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May 2014 RAILWAY AGE 1
From the Editor WILLIAM C. VANTUONO
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Newspeak for tank cars
ewspeak, the fictional language in George Orwell’s novel 1984, is described as “a controlled language created by the totalitarian state as a tool to limit freedom of thought, and concepts that pose a threat to the regime, such as freedom, self-expression, and individuality. The language follows, for the most part, the same grammatical rules as English, but has a much more limiting and constantly shifting vocabulary.” For example, words with negative meanings are removed as redundant, so “bad” becomes “ungood.” Words with comparative and superlative meanings are also simplified, so “better” becomes “gooder,” and “best” becomes “goodest.” Intensifiers can be added, so “great” becomes “plusgood,” and “excellent” and “splendid” become “doubleplusgood.” The language of railroading is complex, full of arcane technical terms and acronyms known mostly to railroaders.You would think that those in charge of regulating the industry are at least somewhat familiar with “our” language, but that isn’t always the case. Recently, we came across an indication that a railroad version of Newspeak may be in the works, as Contributing Editor David Thomas describes: “While construction of the venerable general-purpose tank car has evolved over decades, regulators in the U.S. and Canada have failed to keep up with fresh official designations. Thus, ‘DOT 111’ applies to so many actual designs that the label has become meaningless, even to the regulators themselves. In her announcement of the phase-out of two classes of DOT 111s (immediately for those few without bottom reinforcement, and the rest by 2017; see story on pp. 14-15), Canadian Transport Minister Lisa Raitt introduced a new set of definitions to deal with tank car design. “The 5,000 cars without bottom reinforcement she termed ‘old, old tank cars.’ The others were merely ‘old tank cars.’ Turning to the future, she said the
government is adopting into regulation the ‘new tank car’ (known as CPC-1232 to the industry, though officially still a DOT 111). The next-generation cars being discussed by PHMSA and the FRA, in Raitt’s lexicon, will be the ‘new, new tank cars.’” Let’s take this a bit further. If regulators allow pre-CPC-1232 cars to be retrofitted to new standards, will they be “new, new, old” tank cars? If a CPC-1232 car is upgraded to new standards, does it become a “new, new, new” tank car? “Un-” is a Newspeak prefix used to make a word negative, since there are no antonyms in Newspeak. For example, “warm” becomes “uncold.” “-ful” is a Newspeak suffix used to turn another word into an adjective. For example, “rapid” would be rendered as “speedful.” “-wise” is a Newspeak suffix used to turn another word into an adverb. For example, “quickly” would be “speedwise.” So, if “old, old” tank cars are quickly phased-out, I suppose they would be called “speedful untank cars.” Or would it be “speedwise untank cars”? I unknow. Seems to me that we’re better off sticking with our arcane technical terms, acronyms, and complex nomenclature. At least we know what we’re talking about. In Newspeak, “plus-” is an intensifier, in place of “more” or the suffix “-er.” Thus, “great” or “better” becomes “plusgood.” “Doubleplus-” further intensifies “plus-,” so “doubleplusgood” is used in place of “excellent” or “best.” In conclusion, I doubleplusknow that the railroads will do doubleplusgood to speedfuluntank old, old cars. We will have new, new tank cars. This is good. I hope I haven’t confused anyone with this doublespeak. That would be ungood.
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May 2014 RAILWAY AGE 3
Industry Indicators SHORT LINE AND REGIONAL TRAFFIC INDEX
FOUR WEEKS ENDING MARCH 29, 2014
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
MAR. ’14 81,634 3,177 39,009 25,585 122,094 59,431 453,071 6,261 14,417 23,979 17,696 14,923 41,667 16,343 71,851 83,294 18,933 31,013 11,742 20,577 1,156,697
MAR. ’13 67,362 3,661 35,437 26,193 120,287 54,907 443,422 6,380 14,285 23,600 19,041 15,145 42,541 18,945 72,199 78,840 17,210 29,187 11,802 17,625 1,118,069
% CHANGE 21.2% -13.2% 10.1% -2.3% 1.5% 8.2% 2.2% -1.9% 0.9% 1.6% -7.1% -1.5% -2.1% -13.7% -0.5% 5.6% 10.0% 6.3% -0.5% 16.7% 3.5%
Chemicals Coal Crushed Stone / Sand / Gravel Food & Kindred Products Grain Grain Mill Products Lumber & Wood Products Metallic Ores Metals & Products Motor Vehicles & Equipment Nonmetallic Minerals Petroleum Products Pulp, Paper & Allied Products Stone, Clay & Glass Products Trailers / Containers Waste & Nonferrous Scrap All Other Carloads
COMBINED U.S./CANADA RR
FOUR WEEKS ENDING MARCH 29, 2014
INTERMODAL MAJOR U.S. RAILROADS BY COMMODITY TRAILERS CONTAINERS TOTAL UNITS
MAR. ’14 127,530 898,377 1,025,907
MAR. ’13 112,898 820,348 933,246
% CHANGE 13.0% 9.5% 9.9%
7,976 206,302 214,278
6,129 194,060 200,189
30.1% 6.3% 7.0%
135,506 1,104,679 1,240,185
119,027 1,014,408 1,133,435
13.8% 8.9% 9.4%
COMBINED U.S./CANADA RR TRAILERS CONTAINERS TOTAL COMBINED UNITS
Source: Monthly Railroad Traffic, Association of American Railroads
AVERAGE WEEKLY U.S. RAIL CARLOADS: ALL COMMODITIES (not seasonally adjusted)
% CHANGE -1.1% -9.9% 9.0% -3.5% 14.7% 11.1% 1.1% -11.2% 6.2% 2.9% 19.3% -4.9% 13.2% 4.4% 5.5% 4.7% -0.5%
MARCH 2014 - 378,177 MARCH 2013 - 369,100 290,000 300,000 310,000 320,000 330,000
340,000 350,000 360,000 370,000 380,000
Copyright © 2014 All rights reserved.
RAILROAD EMPLOYMENT, CLASS I LINEHAUL CARRIERS, MARCH 2014 (% CHANGE FROM MARCH 2013)
CANADIAN RAILROADS TRAILERS CONTAINERS TOTAL UNITS
ORIGINATED MAR. ’13 47,805 25,943 25,819 12,727 22,383 6,729 10,903 9,377 22,155 11,666 2,244 2,428 17,703 11,769 40,706 10,799 87,944
TOTAL CARLOADS, MARCH 2014 VS. 2013
CANADIAN RAILROADS ALL COMMODITIES
ORIGINATED MAR. ’14 47,301 23,368 28,141 12,278 25,664 7,474 11,021 8,326 23,527 12,004 2,677 2,308 20,044 12,289 42,931 11,304 87,520
Transportation (train and engine) 66,243 1.01%
Executives, Officials, and Staff Assistants 9,842 0.64%
Professional and Administrative 13,972 (-1.36%)
TOTAL EMPLOYEES: 162,968 % CHANGE FROM MARCH 2013: (-0.06%) Transportation (other than train & engine) 6,687 (-0.98%)
Maintenance of Equipment and Stores 29,718 (-1.07%)
Maintenanceof-Way and Structures 36,506 (-0.64%)
Source: Surface Transportation Board
EMPLOYMENT RISES FROM PRIOR-MONTH PERIOD Figures released by the Surface Transportation Board show Class I railroad employment registered only a miniscule decrease of 0.06% in mid-March 2014 from the year-earlier period, and rose 0.40% from February 2014. Only two categories grew over year-ago levels: Transportation (train and engine), up 1.01%, and Executives, Officials, and Staff Assistants, up 0.64%. All categories except Executives, Officials, and Staff Assistants scored a monthly gain. 4
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Freight car orders, backlogs soar Freight car orders in 2014’s first quarter soared about 38% from fourth-quarter 2013, to 24,050 units, pushing builder backlogs up around 12% to 81,927 units, according to the most recent Railway Supply Institute American Railway Car Institute (ARCI) figures. In this year’s first quarter, builders delivered 13,954 cars, a 12% drop from fourth-quarter 2013’s 15,776 units, as the industry backlog grew. ARCI figures indicated that a relatively flat backlog prevailed through 2013’s second through fourth quarters. Car orders have been on a roller-coaster ride since 2010, starting with a low of 29,992 units, tripling to 89,073 units in 2011, before settling down somewhat to 55,046 cars in 2012 and 66,569 in 2013. The growing backlog is not attributable to tank cars, which as of late last month accounted for around 62% of the total, down significantly from last year’s 86%. “First-quarter industry railcar data support our thesis of a rising non-tank-car backlog,” said Sterne, Agee & Leach analyst Sal Vitale. “Total backlog increased 12%, driven by a 79% quarter-over-quarter increase in the non-tank-car backlog, more than offsetting a 9% quarter-over-quarter decline in the tank car backlog. The first-quarter data are consistent with our thesis of a broad-based recovery in non-tank railcar orders after a lull in 2012 and early 2013. “The first quarter was the fourth straight double-digit quarter-over-quarter increase in the non-tank-car backlog after six quarters of decline. From thirdquarter 2011 through first-quarter 2013, the non-tank-car backlog fell 72%. Since then, the non-tank-car backlog more than tripled from 10,400 in firstquarter 2013 to 31,400 in first-quarter 2014, largely due to a six-fold increase in covered hoppers from first-quarter 2013.”
