jonathan Michel, Senior Industrial Designer, RailPlan International, Inc. Jonathan Mudronja, VP, Leasing, Midwest, SMBC Rail Services Mark Pinske, Senior Staff Engineer, McMillen Jacobs Associates Jarad Prescott, Senior Project Mgr., GSS, Inc. Clint Reilly, Manufacturing Engineer, NYAB Brian Smith, Quality Assurance and Warranty Mgr.,WMATA Daniel Stout, Vice President, STX Corporation James Tylick, Corridor Superintendent California Division, BNSF Railway Ann Waters, Assistant Vice President Mechanical, Railroad Engineering Services, Genesee & Wyoming Inc. RA

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February 2016 Railway Age 23

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oPENING SESSIoN: currENT cHALLENGES & oPPorTuNITIES

rEGIoNAL AND SHorT LINE ISSuES

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James r. Hertwig President & CEO, Florida East Coast

CFO, Union Pacific with Railway Age Editor-in-Chief William C. Vantuono

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Managing Dir., Cowen & Co.; Contributing Editor, Railway Age

THE rEGuLATory ENVIroNmENT— rAILroAD PErSPEcTIVE Ed Hamberger

President & CEO, Association of American Railroads

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THE YEAR AHEAD IN WASHINGTON Washington is a rat hole worth watching because, as the politically savvy know, lawmakers and regulators can inflict unexpected, unprovoked and unjustified wounds. By Frank N. Wilner, Contributing Editor

T

ypically, in a Presidential election year, legislative output by Congress is a slow order. This Presidential election year may be atypical, owing to the agenda, energy and aura of relatively new House speaker Paul Ryan (R-Wis.).

As for the industry’s principal regulatory agencies—the Federal Railroad Administration (FRA), the Pipelines and Hazardous Materials Safety Administration (PHMSA) and the Surface Transportation Board (STB)—expect their resources this year to be sweated toward accelerated delivery of angstcreating rulemakings affecting rates, practices and safety.

Washington perennially is a rat hole worth watching because, as the politically savvy know, lawmakers and regulators can inflict unexpected, unprovoked and unjustified wounds. Recall, for example, 2008 legislation that imposed on the industry an estimated $10 billion unfunded mandate called Positive Train Control (PTC). This year’s watch list includes an FRA attempt to mandate minimum crew size.

Likely to energize Congress this election year is the impatient 46-year-old wunderkind Ryan, so esteemed by fellow Republicans that some speculate his becoming the brokered GOP presidential candidate, should mainstream Republicans revolt against the current front-running candidates.

Ryan says he wants the House to pass—with the Senate to follow—all 12 fiscal year 2017 government funding bills by late October, a rare accomplishment, even in non-election

years. Such haste, although admirable as it would avert the perennial budget gridlock that typically threatens a government shutdown, raises the probability of accepting, in a quest for expedient compromise, problematic specialinterest floor amendments.

One such amendment could permit a blanket increase in allowable truck lengths and weights, carrying significant highway safety and economic implications—more crash-related injuries; additional pavement damage from increased truck traffic; added highway-bridge stress from increased gross weights; an increased gap separating truck user charges from their higher cost responsibility; and freight diversion from rail to subsidized and less environmentally friendly motor carriers.

Expect Ryan to propose a broad overhaul of the tax code, which intrigues railroads. Unlike most industries, railroad revenue and profit is 100% on-shore generated, preventing them from escaping America’s high corporate tax rate (almost twice an 80-nation average and the highest among 34 industrially advanced nations) by booking earnings overseas and outside the reach of U.S. tax collectors as is done by many U.S. corporations.

A lower U.S. corporate tax rate—cut from 35% to a more competitive 25%—would entice repatriation of earnings booked overseas, improve tax compliance and encourage all U.S. corporate entities to plow back more of their earnings into domestic job-creating plant and equipment February 2016 Railway Age 27

the year ahead in washington

modernization and expansion. That could provide railroads an additional benefit of more freight.

Again in 2016, short line railroads must convince Congress to preserve, under the current tax code, their investment tax credit (Section 45G) that makes possible many capital investments that otherwise might not be affordable.

Important to all railroads is pending congressional reauthorization of the Transportation Security Administration, with which railroads share information crucial to protecting from terrorist attack hazmat shipments and infrastructure. Railroads say the existing collaborative relationship functions well.

Regulatory landscape

A wise woman once said, “You can write the legislation if I can write the regulations.” The latter puts flesh and sinew on the legislative skeleton—the devil appearing in the details.

The Surface Transportation Board Reauthorization Act of 2015, which was the first congressional revision of railroad regulatory law since a reduced-in-size STB succeeded the Interstate Commerce Commission in 1995, assigned the STB several consequential rulemakings, gave the STB power to initiate investigations into issues that are of national or regional significance such as service quality, and imposed new deadlines on STB decision-making.

The law also enlarged the number of STB members from three to five, which will allow a maximum of two board members to speak with each other directly without constituting a quorum and violating government sunshine laws. As for the two new members, there is palpitation the Senate will await a new President in 2017 before confirming nominees.

If so, the STB would be reduced by then to two members, as the current lone Republican, Ann Begeman, is in her single holdover year and may even voluntarily depart the agency before Dec. 31.

Rulemaking tasks Congress assigned the STB include developing, within new statutory time lines, a streamlined process for deciding rate cases utilizing a complex standalone cost (SAC) method—by which the challenged rate is compared against costs of service if alternatively provided by a perfectly efficient railroad. Congress also ordered a rulemaking process to establish a framework for less expensive, less complex and less time-consuming voluntary and binding arbitration to settle railroad/shipper disputes.

