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March 2016 | www.railwayage.com

Serving the railway industry since 1856

Short Line of the Year

New Orleans & Gulf Coast Regional of the Year

Central Maine & Quebec

The human side of Conrail Crosstie optionS Railcar component tracking


March 2016

visit us at www.railwayage.com Features Short Line of the Year


Regional of the Year


Conrail human factors


CP, NS and short lines


Railinc component tracking 36 M/W Focus: Crossties


LA transit


News/Columns From the Editor




Watching Washington


Financial Edge



Departments Industry Indicators


Industry Outlook






100 Years Ago






Advertising Index





On the Cover New Orleans & Gulf Coast Railway is the 2016 Short Line of the Year. Photo: New Orleans & Gulf Coast Railway


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. 3. Subscriptions: Railway Age is sent without obligation to professionals working in the railroad industry in the United States, Canada, and Mexico. However, the publisher reserves the right to limit the number copies. Subscriptions should be requested on company letterhead. Subscription pricing to others for Print and/or Digital versions: $100.00 per year/$151.00 for two years in the U.S., Canada, and Mexico; $139.00 per year/$197.00 for two years, foreign. Single Copies: $36.00 per copy in the U.S., Canada, and Mexico/$128.00 foreign All subscriptions payable in advance. COPYRIGHT© 2016 Simmons-Boardman Publishing Corporation. All rights reserved. Contents may not be reproduced without permission. For reprint information contact PARS International Corp., 102 W. 38th Street, 6th floor, New York, N.Y. 10018, Tel.: 212-221-9595; Fax: 212-221-9195. Periodicals postage paid at New York, NY, and additional mailing offices. Canada Post Cust.#7204564; Agreement #41094515. Bleuchip Int’l, PO Box 25542, London, ON N6C 6B2. Address all subscriptions, change of address forms and correspondence concerning subscriptions to Subscription Dept., Railway Age, P.O. Box 1172, Skokie, IL 60076-8172, Or call toll free (800) 895-4389, or (402) 346-4740. Printed at Cummings Printing, Hooksett, N.H. ISSN 0033-8826 (print); 2161-511X (digital). March 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

Creative problem-solving


he American Engineers’ Council for Professional Development, the predecessor of ABET (Accreditation Board for Engineering and Technology, which accredits post-secondary education programs in applied science, computing, engineering, and engineering technology), defined engineering as “the creative application of scientific principles to design or develop structures, machines, apparatus, or manufacturing processes, or works utilizing them singly or in combination; or to construct or operate the same with full cognizance of their design; or to forecast their behavior under specific operating conditions; all with respect to an intended function, economics of operation or safety of life and property.” That’s a lot to remember (even for engineers, who deal with complexity every day). In simpler terms, engineering is “creative problem-solving,” in the words of New York Air Brake Director of Systems Development Engineering John Reynolds. Thanks, John, for getting to the root of the problem (over-wordiness) and coming up with an elegant solution. That’s what the best engineers do. Last month, during nationally observed Engineers Week 2016, NYAB hosted its fourth annual Engineering Open House for middle and high school students. During two days, about 250 young people had the opportunity to see NYAB engineers at work, and learn about the many types of engineering the company performs, through tours, demonstrations and hands-on activities. NYAB supports STEM (Science, Technology, Engineering, Mathematics) education. Its Engineering Open House is one of several ways the company supports local schools in developing these interests in students. “There is no substitute for an up-close view, and that’s what our Open House gives these students,” said John Reynolds. “Our activity leaders are enthusiastic and engaging, and they bring out a lot of smiles and 2

Railway Age

March 2016


wide eyes in the students. Some of these young people, we hope, may begin to envision themselves participating in this kind of work one day.” Added NYAB Vice President Engineering Bill Kleftis, “We consistently reach out to young people in our community. Engineers Week is an opportune time to punctuate those efforts with a special program, engaging students in activities to raise awareness and spark interest in engineering.” During Engineers Week, NYAB also recognized its own engineers, who in 2015 contributed to four patents granted the company, and filed for 14 new patents. What we have is a meeting of the minds —established engineering professionals interacting, and hopefully inspiring, the next generation of engineers. Plant the seeds, ignite the spark, add the catalyst—however you want to describe it—some day in the not-too-distant future, some of these young people hopefully will join the railway industry and devote their careers to engaging in creative problem-solving. I have no doubt that there will be plenty of opportunities for them, at a railroad or transit agency, at a supplier or contractor, or at an engineering/consulting firm. Should one of these future engineers join New York Air Brake, they will benefit and grow from the company’s Engineering Development Program, described as “a threeyear rotational employment aimed at new engineering graduates with undergraduate or graduate degrees. …A powerful blend of practical experience and career mentoring enabling participants to make immediate contributions while fostering their professional development and advancement.” NYAB also offers a Technical Skills Enhancement program through Rochester Institute of Technology, and has an internship program—no doubt, to teach creative problem-solving.

ARTHUR J. McGINNIS, Jr., President and Chairman JONATHAN CHALON, Publisher jchalon@sbpub.com WILLIAM C. VANTUONO, Editor-in-Chief wvantuono@sbpub.com CAROLINA WORRELL, Managing Editor cworrell@sbpub.com Contributing Editors: Roy H. Blanchard, Alfred E. Fazio, Lawrence H Kaufman, Bruce E. Kelly, Ron Lindsey, Ryan McWilliams, David Nahass, Jason H. Seidl, David Thomas, John Thompson, Frank N. Wilner Creative Director: Wendy Williams Art Director: Sarah Vogwill Corporate Production Director: Mary Conyers Production Manager: Lily Man Production Director: Eduardo Castaner Marketing Director: Erica Hayes Conference Director: Michelle Zolkos Circulation Director: Maureen Cooney Western Offices 20 South Clark Street, Suite 1910, Chicago, IL 60603 312-683-0130; Fax: 312-683-0131 Engineering Editor: Mischa Wanek-Libman mischa@sbpub.com Assistant Editor: Jennifer Nunez jnunez@sbpub.com International Offices 46 Killigrew Street, Falmouth, Cornwall TR11 3PP, United Kingdom Telephone: 011-44-1326-313945 Fax: 011-44-1326-211576 International Editors: David Briginshaw, db@railjournal.com Keith Barrow, kb@railjournal.com Kevin Smith, ks@railjournal.com Customer Service: 800-895-4389 Reprints: PARS International Corp. 253 West 35th Street 7th Floor New York, NY 10001 212-221-9595; fax 212-221-9195 curt.ciesinski@parsintl.com Railway Age, descended from the American Rail-Road Journal (1832) and the Western Railroad Gazette (1856) and published under its present name since 1876, is indexed by the Business Periodicals Index and the Engineering Index Service. Name registered in U.S. Patent Office and Trade Mark Office in Canada. Now indexed in ABI/Inform. Change of address should reach us six weeks in advance of next issue date. Send both old and new addresses with address label to Subscription Department, Railway Age,PO Box 1172, Skokie, IL 60076-8172, or call toll free 1-800-895-4389. Post Office will not forward copies unless you provide extra postage. Photocopy rights: Where necessary, permission is granted by the copyright owner for the libraries and others registered with the Copyright Clearance Center (CCC) to photocopy articles herein for the flat fee of $2.00 per copy of each article. Payment should be sent directly to CCC. Copying for other than personal or internal reference use without the express permission of SimmonsBoardman Publishing Corp. is prohibited. Address requests for permission on bulk orders to the Circulation Director. Railway Age welcomes the submission of unsolicited manuscripts and photographs. However, the publishers will not be responsible for safekeeping or return of such material. Member of:













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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

JAN. ’16 88,446 3,568 36,708 25,263 125,367 49,983 301,964 5,344 12,658 23,556 14,958 15,688 33,402 13,305 64,467 74,077 16,557 26,705 12,211 23,815 968,042

JAN. ’15 94,646 4,007 39,404 25,736 122,752 62,020 452,622 6,261 13,936 24,889 21,457 15,816 40,667 18,120 62,032 82,552 16,919 28,361 12,186 16,406 1,160,789

% CHANGE -6.6% -11.0% -6.8% -1.8% 2.1% -19.4% -33.3% -14.6% -9.2% -5.4% -30.3% -0.8% -17.9% -26.6% 3.9% -10.3% -2.1% -5.8% 0.2% 45.2% -16.6%








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




JAN. 2015 - 341,663 280,000 290,000 300,000 310,000 320,000 330,000 340,000 350,000 360,000 370,000 Copyright © 2015 All rights reserved.

Railroad employment, Class I linehaul carriers, january 2016 (% change from january 2015)

JAN. ’16 96,747 942,874 1,039,621

JAN. ’15 117,479 887,619 1,005,098

% CHANGE -17.6% 6.2% 3.4%

3,689 234,486 238,175

6,660 229,304 235,964

-44.6% 2.3% 0.9%

Transportation (train and engine) 60,684 (-16.58%)

100,436 1,177,360 1,277,796

124,139 1,116,923 1,241,062

-19.1% 5.4% 3.0%

Total employees: 156,602 % change from JAN. 2015: -8.67%


Source: Monthly Railroad Traffic, Association of American Railroads

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

% CHANGE 2.1% -31.2% -24.7% -4.7% -10.3% 3.0% -5.4% 61.9% -12.5% 9.5% -64.9% -6.6% -7.0% -1.3% 17.4% -9.4% -7.1%

JAN. 2016 - 323,123


ORIGINATED JAN. ’15 44,620 25,980 25,126 10,888 26,027 5,681 8,394 5,809 18,999 6,602 2,843 1,892 19,762 10,904 37,918 8,461 81,757



ORIGINATED JAN. ’16 45,544 17,880 18,927 10,376 23,350 5,850 7,939 9,406 16,624 7,230 999 1,768 18,377 10,762 44,514 7,665 75,912

BY Commodity

Executives, Officials, and Staff Assistants 9,547 (-3.76%)

Transportation (other than train & engine) 6,510 (-3.25%)

Maintenance of Equipment and Stores 29,951 (-3.29%)

Professional and Administrative 14,071 (-1.68%)

Maintenanceof-Way and Structures 35,839 (-2.61%)

Source: Surface Transportation Board

class I employment continues to drop Figures released by the STB show Class I total railroad employment dropped 8.67% in January 2016, measured against January 2015. All six categories again took a hit for the second month in a row, with Transportation (train and engine) dropping the most at 16.58%; followed by Executives, Officials, and Staff Assistants, which dropped 3.76%; Maintenance of Equipment and Stores, which dropped 3.29%; and Transportation (other than train & engine), which dropped 3.25%. 4

Railway Age

March 2016

160016 160016 160016

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Industry Outlook Metrolinx sets Toronto RER options

Metrolinx has outlined four options for the core of the Toronto Regional Express Rail (RER) network. which involves 15-minute-interval bidirectional services throughout the day on five of the seven GO Transit corridors, with 93 miles of new

dedicated track, electrification, new trains, grade crossing elimination, and new and upgraded stations. Option A: 4- to 6-minute peak frequencies and 7.5-minute off-peak frequencies with new stations serving Gerrard, Unilever, Bathurst-Spadina,

Liberty Village and St Clair West. Option B: Express and local services operating at 20-minute headways to give 10-minute frequencies at key stations in the core. Express services would only serve existing stations, while local services would serve existing stations and eight new stations: St Clair, Liberty Village, Bathurst-Spadina, Unilever, GerrardCarlaw, Ellesmere, Lawrence and Finch. Option C: The funded and committed Go Transit/RER service of 5-10 minute peak and 15-minute off-peak frequencies with seven or eight new stations (as Option B). Option D: 5- to 10-minute peak and 15-minute off-peak services, with four or five new stations serving St Clair, Liberty Village, Unilever and Gerrard- Carlaw. All four scenarios assume through operation between the Kitchener and Stoufville lines.