New oil pipeline will connect with BNSF Basin Transload LLC, a 60%-owned subsidiary of logistics and marketing company Global Partners LP that transloads crude oil to BNSF Railway, has executed a pipeline connection agreement with Tesoro High Plains Pipeline Company LLC, a subsidiary of Tesoro Logistics LP. Tesoro Logistics will build, own, and operate a new 4.1-mile pipeline from its Dunn Center Station to Basin 6
Transload’s facility in Beulah, N.Dak. Crude oil is expected to begin flowing to the Beulah destination in the fourth quarter of 2014, “enhancing the facility’s ability to source product from a broader region,” Global Partners said. The Beulah facility includes 280,000 barrels of storage capacity and connects via direct long-haul CBR service to the West and Gulf Coasts via BNSF Railway.
The Federal Railroad Administration last month announced its intention to issue a Notice of Proposed Rulemaking requiring two-person train crews on crude oil trains and establishing minimum crew size standards for most main line freight and passenger rail operations. News of the proposed rule followed the deliberations of three Railroad Safety Advisory Committee (RSAC) Working Groups on Appropriate Train Crew Size, Securement, and Hazardous Materials Issues. All three Working Groups were created at the request of the U.S. Department of Transportation last summer in response to the LacMégantic disaster. The emergency meeting was held to evaluate and consider wide-ranging proposals to further enhance railroad safety, including the safe shipment of crude oil by rail. Two of the Working Groups produced recommendations that were adopted by the full RSAC for consideration in future rulemakings. However, they were unable to reach consensus on crew size, prompting the FRA to move forward with a rulemaking. “We believe that safety is enhanced with the use of a multiple-person crew—safety dictates that you never allow a single point of failure,” FRA Administrator Joseph C. Szabo said. “Ensuring that trains are adequately staffed for the type of service operated is critically important to ensure safety redundancy. We commend the RSAC’s efforts and will use the valuable input received to formulate a proposed rule that protects the public and recognizes the nuances of railroad operations.” While existing FRA regulations do not mandate minimum crew staffing requirements, current industry practice is to have two-person crews for overthe-road operations. The NPRM will most likely require a minimum of two people in the cab for most main line train operations, including those trains hauling crude oil. It is also expected to include appropriate exceptions.
William C. Vantuono
NPRM coming on two-person crews
Market Regional Connector Transit Project
Skanska/Traylor JV awarded LA Regional Connector contract Regional Connector Constructors, a joint venture of Skanska USA Civil West California District Inc., Traylor Brothers Inc., with Kiewit and Hatch Mott MacDonald, has been awarded a $927.2 million contract from LACMTA (Los Angeles County Metropolitan Transportation Authority) to design and build the Regional Connector Transit Project light rail line in downtown Los Angeles. LACMTA said Skanska/Traylor attained the highest overall ranking among four bidders, with the highest technical and evaluated pricing scores. Skanska/Traylor also told LACMTA it planned to complete construction 115 days early and would absorb the cost of any LACMTA- or subcontractor-caused delays.
North America CUMMINS INC.: Is now producing its Tier 4-compliant QSK19-R diesel engine (below), which will power new Nippon Sharyo DMU trainsets designed for transit and regional/ commuter services in North America. Contracts have been awarded to The six-cylinder, 19-liter QSK19-R produces 760 hp and meets Tier 4 specs.
Nippon Sharyo U.S.A./Sumitomo Corp. of America for 32 railcars, configured as either two- or three-car DMU trainsets with the 760 hp (567 kW)-rated engine installed under-floor in each railcar. The first DMU of 18 for Toronto’s Union Pearson Express is scheduled for delivery this year. Another 14 are for the Sonoma-Marin Area Rail Transit (SMART) rail line. Cummins said the QSK19-R is “the first railcar engine being produced in North America that is certified to meet Tier 4 Final ultra-low emissions standards set by EPA. The under-floor QSK19-R is the latest generation of the 19-liter, six-cylinder engine manufactured at our Seymour, Ind., Engine Plant.” MBTA: Awarded a $2.68 billion, eightyear commuter rail operations and
8 RAILWAY AGE May 2014
maintenance contract to Keolis Commuter Services. A lawsuit filed by competitor and former contractor MBCR accusing MBTA of refusing to “review MBCR’s formal protest in a timely manner” as of late April had no effect on the transition to Keolis. GREATER CLEVELAND REGIONAL TRANSIT AUTHORITY: Selected Protran Technology’s Protracker System for roadway worker protection. The system provides advance warning to roadway workers and train operators that a train is approaching a work zone, and also gives advance warning of dangers regarding mobile assets (hi-rail and maintenance-ofway equipment) and fixed assets (trespasser warning, rail neutral, catenary, and flood warning, etc.).
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LRS RAILWAYAGAPR2014.indd 1
4/22/2014 3:46:55 PM
Financial edge DAVID NAHASS
REF 2014: The locomotive landscape
elcome to Part Two of the Rail Equipment Finance 2014 update, where we’ll cover day three, which was devoted to trends in the locomotive marketplace and the changing regulatory and emissions compliance environment. As with the railcar days at REF, the “Power-Power-Power” day was positive and forward looking. There were discussions on the constantly changing EPA emissions landscape, and the future of the natural gas-powered locomotive and the implementation (and format) of what may be a game changer after 80-odd years of diesel fuel. In general, the locomotive market reflects continuing strength in the overall railroad market. There is renewed interest in third-partyowned and leased locomotives. Railinc’s David Humphrey summarized the North American locomotive fleet, which grew in 2013 by approximately 650 units. This corresponds to long-term market averages. Locomotives entering the market are roughly 70% a.c. powered and 70% have six axles. This has been the market’s trend for a few years. David Powell from Genesee & Wyoming gave us an overview of G&W’s worldwide operations. Powell discussed G&W’s operations in the U.S. (now including the acquisition of RailAmerica) and Australia. G&W achieved best-inclass safety performance and customer satisfaction in 2013. Powell discussed the deep involvement of G&W in the rulemaking process for alignment control couplers in older locomotives. That process is ongoing with major test programs accomplished and some work still to do. The program continued with presentations from three of the major locomotive and locomotive equipment OEMs. Tom Chenoweth from National Railway Equipment Co. discussed technical features of NREC product advancements
that address various performance characteristics of older d.c. locomotives in the North American fleet. Systems offered include a traction control system operating on an individual axle control principle, a computer based-operating control system, and electronic fuel injection system for older EMD locomotives. Jason Kuehn from Oliver Wyman presented a view of the locomotive marketplace with emphasis on the future of the natural gas locomotive and how demand is being driven by changes in emissions regulations. Kuehn
In general, the locomotive market reflects continuing strength in the overall railroad market. discussed natural gas as a locomotive fuel and LNG (liquefied natural gas) vs. CNG (compressed natural gas). Kuehn covered the looming Tier 4 emissions standards and its potential impact on North American natural gas locomotive demand. Len Baran from GE Transportation discussed GE’s view of the natural gas locomotive market and GE’s Tier 4 locomotive, which will be officially introduced next year. He also discussed supply and management of natural gas, and GE’s integrated system of locomotive management. Glenn Rees from Cummins Inc. discussed his company’s success in developing a Tier 4-compliant engine.