The STB additionally is expected in 2016 to hand down numerous decisions affecting railroad ratemaking. Among them are whether to ease the standard for pronouncing railroads revenue adequate; whether to modify the procedure for calculating the railroads’ cost of equity capital, which is a component of revenue adequacy determination; whether to utilize replacement costs rather than historical costs in computing revenue adequacy; and whether to restrict a revenue-adequate railroad’s rate flexibility, such as limiting its ability to impose rate increases in excess of railroad inflation.

Also, the STB is considering whether to grant shippers that are captive to a single railroad within terminal areas access to a 28

Railway Age

February 2016

second railroad (so-called competitive switching or terminal trackage rights), with the STB establishing the level of compensation to the railroad whose track is used by a competitor.

Shippers are pushing for change because, says one of their attorneys, “The lack of shipper filings shows that the policies of the STB too often don’t work for most shippers, who try to avoid going to the STB if they can.” Railroads are of a different opinion, contending shippers win more rate challenges than they lose, and that if regulators want railroads to continue taking financial risks and invest in rail infrastructure, then STB actions should not impede their ability to generate revenue and satisfy investors.

Among pending shipper complaints to be decided in 2016 are whether the SAC method of determining rate reasonableness is appropriate for chemical shippers whose carloads move between multiple origins and destinations; whether and how to cap rail rates of revenue-adequate railroads without harming non-revenue-adequate railroads; and whether agricultural shippers unable to afford pursuing a case under the SAC method have meaningful access to an efficient alternative.

The STB also may rule on acceptable procedures for imposing fuel-cost surcharges amidst complaints they have recovered more than is justified or reasonable. Pending in federal court is an antitrust action alleging unlawful collusion in setting fuel surcharges. Complainants are seeking class action status, with the railroads’ exposure said to be in the billions of dollars.

The STB Reauthorization Act provides for barely enough additional revenue to cover the cost of two new board members and their staff. Thus, resources will be especially tested if one or more merger applications, which carry decision deadlines, are filed.

At the FRA, a notice of proposed rulemaking (NPRM) may be issued in 2016 requiring two-person train crews.

Railroads say that PTC can make a second crew member redundant, that two-person crews can be less safe than single-engineer operation, and that short line railroads and Amtrak have long operated single-engineer trains with exceptional safety records. A final rule likely will be challenged in federal court, and Congress could pass legislation making such a rule moot. Major railroads currently operate collectively bargained two-person crews, and the issue could take years to play out.

PTC extension

A provision of the Surface Transportation Extension Act of 2015 delayed for three years, until Dec. 31, 2018—and as late as 2020 under certain circumstances—the deadline for PTC implementation on some 60,000 route-miles carrying toxic-by-inhalation (TIH) hazmat and all commuter and intercity trains. Technological challenges and delay by the Federal Communications Commission in approving aspects of PTC was the reason. (Amtrak, over its Northeast Corridor—far less complex than freight railroad networks— met the 2015 deadline, as did some commuter railroads on

the year ahead in washington

short stretches of track they own.) The FRA will monitor compliance with the new deadline.

FAST Act

Congress in 2015 also passed the Fixing America’s Surface Transportation (FAST) Act, with rail provisions affecting installation of electronically controlled pneumatic (ECP) brakes and tank car construction standards, both requiring regulatory action.

In response to a PHMSA rule requiring ECP brake installation on certain hazmat trains as early as 2021, Congress ordered an independent evaluation of the rule by the Government Accountability Office, and a second look by PHMSA of its rule following additional testing of ECP brakes by a National Academy of Sciences chosen independent evaluator. Railroads that have tested ECP brakes in their own operations say they have reliability problems, do not prevent derailments and provide only minimal safety enhancements compared with other technologies. Notably, the FRA—prior to the PHMSA rule—declined to require their installation, finding safety benefits do not outweigh the costs.

The FAST Act also expands to all tank cars used in transporting crude oil and other hazmat liquids—and regardless of train consist—a May 2015 PHMSA final rule on new construction and retrofit specifications to enhance tank car

Take the

safety. This creates a more comprehensive tank car rule from what it was. Some 40,000 additional tank cars are affected, and a new timeline applies to a phaseout of non-compliant tank cars.

AMTRAK

The FAST Act marks the first time since Amtrak’s creation that it has been included in a surface transportation act and its funding cycle. The law orders changes to Amtrak’s financial structure such as creating distinct accounts for its Northeast Corridor and national network, and requires costaccounting improvements; increases the size of the Amtrak board of directors from nine to 10 (the new member must be confirmed by the Senate); and increases Amtrak’s liability cap from $200 million to $295 million for the Philadelphia accident last May. The Secretary of Transportation will set future liability caps.

Amtrak also has pending at the STB two rulemakings— a final rule on the definition of on-time performance when freight railroads host and dispatch on their track Amtrak passenger trains; and a policy statement on how the STB will evaluate Amtrak’s statutory right to passenger train preference when operating on freight railroad track.

As for the level of Amtrak’s fiscal year 2017 appropriation, expect it to be problematic, as always. RA

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Rail renewal Roundup

Making the rail renewal process safer and simpler is a top priority among equipment manufacturers and contractors.

By MISCHA WANEK-LIBMAN, Engineering Editor

R

ailroads spend billions each year on rail renewal, and the companies that help them perform the task are making it safer and simpler to accomplish.

But simply replacing rail is not all that modern rail renewal and delivery machines do. Many come with value-added services that provide speed of delivery, ease of maintenance and other benefits.

Adaptable design

The Rail Renewal System (RRS) from Harsco Rail is used for rail renewal, pad replacement and rail seat abrasion repairs on concrete tie track. The company notes that since the system was developed, rail has become bigger, fasteners have changed, pads have improved and epoxies have advanced.

“The RRS has adapted to all of these changes and is currently being upgraded to apply a quick-setting epoxy cured by an ultraviolet light, as well as a more viscous epoxy used for rail seat abrasion repair,” says Harsco Rail.