FTA sets transit funding priorities for Fiscal Year 2017 The Federal Transit Administration has highlighted $3.5 billion recommended in President Obama’s Fiscal Year 2017 federal budget to advance the construction or completion of 31 public transit projects in 18 states, including 15 first-time funding recommendations. The projects would be funded through the FTA Capital Investment Grant (CIG) Program. Among the projects recommended for first-time FTA dollars: • The Downtown Riverfront Streetcar Project in Sacramento, which would connect the urban cores of Sacramento and West Sacramento. • Phase One of the Chicago Transit Authority (CTA) Red and Purple Line Modernization Project, which would reconstruct four stations and reconfigure track. Among FY2017 recommendations: • $1.4 billion for 10 New Starts projects already under construction in Los Angeles, San Francisco, San Jose, Denver, Orlando, Honolulu, 6

Railway Age

March 2016

Boston, Charlotte and Portland, with additional funds recommended to accelerate completion. • $950 million for seven New Starts projects not yet under construction in Los Angeles, San Diego, Santa Ana, National Capital Area in Maryland, Minneapolis, Fort Worth and Seattle. • $458 million for 10 Small Starts projects not yet under construction in Tempe, Sacramento, Fort Lauderdale, Jacksonville, Indianapolis, Grand Rapids, Kansas City (Mo.), Albuquerque, Everett and Seattle. • $599 million for four Core Capacity projects to improve capacity on existing, heavily used transit lines in the San Francisco Bay Area, Chicago, New York City and Dallas. • $125 million for the Caltrain Peninsula Corridor Electrification Project (PCEP). The project will also receive more than $72 million in prioryear funding allocations. • $84 million for MTA New York City Transit’s Canarsie Line Power

and Station Improvements Project. The project will provide capacity improvements, including new power substations and other electrical infrastructure upgrades, to allow operation of additional trains on the line, NYCT’s first equipped with CBTC (communications-based train control). It also will enhance and improve access at the Bedford Avenue and First Avenue Stations to provide more efficient passenger flow within the stations and to reduce overcrowding on the station platforms. In addition to the FY2017 funding recommendation, the Canarsie Line Power and Station Improvement Project is receiving $16.3 million in FY2016 Core Capacity funds. • $75 million for the Expedited Project Delivery for Capital Investment Grants Pilot Program, a new pilot program outlined in FAST that allows FTA to select up to eight projects seeking 25% or less in federal funding and using a publicprivate partnership approach.



Siemens Chargers coming to life



Siemens reached a production milestone at its Sacramento, Calif., manufacturing plant with installation of the first Cummins QSK95 diesel engine and traction alternator into the carbody of a new higher-speed diesel-electric Charger locomotive. The 21-ton power unit, the first diesel engine to be installed at the Sacramento plant, was successfully lowered into the locomotive by an overhead crane. Siemens is manufacturing a total of 69 Chargers.





North America Bombardier: Has been awarded a $36.8 million contract to overhaul 63 MARC III bi-level commuter railcars to improve safety, increase reliability and provide passengers with a more comfortable ride. City of Edmonton (Canada): Awarded a public-private-partnership contract to the TransEd Partners consortium to design, build, operate, maintain, and finance the first phase of the Valley Line, an eight-mile light rail line from Downtown to Mill Woods.

production of 367 new railcars as part of the agency’s 10-year, $2.4 billion modernization plan. Metropolitan Atlanta Rapid Transit Authority (MARTA): Awarded a designbuild contract to Archer Western Construction with WSP | Parsons Brinckerhoff as the lead designer to overhaul and upgrade its tunnel ventilation systems. The scope entails 16 tunnel segments.


Duos Technologies Group, Inc.: Has been awarded a contract for a Vehicle Undercarriage Examiner (vue™) imaging system by a U.S. Class I.

Adif: Awarded a consortium of Alstom and Bombardier a €$72.7 million contract to install and maintain ERTMS on a 35-mile stretch of Barcelona’s Rodalies suburban rail network.

Metra (Chicago): Issued a request for proposals (RFP) for the design and

Ansaldo STS: Along with Linbrooke Services, Britain, has been awarded


Railway Age

March 2016

a £34.5 million contract by Britain’s infrastructure manager Network Rail (NR) to resignal and upgrade a 35-mile section of the Leeds/Doncaster-Hull line between Gilberdyke and Ferriby. Bombardier Transportation: Will supply French National Railways (SNCF) four additional eight-car Region 2N double-deck EMUs worth €$34 million. Cital: Awarded Alstom a contract to supply 26 Citadis low-floor LRV kits. The company is a joint venture of Alstom (49%), Ferrovial (41%) and Algiers Metro Co. (10%). India: Approved investment of $1.56 billion in railway projects. Paris Transport Authority (RATP): Awarded a five-year contract to Ansaldo STS to maintain the signaling on 17 metro and light rail lines.


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Update Supply Briefs United Rail, BBR partner up United Rail, Inc. announced a new partnership with German rail supply manufacturer, BBR Rail Automation GmbH (BBR), to represent and support its products and services to the North American freight and passenger rail transportation markets. United Rail will provide business development, sales and marketing, and engineering services support to BBR for the company’s work in North America. United Rail and BBR will be introducing various railroad systems and products including signaling and interlocking systems, systems for intermodal and switching yards, data transmission and train control, passenger information systems, magnetic and inductive signal transmission, traditional signal equipment and in-house manufactured electronics. BBR is an IRIS and ISO 9001 certified supplier.

Siemens expanding Sacramento footprint Siemens Mobility is expanding its footprint in Sacramento,Calif., with a new 60,000-square-foot plant dedicated to its rail service, maintenance and repair operations. The new site, located in McClellan Park, will be Siemens Mobility’s Customer Services U.S. headquarters and West Coast logistics hub. It will house the company’s rail refurbishment operations, rail bogie service center, accident repair, spare parts delivery and administrative offices. It will complement Siemens’ existing rail manufacturing plant in South Sacramento, which has been in operation for almost 30 years, currently employs more than 800 people and includes a recent 125,000-square-foot expansion to accommodate growing production needs. Siemens will employ more than 30 people at the new facility and began operations in February. 10

Railway Age March 2016

STB declaratory order for CP: Not a question of if, but when

Canadian Pacific CEO Hunter Harrison.


n the continuing saga of Canadian Pacific’s attempt to acquire Norfolk Southern, CP is now seeking a declaratory order from the STB “confirming the viability of the voting trust structure that CP has suggested as part of its proposed merger.” What next? Railway Age Contributing Editor Frank N. Wilner, a former STB chief of staff, offers this analysis: “There is no time limit on the STB having to rule on the request for a declaratory order or provide one. There is a requirement for public comment and replies to merger applications, but no such requirement declaratory order request. If the STB does not provide a definitive answer as to whether the voting trust is independent and can be imposed, should CP manage to convince NS stockholders to tender their shares, then CP is back where it started before seeking the declaratory order. “What CP must overcome are allegations that the voting trust it envisions is a sham to put CP in control of NS pending a merger application and decision, which is contrary to the purpose of an independent voting trust. “If the STB rules against the voting trust framework as proposed by CP, there is not much CP can do, as it is most rare that a federal court overturns an expert regulatory agency decision, especially where, as in this case, the

STB has discretion, rather than a clear mandate in the statute. “With regard to timing, it can be expected that U.S.-based railroads will wish to have a say; so will shippers and other stakeholders. So, the process could morph into two rounds of comment and analysis and even an oral argument. That becomes time-consuming. “If the STB chooses to entertain the request rather than deny it outright, who votes, and when? Republican Begeman is in her holdover year. She could depart at any time. With two new seats created by S. 808, and a strong likelihood that nominations and confirmations will not occur until at least mid-2017, there could be three empty seats and just two members eligible to vote until then. Do they slow things down as there is no time clock? Would only two choose to vote given that there would be three empty seats? Congress surely has not telegraphed any interest in this merger, and most likely wouldn’t complain were there to be no movement on the petition. “If the STB waits for three new board members, expect all 5 major U.S.-based railroads to be lobbying with all their PACs and political IOUs,to influence nominations of individuals they are confident will oppose a CP-NS combination—and, by extension, approval of a voting trust.

r ailway age and parSonS preSent


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Update Who is leading the race to finish Positive Train Control? 2018 or 2020, whatever the case may be, isn’t very far off. According to this FRA PTC implementation chart, 30 out 37 U.S. freight and passenger railroads required to have PTC will have the technology in place by the year-end 2018 deadline. The remaining 7— Central Florida Rail Corridor, CN, CSX, NS, MBTA and Metra—will need to take advantage of the available 2020 deadline, according to FRA. “The freight rail industry continues to work on PTC testing and installation and to move this complex safety system from concept to nationwide reality on roughly 60,000 miles of track as quickly as possible,” said AAR President and CEO Ed Hamberger. “The PTC technology being installed is revolutionary and is a full-time focus of the nation’s freight railroads, their employees, manufacturers, software designers and safety experts.”

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Railway Age March 2016

UP trims capital spending, launches crossing evaluation

Union Pacific last month announced a 2016 capital plan of approximately $3.75 billion, about $550 million lower than 2015. The plan includes $375 million for PTC. At the same time, UP announced a new safety program based on evaluating grade crossings where incidents are more likely to occur. “Given the decline in volume, we have taken a hard look at our capital

plan and continue to invest for safety, productivity and where returns meet our threshold of reinvestability,” said CFO Rob Knight. “These investments will create value for our customers and strong returns for our shareholders in the years ahead.” The UP Board declared a quarterly dividend of 55 cents per share on the company’s common stock; UP has paid dividends on its common stock for 117 consecutive years. Additionally, UP reduced railroad crossing accidents 3% in 2015 to 2.28, which is the total number of FRA reportable grade crossing accidents per million train-miles. Launched in 2015, UP’s Crossing Assessment Process (CAP) focuses attention on crossings with certain characteristics where incidents may be more likely to occur. “While all UP crossings that comply with company

maintenance standards are safe for the traveling public, drivers continue to make mistakes at some of them,” UP said. “CAP helps identify those crossings and find safety enhancements.” “Our initial review showed 25% of accidents happen at just 4% of grade crossings,” said Cameron Scott, UP’s Executive Vice President-Operations. “As we find ways to enhance safety at these crossings, we create some real leverage to improve safety.” For private crossings, the company works with landowners to find alternative access that doesn’t cross the railroad. The UP CARES public safety program allows the company to work with communities through a variety of outreach channels. Thousands of UP CARES events are held annually across UP’s 23-state network to educate pedestrians, motorists and truck drivers about how to stay safe.

Keeping Technology in Motion

March 2016 Railway Age 13

Update FRA: Verify that traffic lights, railroad crossings are in synch The Federal Railroad Administration (FRA) has called on state departments of transportation to verify that railroad grade crossing warning systems interconnected to highway traffic lights function properly. The agency also urged states to add event recorders to traffic lights connected to railroad crossing systems so information obtained during inspections can be used to improve safety. While railroads are required to inspect lights and gates at railroad crossings monthly, FRA has urged states before— and is did again in a letter with an attached safety advisory—to have traffic experts periodically join railroads on those inspections. During those joint inspections, traffic experts and railroads should verify that the traffic lights and crossing lights are properly sequenced and that enough time is provided for motor vehicle traffic to clear from a

nearby intersection before a train enters a crossing. “Simply put: We strongly recommend that state and local transportation officials, together with railroad officials, visit crossings in their region and monitor and test crossing signals and adjacent traffic signals to ensure that the signals are synced and operating properly,” FRA wrote. Last year, FRA launched a new, comprehensive campaign to reverse what it says is “a recent uptick in railroad crossing fatalities.” The campaign includes partnering with Google and other tech companies to use FRA data that pinpoints the country’s 200,000 railroad crossings to add visual and audio alerts to GPS map applications. FRA has also worked with local police to increase enforcement around railroad crossings. “Reducing fatalities at railroad

crossings is an achievable goal. But we can only achieve it if federal, state and local governments work together with railroads to verify that these crossings connected to traffic lights work properly,” said U.S. Transportation Secretary Anthony Foxx. “I have made improving railroad crossing safety a top priority of mine because I know that we can and must do better,” FRA Administrator Sarah E. Feinberg wrote in the letter to the heads of state departments of transportation across the country. “But the Federal Railroad Administration cannot solve this problem on its own. Unless we work closely with state and local officials, law enforcement, railroads and transportation officials and other stakeholders, we will not have the impact we are striving for and we will not save as many lives. But working together, I know we can do more to prevent these incidents.”

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Gil Carmichael, 1927–2016 Gilbert Ellzey “Gil” Carmichael, 88, former Federal Railroad Administrator, and founder of the Intermodal Transportation Institute at the University of Denver, died Jan. 31, 2016. From 1989 to 1993, Carmichael headed the FRA during the George H. W. Bush Administration. In 1991, he founded the Intermodal Transportation Institute. Thus, in his later years, he became more identified with transportation policy than Republican politics. In 1973, Carmichael joined the National Highway Safety Advisory Committee and was chairman from 1974 to 1976. From 1976 to 1979, he was a member of the National Transportation Policy Study Commission. He also chaired the Amtrak Reform Council. In his later years, Carmichael advocated the construction of a railroad to link the ports of Mobile, Alabama and Pascagoula, Miss., north to

Lucedale and Waynesboro and then join with the Meridian Southern Railroad line running to Meridian. “The exceptional measure of Gil Carmichael was his personal effort to cleanse his state’s civil rights stain,” said Railway Age Contributing Editor Frank N. Wilner, a long-time friend. “In 2007, Gil and a business partner purchased 75 acres in the eastern Mississippi town of Stonewall—named for Confederate General Thomas ‘Stonewall’ Jackson— as part of a redevelopment project. Included was a covered-over swimming pool that Carmichael learned had been closed as Mississippi’s long-enforced segregation ended—filled in with truckloads of red clay to prevent children of color from swimming with their Caucasian peers. “The Meridian Star quoted Gil: ‘They didn’t want to see blacks in their pool.’ Through Gil’s leadership and personal

financial support, the Historic Stonewall Mill Community Swimming Pool reopened to families of all colors that summer. Gil said at the time, ‘When the pool closed, it marked the end of an era. Now we are beginning a new era, one which everyone can enjoy. It’s a symbol of reconciliation.’”