Cummins’ engine program extends from low horsepower levels (a few hundred hp) to more than 4,000 hp with the QSK95. Cummins has converted an existing Indiana Rail Road EMD SD90MAC using the QSK95 power system. Field tests begin this summer. Edward and Stuart Biggs from Biggs Appraisal presented North American locomotive production numbers for 2013 and offered projections for 2014. In 2013, EMD delivered approximately 220 locomotives (217 were a.c. units). EMD also fielded a small demonstration group of their P4 (four powered axles out of six total axles) locomotives. For 2013, GE shipped 425 a.c. locomotives, including 175 C4 units. (C4 is GE’s designation for four powered axle out of six total.) The program concluded with a discussion on the used locomotive marketplace and the differences between buyers and sellers on used locomotive values. National Railway Equipment Co. President Steven Beal, Railroad Appraisal Associates President Patrick Mazzanti, and Connell Finance Company Inc. Senior Vice President Ken O’Neill discussed valuations and trends in valuation for many different locomotive models. Although they noted some price erosion in older locomotives used in the short-term operating lease marketplace, most locomotives held their value remarkably well. They discussed high horsepower (4,000-plus) EMD and GE units built in the 1980s. For those considering investment, the panel suggested that SD70MACs from EMD have a lower current market value than the GE AC4400CW. Thanks to David Scott for his help in preparing this article. Scott is President of David Scott Consulting, LLC and a former executive of what is now Electro Motive Diesel. He puts together the agenda for day three at Rail Equipment Finance.
Update SUPPLY BRIEFS Wabtec: Record 1Q 2014 Wabtec Corp. reported record results for first-quarter 2014 and affirmed its 2014 guidance for earnings per diluted share of about $3.45, with revenues expected to be up about 15% for the year. First-quarter sales were a record $695 million, 13% higher than the year-ago quarter, due mainly to growth in the Freight Group. Income from operations was a record $122 million, or 17.5% of sales, compared to 16.8% in the year-ago quarter. Earnings per diluted share were a record 83 cents, which was 15% higher than the year-ago quarter. As of March 31, 2014, the company had cash of $295 million and debt of $451 million. Wabtec’s 2014 guidance is based on its first quarter results and outlook for the rest of the year, as well as its previously announced agreement to acquire Fandstan Electric Group, which is now expected to close in the second quarter.
GE will not buy Ansaldo STS GE said last month it sees no route for purchasing Ansaldo STS from parent Finmeccanica S.p.A. Said GE Europe President and CEO Nani Beccalli-Falco, “When things drag on for a long time it becomes difficult to conclude. The first time we looked at Ansaldo STS was ten years ago and we never concluded anything. There is no room to reach an agreement.” The Italian government owns roughly 30% of Rome-based Finmeccanica. Two years ago Finmeccanica announced its intent to sell its own 40% stake in Ansaldo STS, along with other assets, to cut debt.Ansaldo STS is the parent company of Pittsburghbased Ansaldo STS USA. GE has reportedly set its sights on acquiring Alstom’s energy sector, and is planning to offer $13 billion.
Railroads emerge from a tough winter with renewed momentum
he Class I railroads emerged from one of the coldest, harshest winters on record with overall strong first-quarter 2014 financials. Even those that registered year-overyear declines in revenues, traffic, and earnings received generally favorable reviews from Wall Street analysts with regard to how the remainder of the year will play out. Union Pacific reported 2014 first quarter net income of $1.1 billion, or $2.38 per diluted share, compared to $957 million, or $2.03 per diluted share, in first-quarter 2013, a 17% improvement. Operating revenues totaled $5.6 billion, up 7%; operating income totaled $1.85 billion, up 14%; the operating ratio of 67.1% improved 2.0 points, a first-quarter record. UP’s 7% operating revenue increase compared to $5.3 billion in firstquarter 2013. First quarter business volumes, as measured by total revenue carloads, increased 5% compared to 2013. Volume increased 16% in agricultural products, 10% in industrial products, 3% in coal, and 4% in intermodal. Automotive volume was flat; chemicals volumes were flat vs. 2013 as growth in base chemicals was offset by a reduction in crude oil shipments. Quarterly freight revenue increased 6%
compared to first-quarter 2013, driven by volume growth and core pricing gains, UP said. Quarterly train speed, as reported to the Association of American Railroads, was 24.5 mph, down 7% vs. firstquarter 2013. With net income of C$254 million or C$1.44 per diluted share, Canadian Pacific has posted “the best first quarter financial results in company history,” CEO E. Hunter Harrison announced. CP’s first-quarter 2014 net income was a 16% improvement over the C$217 million, or C$1.24 per diluted share, in the first quarter of 2013. Total revenues were C$1.5 billion, an increase of 1% over the prior-year quarter. Operating expenses decreased 4%, to C$1.1 billion. Operating income was C$423 million, an increase of 17%. The operating ratio was 72.0%, a 380 basis point improvement. “CP delivered solid results in a period that was severely impacted by extraordinary cold and severe winter weather conditions,” said Harrison. “In the face of such difficult operating conditions, I am particularly proud of the women and men of CP who remained on the job 24/7, to keep the railway operating. Despite a slow start to the year and the reduced capacity May 2014 RAILWAY AGE 11
“Despite a slow start to the year and reduced capacity, we have confidence in our ability to achieve our financial targets for 2014.” —CP’s Hunter Harrison that limited our ability to meet strong customer demand, we still have the utmost confidence in our ability to achieve our financial targets for 2014.” CSX reported net earnings of $398 million, or 40 cents per share, down from $462 million, or 45 cents per share, in the 2013 quarter. But that still beat Wall Street analyst consensus estimates of 38 cents per share. First-quarter revenue rose 2% to $3.0 billion “with strength in intermodal and merchandise markets more than offsetting declines in coal,” CSX said. But CSX’s operating ratio increased 520 basis points to 75.5%, which CSX attributed “primarily” to harsh winter weather conditions. CSX expects “modest full-year earnings growth on the strength of
broad-based merchandise and intermodal gains and an improving domestic coal environment. In addition, the company remains confident in its ability to sustain double-digit earnings growth and margin expansion for its shareholders in 2015 and beyond. The company expects to sustain a mid-60s operating ratio longer-term,” the railroad said. Coal volume and revenue that dropped 15% and 13%, respectively, in 2014’s first quarter were largely responsible for Norfolk Southern reporting lower net income and operating revenues and a slightly higher operating ratio, compared to the prior-year period. NS reported first-quarter net income of $368 million, or $1.17 per diluted share, compared with $450 million, or $1.41 per diluted share, earned in the same period of 2013, an 18.2% drop. (First-quarter 2013 net income included a $60 million, or $0.19 per diluted share, gain from a land sale.) Railway operating revenues were $2.7 billion, 2% lower compared with first-quarter 2013, and shipment volumes decreased 1%. Income from railway operations was $667 million, 3% lower compared with first-quarter 2013. Railway operating expenses were $2 billion, 1% lower than in the same period of 2013. The quarterly railway operating ratio was 75.2% vs. 74.8% in the same period of 2013. First-quarter coal revenues were $541 million, 15% lower compared with the same quarter of 2013, the result of a 13% volume decrease due primarily to lower utility and export shipments. General merchandise revenues were $1.6 billion, 1% higher than the same period last year, despite overall volume declining 1%. Increased
crude and liquefied petroleum gas shipments were offset by declines in automotive (–7%), metals/construction (–1%), and paper/forest shipments (–3%). Agricultural products were flat. Intermodal revenues improved 4%, to $596 million. Growth primarily in domestic business pushed traffic volume up 3% in the quarter compared with the same period of 2013. NS CEO Wick Moorman was cautiously optimistic that business will improve. “Following the extreme winter weather across the U.S. rail network which impacted first-quarter results, we are seeing a rebound in shipments across all of our business,” he said. “Our people responded admirably to meet the challenges of the harsh conditions, and we remain focused on delivering superior service to our customers.” Cowan and Company Managing Director and Railway Age Wall Street Contributing Editor Jason Seidl agreed with Moorman’s assessment. “Norfolk Southern is well-positioned to benefit from the positive macro trends and tightening truckload market,” he said. “The company’s intermodal segment, which makes up roughly half of its traffic, saw 4.0% revenue growth, which occurred via a 3.4% traffic increase and a 0.6% RPU (revenue per unit) improvement. While the intermodal revenue growth could not offset the coal revenue decline, this will change in coming quarters. Not only should intermodal volume growth accelerate due to the rollout of new lanes and the shift of freight from a capacityconstrained truckload market, but intermodal pricing should begin to see improvements given the recent spike in truckload rates. Indeed, up until this
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RAILWAY AGE May 2014
Photo courtesy Canadian Pacific