The RRS is a high-production system capable of simultaneously replacing both rails at an average rate of 1/2 mph to minimize track possession time. “The system reduces cost per unit, reduces labor and enhances safety while providing high quality results. Other ‘efficiencies’ of the RRS include

induction rail heating, bulk material handling, and scrap material collection,” says Harsco Rail. “One of the principal advantages of the RRS is that it takes everyone off the ground and into seats. At the same time, the old and new rails are all contained in rollers throughout the rail renewal process.”

Unloading safety

Herzog Railroad Services, Inc. (HRSI), provides a combination of equipment to help with rail handling. The company’s Rail Unloading Machine (R.U.M.) unloads at a rate of up to 10-12 rails per hour and operates with single- or dual-sided unloading options. Tim Francis, Vice President of Marketing, says safety and cost reduction benefits are associated with the R.U.M. He says employees and/or contractors are not in the “direct line of fire” when rail is unloaded, which makes for a safer unloading process. Additionally, he notes that there is no need for railroads to provide a winch car, which results in purchase and maintenance costs for that car being removed.

HRSI also offers the Automated Tie Down Car, which can be used separately or in tandem with the R.U.M. Francis s ays that when used with the R.U.M., only a pilot is needed, which reduces worker exposure and increases the safety factor of the unloading process.

February 2016 Railway Age 31

RAIL RENEWAL

The clamps on the Automated Tie Down Car are operated remotely, the only operation of this sort in a tie down car in the industry, notes Francis. When used with HRSI’s R.U.M., the clamps can be opened and closed remotely from inside the R.U.M. operator’s cab.

Francis says that standard manual unclamping of rails on average takes between 1.5 to 3 minutes per rail, but the Automated Tie Down Car unclamps a rail in six seconds, which results in significant productivity gains and allows for a reduction in track time required.

High production

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Scott Diercks, Director of Marketing and Business Development at Loram Maintenance of Way, Inc., says that as railroads look to renew their fleets, they address concerns of antiquated equipment and seek to gain production efficiencies, as well as improve safety.

“Loram’s Raptor outperforms traditional rail-handling systems with double the production at 3,000 feet per hour, provides a better solution for the entire process of rail relay as opposed to a system focused solely on rail delivery, and diminishes risk of injury by reducing the human interaction and retaining total control of the rail while loading and unloading,” says Diercks.

Diercks notes that the life cycle of rail includes four primary logistical components: transport of rail from steel mill or ship to welding plant, delivery of CWR from plant to trackside, pick-up of relay rail for reuse or re-welding, and pick-up and disposition of scrap rail. He says the Raptor’s modular design can adapt to provide service in any of these four areas by incorporating design features that anticipate future expected changes of rail size and long-rail delivery needs.

“Raptor’s many strengths lie in its lower manpower requirements, vast improvements in safety vs. traditional units, productivity improvements, value-added rail quality improvements by eliminating torch cutting of ends and providing drilled bolt holes that will improve relay gang effectiveness, and a top load design that will prove

critical as rail rolling and welding processes evolve,” says Diercks.

Product evolution

Bob Coakley, Nordco, Inc.’s Director of Sales and Marketing, says the company’s strategy is based on partnering with customers to exceed joint expectations for safe rail renewal that doesn’t impact train velocity.

“Over the past 10 years, we have seen our customers become more involved in product development, helping us focus on improving our equipment,” says Coakley. “Customers have done an extremely good job of studying pain points on their current rail renewal equipment and driving improvements back through our product improvement and manufacturing process. Nordco has continued to seek new and innovative solutions that drive increases in customer value through a rigorous focus on three key metrics— people, productivity, and customer profitability.”

“To understand our vision more clearly, we can look at the evolution of a few of our key products,” notes Coakley. “We have successfully rebuilt older-model Nordco Spikers into models with the productivity and reliability of the latest design at a fraction of the cost of a new one. We have led the industry in providing ergonomic solutions for the majority of our new machines, drawing on expertise in roadway work equipment design and manufacturing. A prime example is the Nordco BAAM – Anchor Applicator.

The Nordco BAAM includes a number of new features including a fully enclosed operator cab equipped with air-conditioning, positive ventilation, comfortable controls, and a noise and dust free environment. This is a focus on keeping our customer’s personnel safe, comfortable and productive.”

Coakley says Nordco continues to work with its own suppliers to understand the latest in design for mobile equipment, noting that Nordco customers see increased reliability and/or easier maintenance of equipment from upgrades to hydraulic manifolds, bearings, or fittings.

Smooth operator

ROBEL’s Rail Train makes transport, loading and unloading of long welded rails safe, accurate and efficient, the company says.

ROBEL, a specialist for railway construction equipment and machinery located in Freilassing, Germany, supplies Rail Trains operated by four people and consisting of three components: the Rail Manipulator (RM) gantry for loading and unloading rails onto/from the transport unit running over the full length of the Rail Train; the two-sided Chute Wagon Set (CWS) guiding the rails during the loading/ unloading process and placing the unloaded rails either alongside or between the tracks; and a Transport Wagon Set (TWS) carrying up to 50 rails on roller gates in up to five layers with a maximum length of 500 meters (approximately 1,640 feet).

For unloading, the ends of two rails are seized and pulled toward the CWS. The rails glide into the guide rollers of the CWS channels and are gripped again and pushed from the train until their ends smoothly touch the ground. The locomotive then pulls the train away while the RM moves with synchronic speed in the opposite direction. The rails slide down springloaded chutes mounted at the ends of the unloading channels. ROBEL notes that this technique avoids damage to the ties due to impact caused by the rails. When there is sufficient friction force on the track bed, the manipulator releases the rails and grips the next pair. ROBEL adds that “at no time are the bending and stress limits exceeded. The unloading time for two 180-meter (590.5-foot) rails is about two minutes, with loading taking no more than four minutes.”