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March 2016 Railway Age 15

Update CN targeting C$2.9 billion in 2016 capital investments CN announced last month the details of its 2016 plan to invest approximately C$2.9 billion in rail infrastructure and equipment “to raise network efficiency, support long-term growth and further strengthen safety.” CN plans to spend approximately C$1.5 billion on track infrastructure “to maintain a highly efficient and safe network,” the railroad said. This work will include the replacement of rail, ties, and other track materials, bridge improvements, and targeted branch line upgrades. CN will invest C$600 million in rolling stock, “allowing the company to tap available growth opportunities and to improve the quality of its car fleet.” CN also expects to take delivery of 90 new high-horsepower locomotives “to handle future traffic volumes and further improve fuel efficiency.” CN said it plans to invest C$400

million this year in “a range of other key initiatives to drive productivity and to improve service for customers.” CN will also spend C$400 million on the implementation of Positive Train Control technology on portions of its U.S. rail network. The railroad said it expects to install all the required PTC hardware on approximately 3,500 route-miles of its network by the end of 2018, with full PTC system operability achieved by the end of 2020, as required by U.S. federal government safety legislation. Claude Mongeau, President and CEO, said, “CN is investing for the long term, and we are again planning a significant capital program in 2016 to support a safe and fluid railway network, and to raise the bar on efficiency and customer service. Despite the current uncertain economic environment, it is a good time to harden our infrastructure, because we

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Railway Age March 2016

can do the work faster and at a better price. The strength of CN’s balance sheet enables us to sustain significant capital investments throughout business cycles. Rail is critical to the North American economy, and our investments will allow the company to build on its long-term competitive advantage.” John H. Armstrong’s

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Wabtec finishes 2015 strong; expects record 2016 results even as we face challenges in some of our key markets. We have responded by accelerating our cost and efficiency improvement programs. At the same time, we continue to invest in our growth strategies and remain optimistic about our long-term prospects, thanks

to continued investment in freight rail and passenger transit projects around the world. As always, we expect to benefit from our diversified business model, balanced growth strategies and rigorous application of the Wabtec Performance System.”




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Wabtec Corporation reported record results for fourth-quarter 2015, as higher sales in the company’s Freight Group more than offset lower sales in the Transit Group, which led to $833 million in sales for the quarter. Changes in foreign exchange rates reduced sales by about $27 million compared to the year-ago quarter. Wabtec reported fourth-quarter operating income of $151 million, 18.2% of sales, compared to $137 million, 16.7% of sales, in the yearago quarter. Earnings per diluted share were a record $1.05, 11% higher than fourth-quarter 2014. For the full year, Wabtec had sales of $3.3 billion, operating income of $608 million,18.4% of sales, and earnings per diluted share of $4.10, all of which were records. For the full year, the company generated cash flow from operations of $448 million, which exceeded net income of $399 million. At year-end, the company had cash of $226 million, an additional $203 million of cash held in escrow for the planned acquisition of Faiveley Transport, and debt of $696 million. In 2015, Wabtec repurchased 4.9 million shares of its common stock for $388 million, or about $79 per share. Additionally, Wabtec issued 2016 guidance for earnings per diluted share of between $4.30 and $4.50, with revenues expected to be flat to slightly up. The company expects 2016 quarterly results to improve sequentially during the year as it realizes the benefits of ongoing cost reduction initiatives and as projects already in backlog begin to ramp up. This guidance does not include Wabtec’s acquisition of Faiveley, which is progressing and which Wabtec currently expects to close by mid-year depending on the timing of regulatory approvals. Faiveley Transport is a global supplier of high added-value integrated systems for the railway industry. Raymond T. Betler, Wabtec’s President and CEO, said: “We finished 2015 with a strong performance and are positioned for record results again in 2016,

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March 2016 Railway Age 17

Watching Washington Frank n. wilner

CP+NS and the Humpty Dumpty effect


he chasing by suitor Canadian Pacific of grand dame Norfolk Southern has reintroduced to the railroad chattering classes the nebulous term “public interest,” used often and broadly when mergers and other railroad maneuvers requiring regulatory approval are afoot. That the term is so malleable is owed to Congress, the Interstate Commerce Commission (ICC), its successor Surface Transportation Board (STB), and the Supreme Court. As none has provided a precise definition, we might turn to Humpty Dumpty, who said in Lewis Carroll’s Alice Through the Looking Glass, “When I use a word, it means what I choose it to mean—neither more nor less.” More than half century ago, ICC Commissioner Rupert L. Murphy termed public interest “the greatest good for the greatest number.” Yet if one robs St. Petersburg to pay St. Paul, the “good” accrues only to the latter; and what if the population of the former is greater? In 1926, the ICC termed public interest “the aggregate of many individual and community interests.” In 1981, it termed public interest a balancing test, weighing “the potential benefits to applicants and the public against the potential harm to the public.” In 1996, the ICC’s successor STB said public interest “requires us to balance efficiency gains against competitive harm.” And in 2001, the STB said public interest might be met by demonstrating “the transaction would enhance competition where necessary to offset negative effects of the merger, such as competitive harm or service disruptions.” The Supreme Court observed in 1932 that the public interest has direct relation to “adequacy of transportation service, to its essential conditions of economy and efficiency and to 18

Railway Age

March 2016

appropriate provision and best use of transportation facilities … [but] this is a mere general reference to public welfare without any standard to guide determinations.” As for Congress, in the Transportation Act, 1920, and in statutes since, it instructs regulators to approve every railroad merger deemed to be in the public interest. Period. Were Congress of the opinion that regulators flubbed the dub in identifying public interest, lawmakers had opportunity to provide

“Public interest” remains in the eyes of the beholder—and for rail merger purposes, that is the STB. a precise definition in the 1980 Staggers Rail Act, the 1995 ICC Termination Act or the 2015 STB Reauthorization Act. Dictionaries say public interest is the “welfare of the general public in which the whole society has a stake.” Fortune magazine once suggested regulators be astute in identifying rogue stakeholders “ignorantly or deliberately cadging special treatment in the name of the public interest.” Law professor Richard Epstein, among the most frequently quoted legal scholars, termed public interest “theft mediated by legislative behavior.” So, might the discretion of the former Linda Morgan-led STB—which defined public interest so liberally as to allow four major rail mergers in nine years—thwart the current Dan

Elliott-led STB to take a less liberal direction? (Not since 1998, under Morgan, has the STB voted on a Class I rail merger application.) The three members of the current STB recently responded to congressional inquisitors that they are bound by the “new” merger rules created by Morgan in 2001, following a merger moratorium imposed while writing the new rules. While perhaps unintended, the moratorium derailed a then-proposed marriage between BNSF and Canadian National. These 2001 rules have yet to be applied, affording this STB substantial discretion in implementation. And the STB might probe, for the first time, public interest in a possible tax inversion—relocating a corporate legal domicile to a lower-tax nation while retaining material operations in the higher-taxed U.S. As for STB discretion, the Supreme Court held in 1984 that the power of an independent regulatory agency “to administer a congressionally created program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress.” If Congress fails to provide an “unambiguously expressed intent,” then courts must uphold a regulatory agency’s reasonable interpretation so long as it is neither arbitrary nor capricious. This so-called Chevron deference, named for petitioner Chevron U.S.A., gives the current STB a relatively long leash. As with the term “fair,” public interest remains in the eyes of the beholder—and for rail merger purposes, that is the STB. With two of five STB seats now vacant, and a third perhaps soon to be, there are a lot of unknowns in an environment of generous discretion. Humpty Dumpty was one smart dude.

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Short Line of the Year

New Orleans & Gulf Coast Railway

A new line to eliminate street running in Gretna, La., is in the works.


ow does a railroad realize a 50% improvement in train velocity while adding new customers and expanding facilities, and do all of that with no FRA-reportable injuries? The key is teamwork, one of the many reasons why the New Orleans & Gulf Coast Railway is our 2016 Short Line of the Year. Here’s the NO&GC story, as told by General Manager Scott Wollack: The New Orleans & Gulf Coast Railway (NO&GC) operates on the West Bank area of New Orleans and predominately hauls petroleum products, oils, chemicals, food products, grains and steel products. The NO&GC operates 32 miles of track and connects with Union Pacific at Westwego, La., and runs eastward to the Gouldsboro Yard in Gretna and south to Myrtle Grove, La. We service 14 different industries on two subdivisions, with Chevron, Kinder Morgan, and CHS being three of the larger industries served. Safety is a requirement of all employees at the NO&GC, and it shows. In the past 15 years, this short line has won the industry’s top safety honor, the Jake Award, seven times. Four times, NO&GC has won the award “With Distinction” and is in line to win it again for 2015 with no FRA-reportable injuries. The NO&GC has utilized technology in numerous facets with locomotives, vehicles, maintenance and fuel consumption in improving the safety atmosphere for all, but the bread and butter is the basic philosophy in working and

By WILLIAM C. VANTUONO, Editor-in-Chief

helping your fellow coworker, no matter what department he or she is in to do it the safe way. The NO&GC has adjusted its entire operations in the past couple of years, and the results have been remarkable. From 2012 to the present, NO&GC velocity numbers have almost been cut in half. For a 32-mile line that typically operates Monday-Friday from 0600 to midnight to have its release-tointerchange with the Union Pacific average a little more than one day is quite impressive. It takes an entire team effort for one car to turn its wheels. Our customers have also taken notice. In the past couple of years, we have added new customers and have seen a number of existing customers grow their operations through additional tracks and storage tanks, and increased volume. On the NO&GC line itself, we just added a 12,000-foot yard, creating a more-efficient operation for all our customers and allowing for more possibilities in the future. Another form of excitement is the potential growth of the NO&GC. The corporate officers at Rio Grande Pacific Corporation have been tirelessly working to obtain federal, state and private funding for developing a new line connecting both subdivisions, which would eliminate a line going literally through the center of the street in the city of Gretna. This line would follow an industry area route through the community of Harvey and run through undeveloped land in March 2016 Railway Age 23


Lake Pontchartrain







90 N



Ama UP P













F /U

Avondale Yard

Saint Bernard


Westwego Marrero

Saint Charles


Gretna Harvey



Gouldsboro Yard

90 23 N OG


Intracoastal Canal NS


Belle Chasse

Oak Point

Plaquemines NO

Lake Salvador



A Rio Grande Pacific Corporation NOGC Other Rail Stations Interchange Highways Counties

End of Track - Myrtle Grove

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Belle Chasse, and connect to the Belle Chasse subdivision. Along this line is the planned construction of two additional railroad yards. This proposed new line would eliminate safety concerns the NO&GC has for some of the communities through which we operate, enable residential and commercial growth along the old line, and allow for proposed expansion of Highway 23 through Gretna, Terrytown and Belle Chasse. It would also improve our already impressive velocity. An additional major project being reviewed by the NO&GC is an extension of our line by 4.5 miles in Myrtle Grove. This line would connect to Kinder Morgan’s International Marine Terminal. Along this proposed extension are two other coal terminals presently in the permitting process, and the proposed Port of Plaquemines on 550 acres just south of the Kinder Morgan terminal. The Panama Canal expansion is scheduled to be completed this year, and this has heightened the excitement at the NO&GC as we are the only railroad on the West Bank area of New Orleans, as well as the southernmost railroad to serve the Mississippi River in the great state of Louisiana. Our growth has occurred amid the recent economic woes the railroad industry has experienced in the past couple of years. It has created more jobs in the area, including on our railroad—in the past couple of years, the NO&GC team has grown by about 50%. Throughout this growth period, the NO&GC has not lost its identify of being a family owned railroad. We will continue to operate in that family atmosphere, which our customers—both internal and external—have come to expect from the NO&GC. Safety, a family orientation, growth, job opportunities, improved working conditions, improvements in velocity, an overall team atmosphere: That’s what the New Orleans & Gulf Coast Railway is all about. RA NO&GC is the only railroad serving the West Bank area of New Orleans.