point, NS had not seen the full benefit of the truckload rate recovery because only 15% of its intermodal business is transactional. On the coal front, while export weakness does not seem to be going away anytime soon, the utility coal outlook has improved owing to weather-driven stockpile reductions and the expectation of continued strength in natural gas prices.” “The winter of a lifetime,” as described by CN President and CEO Claude Mongeau, bumped up CN’s first-quarter 2014 operating expenses and ratio compared to the year-ago quarter, but despite these challenges, the railroad posted gains in revenues, operating income, and net income. CN’s net income was C$623 million, or C$0.75 per diluted share, compared with net income of C$555 million, or C$0.65 per diluted share, for the yearearlier quarter. Excluding gains on rail line sales in both the 2014 and 2013 periods, first-quarter 2014 adjusted diluted earnings per share (EPS) increased 8% to C$0.66 from adjusted diluted EPS of C$0.61 in first-quarter 2013. Adjusted net income of C$551 million increased 6% over adjusted net income of C$519 million for the first quarter of 2013. Operating income increased 5% to C$820 million. Revenues increased 9% to C$2.7 billion million, revenue ton-miles grew by 5%, and carloadings increased 1%. CN’s operating ratio for the quarter deteriorated by 1.2 points to 69.6% from 68.4% the year before. Operating expenses for the quarter increased by 11% to C$1.87 billion, “mainly attributable to the negative translation impact of a weaker Canadian dollar on U.S.-dollardenominated expenses, operational challenges due to a harsh winter, increased fuel costs, and higher casualty and other expense,” CN said. “Although we report our earnings in Canadian dollars, a large portion of our revenues and expenses is denominated in U.S. dollars,” CN said. “The fluctuation of the Canadian dollar relative to the U.S. dollar resulted in a positive impact to net income of C$26
million (C$0.03 per diluted share) in the first quarter of 2014.” Revenues increased for petroleum and chemicals (23%), intermodal (12%), metals and minerals (7%), coal (7%), and grain and fertilizers (6%). Forest products revenues were flat, and automotive revenues declined by 4%. “The increase in revenues was mainly attributable to the positive translation impact of the weaker Canadian dollar; freight rate increases; higher freight volumes due to strong energy markets and market share gains, particularly in intermodal; and the impact of a higher fuel surcharge as a result of higher volumes,” CN said. Revenue ton-miles increased by 5% over the year-earlier quarter. Rail freight revenue per revenue ton-mile, a measurement of yield defined as revenue earned on the movement of a ton of freight over one mile, increased by 4% over the year-earlier period, “driven by the positive translation impact of the weaker Canadian dollar and freight rate increases, partly offset by an increase in the average length of haul,” CN said. Kansas City Southern reported net income in its 2014 first quarter of $94 million, or 85 cents per diluted share, slipping from $104 million, or 94 cents per diluted share, in the first quarter of 2013. But excluding the impacts of lease termination costs, foreign exchange rate fluctuations, and debt retirement costs, adjusted diluted earnings per share for first quarter 2014 was $1.05, compared with 89 cents in the first quarter of 2013, an 18% increase, KCS said. Operating income of $160 million dipped slightly from the $162.9 million KCS notched in the 2013 first quarter. Record revenue of $607 million, up 10% from the comparable 2013 period, was largely due to a 40% increase in Agriculture and Minerals, primarily due to an increase in grain volumes. Intermodal and Automotive sectors also contributed. KCS’s adjusted operating ratio for the quarter was 68.7%, a 1.8 point improvement from first quarter 2013.
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Update Crude by rail: Transport Canada clamps down
Trains carrying 20 cars or more of crude oil or ethanol must not exceed 50 mph under a new directive issued by Transport Canada last month, and that limit may be lowered for some locations after specific risk assessments for particular urban populations and sensitive assets such as water sources. Unmodified older DOT-111 (pre-CPC-1232) tank cars will be banned from Canadian rails after May 1, 2017. The industry’s so-far voluntary CPC-1232 specification that has governed tank car fabrication since late 2011 is being adopted as regulatory law, though that will be superseded by whatever new standard emerges from an ongoing U.S. Pipeline and Hazardous Materials Safety Administration/ Federal Railroad Administration rulemaking process. Canadian Transport Minister Lisa Raitt (above) also announced that the country’s established Emergency Response Assistance Plans (ERAPs) will be extended to cover trains with just a single carload of crude oil, ethanol, gasoline, diesel, or aviation fuel. Such ERAPs imply the pre-positioning of emergency response assets and trained personnel along the entire route and require the level of cooperation with emergency responders that municipalities in both Canada and the U.S. are demanding. The new regulations are a response to interim recommendations emerging from the investigation into the July 2013 calamity at Lac-Mégantic, for which Canada’s Transportation Safety Board (TSB) has yet to publish a final report. The new regulations were detailed in an Emergency Directive and a companion Ministerial Order. Raitt said Canada’s simpler regulatory process allows the country to act immediately with respect to tank car standards while waiting for the FRA and PHMSA to complete the consultations and deliberations required by U.S. regulatory practice. The Emergency Directive expires in six months and will be replaced by what emerges from the parallel Ministerial Order, which directs railways to devise permanent operating rules for hazmat cargo. Notably, the Ministerial Order goes further than the Emergency Directive by demanding that a speed restriction of just 40 mph must apply to any train in which even a single unmodified DOT-111 is carrying highrisk cargo. The interim Emergency Directive applies only to trains including 20 or more cars of any type loaded with hazardous materials. 14
RAILWAY AGE May 2014
Photo courtesy of THE CANADIAN PRESS/Adrian Wyld
Minister Lisa Raitt
Disparities between Canada’s regulatory system— essentially an extension of the government’s executive power—and the more consultative process required of the FRA and PHMSA, have disrupted the usual synchronicity of rail regulation across North America. Historical practice has been for Transport Canada to await FRA regulation and endorse it with matching rules. This time, Canada acted first, partly because Lac-Mégantic was a domestic disaster and because the country’s accident investigation legislation requires a government response within 90 days of any recommendation by the autonomous TSB. Consequently, Canada chose as an interim measure to absorb into regulation the industry’s voluntary CPC-1232 specification for tank cars built since October 2011, and to impose by law the voluntary speed restrictions urged upon U.S. railroads by the FRA. Transport Canada said the route selection measures included in the U.S. voluntary action are impractical in Canada, where there are few alternatives to the linear main lines that almost invariably run through the centers of the country’s towns and cities. Raitt said the tank car phase-out is faster than oil shippers wanted (though slower than Canada’s Class I’s would like). She said she was confident that carbuilders can achieve the objective of providing sufficient new and upgraded cars to meet demand. Regardless of the pace of fleet renewal in the U.S., Canada will bar any tank car not meeting CPC-1232 from Canadian rails after the May 2017 deadline. The most significant divergence from U.S. practice is the requirement for Emergency Response Assistance Plans covering trains carrying dangerous goods. ERAPs are a Canadian innovation implemented following the 1979 derailment and explosion of a train carrying chlorine and propane in a heavily populated corridor west of Toronto. The new regulations extend the requirement for ERAPs to crude oil and ethanol and to trains hauling just one car of such cargo instead of the multi-car consists previously targeted by ERAP regulations. Also, the vast majority of tank cars are owned by shippers or railcar leasing companies, and the new ERAP protective direction is primarily directed at shippers. The government has delegated development of ERAPs to an industry task force that will have 150 days to produce plans for Canada’s crude oil and ethanol routes. The task force will include national firefighter organizations, municipalities, shippers, and industry associations, thus going some distance to appease the country’s anxious first responders and municipal councils. The measures may inspire similarly concerned first responders and local governments in the U.S. who must often react to incidents without adequate information, equipment, or training. If Canada does set the model for emergency response planning, this particular disruption of the continent’s lockstep regulatory tradition may lead to a more socially sustainable regime for the transport of dangerous goods by rail. —David Thomas, Contributing Editor
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Update New leadership in place at MTA Metro-North Railroad MTA Metro-North Railroad has appointed three industry veterans to executive posts in its transportation, mechanical, and engineering divisions, as part of a major reorganization, newly appointed President Joe Giulietti announced in early April. Amtrak and New Jersey Transit veteran Kevin J. O’Connor (pictured) has been named Chief Transportation Officer. He will be working closely with Assistant Vice President John McNulty until McNulty’s retirement this summer. During his 36-year career in railroading, O’Connor rose through the ranks, starting at Amtrak where he began his career first as a service attendant, block operator, and train dispatcher, then in progressively responsible positions in operations management for Amtrak and NJT. Most recently, he was Vice President and General Manager of Rail
Operations for NJT. O’Connor implemented the FRA’s Confidential Close Call Reporting System (C3RS) as well as programs to improve customer service at NJT. Metro-North Acting Chief Mechanical Officer Michael J. Yaeger has been promoted to CMO. Yaeger has spent 27 years at Metro-North in the Maintenance of Equipment Department, in project planning and maintenance operations. He has also participated in Metro-North’s
benchmarking efforts, representing the railroad internationally as it sought to identify operational best practices and implement them successfully. Yaeger had been Acting CMO since July 2013. Glen E. Hayden has to returned to Metro-North in the newly created position of Vice President Engineering, reporting directly to Giulietti. Hayden brings 37 years of experience to this position. During the past 16 years, he worked for Parsons Brinkerhoff, where he was responsible for planning and project management for a number of major transportation projects throughout the Northeast. Hayden spent much of his early career at Metro-North and its predecessor railroads, rising to the position of Chief Engineer. He then worked for F.R. Harris before joining PB. He is a Professional Engineer, licensed in New York, New Jersey, and Connecticut.