The automated version of the Rail Train, ARTS (Automated Rail Train System), deployed since 2014 by Germany’s Deutsche Bahn, reduces manual operations to a minimum, resulting in higher safety and sustainable cost reduction, says ROBEL. Three people, who at no point of the process come in contact with the rails, operate the system. In Australia, an ARTS was deployed in January 2016, the first of its kind outside of Europe. RA

TIMES HAVE CHANGED. HAVE YOU? 1960

Manual rail unloading is labor intensive. Personnel are placed in the line of fire when untying the rail on the manual tie down car, fish plating rails together on the end car, and tying off the rails as sticks are unloaded.

we listened to our customers and developed a better approach

2005 The Rail Unloading Machine (R.U.M.) unloads CWR from one or both sides of the machine with just two qualified Herzog operators. Risk of injury is drastically reduced because there is no longer a need to fish plate the rails together or fasten them to the rail.

2012 The Automated Tie Down Car produces an even safer outcome. There is no longer a need to place personnel in harms way to clamp and unclamp rails. The R.U.M. operators can open and close the clamps from the safety of the R.U.M. cab.

The Herzog R.U.M. and Automated Tie Down Car improve the safety and increase the efficiency of unloading rail trains.

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February 2016 Railway Age 33

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Initiation of a wheel surface crack, reaching maximum Hertzian shear stress location.

Understanding High Impact Wheel Mechanisms

P

By Sabri Cakdi and Harry Tournay, TTCI, for Railway Age

reliminary findings in Transportation Technology Center, Inc.’s (TTCI) rolling contact fatigue (RCF) investigations using instrumented wheelsets and numerical modeling have found that lead axle low rail wheel surface micro void formation may occur in curvatures tighter than 5 degrees at balance speed and normal operation temperatures for C Class wheels. Upset of wheel continuum can ease material flow into these voids due to subsequent tangential forces, and may be defined as the initial stage of surface initiated RCF, also known as “scuffing.”

This result has been obtained under lateral creep forces slightly higher than 10,000 pounds, or 10 kips, and longitudinal creep forces of 4,000 pounds, or 4 kips (~0.3 traction ratio under dry rail conditions). Under braking conditions or underbalance speed curve negotiations, this limit can be exceeded at shallower curvatures.

Wheelset removal due to high impact wheels (HIW) continues to be a major cost issue to heavy-haul operators.

The majority of HIW are caused by high steering tractions under heavy axle load operations. Tangential forces (tractions) are generated at the wheel/rail interface mainly as a 36 Railway Age February 2016

function of lead axle low rail contact. Consequently, truck curving performance is associated with RCF and the development of HIW. Along with this investigation of root causes of RCF, integrated freight car truck (IFCT) research has also been performed under the Association of American Railroads’ Strategic Research Initiative program to improve the curving performance of cars.

High impact wheel generation due to rolling contact fatigue, or “scuffing,”1-4 is based on the initiation of a crack on the surface of a wheel, propagating to an extent that it reaches the maximum Hertzian shear stress location and breakout occurs. HIW examinations showed that surface crack depth is about 3/16 inch, which matches with maximum Hertzian shear stress location.

TTCI conducted a full-size roller rig test under controlled angle-of-attack that resulted in surface-initiated cracks. In addition, contact stresses have been modeled with a boundary element method (BEM) software called CONTACT.5 Three-dimensional frictional contact models were created with Class D wheel material properties and heavy haul wheel and rail forces. Numerous truck curving tests were

TTCI R&D

conducted at the Transportation Test Center’s Wheel/Rail Mechanism (WRM) loop in addition to revenue service tests with instrumented wheelsets. The WRM features a variety of curvatures up to 12 degrees. Curving performance of conventional, non-steering trucks, along with typical M-976 and better steering IFCT, have been quantified through extensive data analysis and have been used in CONTACT models. Preliminary findings are: • Lead axle low rail wheel surface “von Mises” stresses can exceed the ultimate yield strength of Class C wheels in curvatures tighter than 5 degrees at balance speed and under normal operation temperatures. This result has been obtained under slightly higher than 10 kips of lateral creep force and 4 kips of longitudinal creep force (~0.3 traction ratio).

Exceedance of ultimate yield strength can occur during partial slip contact conditions at relatively low tractions. This is lower than anticipated by some current analytical theories.

This results in microsurface crack initiation, or “pitting.”

Once a void is created on the surface as a result of pitting (Figure 1, above right), material flow can occur with the possibility of crack initiation.

In 2015, TTCI developed a state-of-the-art rolling contact fatigue simulator. Research has been ongoing to validate and quantify these mechanisms under a highly controlled, fullscale test environment. RA

Figure 1. When a wheel surface void results from pitting, material flow can occur, followed by crack propogation.

1. Tournay, H. Wheel/Rail Rolling Contact Fatigue under 32t Axle Load Freight Operation in North America, 9th International Conference on Contact Mechanics and Wear of Rail/Wheel Systems, Chengdu, China, August 27-30, 2012.

2. Tournay, H. Development and Evaluation of Next Generation Integrated Freight Truck Designs in North America, 10th International Heavy Haul Conference, New Delhi, India, February 2013.

3. Tournay, H. Development and Evaluation of Next Generation Bogie Designs for North American Freight Service, 10th World Congress on Railway Research, Sydney, Australia, November 25–28, 2013.

4. Tournay, H. Cakdi, S., Jones, K. Damage Observed on the Treads of Wheels Removed from Revenue Service, Technology Digest 15-014, TTCI/ AAR, Pueblo, Colo., June 2015 5. CONTACT software, www.kalkersoftware.org, Date accessed: December 7, 2015.

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People

Meetings

High profile WSP | Parsons Brinckerhoff has appointed Bernie McNeilly as Chief Operating Officer. Jerry Jannetti assumes McNeilly’s previous position as Northeast Regional Business Manager. As COO, McNeilly will have responsibility for strategic and tactical decision-making, analyzing regional profit and loss performance, net margins, competitive positioning and sales strategy. “He will maintain a highly visible external profile, focusing on client relationships, industry advocacy, civic engagement, strategic recruitment and market McNeilly presence,” the company said. McNeilly joined WSP | Parsons WSP | PB Brinckerhoff in 2007 and has served as Regional Business Manager-Northeast since 2009. Please fill out here if you can thanks a bunch.