5hp high pressure blower distributes hot air throughout the switch area High velocity, high volume air output keeps switch area open and operative in the most difficult applications User adjustable High/Low BTU output reduces fuel usage Variable timer based Hi/Lo flame control is adjustable for your application Snow detector, dispatcher or manual operation Provides the power to protect single or multi-track installations Maplewood, NJ 07040 Phone: (800) 21RAILS Email: gburwell@railsco.com Web: www.railsco.com


Railway Age

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March 2016 12/21/15 2:11 PM

Regional Railroad of the Year

Central Maine & Quebec Railway


ears from now, the history books will recount the tragic story of the Lac-Mégantic crude oil train disaster, a wreck that claimed 47 lives and decimated a small, bucolic Canadian village. But if history is to be accurately served, the history books will also recount how a new railroad came in, and did its best to set things right, restoring service, but more important, helping a community get back on its feet. Thus, the story of our 2016 Regional Railroad of the Year, the Central Maine & Quebec Railway. Here is the CM&Q story, as told by its own people: Twenty months ago, Railroad Acquisition Holdings (an affiliate of Fortress Investment Group) bought the U.S. and Canadian railroad assets of the bankrupt Montreal, Maine & Atlantic Railway and named the new railroad Central Maine & Quebec Railway. Fortress is one of the leading investors in transportation and infrastructure assets and currently has $75 billion under management. Prior to the purchase of CM&Q, Fortress previous rail investments included RailAmerica and Fortress continues to own the Florida East Coast Railway. CM&Q’s first daunting task was rebuilding the railroad, which at the time of the purchase was severed in the middle following the tragic accident in Lac-Mégantic. Faced with a neglected infrastructure that included more than 230 miles of main line track with restricted speeds of 10 mph, multiple Transport Canada notices and orders, and the formidable goal of earning back the trust of the public, customers, employees and connecting carriers, CM&Q invested in excess of $22 million in track and infrastructure improvements. Those

By WILLIAM C. VANTUONO, Editor-in-Chief

improvements include ties, ballast, rail, surfacing, bridge repairs, weed spraying and culvert replacements. Recently, CM&Q led the initiative to apply for (along with our partner roads) and was awarded a $20 million TIGER grant that provides funding to rehabilitate approximately 380 (109 on CM&Q) miles of track through Maine, creating more reliable rail service. In total, this is a $37 million public-private partnership. In addition, in January of this year, CM&Q was awarded operation of the state-owned Rockland Subdivision, which adds 58 miles of track to our network. CM&Q began operations by completely shutting down the railroad for two days in both the U.S. and Canada. These two days were used to introduce the new leadership members to the rest of the team and to teach what we call the “CM&Q Way,” which focuses on the key elements of integrity, safety and “being your brother’s keeper,” productivity, excellence and continuous improvement. Once the track in Lac-Mégantic was reconnected, CM&Q negotiated a social compact with the town of Lac-Mégantic that included open communication with the Mayor and the promise not to operate hazardous goods through the city until our 2014 capital improvements were completed and we were satisfied that the tracks were safe to handle those commodities. The transport of hazardous commodities has resumed through the town, but CM&Q is, out of respect for the residents in Lac-Mégantic, not handling crude oil through the town in 2016. In a recent article in the Bangor Daily News, Conrad Lebrun, Director of Buildings and Projects for Lac-Mégantic, March 2016 Railway Age 25

Central Maine & Quebec railway Madawaska Fort Kent



1-800-635-9449 1-800-222-1433

St. Johnsbury

St. Lawrence & Atlantic SLR


Central Maine & Quebec Railway CMQ trackage via CP CMQ haulage via EMRY/NBSR/MNR

Searsport AUGUSTA







St. Stephen






White River Jct.




So. LaGrange

Northern Maine Jct.




Wiscasset Newcastle Rockland Brunswick

Wells River

New England Central, Pan Am Southern, CSXT, Norfolk Southern



Be nso



Derby Hermon











Gr e en vill e



Bedford Richford


East Millinocket



ega n W T

km an

m Magog

Millinocket Brownville Jct. T

La cM

S Le herbr nn oo ox ke vill e



Canadian Pacific / Norfolk Southern to south


CN to east


Fort Fairfield Easton Presque Isle W NEW MNR erick BRUNSWICK im L w Ne Oakfield Houlton


sal ie CP CN

Farnham MONTREAL Yard St. Jean T

St. Leonard, NB T

Skerry Ashland


Sa int e-R o

Canadian Pacific, CN to west

Van Buren Caribou


700 Main Street, Ste. #3, Bangor, ME 04401 TEL. (207) 848-4200 Customer Service: FAX: (207) 848-4232 Marketing: www.cmqrailway.com




Springfield Terminal to south

Atlantic Ocean

Canadian National Railway Canadian Pacific Railway Eastern Maine Railway Maine Northern Railway New Brunswick Southern Ry. Co. Ltd. New England Central Railroad


Pan AM Southern St. Lawrence & Atlantic Railroad Springfield Terminal (Guilford) Vermont Rail System Lumber Transload Warehouse


agreed that the Central Maine & Quebec and the city have developed a good working relationship. “It is good,” he said. “We have access to CM&Q representatives. When we need to, we call them and they call us right back and we work issues out well. We expect it to keep going in the future.” CM&Q has invested heavily in safety and employee training. Employees are trained on an annual basis rather than tri-annually. In July 2015, CM&Q volunteered to be the first railroad to participate in the Railway Association of Canada’s Safety Culture Assessment. This assessment was aimed at understanding what improvements are required within the railway in order to cultivate and maintain a positive safety culture. More than 90% of CM&Q employees (U.S. and Canada), including management, supervisors and tradespeople, participated in the initial safety culture assessment phase. The results of the survey and focus groups enabled CM&Q to identify and promote safety improvements and enhancements across the company. As a result, CM&Q received the 2015 RAC Annual Safety Award for our participation, leadership and contributions to railway safety. Safety and training has not stopped with just the employees, since beginning operations CM&Q has reached out to many towns and communities along the railroad and participated in 26

Railway Age

March 2016

onsite training demonstrations and opportunities. In June 2015, CM&Q participated with Department of Environmental Protection, the Maine Emergency Management Agency, local firefighters and first responders by providing staff, locomotives and tank cars enabling the agencies to perform a real-life exercise on a derailment with a hazardous chemical. In an effort to educate local fire departments, CM&Q sponsored three firefighters to attend a Crude by Rail Emergency Response Training program at TTCI in Pueblo, Colo. This training program provided them with basic knowledge, skills and abilities to respond to incidents involving crude by rail. CM&Q has been working diligently to regain business lost prior to the accident as well as increase business. When operations began, the railroad was handling a little more than 3,000 carloads per quarter. Today we are reaching close to 7,000 carloads, and this has been achieved by providing customers with a dependable and economic transportation option, working with local municipalities and our partner railroads to develop new business opportunities. CM&Q has made significant progress, and we continue to look to the future to grow business and help our customers improve their reach into the marketplace. RA

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The human-factor side of Conrail The most important ingredient in the human-machine interface is the human. By ALFRED E. FAZIO, P.E., Contributing Editor

RailsEast.com/Chris Spiewak


lthough not generally recognized, basic human factors and ergonomics (man-machine interface) theory has historically been applied in railroading. For example, while various rulebooks offer different signal aspects for medium speed and even “clear” signals, no railroad uses red alone for a permissive indication. Likewise, turning a dial clockwise or moving a control tab to the right increases the values of the parameter being controlled. Improvements to locomotive cabs and layout of modern dispatch centers and shops are examples of more complex applications of human factors engineering, yet they still remain focused primarily on equipment design. Conrail has recently widened the internal application of fundamental human factor concepts. Conrail’s effort goes well beyond previous practice in that it incorporates an operational dimension as well as engineering principles. Conrail is now extending railway human factors to the training and thinking patterns of its operating and maintenance employees, with particular interest in those engaged in the direct provision of transportation. It considers the psychology of human attitudes and of workplace behavior. Yet, even in its approach to operational and behavioral applications, it remains analytically based. Conrail President Ron Batory, looking for definitive and measureable improvements in operational performance, notes that there has been a 55% reduction in human factor-caused train incidents over the past 15 years, resulting in a .0003% human risk factor.


The application of human factors at Conrail falls into a comprehensive and highly analytical approach to running the business. Vice President and Chief Engineer Tim Tierney notes that due to continued and steady industry investment in rolling stock along with Conrail’s investment in fixed-plant infrastructure, mechanical and maintenance caused derailments on his railroad have been greatly reduced. As Tierney points out, “Conrail continually reviews the needs of our line-of-road infrastructure, bridges, yards and facilities to prioritize the proper level of investment at the proper time. Additionally, projects to increase capacity and operational flexibility are designed and implemented to address existing needs and new business opportunities. Over the years, Conrail has also participated in many publicprivate partnership projects in all three Shared Assets Areas that further enhance and strengthen our assets and add capacity to improve the service product we provide.” However, the greatest opportunity to be achieved resides in the category of operational causes, and this is where human factors can play a big role. Tierney notes that, despite its condensed geographic footprint, Conrail crews executed in excess of 15 million switching events in 2015 alone. So how do human factors enter this equation? Obvious items are crew qualification of and rules compliance and the more subtle, man-machine interface issues. As Assistant Chief Engineer Eric Levin observes, “Our March 2016 Railway Age 31

human factors

Managers must learn how the ‘whole thing’ works in order to be effective.” Learning the equipment, technology and rules of one department is no longer sufficient. Conrail’s management team strives to be cross-functional and wellversed in all operating crafts, to be able to make decisions that will positively impact all departments. Levin’s insight about the need to learn how the different mechanical and engineering functions interact with the human element of railroading is well-taken. Clearly this not only tends to reduce incidents, it also makes for a more efficient business and a healthier bottom line. Today, achieving such integrated experience and knowledge in the next generation of managers and supervisors represents an industry-wide challenge. How is this accomplished on Conrail? It starts at the top, where Batory notes “Our young people, both agreement and non-agreement, constitute the future of Conrail. With the talent hired in the late 1970s now retiring, we continue to increase our work force by 7% to 10% each year. It is critical that Conrail maintain and strengthen its workforce.” To further cultivate talent, Conrail has instituted a series of formal and comprehensive training and development programs “to accelerate and properly shape the experience factor.” In October 2015, Conrail hosted a training and education seminar at its Bellmawr facility in Southern New Jersey. The attendees were drawn from all of the operating departments, and participants were purposely mixed into pre-assigned cross-discipline workgroups. This particular seminar, derailment training, was spearheaded by Conrail’s Risk Management Team. RISK MANAGEMENT

Chief Risk Officer Neil Ferrone notes that Conrail’s investment in training and retaining is a bottom-line-driven process and covers all phases of a railroader’s career, from Conrail’s early observation of attitudes and aptitudes to train crew refresher training to performance of summer interns. The employee development process begins before new hires are on the roster. Pre-employment orientation for prospective trainees is stresses that these individuals and their families are made aware of the challenges as well as the benefits of life in a railroad operating environment. This occurs prior to their acceptance of a position with the railroad. WORKFORCE ACURACY AND INTEGRATION

Conrail has been continually scouting, recruiting and training young talent over the past ten years. This has been accomplished by going to some of the best engineering schools in the country and offering summer internships to future civil and mechanical engineers. Conrail also seeks out highly motivated veterans with experience in leading and molding individuals into part of a functioning team while understanding the concepts of organization and mission. Conrail’s cross section of military experience, higher education and experienced operating employees forms an effective management team that can 32

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March 2016

recognize real risk and develop processes to reduce it. October’s training session cemented concepts of team building along with operational knowledge. Gary Wolf, principle of Wolf Railway Consulting and a recognized expert in track/train dynamics, assisted in training development and then execution by giving in-depth seminars in train dynamics and track infrastructure. Wolf went into such details as how to locate the actual point of derailment, differences between wheel climb and drop-in derailments, and the actions of freight car suspensions. “I’ve never been involved in such a well-designed training program,” he said. “It’s world-class.” Atticus Consulting’s Randall Jamieson, an authority on workplace behavior and motivation, gave a seminar on employee attention-related errors and how supervisors can better understand their people. Insight was offered on how to communicate with many personalities. Jamieson noted that “Conrail’s management team consists of an earnest and dedicated group, thirsty to learn, willing to do the work, and appreciative of the opportunities provided to them.”