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San Diego, Tijuana seek cross-border LRT Light rail transit operating across national borders is an established procedure in Europe, even as U.S. LRT operations across state boundaries remain rare. But San Diego, Calif., and neighboring Tijuana, Baja Norte, have revived plans for LRT service spanning the U.S.-Mexico border. San Diego Regional Chamber of Commerce President Jerry Sanders said last month, “That’s one of our top priorities.” He added, “It’s very complex, obviously, when you have two governments, two state governments, two city governments, and MTS (Metropolitan Transit System). But I think it can be done.” Complications involving freight rail use also exist. MTS in December 2012 leased a portion of the route to short line Pacific Imperial Railroad, which could make temporal separation of freight and light rail operations a
necessity to comply with safety requirements mandated by the Federal Transit Administration and, perhaps more important, Federal Railroad Administration. But Sanders said business leaders and political officials in both nations were actively urging establishment of cross-border LRT service, noting the San Diego-Baja rail line was also among the top concerns discussed during a recent trade trip to Mexico City sponsored by the San Diego Regional Chamber of Commerce. “We’re seeing more companies want to come here and work on both sides of the border,” Sanders said, “but the railroad is really an important issue for almost all of them.” Freight issues are
helping to drive the process, but LRT is a significant factor as well. The San Diego Trolley began operations on its 13.5-mile South Line (now the Blue Line) on July 26, 1981 as the first modern U.S. light rail transit line, linking San Diego’s Santa Fe Depot (served by Amtrak) with San Ysidro, Calif., ending just short of the U.S.-Mexico border.
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Watching Washington FRANK N. WILNER
RRIF program discourages applicants
hat is more American than pizza pie, Taco Bell, and Toyota? Maybe a pot of gold at the end of a rainbow—say, $35 billion in federal loan and loan guarantees reserved for railroads at below-market interest rates and with repayment periods up to 35 years. Troublingly, that pot of gold is superintended by a mischievous Yankee leprechaun—federal regulations whose unlocking to get at the gold earmarked for rail development dares the skills of Houdini. For sure, the gold is there, because in America, everything is possible; but less than 5% of the $35 billion has found its way to railroads owing to unintended difficulties in the application process. American ingenuity can fix that. The Railroad Rehabilitation & Improvement Financing (RRIF) program, established by Congress in 1998, is managed by the Federal Railroad Administration (FRA). The RRIF is open to all railroads, with $7 billion reserved for projects benefiting regionals and short lines. The funding is to be used to acquire, improve, or rehabilitate track, bridges, yards, buildings, shops, motive power, and rolling stock; or to refinance outstanding debt incurred for infrastructure and equipment. The RRIF program is traceable to the 1976 Railroad Revitalization and Regulatory Reform (4-R) Act, which provided emergency funding for an industry then beset by growing financial failure. Following the 1980 Staggers Rail Act’s partial deregulation provisions, scores of new short lines were created as an alternative to Class I track abandonment. Beginning in the 1990s, short line entrepreneur Walter Rich, assisted by consultant Ray Chambers, worked with then House Rail Subcommittee
Chairman Susan Molinari (R-N.Y.) to expand and extend the 4-R Act’s federal loan and loan guarantee program to short lines desperate to eliminate deferred maintenance and upgrade track to handle heavier freight cars being placed in service. Available today under the RRIF program is a $35 billion revolving credit pool, with loans protected from default through a borrower-paid, up-front credit-risk premium and/or borrower collateral. For example, Amtrak recently financed a $563 million purchase of 70 new electric
Less than 5% of an available $35 billion in federal loans and loan guarantees has found its way to railroads. locomotives, spare parts, and improvements to maintenance facilities through a RRIF loan requiring a 4.4% up-front credit-risk premium whose source is revenue exceeding Northeast Corridor operating costs. As the neediest of short lines are small enterprises—typically less than 50 miles long—the source of the credit-risk premium can be problematic. Equally challenging for these small, cash-strapped and privately held enterprises are application requirements more suited to Class I’s and short lines controlled by publicly traded holding companies. They include up to five years of audited
financial statements, detailed maintenance-of-way plans, and in-depth marketing analysis. Compounding the frustration is that larger railroads and short line holding companies, for which the RRIF application process seems designed, borrow through Wall Street investment banks. Neither investment nor commercial banks show much interest in individual short lines. Consultant Michael Sussman says it’s easier to finance a front-end loader at a bank than a locomotive. Among the reasons: Commercial banks’ lack of understanding of railroad finance, terms limiting loans to less than an asset’s useful life, and higher-than-market interest rates as railroad collateral is viewed less favorably than non-railroad collateral. “There is a competitive market for used railroad equipment such as switcher locomotives, but commercial banks don’t understand that,” says Sussman. “And few banks accept track as collateral or lend to short lines on going-concern value.” Sussman said that in assisting an Iowa short line with a RRIF loan application, a bank “five doors from the railroad’s offices had no idea the railroad stretched for 50 miles in each direction and served many of the bank’s agricultural customers.” Thus, the rationale for the RRIF program. But its application process discourages seekers. This is not to suggest diluting terms and conditions that assure applicants have the ability to repay loans. It does suggest revisions to meet the business realities of small railroads and thus enhance their ability to serve rural areas and small communities, improve the environment, enhance public safety, promote economic development, and make the national rail network more efficient. May 2014 RAILWAY AGE 21
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TAMING THE PTC ELEPHANT
As railroads struggle with this bureaucracy-laden mandate, they have to remember that PTC isn’t the only game in town.
he pressing issue for the railroad industry’s communications and signal engineers is whether or not Positive Train Control (PTC) is going to be complete and fully functional by the fastapproaching Dec. 31, 2015, deadline. For some elements of the U.S. government—in particular, the Federal Communications Commission (FCC) processes, which present a serious barrier to finishing PTC wayside antenna installation—PTC is the elephant in the room, the looming big issue that is either being ignored or going unaddressed. For the railroads, which are pushing ahead on an unfunded mandate whose deadline they probably won’t be able to meet due to circumstances largely beyond their control, PTC, as Railway Age Engineering Editor Mischa Wanek-Libman describes it, is “the elephant the industry is trying to tame.”