March 3, 2016

Dallas Area Rapid Transit (DART)— John Rhone appointed Vice President of Capital Design & Construction.

Rhone’s responsibilities will include oversight of staff engaged in design, construction, and utility coordination of DART’s major capital projects.

Georgetown Rail Equipment Company (GREX)—Shawnda Ewing appointed Vice President of Human Resources.

HDR—Scott Goehri appointed Director of Professional Services for the company’s Transportation Business Group.

Loram Maintenance of Way, Inc.— Jon Behrens promoted to Director, Chief Engineers within the company’s engineering group located in Hamel, Minn. In addition, Vennie Dyavanapalli has been promoted to Director, Friction Management. He will be located in Loram’s Carol Stream, Illinois office.

Operation Lifesaver, Inc. (OLI) has named Bonnie Murphy, a former commuter rail executive and Federal Railroad Administration (FRA) official, President and CEO. Parsons—Patrick A. “Pat” Cassity appointed as Group Executive Vice President of Parsons Infrastructure.

Railway Supply Institute (RSI)— Amanda Patrick promoted to Vice President of Trade Shows & Member Relations.

38

Railway Age

February 2016

Sidly Austin LLP— Louis P. Warchot, Association of American Railroads (AAR) Senior Vice President-Law and General Counsel, has joined the firm’s Transportation practice as counsel in its Washington, D.C. office.

TransSystems—Richard Morsches promoted to Chief Executive Officer.

WSP | Parsons Brinckerhoff—David Earley appointed Director of Strategic Planning and Development; Judy Jones is the new Director of Marketing and Sales; Senior Vice President and National Director of Strategic Consulting John D. Porcari has been named President, U.S. Advisory Services; and Joseph G. Pulicare has been named President of the company’s Transportation and Infrastructure Sector. Pulicare succeeds Cliff Eby.

100 YEARS AGO in

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February 1916 The Railway Business Association Dinner With the President of the United States as its guest, the Railway Business Association on January 27 began its eighth year with a meeting in the Waldorf-Astoria Hotel, New York, attended by an audience of 1,250 guests, comprising perhaps the largest number of executives of transportation and large manufacturing and banking institutions ever gathered together under one roof in this country.

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Flexible Scheduling. Anytime. Anywhere.

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Freight Car: • Freight Car Inspection and Repair • Single Car Air Brake Test • FRA Part 232 Brake System Safety Standards for freight and other non-passenger trains • Train Yard Safety

Track: • Track Safety Standards

CORRESPONDENCE TRAINING • WORK SITE TRAINING • CONSULTING

The Railway Educational Bureau 1809 Capitol Ave., Omaha NE, 68102 Toll Free (800) 228-9670 • (402) 346-4300 www.RailwayEducationalBureau.com

February 2016 Railway Age 39

The Railway Educational Bureau BOOKS - Railroad Resources UPD

ATE D

The Basics of Railroad Wheels -

Professional Railroad Atlas of North America Now available new fourth edition. This atlas has been designed for the railroad professional and transportation consultant. Nine major lines are color coded for enhanced readability. A great reference tool. Great care has been taken to provide the most accurate and current information available. Over 40 insets displaying highly detailed maps of metropolitan areas. Also includes map of the "Conrail Merger."

From Alaska and the Yukon to the Yucatan in southern Mexico, its all here. The atlas includes a listing of approximately 650 railroad companies and reporting marks in North America. Softcover, 112 pages.

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Keep your cars rolling with our newest book on wheels. The Basics of Railroad Wheels 5th edition provides a solid foundation of wheels and a discussion of basic inspection techniques. The first portion of the book presents the history of the wheel, a synopsis of the AAR's role with the design and engineering of today's wheels, a quick glimpse of the two main manufacturing methods used on modern wheels, and an introductory study of AAR wheel classes and their respective service life. The later section of the book will help with identifying wheels and basic inspection. Softcover, 36 pages.

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Railway Geotechnics

by Dingqing Li, James Hyslip, Ted Sussmann, Steven Chrismer Railway Geotechnics covers track, track substructure, load environment, materials, mechanics, design, construction, measurements, and management. Illustrated by case studies, with an emphasis on the geotechnical aspects of railway engineering, it discusses these topics from a historical perspective. It also presents the methodologies and best practices developed over the past 20 years.

This book was written primarily for professionals and graduate students. 574 pages. Hard cover.

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FRA Regulations

Freight Car

Track

Track Safety Standards, Subparts A-F • BKTSSAF • $10.50

The Double Stack Container Car Manual • BKDOUBLE • $18.50

Dictionary of Railway Track Terms • by Chris Schulte • BKRTT • $33.50

Rules & Regulations Governing Railroad Signal and Train Control Systems • BKSTC • $20.50

Mechanical Department Regulations • (Parts 210, 215, 216, 217, 218, 221, 223, 225, 229, 231, & 232) • BKMFR • $28.95 General Train Wreck: The Forensics of Rail Disasters • by George Bibel • BKTW • $29.95 The Railroad: What It Is, What It Does - 5th Edition • BKRRNN • $45.95 Emergency Responder’s Guide to Railroad Incidents • BKERGRAIL • $33.00 All About Railroading - Second Edition • BKAARR • $34.95 The Historical Guide to North American Railroads, Third Edition • BKHIST • $24.99 Operations Elements of Train Dispatching, Vol. I • by Thomas White • BKETD1 • $44.95

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Railroads of Canada Wall Map (laminated) • MPRRCAN • $99.00 Training Videos (DVD) Basic Railroad Shop and Yard Safety (DVD format) • DVYARD • $200.00