Ron Batory: “Our young people, both agreement and non-agreement, constitute the future of Conrail.” Attendees were assigned to work teams from different Conrail districts—a mix of mechanical, transportation, engineering and support personnel. They were given field instruction on equipment that included turnouts, partially disassembled switch stands, and freight car trucks. A laboratory with several derailment stations, each of which included a scale model of a derailment with an incident summary, included an instructor drawn from the ranks of seasoned managers. Depending on the questions asked, or the requests made for specific measurements (track gauge, wheel tread), the facts were presented to a committee. If the appropriate questions were not raised, the discoverable facts remained hidden. With appropriate investigation, the sequence of events, primary cause and contributing factors were determined. Theese drills offered each participant an opportunity to use the knowledge and skills learned over the previous two days in a controlled environment. Ron Batory views this training along with other educational efforts holistically: development of the individual and the fostering of an integrated attitude, one that respects the machines and the work performed. It all comes down to recognizing that the most important ingredient in the human-machine interface is the human, and that a well-run railroad is primarily driven by well-trained and highly motivated people of all crafts and disciplines working together toward a common goal. RA

Interest Form For nrC 2016 raIlroad ConstruCtIon and m aIntenanCe e quIpment a uCtIon – a prIl 14, 2016

Please tear out form and fax this information to the NRC at 202-318-0867 or email to Linsey Collins at lcollins@nrcma.org Auction begins 9 a.m. in Lonoke, Arkansas, Thursday, April 14, 2016 – expected finish by 1 p.m. Located at Blackmon Auctions Facility, 425 Blackmon Road, Lonoke, AR, 72086 Equipment inspection available 8 a.m. - 5 p.m., April 13, 2016 Happy Hour/Social event: Wednesday, April 13, 5:00 p.m. to close – Wyndham Riverfront Little Rock, 2 Riverfront Place, North Little Rock, AR 72114 Hotel: Discounted room block available at Wyndham Riverfront Little Rock, 2 Riverfront Place, North Little Rock, AR 72114; 501-371-9000

Name: _________________________________ Company:______________________________ Phone: _________________________________ Email:_________________________________ Check all that apply: _____ My company is interested in donating equipment to the Auction. 100% of the proceeds of the sale will go to the NRC Safety, Training and Education Fund. My company will receive the tax deduction benefits.

_____ My company is interested in consigning equipment to the Auction. My company will receive 100% of the proceeds of the sale, minus a 2% seller’s fee which will go to the NRC Safety, Training and Education Fund. _____ My company is interested in sending a representative to consider purchasing equipment at the Auction. I understand that I do not need to register ahead of time with the NRC for this event, but should contact Blackmon Auctions for an Official Auction Catalog. The auction will begin promptly at 8 a.m., April 17, 2015.

Auctioneer: Blackmon Auctions, Inc. Thomas Blackmon Jr., Vice President Phone: 501-664-4526 • thomas@blackmonauctions.com P.O. Box 7464, Little Rock, Arkansas 72217 www.blackmonauctions.com

Host Association: National Railroad Construction & Maintenance Association (NRC) Chuck Baker, President Phone: 202-715-2920 • cbaker@nrcma.org 500 New Jersey Ave NW, Suite 400, Washington, D.C. 20001 www.nrcma.org

NRC Auction Committee: Danny Brown V&H Trucks 810-397-3533 dbrown@vhtrucks.com

Mark Gaffney Stacy & Witbeck 510-748-1870 mgaffney@stacywitbeck.com

Jay Gowan Harsco Rail 803-822-9160 jgowan@harsco.com

Dean Mackey Progress Rail Services 800-962-2902 dmackey@progressrail.com

Dan Samford Peak Perf. Asset Services 816-387-3116 dsamford@PPASllc.com

Greg Spilker Encore Rail Systems, Inc. 303-936-3641, ext. 104 gs@encorers.com

Paul Laurello Delta Railroad Construction 440-992-2997 paul@deltarr.com

CP+NS: Where do small roads figure? By Roy Blanchard, Contributing Editor


e will remove paper barriers for both privately-owned and leased short lines,” said James Clements, Vice President Strategic Planning at Canadian Pacific, on the Dec. 7, 2015 conference call with the financial community and the press. This came on the heels of a Nov. 17 press release offering “a new approach to terminal access,” in which the combined CP-NS would allow “another carrier” to use its tracks to reach any customer if CP-NS “failed to provide adequate service or competitive rates.” There’s more. On Jan. 19, CP offered post-merger to give shippers the choice of where they can connect with another railroad along its network, bringing an end to the practice of “bottleneck pricing.” (The AAR says a “bottleneck situation exists where one railroad can move freight from an origin to an intermediate point, and from that intermediate point on to a final destination, yet another railroad can also move the freight from that intermediate point to the final destination.”) Instead, CP proposes to allow competing rails to use its tracks “in terminal areas where CP+NS service is not adequate and/or rates are non-competitive.” That is to say, a customer at a CP+NS location who encounters a bottleneck situation and where another railroad connects at an intermediate point may request the other railroad’s routing without penalty. CP had not as of mid-January defined “terminals” or who pays what for access. It appears, however, that any railroad customer local to CP but with a convenient connection to 34 Railway Age March 2016

another railroad would qualify as being in a “terminal.” And since there is no free lunch, there’s no doubt CP will collect fees of some sort accruing to other roads using CP tracks to reach customers. As usual, the devil is in the details. This brings us back to James Clements’ comment about paper barriers (contractual provisions in line sale or lease agreements that prohibit freight interchange with other connecting railroads). In the classic case, Short Line A is a former NS branch line and has a paper barrier to force interchange only with NS. The short line also physically connects with, for example, CSX at some point, but the terms of the agreement creating the short line prohibit interchanging with CSX without stiff per-car penalties. Clements says a merged CP-NS will remove these restrictions. That’s straightforward enough. But what happens if CSX has a connection with NS five of 50 miles from the existing NS short line connections? Will the terminal access provision to remove bottlenecks apply in this case as well? We can make the argument that they should. For the short line customer, a paper barrier forces its traffic over the controlling Class I, even if there exists a better, more efficient route to the short line customer’s customer over the proscribed paper barrier route. By definition, the more efficient route implies shorter transit times and better equipment cycles, something all Class I’s say they want—yet protecting the franchise prohibits. The unanswered question is whether it will be reciprocal:

William Beecher

Can Canadian Pacific offer Norfolk Southern-served short lines economies of scale and new revenue opportunities?

CP+NS getting onto the other railroads’ lines when the tables are turned. A concern is that this should be reciprocal—and it’s unclear if this has been thought through for the U.S., and if NS understands it. This is pretty new stuff for the present crop of railroad managers. As part of the access discussion, CP needs to say what it would do with Conrail—the Shared Asset Areas (SAAs) jointly owned by CSX and NS. If you rely on trackage rights all over, especially into key, busy terminals, and you lose the SAAs, that’s a net loss to competition. It’s a fact that trackage rights and/or reciprocal switching is not nearly as good competitively as what the SAAs provide–a neutral, independent switching entity with the sole goal of maximizing efficient direct service. In the traditional model, the railroad coming in on trackage rights is at the complete mercy of the owner railroad’s dispatching, etc. This is why in many instances so few have used trackage rights effectively, while others have frequently given up on them, and negotiated a haulage arrangement instead. Haulage arrangements can be a very expensive alternative—and perhaps even noncompetitive. Plus, if you’re trying to handle any real volumes in haulage, those haulage trains may suffer the same fate as a second-class tenant trackage-rights train. CP claims the terminal access and paper barrier proposals for the merged companies “should significantly enhance competition and improve rail efficiencies for customers everywhere.” That’s a tall order. We have right now a balanced network: two large western roads, two large eastern roads, and two large Canadian roads, each with some U.S. holdings.  If a Canadian road or a western road attempts a merger with an eastern road, it unbalances the network and creates a potential competitive advantage. It‘s not really a monopoly, but it becomes the only road that can go coast to coast—in the present case, Vancouver, B.C. to Norfolk, Va. So, the other railroads would all have to attempt to restructure their networks to compete, which means they would want to merge or take pieces of other lines. BNSF has vastly more resources (Warren Buffett) than CP, so it could easily outbid CP for NS, and UP could too. At the same time, we have an activist STB that doesn’t like the idea of less competition, so even if the merger proposal gets there, you would likely have conditions attached such as “open access” for other carriers that would devalue the merger. Even though coal is dwindling, and intermodal is the fastest growing commodity sector, carload shipments, either in unit trains or single-car service, constitute roughly half of all railroad revenue units. Unfortunately, single-car moves can be slow, expensive and non-competitive. CP+NS has a unique opportunity to revive the carload network, and the short lines must play a critical role as first-mile/last-mile service providers. Regardless of whether NS and CP ever formally merge, it’s a given we must empower short line and regional connections, perhaps using incentive payments, to dig around for new business. It’s out there, and there’s lots of room to grow. Imagine a large Class I dividing its entire railroad among

these smaller partners, with short line staffers doing the marketing at the local level. Going still further, short line power and crews operating on trackage rights could switch branch line customers outside of major terminals. As for empowering short lines, CP commits to eliminating paper barriers. NS must do that now, then move onto short lines that NS created by spinning off the miles between the last big customer and the end of the line. Many of those customers have either gone away or downsized, and, where they remain, they eat up NS assets (power, crews, track repair). NS could easily turn these vestiges of franchiseprotection over to the short lines and even move the interchange to a serving yard where it makes sense. As for dividing the railroad, NS has already assigned in-house “short line development managers” by region and by short line within the region. These managers’ charge is to help turn opportunities into revenue from customers local to the short lines. Take that another step: Let short lines offer their customers the NS product that best suits their supply chain needs—carload, intermodal, transload—and pay the short line a handling fee for every load so initiated. The Hunter Harrison model appears to be one of trimming assets to fit the traffic available and making sure the traffic available makes best use of the assets. Twenty-five years ago he was able to turn grain trains between the Midwest and New Orleans six times a month while singletracking most of the IC main line. At CN he converted low-volume carload customers into higher volume intermodal customers. And at CP he eliminated hump yards to cut days per car-cycle. In none of these instances did Harrison just take a chain saw to the single-car network. He used a scalpel to decrease the number of customers requiring custom treatment in a batch network, and in the process increased the number of customers best-suited to the batch network. The short lines, which NS staffers accurately call “market extenders,” can facilitate this shift. They can build their outbound consists sorted by distant node, rather than delivering a mill-run of mixed-destination cars to NS. Doing so lets NS run distant-node cars directly to the departure yard from the receiving yard, skipping the hump, saving the customer a day’s transit time at each class yard, and decreasing car-cycle time. There are three near-term possibilities: Nothing happens and the players return to neutral corners; CP and NS agree to merge and the STB process starts; or CP enlists folks friendly to its cause to serve on the NS Board, opening the way for Harrison to succeed Jim Squires, and the proceedings stop short of a full merger. If the last outcome occurs, Harrison, as CEO, will accelerate the line rationalization program, more closely align the fungible assets (locomotives, crews) to the work at hand, and focus the single-carload and intermodal networks on the commodity lanes offering the best customer value. At the end of the day, the NS family of non-Class I railroads could benefit from the elimination of paper barriers and wider access to other railroads, offering better supply-chain solutions for customers, and doing so with fewer assets. RA March 2016 Railway Age 35

By Jerry Vaughn, Director of Asset Services and Umler® Product Manager, Railinc Corp.

Every new wheelset receives a bar code containing the component ID (CID), and is registered with Railinc’s Umler Component Registry.

Reduced failures, faster response Railinc’s Umler Component Registry works for the benefit of railroads, car owners and lessors, car shops and shippers.


afe and efficient operations are at the core of the railroad industry’s ability to support a diverse range of supply chains—from the movement of global retail goods to raw materials for basic manufacturing. The industry works diligently and tirelessly across a wide range of fronts so that shippers can rely on railroads to support all their customer requirements for product availability and quality. To that end, the Umler® Component Registry was inaugurated in 2011 as an industry-wide initiative, designed to create a database of railcar equipment component information. The multi-year program enabled the electronic tracking and identification of specific railcar components in near real-time, improving the monitoring and management of railcar component quality across North America.

First applied to wheelsets

Today, when a newly manufactured wheelset enters service, the wheelshop assembles an axle, two matching bearings, and two matching wheels to create a single wheelset, and places a bar code containing the component ID (CID) on the wheels and axle. The wheelset is then registered with Railinc’s Umler Component Registry. The application of a wheelset to a railcar is called an association and its CID is reported into Umler at its specific location on the railcar. In the case of a wheelset, the association occurs at an axle location as defined by the equipment characteristics in Umler. From then on, if a 36 Railway Age March 2016

problem arises, the system can be used to target the individual wheelset for research, analysis, and even replacement. This process has been expanded to additional component types. It’s no small task, involving key components in a fleet of some 1.6 million railcars that are in constant motion across our 140,000-mile network. Complete coverage of wheelset component tracking is still a few years away; yet, over the past four years nearly seven million wheelsets have been registered. Other components being phased in are: sideframes; bolsters; couplers; service valves; emergency valves; and slack adjusters—with more to come. The industry is already experiencing benefits. The positive effects of such a wide-ranging process are significant and include better rail equipment health and performance visibility, increased safety through faster and better-targeted recalls, and reduced costs of recalls. Here is a look into how the component registry works for the benefit of railroads, car owners and lessors, car shops, and shippers. A challenge as old as railroading

Since the first trains rolled, there have been friction, impact, heat, cold, and all the other factors that cause wear. As the industry has grown, so has the challenge of identifying the location and condition of railcar components, many of which are critical to safe and efficient operations. No component grouping is more critical than wheelsets.