By WILLIAM C. VANTUONO, Editor-in-Chief
CN, for example, reports it “is taking steps to ensure implementation of PTC, including working with other Class I railroads to satisfy the requirements for U.S. network interoperability.” The Federal Railroad Administration approved the railroad’s PTC Implementation Plan, submitted in April 2010. But 28 months later, in August 2012, an FRA report to Congress on PTC implementation progress said that most railroads would be unable to meet the deadline. In August 2013, legislation was introduced in the Senate that would delay PTC implementation by five years to the end of 2020. In the same month, the U.S. Government Accountability Office published a report recommending that Congress give the FRA authority to extend the deadline for individual carriers on a case-by-case basis. May 2014 RAILWAY AGE 23
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will2012:Layout not be completed the then? NotPM much, and 1the al Ad Art U.S. Dec 1 by12/27/12 1:34 Page Dec. 31, 2015 federal deadline.
regulatory delays get worse. In May 2013, the FCC began to review the potential impacts that installing tens of thousands of required PTC wayside radio antenna poles could have on Native American historic and cultural artifacts. Necessary, industry-recommended changes to antenna installation procedures—specifically, dealing with permits in
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volume, rather than case-by-case—are still in political limbo. In its March 2014 PTC status update to the FRA, the Association of American Railroads reported that “it is clear that the railroad industry will not be able to install interoperable PTC on the entire U.S. network by the deadline.” In effect, the railroads’ brisk, entirely self-funded march toward an interoperable PTC system now looks more like a slog through waist-deep muck. CN estimates its total PTC implementation costs at $335 million for the U.S. portion of its network. That’s huge, except when compared to railroads like Union Pacific and CSX. CSX’s total PTC cost, for example, will be around $1.7 billion for equipping 3,600 locomotives and installing equipment at 6,400 wayside locations on 15,000 trackmiles—75% of its network. Around 1,000 CSX employees are working solely on PTC, but thousands more require training on the new technology. BNSF Railway Assistant Vice President Signal Jim LeVere says, “We’ve been making tremendous progress on the infrastructure side all across BNSF.” The railroad’s non-vital overlay PTC system is under construction across 9,400 miles of BNSF’s network in 21 states. A “greenfielding” approach that involves “removing outmoded relay-based control points (interlockings, etc.) and overlaying PTC on modern microprocessor-based technology has worked very well,” he adds.
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greenfielding approach to installation, have produced many benefits for renewing our Communications and Signal (C&S) infrastructure. We’re determined to get PTC installed.”
Classification yards (pictured: NS Bellevue Yard) are receiving significant automation upgrades.
However, “our progress has been slowed down by the FCC processes,” says LeVere. “We can’t go out to a PTC location and finish an installation in one shot. We’re not sure what the final ruling is going to be on the FCC’s tribal review process for antennas.” But railroaders tend to be optimistic, “can-do” people. “We remain hopeful,” says LeVere. “PTC is a good safety system. The technology, and our
As LeVere and his C&S colleagues around the industry will tell you, there’s a whole lot more going on in C&S than PTC. “We have a strong capital maintenance program,” LeVere says. “We’re getting close to eliminating what’s left of pole lines. We’re installing more wayside mechanical defect detectors on many corridors, including our ethanol and crude oil routes. And we’re working with the states on hundreds of grade crossing warning systems that need to be upgraded.” BNSF has made a major commitment to upgrading its classification yards, and is in the midst of an initiative to replace outmoded yard process control and automation systems. “Many of our class yard systems are based on 1980s computer technology,” LeVere says. “We’re working to get them renewed, to make our class yards more fluid and efficient.” The first major BNSF class yard to be upgraded will be Memphis (Tennessee) Yard. Under way or planned are Argentine (Kansas City, BNSF’s largest), Galesburg (Illinois), Cherokee (Tulsa, Okla.), Barstow (California), Pasco (Wash.) and Northtown (Minneapolis, Minn.). Hobson (Lincoln, Neb.) was recently returned to its original hump yard config-
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uration. Balmer (Seattle) is under evaluation for upgrading. In Ohio, Norfolk Southern’s Bellevue yard is undergoing a major expansion and transformation. Assistant Vice President Communications and Signals Ed Boyle describes the project as a critical part of mitigating bottlenecks across NS’s network. Located midway between Toledo and Cleveland, Bellevue is at the confluence of several major NS east-west and north-south main lines. Many trains are routed between the Lake and Dearborn divisions at Bellevue. Also, numerous intermodal trains operating on NS’s Heartland Corridor between Virginia’s ports and Chicago pass through there. Bellevue is essentially being doubled in size to 80 classification tracks, with two hump leads that provide access to the entire yard from either lead by means of a scissor crossover. The hump leads can also work simultaneously, feeding cars independently to their respective sides of the yard. It will be the only one of NS’s 12 production yards with dual-humping capability, doubling the average 600 to 650 cars per shift it currently handles, and more than doubling train speed, to 25 mph from 10 mph. Hardware for the 5.5-mile-long, $160 million project includes 140 powered turnouts, 38.5 miles of additional track, approximately 145 miles of underground cable for the communications and signals system, and 11 control points, plus car retarders, wheel detectors, and
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distance-to-coupling circuits—all being installed while the yard remains in operation. Bellevue’s expansion is being equipped with one master retarder, five group retarders, and 38 skate retarders. Trainyard Tech LLC, which has upgraded several NS class yards during the past few years with its CLASSMASTER™ technology, is providing Bellevue’s process control and automation systems, everything from the hump system to the receiving yard, pullout yard, and blue-flagging equipment. When completed in early 2015, Bellevue—the biggest construction project on an NS production yard in decades—will be the railroad’s largest hump yard and the largest yard in North America where all tracks are humped from one process control system. “Bellevue is located at a ‘sweet spot’ of increasing train traffic in our Northern Region,” says NS Director Terminal Operations John LeStrange. “A big driver of the volume is a drilling boom to extract natural gas from the Marcellus Shale deposit. Steel-making and the automotive industry also are key factors. Strategically, it’s right where all the traffic wants to go,” based on the computer models NS uses to forecast future traffic flow. Those models show that Bellevue “provides the most efficient route to switch cars for timely delivery to customers,” he says. Another bottleneck on the NS system receiving an upgrade is Randoph Street Interlocking in Roanoke, Va., the only location on the railroad where the Heartland and Crescent Corridors cross. A combination of track expansion and signal work, the project involves building four tangent tracks, each with a controlling signal at each end, and higher-speed turnouts. When completed by year-end, train speeds through this interlocking will double, from 15 mph to 30 mph, effectively doubling capacity. “It’s amazing what relieving one bottleneck can do,” says Ed Boyle. Of course, PTC remains a huge undertaking for NS. “We’re working full steam ahead on construction,” says Boyle. “At roughly 300 locations, we have completed construction on everything—except the antennas. Our biggest concern is getting them installed.” FCC, the railroads are holding up their end of the agreement. What are you waiting for? RA
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SIGNALING AND TRAIN CONTROL
THE NEW FRONTIER IS HERE Congress and the FRA perceive PTC primarily as a safety measure to counteract human error and prevent accidents. But rail industry suppliers seek to make PTC, and CBTC too, something with far greater utility than that, as railways scramble to adopt this new technology.
Siemens Rail Automation
By DOUGLAS JOHN BOWEN, Managing Editor
“We’re off to the races,” one supplier executive says, at once both sardonic and fully in earnest. For those communications and signaling companies, the advent of Positive Train Control (PTC)—and near-cousin Communications-Based Train Control, or CBTC—is generating market churn and serious innovation. Rail properties are racing to meet the federally mandated deadline of Dec. 31, 2015, required by the Rail Safety Improvement Act of 2008, to install PTC. Many won’t make that deadline, and already are pleading for extensions to placate Congress and the Federal Railroad Administration. As they do so, they’re also seeking ways to transform an unfunded mandate into a market positive. Suppliers see benefits in that approach both for their customers and themselves.
“The technology is now becoming [a given]; PTC for freight and rail transit is becoming the reality,” says Siemens Rail Automation President John Paljug. “As it’s being implemented, people are thinking: What else can we use it for besides safety?” The answer, according to Paljug and others, is simple: A lot. PASSENGER RAIL SETS THE PACE
In some ways, U.S. passenger rail operators have led the way. The Sept. 2008 accident in Chatsworth, Calif., when a Metrolink engineer ran past stop signals and collided with a Union Pacific consist, killing 25 and injuring 135, set the PTC mandate in motion. Metrolink now has implemented Wabtec’s I-ETMS® interoperable predictive May 2014 RAILWAY AGE 31
SIGNALING AND TRAIN CONTROL
Ansaldo STS says its MicroLok® II interlocking platform has a dual architecture, able to implement both ACSES and I-ETMS to meet the requirements of commuter and freight railroads.