Blue Signal Protection (DVD format) • DVBLUE • $210.00 Railroad Hearing Conservation Training (DVD format) • DVHEAR • $165.00

Basic Principles of Track Maintenance • BKTMB • $135.00 The Art and Science of Rail Grinding • BKGRIND • $135.00 Transit Urban Transit: Operations, Planning & Economics • BKUTOPE • $150.00* Elements of Planning, Engineering and Operating Light Rail with Applications in New Jersey • by Al Fazio • BKEPEO • $59.95

Shipping Rates:

Add the following shipping and handling if your merchandise subtotal is: UP TO $10.00 10.01 - 25.00 25.01 - 50.00 50.01 - 75.00 75.01 -100.00 100.01 - 150.00 150.01 - 200.00 200.01 - 300.00

U.S.A. $4.50 7.92 10.78 11.99 14.30 16.28 19.03 23.10

CAN $8.75 12.65 16.80 21.20 27.95 36.60 49.15 61.20

U.S.A. CAN 300.01 - 400.00 27.17 73.75 400.01 - 500.00 31.35 86.05 500.01 - 600.00 35.75 98.12 600.01 - 700.00 40.15 112.90 700.01 & up (Appropriate charges applied)

To order, call

1-800-228-9670 or visit www.transalert.com The Railway Educational Bureau 1809 Capitol Ave., Omaha NE, 68102 I (800) 228-9670 I (402) 346-4300 www.RailwayEducationalBureau.com

Ad Index Company

Phone #

Fax

URL/Email address

Amsted Rail Group

312-922-4516

312-922-4597

kskibinski@amstedrail.com

C2

Brandt Road Rail Corporation

306-791-3287

306-525-1077

sgettis@brandt.ca

23

Danella Rental Systems, Inc.

610-828-6200

610-828-2260

pbarents@danella.com

Dixie Precast

770-944-1930

770-944-9136

fbrown142@aol.com

29

Georgetown Rail Equipment Co.

512-869-1542 ext. 5292 512-863-0405

bachman@georgetownrail.com

11

Herzog Railroad Services, Inc.

816-233-9002

816-233-7757

tfrancis@hrsi.com

33

LTK Engineering Services

215-641-8826

215-542-7676

tfurmaniak@ltk.com

37

Nordco

414-766-2180

414-766-2379 info@nordco.com

32

Norfolk Southern Corp.

757-629-2706

757-629-2822

21

NRE

618-241-9270

618-242-8519 sales@nre.com

ORX

814-684-8484

Pandrol USA, Inc.

1-800-221-CLIP

856-467-2994

3

Plasser American Corp.

757-543-3526

757-494-7186

plasseramerican@plausa.com

7

Progress Rail Services

256-505-6402

256-505-6051

info@progressrail.com

14

Railquip Inc

770-458-4157

770-458-5365

sales@railquip.com

12

Rails Co.

973-763-4320

973-763-2585

rails@railsco.com

15

Railway Educational Bureau, The

402-346-4300

402-346-1783

bbrundige@sb-reb.com

Siemens-Rail Automation

412-944-6533

amanda.weir@siemens.com

Trainyard Tech LLC

724-443-8881

cra2@zooninternet.net

15

Vertex Railcar Corporation

508-556-5500

info@vertexrail.com

13

Wi-Tronix

888-948-7664

724-443-8881

Page #

5

rsbroom@nscorp.com

26

glenn@orxrail.com

C4

29, 39, 40, C3

630-679-9954 cjasmin@wi-tronix.com

9

30

The Advertisers Index is an editorial feature maintained for the convenience of readers. It is not part of the advertiser contract and Railway Age assumes no responsibility for the correctness.

Advertising Sales MAIN OFFICE Jonathan Chalon, Publisher 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com AL, AR, IN, KY, LA, MI, MS, OH, OK, TN, TX Marc Condon 20 South Clark Street, Suite 1910 Chicago, IL 60603 (312) 683-5021 mcondon@sbpub.com CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, PA, RI, SC, VT, VA, WV, Canada – Quebec and East, Ontario Jerome Marullo 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7260 Fax: (212) 633-1863 jmarullo@sbpub.com

AK, AZ, CA, CO, IA, ID, IL, KS, MN, MO, MT, NE, NM, ND, NV, OR, SD, UT, WA, WI, WY, Canada – AB, BC, MB, SK Heather Disabato 20 South Clark Street, Suite 1910 Chicago, IL 60603 (312) 683-5026 Fax: (312) 683-0131 hdisabato@sbpub.com The Netherlands, Britain, France, Belgium, Portugal, Switzerland, North Germany, Middle East, South America, Africa (not South), Far East (Excluding Korea /China/India), All Others, Tenders Louise Cooper International Area Sales Manager The Priory, Syresham Gardens Haywards Heath, RH16 3LB United Kingdom +44-1444-416368 Fax: +44-(0)-1444-458185 lc@railjournal.co.uk

Scandinavia, Spain, Southern Germany, Austria, Korea, China, India, Australia, New Zealand, South Africa, Russia, Eastern Europe Baltic States, Recruitment Advertising Julie Richardson International Area Sales Manager The Priory, Syresham Gardens Haywards Heath, RH16 3LB United Kingdom +44-1444-416368 Fax: +44-(0)-1444-458185 jr@railjournal.co.uk Italy, Italian-speaking Switzerland Dr. Fabio Potesta Media Point & Communications SRL Corte Lambruschini Corso Buenos Aires 8 V Piano, Genoa, Italy 16129 +39-10-570-4948 Fax: +39-10-553-0088 info@mediapointsrl.it

Japan Katsuhiro Ishii Ace Media Service, Inc. 12-6 4-Chome, Nishiiko, Adachi-Ku Tokyo 121-0824 Japan +81-3-5691-3335 Fax: +81-3-5691-3336 amkatsu@dream.com CLASSIFIED, PROFESSIONAL & EMPLOYMENT Jeanine Acquart 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7211 Fax: (212) 633-1325 jacquart@sbpub.com

February 2016 Railway Age 41

equipment Sale/Leasing

Available For Lease ◆ 3,600 cu. ft. Open Top Hoppers. 45 degree slopes for aggregate, coke, coal, etc. ◆ Covered Hopper Cars – 4,650 & 4,750 cu. ft. cars with trough hatches & gravity gates. 268K Gross Rail Load. ◆ Flat Bottom Gondolas – 4,000 cu. ft. cars, 263K Gross Rail Load and no interior bracing. ◆ Mill Gondolas – 65’ 6” inside length with 5’ sides and 52’ 6” inside length with 4’ 6” sides.