They account for most of a car’s empty weight, and failure in any part of a wheelset can result in a derailment. Plus, wheelsets account for the greatest percentage of the cost of railcar maintenance and repair. Until recently, the task of identifying defective wheelset components was a time-consuming process. An extreme example is an ongoing recall that is more than 10 years old. Stemming from an investigation in 2004, it resulted in an order to remove several hundred thousand wheelsets from service, which initially caused a significant disruption in freight rail service across North America. This, and other incidents, motivated leaders of the rail industry to seek technology and process changes that would make it possible to more precisely identify components needing to be recalled in the future. The question that faced the industry was: Could recalls be limited to affected components known to be applied to specific railcars, rather than the much larger group that might contain defective components? Industry leaders also believed that with the right data collection, patterns could be identified more easily—leading to early resolution of potential safety issues. A collaborative solution

North America’s railroads have a rich history of cooperation that spans many decades of committee work to solve common problems. With Component Tracking, these committees have again risen to the challenge presented by the complex array and distribution of components. The various AAR committees and their members function within a rulemaking hierarchy that makes this complex process work. Each component falls under the jurisdiction of a specific technical committee. These committees rely on the dedicated participation of members from Class I railroads, private car owners, and others who have a direct interest. The rulemaking starts in the committee responsible for a specific component. Initially conceived as the Comprehensive Equipment Performance Monitoring (CEPM) program in 2010, the task for AAR committees was to develop requirements for a reusable framework and related business processes to register and associate components. Execution and rollout came in conjunction with compliance to newly established industry rules for registering component details and associating components to equipment. Rules of that magnitude greatly impact operations and systems, and require a cost/benefit analysis weighing manufacturer, car owner, shop, and railroad factors. It is also paramount that the process maintains the confidentiality of reported data. A task force of industry leaders collaborated to develop both the business processes and the backbone of systems required for implementation of what came to be known as the Component Tracking program. The task force met weekly for 12 months before the first phase was launched for wheelsets on Jan. 10, 2012. Subsequently, the AAR Field Manual rules were reviewed and modified by the AAR Car Repair Billing Committee for approval by the Arbitration and Rules Committee. The AAR’s Technical Services Working Committee and the

Safety and Operations Management Committee provide ongoing oversight. The drafting, review, and approval process provides a thorough and proven method for the release of interchange rules. Components meet big data

The committees and other industry stakeholders—who possess expertise and real-world operations experience— utilize Railinc to facilitate the definition of industry-wide business scenarios that provide positive ROI for the industry. Also, Railinc’s systems development and requirements analysis capabilities are helpful in solving problems involving large data volumes from across the entire industry. Thus, Railinc acts as the industry’s project manager to define project scope, which helps the industry execute and ensure ongoing compliance with new and enhanced rules. Railinc continues to fine-tune the process to onboard new components for tracking. The first step requires the creation of a component data glossary. The purpose of the data glossary is to define the format and data to be collected to support a recall. Also, the glossary may contain additional data to support performance analysis. Thus, when a component is manufactured or reconditioned, it is registered using data glossary definitions. The data glossary elements and permissible values are loaded in Umler. Then, a combination of serial number, design code, and date of manufacture information is used to define a unique key linking the CID and the physical component. The key can be used in Umler to look up the CID in the event the bar code tag becomes detached or is unreadable. With a wheelset, the component registration includes data on an axle, two wheels, two bearings, plus data on the complete pressed wheelset. The manufacturer then distributes the wheelset to a repair shop or a newcar builder, which will apply the component to a railcar during the course of new construction, maintenance programs, or repairs. Shops and new-car builders associate a wheelset’s CID to a specific axle location in Umler through one of three industry systems: Umler; Equipment Health Management System (EHMS); or Car Repair Billing (CRB) data exchange. Options for this process range from logging in via the Internet to sophisticated system-to-system integrations. Eventually, the original bar code tag will likely degrade or drop off the component, but the Umler registry will always “remember,” because it records and tracks the CID at a given railcar location until another CID is associated at that location. The previous CID is then moved into history. Positive experience leads to expansion

The timeline for phasing in new components has decreased by more than 50% since wheelset Component Tracking was introduced. The typical timeline now allows three to six months to define the data glossary, permissible values, and data quality business rules for production implementation. The time needed for phasing in the rules depends on several supply chain variables, but normally takes about 18 months so as not to hamper normal business operations. That too is decreasing March 2016 Railway Age 37

Umler component registry

as the process continues to mature. Because the Component Tracking program uses big data to track millions of components, it requires sophisticated and reliable technology—which Railinc provides. Since Component Tracking was launched, compliance percentage coverage for wheelsets has reached 58%, with nearly seven million wheelsets registered and nearly four million associated to equipment. It is expected that coverage will rise to more than 98% in the next few years, because normal wear requires the replacement or refurbishment of wheelsets about recently added: Couplers, bolsters, sideframes, brake components. every five years. The success of wheelset Component an Early Warning notice can be linked to specific recall criteTracking has led to the addition of sideframes, bolsters, ria, any time a component matching the criteria is removed, couplers, service portion of the brake valve, emergency the railcar will be removed from the notice. portion of the brake valve, and slack adjusters. The recall process works like this for wheelsets: Early warnings for system integration 1) Pattern of defect identified by industry. The Early Warning System provides a method for the rail 2) Specific criteria from the data glossary used to industry to communicate the identification of mechanical determine scope. problems on rail equipment that could impede the safe 3) Identify all components matching the defect criteria. movement or handling of the equipment. To do this, 4) Identify railcars with defective component(s) associated. Component Tracking has two primary capabilities: identify 5) Create and assign equipment to an Early Warning notice. all registered components that match specific defect crite6) Route affected cars to repair shop. ria and identify which equipment is associated with 7) Inspect/replace defective components. defective components. 8) Return cars to service. The Early Warning system is a web-based application Previously, when a component manufacturer identified a that allows authorized users an online interface to perform defect that required a recall, it could take months to locate queries of Early Warning and Maintenance Advisory notices the affected cars. Now, that function can be accomplished via and equipment and to report inspections and repairs. Since a query at a fraction of the previous time.


connectingrail.com 38 Railway Age March 2016

Umler component registry

Using this process for more precise targeting of equipment for recall also means the number of cars shopped for inspection can be reduced. Since Component Tracking was first implemented, there have been three recalls for defective wheelsets where the registrations and associations within Umler were utilized. The most recent wheelset recall occurred in 2014 with criteria based on a manufacturer and a defined date range. The recall targeted only the specific 8,500 wheelsets on 6,500 railcars, allowing the industry to strategically assess the risk and execute the appropriate mitigation strategy. The anticipated value of Component Tracking is being delivered, and includes increased visibility into rail equipment health and performance including component mileage for car owners; successful support of three recalls; reduced time to identify scope of recalls; fewer costs associated with component failures; reduced inspections with more targeted recalls; and over and above all, safety. Component Tracking’s ability to speed up and reduce the cost of recalls lends itself to improving safety for the entire industry. Now it has been determined that additional data provided through this process can be reviewed for possible use as a failure-prediction tool. This is being accomplished under the guidance of the AAR’s Asset Health Strategy Committee. When sufficient data is accumulated for failure patterns in specific components, it might be possible to develop better replacement cycles and, in some cases, reduce the failure rate by removing equipment from service before failure occurs. The direct benefits of Component Tracking include safer operations and reduced cost. Yet, one of the greatest benefits of Component Tracking might never be known, because the financial and human costs of a derailment that is prevented can never be quantified. That’s one mystery everyone in railroading can live with. RA

Component Tracking Uses Component Tracking users get a broad view of equipment health and performance. The program provides—per an industry security model—critical data that can help equipment owners, shops, reconditioners and other rail industry participants make decisions that improve safety, lower costs, and lead to more efficient and effective operations. Through the Component Tracking program, equipment owners can improve equipment productivity and asset utilization; make more informed fleet management decisions; validate billing more effectively; and better plan fleet maintenance. Wheelshops can access higher-quality data on components that they refurbish; improve resource planning and supply chain management; and query and review registration data for components they registered. Repair shops can improve maintenance planning and prioritize work; apply registered wheelsets, side frames, bolsters and couplers; and reconcile work with system records through daily reports. OEMs (Original Equipment Manufacturers) can get greater insight into the quality and failure rate of the components they produce; and issue smaller, more effective recalls. Reconditioners can access higher quality data on the components they recondition and seed new component registrations. Third-party software providers can integrate component registry capabilities with their products; and create new, value-added products and services for their customers.

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All tied up

Global economic issues have shrouded the crosstie market outlook for 2016 in uncertainty, but a few bright spots could diminish expected softening of demand.


hile railroads have reduced their overall capital plans for the year, spending on maintenance remains strong, the short line tax credit is in effect and transit projects continue to come online. These factors, mixed with questions surrounding global economic growth, are leaving industry experts puzzling over how the 2016 crosstie market will balance out.


Wood crossties

The treated timber crosstie market is expected to soften in 2016, but by how much is a big question mark. The Railway Tie Association (RTA) has forecasted three demand scenarios for new wood crossties. Predicted reductions from 3% to as little as 1.6% represent the base-case forecast and the optimistic case, respectively. The worst-case scenario would be if the economy tipped into recession, where the RTA econometric model predicts a demand reduction of 6.4%. RTA economists have been following world economic growth and the relationship of the U.S. dollar to world currencies, how growing climate concern affects U.S. energy policy, and coal and crude-by-rail shipments. Other factors include what impacts legislation, such as the recent extension of the PTC deadline and extension of the short line tax credit in the U.S., could have on the timber tie market. “Last year, we knew with a fair degree of certainty what was going to happen,” says Jim Gauntt, Executive Director of the RTA. “We knew where demand should be, and that air-dry tie availability would not meet total demand. This year, so much of what is going on is driven by factors that aren’t as easy to predict.”

By Mischa Wanek-Libman, Engineering Editor

Gauntt explains that, from 2013 through 2015, railroad wood tie needs resulted in exhaustion of air-dried tie inventories. That put wood crosstie producers into catch-up production mode to rebuild air-dry inventories. While east of the Mississippi is nearing the re-establishment of those inventories, west of that line remains some months behind. “Since that process isn’t yet complete, we expect procurement of green ties to remain strong this year. We should see treaters procure green ties only a little below the same rate as they have been for the past two to three years, but what the railroads will purchase this year most likely will be less than 2015,” says Gauntt. Gauntt says RTA is aware of the recently announced reductions in railroad capital expenditures. He notes that although a reduction in total capex spend does not usually equate to a one-to-one correlation in tie procurement reduction, it will have some negative effect in 2016-2017. He also notes that the commercial markets will see an impact too, due to reduced traffic. He remains hopeful, though, with the short line tax credit in effect for all of 2016 and more flexibility from suppliers for this portion of the rail market, demand in this market sector may still hold up well. Gauntt notes there are other variables with yet-unknown potential effects. Among these are potential improvements in intermodal and chemicals shipments, how PTC capex spend will factor in the equation over the next three years, and talk about acquisition activity. Despite these unknowns, Gauntt still finds good news: “If demand isn’t as strong, even by only a percent or two, inventory equilibrium could occur at a pace that’s easier to manage for all parties involved,” he says. March 2016 Railway Age 41


“Generally, when it’s more manageable there is less stress for producers and users alike.” John Giallonardo, Vice President Class I sales at Koppers Inc., says, “There is no question that the softening U.S. economy will have some impact on our business in 2016. The coal, oil and gas sectors continue to be depressed and have certainly affected our Class I customer base. However, untreated tie production has rebounded strongly over the past year, and we are in a much better position in terms of inventory to meet the demands of all our customers. We are continuing to monitor the economic headwinds closely and still remain cautiously optimistic that we can duplicate our strong performance from 2015.” Giallonardo said the short line tax credit extension should allow for the commercial segment of Koppers’ crosstie treatment business to remain vibrant. “Our improved inventory situation will allow us to participate to an even larger extent in this area,” he says. “We are also experiencing solid growth in our rail-joint business, with significant market growth from both the Class I and commercial market. Our bridge inspection and repair business is also well-positioned for continued growth in the Class I and short line sectors.” George Caric, Vice President Marketing at Stella-Jones Corp., says 2016 will be “an interesting year for sure.” “The good news is that tie production has rebounded and inventories are back to normal levels in most areas of the country,” he says. “Our Class I customers are firm on their 2016 maintenance requirements that are near last year’s levels. However, this time last year, there were many projects on the books to support industry projects related to the crude by rail boom. As we all know, that business has been impacted tremendously by falling oil and natural gas prices. That said, we are hopeful for a rebound on the commercial side of our business, and that the economy gets a boost sometime soon.”