collision-avoidance technology on portions of its system this year, vowing to meet the federal deadline. It claims to “become the first U.S. regional passenger railroad to do so.” But Amtrak’s Northeast Corridor (NEC) for years has had its Advanced Civil Speed Enforcement System (ACSES) system in operation, notes Alstom Transportation Inc. North America Vice President Marketing & Strategic Planning Scott Sherin, and “though it wasn’t called PTC at the time,” ACSES was the first PTC-sanctioned operation in the U.S., he says. Sherin says that ACSES also allows Amtrak to “run Acela Express at higher speeds,” and adds, “We’re working with Amtrak on the NEC to continue to ACSES II. We’re also working with New Jersey Transit,” which runs many of its trains on the NEC but also has an extensive statewide rail network. Alstom is being assisted by Parsons Transportation Group. One of the main goals besides safety for both rail operators: Increased throughput, essentially increasing capacity on an NEC bumping up against capacity limits. Elsewhere in metropolitan New York, a Siemens and Bombardier Transportation consortium is working to install PTC on both MTA Metro-North Railroad and MTA Long Island Rail Road, the two largest regional/commuter rail systems in the U.S. Siemens and Bombardier will develop, test, and commission a new overlay PTC system, which will be delivered in
SIGNALING AND TRAIN CONTROL
phases on approximately 700 miles of track and 1,500 vehicles across the two railroads. Metro-North has been roundly criticized for delaying PTC implementation, which some believe might have prevented the Dec. 4, 2013 incident in Spuyten Duyvil (the Bronx), N.Y., that resulted in four deaths. Siemens’ Paljug says the installation “is not a redesign. Essentially, we’ll be bringing new functions into the existing platforms—for example, grabbing indications from interlockings and bringing them into the PTC pipeline.” The Siemens/Bombardier consortium isn’t alone in MTA territory. Last December, Ansaldo STS was awarded a signaling contract to provide the Long Island Rail Road an upgraded 45-mile segment of right-of-way between Speonk and Montauk, N.Y., the easternmost portion of LIRR’s Montauk Branch. Ansaldo STS will design and furnish a new vital microprocessor based interlocking control system as part of the LIRR project to improve the signaling on this route from dark territory to signaled territory. “The system has a dual architecture, able to implement ACSES and I-ETMS to meet the requirements of both commuter and freight railroads,” says Ansaldo STS. “The ability to have both architectures in one ‘box’ is a major advantage of the Ansaldo STS MicroLok® II interlocking platform.”
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Last January, the Maryland Board of Public Works approved a $13 million contract with Wabtec Corp. subsidiary Wabtec Railway Electronics to install PTC equipment on 32 MARC locomotives and 30 cab cars, which operate over right-ofway owned by either Amtrak or CSX Corp. Across the continent in Seattle, Wabtec Corp. was chosen by Seattle’s Sound Transit to design, install, test, and commission a PTC system on the agency’s regional 82-mile regional rail line linking Everett, Seattle, and Tacoma, Wash. Wabtec will provide I-ETMS® equipment and installation for 16 locomotives and 18 cab cars, and also provide signal design and communications, mapping, and systems integration. The system will be fully interoperable with PTC systems being implemented by the Class I railroads over which Sound Transit operates. Wabtec Railway Electronics also has been tapped by the Alaska Railroad to provide PTC equipment and services, including CAD (computer-aided dispatch) and back office systems, for the railroad’s 525 miles of controlled track, which are used for both freight and regularly scheduled passenger service. Here, too, Wabtec will provide its I-ETMS® equipment and installation of all onboard PTC components, in this case for 54 locomotives. Wabtec’s scope of work also includes installation of its Train Management &
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SIGNALING AND TRAIN CONTROL
Dispatch System® (TMDS®), a CAD system to be used for CTC (centralized traffic control) and TWC (track warrant control) for all territories, and integration of I-ETMS® with Wabtec’s back office system. Even though the Alaska Railroad is a stand-alone operation with no physical connection to the North American railroad network, its new PTC system will nevertheless be fully interoperable with those being implemented by U.S. Class I railroads in the contiguous U.S., Wabtec notes. Alaska Railroad last August also awarded the second portion of a two-part contract to TÜV Rheinland Mobility’s Rail Safety Consulting division involving PTC deployment. TÜV RSC will assist with the development and deployment. UNFINISHED BUSINESS REMAINS
Congress wasn’t primarily focused on rail transit systems when it passed the Rail Safety Improvement Act of 2008. But that hasn’t stopped transit agencies nationwide to begin—or continue—delving into Communications-Based Train Control (CBTC), or what Siemens’s Paljug jokingly dubs “PTC for transit.” He notes MTA New York City Transit already has implemented CBTC on its L Line (Canarsie Line), and is adding it to its No. 7 Line as well. The relevance to the larger PTC universe, he says, is simple: “CBTC is designed to optimize the [transit] system.
PTC can evolve for this. For the railroads, it’s all about operational optimization.” Not that transit agencies don’t have issues of their own. In December 2012, citing cost concerns, Massachusetts Bay Transportation Authority (MBTA) deferred any installation of PTC on Boston’s Green Line light rail transit operation, saying lower-cost alternatives would become available. Suppliers say MBTA’s decision at the time was a reasonable one, even as MBTA continues to wrestle with implementation of some sort. “Smaller railroads, including many commuter operations, should bear in mind that a highly complex system may not be what they need to meet the intent of the PTC mandate, which is to prevent collisions and derailments, as well as protect roadway workers,” Ansaldo STS says. “Railroads must recognize that in many situations there are more cost effective ways to meet these requirements than the completely interoperable system defined by the ITC standards.” Adds Paljug, “It’s important not to get carried away with technology. Traditional systems we’ve provided are safe and cost-effective. I don’t want to say the other systems are obsolete or even second-tier. They’re not. Some of it is simply different approaches. PTC (or CBTC) needs to offer added value to the user, regardless of size, if it’s to surmount the negatives of an unfunded mandate.” RA
SIGNALING AND TRAIN CONTROL
MUNICIPALITY MAKES ITS OWN MOVE TO MODERNIZE BEYOND CLASS I RAILROADS or passenger stalwarts such as Amtrak or New York’s MTA, cities, too, can work on improving signaling capabilities for rail operations, at least within their borders. Milpitas, Calif., recently purchased five IDEC MicroSmart Pentra Programmable Logic Controllers (PLCs) with digital I/O modules. The objective: to provide traffic light controls at four different four-way intersections in the city. Milpitas sought to have Santa Clara Valley Transportation Authority (VTA) light rail transit trains to pass through each intersection within the city safely, without slowing or stopping for auto traffic in normal operation. City officials “also wanted to be able to tell the trains to stop when dictated by certain traffic signal and pedestrian conditions,” according to the city’s overseer of Traffic Signals & Lighting, Thai Nguyen. IDEC’s Penta PLC also had an Ethernet port to allow remote monitoring and communication, and the capability to expand as necessary, Nguyen says.
Among other functions, the PLC also detects all the traffic light changes made by the traffic light controller. If it sees that the traffic control system cannot change the lights in time, the PLC will send an output to a stop signal. Each train has an operator, who will manually stop the train. Systems integrator Angelo Lombardo programmed the PLCs using IDEC’s PC-based Automation Organizer Suite, primarily using the WindLDR ladder logic software, which is part of the suite of available programming tools. WindLDR has a built-in simulation mode, which allowed Lombardo to completely test the logic prior to installing the PLCs at the intersections. Though the PLCs don’t actually change the vehicle lights, there is no reason why they couldn’t, Nguyen says. “Although literally millions of such traffic light controllers are being used around the world, it’s quite possible that PLCs could take over many tasks in that industry—especially if a city plans to add advanced functions, such as accommodating light rail service.”
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MANAGING THE LINEUP Strategic business plans aligned with a strategic technology plan can provide more-effective interchange data and traffic control processes.
everal years ago, a Class I operations vice president engaged my services to investigate the extraordinary amount of crew deadheading that the railroad was experiencing, thereby resulting in a shortage of available crews. He had previously engaged a prestigious consulting firm for the same reasons, but had fired them within several months because no valid results had been delivered. It was clear to him that the crew management department didn’t have its act together, and he wanted it straightened out. Within several weeks of beginning the engagement, I presented my initial findings to the VP: In actuality, he as head of operations, and not crew management, was the problem. In fact, crew management was being quite effective in reducing the negative consequences of how operations was running the railroad. It was all about managing the train lineup used by the dispatcher to assign track time. However, the dispatchers were without the proper data, decision making tools, and management directives to manage train movements in a balanced, cost-effective fashion. Operating a freight railroad efficiently is based upon
By RON LINDSEY, Contributing Editor
three primary types of activities. First, the service design department is charged with constructing a network schedule of train movements and the blocking of cars to pursue its view of “optimal” efficiency of the railroad based upon corporate and marketing objectives. Operations is then responsible for executing that schedule and car blocking by setting up the train lineups. Last, the dispatchers are charged with managing the lineups and making adjustments as conflicts and disruptions occur. However, these mishaps occur frequently, thereby greatly compromising service design’s efforts. That is, the dispatcher too often is in a reactive, “crisis” mode given the lack of timely, accurate train position and speed as well as the mathematical tools to minimize the consequences of such disruptions. Rather than achieving the efficiency structured by service design, this railroad and many others are operating at substantially less than optimum in that they are limited by the skills of the dispatcher and the subjective criteria that operations management exercises—not running short trains, pushing through “hot” trains, increasing traffic velocity to maximize executive bonuses, etc. May 2014 RAILWAY AGE 37
NEXT-GENERATION TRAFFIC CONTROL
There are two areas of inefficiency that are beyond the consideration of operations at this point. These areas are not capable of being handled efficiently in crisis mode. First, there is the overall efficiency of all key operating resources within the railroad (not just track time). Second, there is the effect of interchange with other railroads.