Available for Lease

For additional information and pricing, please contact John Goodwin phone (605) 582-8318 e-mail jgoodwin@mwrail.com www.carmathinc.com

4650 cu ft Covered Hopper Cars 3600 cu ft Open Top Hopper Cars 100 ton Automated/Manual Ballast Cars 4480 cu ft Aluminum Rotary Open Top Gons 65 ft, 100-ton log spine cars equipped with six (6) log bunks Contact: Tom Monroe: 415-616-3472 Email: tmonroe@atel.com

products & services The oldest and largest manufacturer of railroad graphics headquartered in USA is soon going to be

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42

Railway Age

February 2016

29/01/2016 12:55

The News Destination for the Rail Industry

PROFESSIONAL DIRECTORY

RECRUITMENT

EDNA A. RICE, EXECUTIVE RECRUITER, INC

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PROFESSIONAL SALES Yangtze Railroad Materials Baltimore, MD Resume to info@yangtzeproducts.com See Full Job Posting at RAILWAYAGE.COM Job Board

Are you a railroad or supplier searching for job candidates? visit http://bit.ly/railjobs THE RAILWAY AGE JOB BOARD connects candidates and opportunities in the rail industry.

To place a job posting, contact: Jeanine Acquart • 212 620-7211 • jacquart@sbpub.com February 2016 Railway Age 43

Financial edge DAVID NAHASS

A locomotive value proposition?

A

t the 2016 Rail Equipment Finance Conference (REF) being held March 6-9, 2016, topics certain to be discussed are the decline in loadings, car demand, the high price of railcars and locations to store them. However, on the final day of REF, attention will shift to locomotives and the issues in that integral and sometimes challenging market.

The lease market for locomotives turned south as loadings decreased and velocity improved. High horsepower locomotives are parked all over North America. This is a dramatic turn from the surge-driven, short-term demand that was happening in 2014 and put stored locomotives to work (see Financial Edge from February 2014 Railway Age). How bad is the market for locomotives? According to industry sources, there are more than 3,000 locomotives in storage throughout North America. All parties invested in locomotives (OEMs, railroads, equipment lessors, maintenance and repair) are feeling market pressures as lessees return six-axle, high horsepower units and four-axle units used in switching and line haul service.

Interestingly, as service metrics (e.g. velocity) were increasing, the 2015 order book for new locomotives was full. As new units were being added to railroad fleets, other units were going into storage or back to their owners.

Some high-horsepower locomotives have been purchased by Class I operators while other units, heading into the ends of leases, have been coming back to their lessors/owners. As much as an operating lessor does not want 30-year-old SD40-2 Units coming back from a lease when demand is thin, a bank investor does not want a 20-year-old locomotive coming back from the operator.

Historically, high-horsepower locomotives (like the SD40-2) started their 44

Railway Age

February 2016

life in large ticket (big dollar) financings and then traveled their way through a rail equipment life cycle. An operator may have owned them. They were renewed, released, overhauled, bought and sold in the secondary market to a variety of investors (primarily operating lessors). The SD40-2 was a workhorse and made its money back multifold for many a savvy rail lessor.

Today, the legacy and reputation of the SD40-2 lives on. As locomotive models changed and evolved, the finance community (banks, operating

The lease market for locomotives turned south as loadings decreased and velocity improved. lessors and appraisers) had been conditioned to expect the same longevity and value that the SD40-2 had been providing for decades. Something funny happened on the way to locomotive nirvana. As locomotive prices increased from $650,000 for an SD 40-2 to $1.4 million in the mid 1990s to more than $2.5 million in 2015, the real dollar values of the residuals of those new locomotive models (SD60 and SD70 locomotives manufactured by EMD and C44-8 locomotives manufactured

by GE) increased significantly.

According to long-time locomotive investor and REF speaker Ken O’Neill, Senior Vice President at Connell Finance Co., typical residuals in a 20-year lease on an SD40-2 would have been 20% to 25% of original equipment cost ($146,250). Thirty years

later, new locomotives built in 1995 had investors assuming those units would be worth up to $500,000 after 20 years (30% of original cost).

Price increases and changing locomotive technology may have investors wondering where the value went. The pace of change in locomotive design since the early 1990s with the incorporation of AC traction in long-haul intermodal service, the cost impact of the EPA’s emission regulations and the cost to repair and overhaul certain units creates a gap between what investors want their locomotives to be worth and their fair market value. Pity the investor getting units returned as the rail industry moves through its current cyclical downturn, when 20-year-old locomotives are headed to storage and there may not be a buyer at any price.

Moreover, Class I railroads have purchased (not leased) almost all of their new locomotives starting around 2008. These are units that they will use and hold onto long term. This strategic shift has signaled a potential end to what was once a prolific secondary lease market for locomotives. Unless an investor has units coming off at the right time, there’s a risk to those residual value numbers and the ability to recoup the full investment amount.

Advice? Stay in touch with your lessee and don’t pull an ostrich. Hoping that through silence you might slip one past the goalie is not a good career or leasing strategy. At least a dialogue with your lessee might give you a notice greater than 180 days prior to lease termination.