Concrete crossties

A reduction in freight railroad expansion capital along with funding availability through the FAST Act could result in a mixed 2016 for the concrete tie sector. “The FAST Act is the first surface transportation bill in more than ten years that provides funding certainty,” says Steve Burgess, President, CXT, Inc. and Vice President Concrete Products, L.B. Foster. “This positions passenger rail for increased funds over a long-term period. We anticipate that our transit work will be as strong as ever with designbuild projects moving ahead, representing a good opportunity. But these are entirely project-driven, and timing could be somewhat fluid. At this point, maintenance-of-way activity doesn’t seem to be as adversely affected. We expect railroad maintenance spending to be consistent throughout 2016.” GIC USA supplies what it calls a new generation of highperformance concrete crossties. Ryan Kernes, Engineering and Technology Development Manager, says the company’s crosstie design reduces the stress state within the tie by creating a more uniform distribution of prestress forces. Additionally, the increased bearing area at the rail seat reduces rail seat deterioration, which reduces crosstie life-cycle cost. “The need for increased efficiency and innovative solutions grows as the soft market restricts the amount of infrastructure investment,” says Kernes. “GIC will capitalize on growth opportunities by understanding customer needs and demonstrating the technical and economic benefits of GIC crosstie designs and manufacturing processes. 2016 will provide good opportunities for GIC to prove the efficiency of its concrete crossties through projects on freight and passenger lines.” RAIL.ONE USA Corp. Chief Sales Officer Ludwig Schöll reports that concrete tie demand could be up to one-third lower than last year, depending on the railway. “The loss of business can potentially only be compensated with adjustments in output performance,” he says. “Furthermore,


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March 2016


railroads ask for a more diversified product range to optimize use of concrete ties in existing infrastructure. For RAIL. ONE, [this is] a positive signal. Wider use of concrete ties presents interesting opportunities to enter into special applications with innovative solutions, such as urban transportation track systems.” Rocla Concrete Tie, Inc., will begin production at two new facilities this year in Fort Pierce, Fla., and Tucson, Ariz. “Overall volumes have softened, with Class I railroads cutting back on budgets,” says Brett Urquhart, Vice President Business Development. “Typically, concrete ties are used in expansion and new track projects, so we do see fluctuations during times when railroads cut their spending.” Composite crossties

Composite tie manufacturers are more bullish toward 2016 thanks to strong 2015 orders and the use of their products in maintenance projects rather than expansion projects. Cory Burdick, Vice President-Rail Division at AXION International Inc., says 2016 is showing steady and growing demand for the company’s ECOTRAX® crossties. “Current orders have us at capacity through Q2 of this year,” he says. “We are aware of the capex reduction by Class I’s. However, 99% of AXION’s ECOTRAX ties are used in Class I maintenance programs that have not taken as big a hit,

and we see steady demand related to maintenance over the course of this year and in the future. AXION continues to see strong and growing demand from public transits, including a recently awarded 25,000-tie contract from New Jersey Transit, one of AXION’s largest transit projects to date. Public funds tend to have a green initiative for sustainable, long-lasting products, and our ties are sought out by agencies for those reasons. The specialty application market for ECOTRAX ties continues to be strong as well, for applications such as tunnels, turnouts and road crossings.” LT Resources, Inc. has been supplying AREMA Standard Engineered Composite Ties to its customer base since 1999. The company will continue to provide composite crossties, switch ties and bridge ties to the U.S., Canadian and Mexican markets through its exclusive distributorship with American TieTek. “We’re confident the use of composite ties will continue to increase, based on heightened interest in sustainable, reliable, cost-effective composite products” says Linda Thomas, President of LT Resources. “TieTek® ties are performing well for Class I railroads, transits, short line railroads, ports, industries and military facilities, and have been accumulating tonnage in TTCI’s FAST (Facility for Accelerated Service Testing) since 2000—longer than any other composite tie, with more than two billion gross tons accumulated to date.” RA


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March 2016 Railway Age 43


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conference topics • Express Operations on Hudson-Bergen Light Rail • Calgary Transit C Train Expansion • Scheduling Zone Expresses on SEPTA’s Norristown High Speed Line • Ontario’s Kitchener-Waterloo ION LRT • Alternative Vehicle Technology for FRA-Regulated Operations • NJ Transit River LINE/Conrail Extended Temporal Separation • Signalization and its Impact on Operations

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LA connections

With demand rising for its highly integrated rail transit system, the Los Angeles MTA surges ahead with expansion programs and vehicle upgrades. By WILLIAM C. VANTUONO, Editor-in-Chief


his is the city. Los Angeles, California. The City of Angels. The Automobile Mecca. The place that helped give rise to the words “smog” and “urban sprawl.” The city that once was home to one of the largest surface-running rail transit systems in the world, the Pacific Electric, until it was torn up and replaced with diesel-powered buses, co-existing with a growing mass of private automobiles that over time turned the city’s roads and highways into parking lots on steroids—which added to the smog. A word about smog, a particularly nasty air pollutant: The word “smog” was coined in the early 20th century as a combination of the words smoke and fog to refer to “smoky

fog.” Smog was then intended to refer to what was at times called “pea soup fog”—visible air pollution composed of nitrogen oxides, sulfur oxides, ozone, smoke or particulates, and less-visible pollutants including carbon monoxide, CFCs and radioactive sources. Smog is derived from coal, vehicular and industrial emissions; forest and agricultural fires; and photochemical reactions of these emissions. Smog, as inhaled in Los Angeles, is derived from vehicular emissions and industrial fumes reacting in the atmosphere with sunlight to form secondary pollutants that also combine with primary emissions to form photochemical smog. Atmospheric pollution levels in Los Angeles are increased by inversion, which traps pollution close to the ground. It is usually highly toxic to humans. March 2016 Railway Age 47

la connections

Smog these days isn’t as bad a problem as it once was in LA. Due to advancements in pollution controls, vehicular emissions are significantly less than when LAPD Sgt. Joe Friday and Officers Reed and Malloy were protecting and serving the public, even though traffic congestion has gotten worse. And LA, specifically, the Los Angeles County Metropolitan Transportation Authority (Metro), has taken great strides and invested billions of public funds to restore the city’s once-vast network of surface rail transit lines, adding two subway lines in the process. Today, Metro Rail—modern LRT (light rail) and rapid transit (“heavy rail”)—carry nearly 350,000 people on an average weekday, on six lines: the Blue Line, opened in 1990, an LRT running between Downtown Los Angeles and Downtown Long Beach; the Red Line, opened in 1993, a subway running between Downtown LA and North Hollywood; the Purple Line, opened in 1993, a subway running between Downtown LA and the Mid-Wilshire district (and shared with the Red Line); the Green Line, opened in 1995, an LRT running between Redondo Beach and Norwalk, largely in the median of the 105 Freeway (and providing indirect access to Los Angeles International Airport via shuttle bus); the Gold Line, opened in 2003, an LRT running between East LA and Pasadena via Downtown LA, with an extension to Azusa scheduled to open March 5, 2016; and the Expo Line,

opened in 2012, an LRT running between Downtown LA and Culver City, with an extension to Santa Monica scheduled to open May 20, 2016. Many of the oldest vehicles in the Metro fleet are undergoing replacement or rebuilding. Kinkisharyo is currently supplying 174 new LRVs; a builder is being sought for rehab of 52 additional cars. As well, Metro plans to overhaul the entire Breda-built rapid transit fleet, and order up to 78 more LRVs within the next five years. EXPO Extension and Regional Connector

Metro’s 6.6-mile Expo Line extension will open between Culver City and Santa Monica on May 20. Described as the first rail transit line to the far west side of Los Angeles in 63 years—since Pacific Electric streetcars were removed from service in 1953—the Expo Line Phase 2 extension is expected to provide an alternative to the congested Santa Monica Freeway. The trip between 7th/Metro Center in Downtown LA and the Downtown Santa Monica Station is expected to take 46 minutes. The current Expo Line (Phase 1) covers 8.5 miles between 7th/Metro Center in Downtown LA and Culver City; the extension adds seven stations: Palms, Westwood/Rancho Park, Expo/Sepulveda, Expo/ Bundy, 26th/Bergamot, 17th Street/SMC and Downtown Santa Monica.

BUILDING EXPECTATIONS OCS and Traction Power | Train Control and Signals | Communications and Security SCADA and Systems Integration | Trackwork and Facilities 48

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March 2016

la connections

The Expo Line is named after Exposition Boulevard, which it runs alongside for most of its route. It largely follows the former Pacific Electric Santa Monica Air Line right-of-way that was used by Pacific Electric streetcars and Southern Pacific freight trains. The SP, prior to merging with Union Pacific, sold the right-of-way in the early 1990s to the Los Angeles County Metropolitan Transportation Authority, which wanted to preserve the corridor for possible future use as a rail transit line. Expo Line construction was accomplished in two phases, based on funding availability. Phase 1 broke ground in 2006 and opened to Culver City in 2012, the same year that primary construction began on Phase 2. The Regional Connector Transit Corridor (also known as the Regional Connector, Downtown Connector or Downtown Light Rail Connector) is an under-construction, belowground LRT through Downtown LA that will connect the Blue and Expo lines to the Gold Line, allowing a one-seat ride between the Blue and Expo lines’ current 7th Street/ Metro Center terminus and Union Station, which hosts Amtrak intercity and Metrolink regional/commuter trains. Once the Regional Connector is completed, the Gold Line’s Eastside leg will be connected to the Expo Line, which by that time should be running between Downtown LA and Santa Monica. Concurrently, the Gold Line’s Northern leg

through the San Gabriel Valley will be joined with the Blue Line, creating what will be the longest LRT line in the U.S. Names and/or colors for these new lines have not been officially announced, but it is possible that the current Expo Line/Gold Line Eastside leg will become the new Gold Line, and the Blue Line/Gold Line Northern leg will become the new Blue Line. Under a proposed system in which each Metro Rail and BRT (bus rapid transit) line would be assigned a letter and a color, the current Expo Line and the southern leg of the current Gold Line would be combined into the gold-colored Line E, retaining elements of the identities of both. Groundbreaking for the Regional Connector Transit Corridor occurred on Sept. 30, 2014, and the new line is expected to be in service by early 2020. A new universal smartcard fare collection system called TAP (Transit Access Pass) was introduced in early 2010. The TAP smartcard allows bus and rail passengers to literally “tap” their cards on the farebox. The automated system will eventually be implemented on eleven other LA County transit operators, and should replace the EZ Pass, which allows travel among these transit agencies for one monthly price. Riders from LA’s surrounding cities and communities will be able to travel across the county, switching from one transit operator’s system to another using one smartcard to pay for fares. RA

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North America’s leader in Track and Transit & Systems construction and maintenance services March 2016 Railway Age 49



High profile The Greenbrier Companies, Inc. has promoted two senior-level executives to new positions. CFO Mark J. Rittenbaum, has been promoted to the newly created position of Executive Vice President, Commercial, Leasing and Finance. Lorie L. Tekorius, Senior Vice President and Treasurer, has been promoted to Senior Vice President, CFO and Treasurer. Both report to Chairman and CEO William A. Furman. In his newly created position, Rittenbaum will shift his primary focus to commercial activities, with particular emphasis on Rittenbaum new railcar sales, leasing and integration/enhancement of Greenbrier Co. customer service design. Senior commercial officers William Glenn and Brian Comstock, as well as Jim Sharp, President of Greenbrier’s Leasing and Management Services business, will report to Rittenbaum, who will chair a newly created Executive Committee reporting to Furman.