Don’t miss day three at REF. The Power-Power-Power day will answer all your locomotive questions. Find out what’s being built, who’s building it and what is going to happen in this market in 2016.

Got questions? Set them free at dnahass@railfin.com

We’re current, are you? FRA Regulations FRA News:

Mechanical Department Regulations A combined reprint of the Federal Regulations that apply specifically to the Mechanical Department. Spiral bound.

Part Title 210 Railroad Noise Emission Compliance Regulations 215 Freight Car Safety Standards 216 Emergency Order Procedures: Railroad Track, Locomotive and Equipment 217 Railroad Operating Rules 218 Railroad Operating Practices - Blue Flag Rule 221 Rear End Marking Device-passenger, commuter/freight trains 223 Safety Glazing Standards 225 Railroad Accidents/Incidents Update 1-1-16 229 Locomotive Safety Standards 231 Safety Appliance Standards 232 Brake System Safety Standards Update 1-6-15

$28.95

Mech. Dept. Regs.

BKMFR

Order 25 or more and pay only $26.00 each

49 CFR Part 225, Monetary Threshold for Reporting Rail Equipment Accidents/Incidents for Calendar Year 2016: This rule maintains the rail equipment accident/incident monetary reporting threshold at $10,500 for railroad accidents/incidents involving property damage that occur during calendar year (CY) 2016 that FRA's accident/incident reporting regulations require to be reported to the agency. FRA is maintaining the reporting threshold at the same level it did in CY 2015, and CY 2014, because, in part, the wage and equipment data for the second-quarter of 2015 (i.e., the data used to calculate the threshold) changed only slightly (about 1 percent) from second-quarter 2014 values. In addition, FRA is maintaining the monetary threshold for CY 2016 at the CY 2015 level while it re-examines the method for calculating the monetary threshold.

This final rule was effective January 1, 2016.

Current FRA Regulations Item Code

FRA Part #

209 211 BKTSSAF 213 BKTSSG 213 BKWRK 214 BKFSS 215 BKROR 217 218 BKRRC 220 BKEND 221 BKSEP

2-12-13 7-20-09 3-25-14 7-11-13 7-1-14 6-25-12 6-25-12 6-25-12 6-25-12 6-25-12

BKHORN 222 6-25-12 BKRFRS 224 6-25-12 BKHS BKLSS BKSLI BKSAS BKBRIDGE BKLER

228 229 230 231 237 240

50 or Each more

Update effective

6-25-12 12-19-12 6-25-12 6-25-12 6-25-12 6-25-12

BKCONDC 242 6-25-12

RR Safety Enforcement Procedures & Rules of Practice Track Safety Standards (Subpart A-F) Track Safety Standards (Subpart G) RR Workplace Safety RR Freight Car Safety Standards RR Operating Rules and Practices

28.50 10.50 9.50 9.95 7.65 9.95

9.45 8.55 8.95 6.90 8.95

RR Communications Rear End Marking Device, Passenger, Commuter & Freight Trains Use of Locomotive Horns Reflectorization of Rail Freight Rolling Stock Hours of Service Locomotive Safety Standards Steam Locomotive Inspection RR Safety Appliance Standards Bridge Safety Standards Qualification and Certification of Locomotive Conductor Certification

5.95 5.50

5.35 4.95

13.75

12.40

6.95 11.00 11.50 23.95 9.95 6.95 13.25

6.25

8.95 6.25 11.90

11.50

10.35

Each

BKBSS

BKCAD BKSTC

BKPSS

232 10-5-15 Brake System Safety Standards

FRA Part #

40 219

233 234 235 236 238 239

Update effective

more

10.35

13.70

Each

25 or more

10-3-12 Drug and Alcohol Regulations in 7-7-15 the Workplace

37.00

9-2-14 Signal and Train Control Systems 5-28-15 10-21-14 10-21-14 1-28-14 Passenger Safety Standards 7-29-14

20.50

18.45

23.80

21.40

BKTM

Track and Rail and Infrastructure Integrity Compliance Manual - Volume II, Track Safety Standards - Part 213 Technical Manual for Signal and Train Control Rules. - Includes Part 233, 234, 235, 236

33.00 47.00

Updates from the Federal Register may be supplied in supplement form.

Freight Car Safety Standards

BKFSS

Order 50 or more and pay only $6.90 each

30.00 42.30

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Part 231: Railroad Safety Appliance Standards 49 CFR 231. General requirements for safety appliances including: handbrakes, brake step, running boards, sill steps, ladders, end ladder clearance, roof handholds, side handholds, horizontal end handholds, vertical end handholds, and uncoupling levers. 106 pages. Softcover.

Railroad Safety Appliance

Order 50 or more and pay only $8.95 each

$9.95

Part 224: Reflectorization of Rail Freight Rolling Stock 49 Part 224. The FRA released this rule in effort to reduce the number of highway-rail grade crossing accidents and deaths.

Softcover. Spiral bound. 45 pages.

25 or

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49 CFR 215. Prescribes the minimum safety standards for freight cars allowed by the FRA. Includes safety standards for freight car components, car bodies, draft system, restricted equipment and stenciling. Softcover, spiral.

BKSAS

15.25

Combined FRA Regulations

Part 215: Freight Car Safety Standards

BKRFRS

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$6.95

800-228-9670 www.transalert.com

The Railway Educational Bureau 1809 Capitol Ave., Omaha NE, 68102 I (800) 228-9670 I (402) 346-4300 www.RailwayEducationalBureau.com

Add Shipping & Handling if your merchandise subtotal is: U.S.A. CAN U.S.A. CAN UP TO $10.00 $4.50 $8.75 25.01 - 50.00 10.78 16.80 10.01 - 25.00 7.92 12.65 50.01 - 75.00 11.99 21.20

Orders over $75, call for shipping

*Prices subject to change. Revision dates subject to change in accordance with laws published by the FRA.2/16

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