April 11, 2016

Caltrain—Michael Burns, who retired as the Chief Executive Officer for the Santa Clara Valley Transportation Authority in 2014, will take the reins of the Caltrain Modernization Program. Burns was appointed Interim Chief, Caltrain Modernization Officer. He began his new role on Feb. 8. Chicago South Shore & South Bend Railroad Co.—Todd Bjornstad, formerly the General Manager of the Rapid City, Pierre & Eastern Railroad (RCP&E), has been named President. He will succeed Andrew C. Fox, who will assume the role of CEO for a transitional period, after which he will join CSS&SB parent company Anacostia Rail Holdings. EverBank Commercial Finance— Michael Fuoti hired as Business Development Manager. In this role, he will focus on originating equipment and infrastructure asset financing opportunities in and around the rail, marine and intermodal sectors. Metropolitan Transit System— Michael Barletta, former San Diego County Sheriff’s commander, has been hired to oversee all field security and enforcement operations. National Railroad Construction and Maintenance Association— Rick Ebersold, President of Herzog Services, appointed to fill a temporarily open seat on the NRC Board. 50

Railway Age March 2016

Parsons—Michael W. “Mike” Johnson appointed President of the company’s Infrastructure business unit. RTR Technologies—Kevin Clyne appointed Vice President of Sales. Wi-Tronix, LLC—Chad Jasmin, formerly the company’s Director of Sales, will lead Wi-Tronix’s newly formed Customer Strategy department as Vice President. He takes over for Donald D. Graul, who will continue as President of Parsons Construction

100 YEARS AGO in

March 1916 How prosperous are the railways, in fact? The railways of the United States are much more prosperous than they were a year ago. In fact, they are more prosperous than at any time within the past three years. But the degree of their prosperity is being greatly exaggerated. The exaggeration is unfortunate because it encourages the belief that the roads can afford to increase wages and incur other additional expenses, and do not need further increases in rates or other forms of amelioration of the regulation applied. It is, therefore, desirable that the facts regarding present earnings, expenses and net return should be accurately and fully presented.

Chicago Railroad Mechanical Association, Canadian National Railway Golf Outing Odyssey Golf Course and Banquets, Tinley Park, Ill. Contact: Ken Derby, thecrma1988@gmail.com Website: www.thecrma.org

April 27-28, 2016 Railway Age/RT&S Light Rail Planning, Engineering and Operations Conference Philadelphia Marriott Downtown, Philadelphia, Pa. Website: railwayage.com/lightrail

May 10, 2016 Western Railway Club Dinner Union League Club of Chicago Contact: wrclub13@comcast.com

June 6-7, 2016 Railway Age Second Annual Rail Insights Conference Hotel Allegro, Chicago, Ill. Website: railwayage.com/ railinsights

June 14-16, 2016 International Crosstie & Fastening System Symposium Newmark Civil Engineering Lab, Urbana, Ill. Contact : crosstie-conf@illinois.edu Website: http://railtec.illinois.edu/ Crosstie/2016/crossties.php

June 19-22, 2016 APTA Rail Conference Phoenix, Ariz. Website: apta.com

June 28-30, 2016 RSSI 56th Annual C&S Exhibition Gaylord Texan Resort Grapevine, TX Contact: mike@rssi.org Website: www.rssi.org

Products Stainless steel pressure switches offer options

D.A.S. expands lineup of railroad track indicators D.A.S. Rail Enterprises, makers of the Switchrite line of products, has expanded its lineup of railroad track indicators. The new D-200 model is the latest in railroad derail indicators. The D-200 Switchrite will only change colors when the derail is activated, not when the lock is removed from the derail. The D-200 can be made with any bi-color combination of red, blue, green, amber, and white. All Switchrite products use reflectors as their primary source of signal, but LED enhancement is available on all models. For more information visit www.switchrite.com.

Ashcroft® A-Series 316L stainless steel pressure switches now offer a greater selection of process and electrical connections. With the addition of male and female ½ NPT and 37° flare pressure fittings, both the watertight and explosion proof versions can be easily installed in a wider variety of applications. Additional electrical conduit fittings improve connection options while NACE compliant piston seals round out compatibility with sour gas applications. With expanded pressure ranges, the A-Series switch can now control pressure up to 15,000 psi. For more information visit www.ashcroft.com.

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March 2016 Railway Age 51

We supply new and relay rail & OTM as well as turnouts and switch material for new track construction, maintenance, and emergency repairs. We manufacture 5/8” x 6” track spikes. Our locomotive division performs routine inspections and maintenance along with major repairs and complete rebuilds for modern and older locomotives. We will always work to find the best material to meet your demands and budget.

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Railway Age March 2016

New and reconditioned switch material for complete turnouts or replacement.

Products Wireless load-out management system enhances safety, increases efficiency Control Chief Corporation’s latest locomotive-based offering combines the flexibility of its transportable MU&Go®plus+™ system with the safety and convenience of a pedestal mounted console transmitter located in the load-out control room. “With this wireless solution, we are able to take the operator out of the cab of the locomotive and have them positioned in the load-out control room, optimizing personnel safety and efficiency throughout the entire process,” states Dan Sipko, Rail Applications Specialist at Control Chief. “This solution addresses safety concerns that arise from voice-radio miscommunication between the load-out and locomotive operators. It also provides the load-out operator an ‘eye in the sky’ perspective, allowing them to place the locomotive exactly where it needs to be, reducing time wasted re-positioning of cars due to overshoots leading to coupling slack issues,” says Sipko. The MU&Go®plus+™ system is a transportable platform that can be easily installed on any MU equipped locomotive in fifteen minutes or less. This is an ideal solution for many terminals that utilize leased locomotive power for their operation. Control Chief’s Load-Out Management Solution is PLC-based and incorporates a customized HMI (Human Machine Interface) for real-time operational data from the locomotive as well as control of any ancillary devices such as car shakers, rotary dumpers and other site-specific equipment. Dave Tenney, Locomotive Product Manager from Control Chief, adds, “Having the locomotive operator in the control room allows them the ability to monitor feed and/or dump cycles throughout the process. The inherent logic of the system also lends itself for site specific configuration of ‘Permissive’ and ‘Inhibit’ safeguards restricting inadvertent movement of the locomotive during the dump process.” Load-out sites employing this technology have proven they can typically process cars at a similar efficiency to that of a high-end car positioning system at a considerable cost savings. For more information on Control Chief’s Loadout Management Solution visit www.controlchief.com.

Ad Index Company

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Alstom Transport SA





Birmingham Rail & Locomotive





Chet’s Shoes





Danella Rental Systems, Inc.




Dixie Precast





FreightCar America





Georgetown Rail Equipment Co.

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Herzog Railroad Services, Inc.





Holland Co.






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Koppers, Inc





L B Foster Company









LT Resources




42 16




LTK Engineering Services




MAC Products





Nord-Lock, Inc./Superbolt, Inc.











618-242-8519 sales@nre.com

19, 33

Progress Rail Services




Railquip Inc





Rails Co.






28-29 5

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16, 30, C3



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Soft Rail




VTG Rail







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Willamette Valley Company




48-49 17


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

March 2016 Railway Age 53

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

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March 2016 Railway Age 55

Financial edge DAVID NAHASS

“Slow and steady growth, positive and healthy”


ear-end 2015 saw the purchase of General Electric Railcar Services, one of the largest of the operating lessor companies that lease railcars to their customers on primarily shorter terms. Wells Fargo Rail (formerly First Union Rail) purchased the majority of the cars and locomotives, and Union Tank Car Company purchased the tank railcars and railcar repair shops. This is a dramatic change in the railcar leasing marketplace. I had a chance to sit down with Wells Fargo Rail President Barbara Wilson and ask her about the acquisition, the outlook for the company and how she views today’s railcar leasing market. Financial Edge: Post-GE acquisition, what’s the size of WFR? Barbara Wilson: The acquisition of GE Railcar Services on Jan. 1, 2016 allowed us to expand our available fleet of rail equipment by more than 77,000 railcars and 1,000 locomotives. We rebranded the company to Wells Fargo Rail. Our fleet available for lease now totals more than 174,000 railcars and 1,800 locomotives. We own fewer than 10,000 tank cars but look forward to growing that portion of our fleet. In addition, we manage more than 20,000 railcars on operating leases for other owners. FE: To which market segments do you feel is WFR particularly exposed right now? Is that exposure something that immediately begins to require active management, or as a result of the overall scale of WFR, do individual market segments not move the needle in the way they used to in the past? BW: Our present railcar fleet diversification largely mirrors the diversification of the North American railcar fleet. Therefore we do have meaningful exposure to coal, sand, grain and centerbeams. As you know, the strong U.S. dollar has negatively 56

Railway Age

March 2016

impacted virtually all commodities that get exported. We see weakness in the volumes of those commodities (steel, scrap, grain etc.) and therefore reduced demand for railcars to move those commodities. We have a very small tank car fleet, and our Packing Group 3 tank car fleet consists of fewer than 2,500 cars, so our exposure to the new tank car design regulations is very limited. Our locomotive operating lease fleet consists primarily of four-axle road and switcher units. Presently there is some weakness in demand for those units due to the decrease in rail freight volumes.

We are clearly experiencing significant headwinds in the business. FE: In what markets does WFR maintain limited exposure? Do those markets, now in retrospect, offer you vindication vs. the peer (or previously peer) group that is also working to grow? BW: We are clearly underweighted in tank cars. That is because we entered that market late and were very selective in the equipment we acquired. Today we see the tank car market as very attractive. FE: GE had made market noise for years about selling its operating lease fleet, and throughout your career you had participated in a number of evaluations of that fleet. What made the final push successful this time around? BW: We were fortunate that in April 2015 the management and board of directors at GE corporate decided to

exit the financial services business and focus on industrial technology businesses. Once we saw the detail and the quality of the GE Rail fleet, we knew it would be a complementary and accretive acquisition. With a significantly larger inventory of assets, we are much better positioned to have the railcars and locomotives needed by our customers. FE: Will the market see some large offerings of excess product from the WFR to begin rebalancing the fleet or to reduce exposure to certain markets? BW: The integration of the GE Rail fleet into our legacy fleet will take some time. By the second half of this year we will be in a much better position to assess our fleet mix and answer the question on future asset sales. FE: How do you see the 2016 market for operating lessors? Are we headed into a cyclical downturn in rail? BW: Rail equipment demand in the aggregate tends to follow railcar loadings in the aggregate, and 2016 is off to a soft start for both. Crude oil and sand shipment volumes are down meaningfully due to weakness in the energy space, and coal volumes remain depressed due to numerous new regulations combined with mild weather. Add in the strong U.S. dollar, which has depressed all exports, and we are clearly experiencing significant headwinds in the business. However, significant investment in the petrochemical space is providing solid demand for plastic pellet cars that we expect will continue for the next several years. The reality is that, in the operating lease market, our leases typically are several years in length, so we do not feel the immediate impact of a weak market in the utilization (and earning power) of our equipment. (The full version of this interview is posted on the Railway Age website, www.railwayage.com.)

Weâ&#x20AC;&#x2122;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 1-1-15 229 Locomotive Safety Standards 231 Safety Appliance Standards 232 Brake System Safety Standards Update 10-5-15


Mech. Dept. Regs.


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49 CFR Part 223, Safety Glazing Standards: The FRA is revising and clarifying existing regulations related to the use of glazing materials in the windows of locomotives, passenger cars, and cabooses. This final rule reduces paperwork and other economic burdens on the rail industry by removing a stenciling requirement for locomotives, passenger cars, and cabooses that are required to be equipped with glazing. This final rule also clarifies the application of the regulations to older equipment and to the end locations of all equipment to provide more certainty to the rail industry and more narrowly a dress FRA's safety concerns. In addition, this final rule clarifies the definition of passenger car, updates the rule by removing certain compliance dates that are no longer necessary, and, in response to comments on the proposed rule, modifies the application of the regulations to passenger cars and cabooses in a railroad's fleet that are used only for private transportation purposes and to older locomotives used in incidental freight service.This final rule is effective April 11, 2016.

Part 229: Locomotive Safety Standards The Locomotive Safety Standards cover the laws governing inspections and tests, brake system, draft system, suspension, electrical, cabs and cab equipment plus more! Softcover. Spiral bound.

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

Update effective

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


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FRA Part #

40 219

233 234 235 236 238 239

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


9-2-14 Signal and Train Control Systems 5-28-15 10-21-14 10-21-14 2-5-16 Passenger Safety Standards 7-29-14






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

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

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Part 240â&#x20AC;&#x201C;Qualification and Certification of Locomotive Engineers This book affects locomotive engineers, trainers and supervisors. The rule is largely based on recommendations made by an advisory committee comprised of rail industry and labor representatives. This final rule will clarify the decertification process; clarify when certified locomotive engineers are required to operate service vehicles; and address the concern that some designated supervisors of locomotive engineers are insufficiently qualified to properly supervise, train, or test locomotive engineers. 162 pages. Spiral bound.

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Part 242: Conductor Certification The Conductor Certification rule (49 CFR 242) outlines details for implementing a Conductor Certification Program. The FRA implemented this rule in an effort to ensure that only those persons who meet minimum Federal safety standards serve as conductors, to reduce the rate and number of accidents and incidents, and to improve railroad safety. Softcover. Spiral bound. 124 pages.


Combined FRA Regulations

Compliance Manuals BKINFRA

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March 2016 Railway Age  

March 2016 Railway Age