Railroads require a business strategy in sync with a technology strategy based upon the availability of wireless data to provide time train speed/position data.
Traditionally, a freight railroad’s operations department focuses primarily on track time utilization by dynamically adjusting train lineups and then filling in the other key resources that are required upon lineup initiation, such as train crews. Hence, without operating to a true schedule, a railroad is without the means to achieve a balanced, cost-effective use of the total set of the additional key operating resources: locomotives, fuel, maintenance crews, and yard operations. An example of what can be achieved is to consider the passenger airline industry, where each major carrier operates with a true, integrated schedule of all primary operating resources. I use Delta Airlines as an example. Each month, Delta develops a detailed, integrated schedule for each plane type (if not the specific plane), gate, route, and crew member to which each respective resource department commits so as to achieve what is required to meet Delta’s business plan. This schedule is supported by a sophisticated
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IT architecture that feeds timely information to each resource management system as events occur with the same singular source of critical operating data: the status of each plane relative to staying on schedule. Of course, disruptions occur, including mechanical failures and weather, but such occurrences are addressed to the extent possible with a commitment of excess or “slack” resources to address such challenges. For example, airlines have crew extra boards. The bottom line here is that this use of planned slack resources is less costly than the inefficient use of resources required for reactive, crisis management as exemplified by the crew management study I performed. In the study, there were numerous issues as to how operations was directly and indirectly affecting the performance of its schedule—performance that was estimated by the railroad’s service design department to be 30% on schedule. Consider these examples: First: Neither CTC nor dark territory operations provide the dispatcher with timely, accurate position and speed data (as in, did the train come to a stop?). Nor is there an effective means for the dispatcher to comprehensively incorporate other major variables such as the availability of locomotives, crew outlawing, and yard availability in dense corridors. To a great extent, the experience of the dispatcher with a specific territory, as well as the discouraging complexity of
considering such variables, determines the efficiency of a railroad’s major operating assets. Given the PTC mandate, there will be an industry-wide wireless data infrastructure and an onboard platform that can provide that train speed/ location data—the singular source of critical, underlying data that should be feeding all resource management systems. Therefore, the majority of railroads that have yet to implement a wireless data platform will be in a position to deploy advanced traffic management systems that use mathematicsbased planners to predict traffic conflicts and provide solutions to the dispatcher to minimize if not avoid the consequences of those conflicts. As described in previous articles in Railway Age, this capability is referred to as Proactive Traffic Management (PTM). Most important, PTM can be obtained outboard of and without changing the traffic control system. One Class I in the U.S. has already made a transition to PTM, without PTC. Second: Operations would note frequently that others were to blame for why the railroad could not maintain an effective schedule. Perhaps the most telling was its explanation that several major customers were dictating to the railroad when the trains would run. Their rationale was that these shippers had control of certain portions of the lineups, and hence it wasn’t the fault of operations that it couldn’t maintain a true schedule. However, the customer was forced Visit us at Booth #453 / RSSI Exhibit
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NEXT-GENERATION TRAFFIC CONTROL
to set its schedule of trains because the railroad had consistently failed in maintaining its own schedule. Hence, this action by the shipper was one of self-defense in order to maintain its own operating schedule. Third: Lineup initiation was a faulty process in that the railroad’s yardmasters were so overloaded with activities that they would set up trains on the lineup in the beginning of the shift based upon what they hoped to achieve. However, without the discipline and direction of operations management, some trains were not actually initiated due to yard issues. Hence, crew and locomotive management were assigning resources that were not used for these “ghost” trains, which was their term for such faulty lineup practices. INTERCHANGE
While the three above examples are internal to the railroad’s operations, a fourth reason for the inability of the railroad to run to schedule is due to mutually dependent external reasons. Specifically, given the high level of interconnection between freight railroads in the U.S., any one individual railroad is not able to run to a service design perspective if the other railroads with which it is interconnecting are not running to schedule. How does an individual railroad deal with this Catch 22? It can’t. Rather, an industry perspective of scheduled operation is required. And, in my opinion, that won’t happen until
1) the executive bonus incentives are so structured, and 2) there is a strategic industry business plan in sync with a industry-based technology plan (what I refer to as Strategic Railroading). However, neither of these two points is achievable at present, in my opinion, given the traditional railroading mindset that exists. Operations management has yet to understand what timely train status speed/location data can do to improve the efficiency of operations. Again, both internal and external challenges to operating to schedule require simple information that can be obtained without PTC and any significant amount of capital investment. I emphasize the following points: • Railroads require a business strategy in sync with a technology strategy based upon the availability of wireless data to provide time train speed/position data. For most railroads, this will require a restructuring of IT architecture. • Railroads need to make the changes in operating processes and the design of executive bonuses that can bring about a substantial increase in schedule performance. • The industry needs a strategic business plan aligned with a strategic technology plan that provides for effective interchange data and processes. • Railroads, both individually and collectively, need to employ technologists, not just technicians, who can provide cost-effective technology solutions. RA
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SAFETY APPLIANCE EVOLUTION
By RICHARD W. DAWSON, Chairman, AAR Safety Appliance Task Force, for Railway Age
S-2044, the AARâ€™s new safety appliance standard, is one of the most significant improvements to freight car safety in more than 50 years.
s reported in the November 2011 issue of Railway Age, the FRA established a process in Part 231.33 of Title 49 of the Code of Federal Regulations for industry organizations like the AAR to submit new safety appliance standards to the FRA for review and approval. On Feb. 10 of this year, the FRA approved an AAR petition requesting approval of major portions of the new AAR safety appliance standard S-2044. To improve the safety of railroad employees in train and engine service, Congress enacted the Safety Appliance Acts of 1893, 1903, and 1910. Among other things, these acts required all cars to be equipped with secure sill steps and efficient handbrakes and required all cars needing secure ladders and running boards to be equipped with them. The 1910 act further required the Interstate Commerce 42 RAILWAY AGE May 2014
Commission to designate the specific safety appliances required for freight cars, passenger cars, and locomotives. It did so in 1911 when it issued the safety appliance regulations now found in Part 231 of Title 49 CFR. These regulations spell out the required safety appliances for boxcars, open-top hopper cars, gondolas, flatcars, and tank cars, as well as passenger cars and locomotives. Around 1960, new requirements were established for tank cars without continuous underframes, the type of construction used today. New requirements that became effective in 1966 were also established for boxcars that eliminated roof running boards. For the first time, separate requirements were set for covered hopper cars. Both required crossover platforms at the ends, which had not been used previously. Other than some interpretations of the existing
regulations, no significant additions to freight car safety appliance regulations have been made since then by the ICC or (after 1966) by the Federal Railroad Administration. Since the ICC and FRA safety appliance regulations were originally published, however, a variety of new freight car configurations have been developed, including bulkhead flatcars, doublestack well cars, spine-type intermodal cars, multi-level vehicle-carrying cars, aggregate hopper cars with recessed carbody ends, and coil steel cars. In addition, the vertical-shaft, horizontal-wheel handbrakes on which almost all the federal safety appliance regulations are based have been replaced by geared vertical-wheel or lever brakes. The AAR has specifications for some individual safety appliances, like handholds, ladder treads, sill steps, and running boards, and has established safety appliance arrangements for a few car types not specifically covered by the FRA safety appliance regulations, like bulkhead flatcars. Its safety appliance requirements, however, are much less extensive than those of the FRA, which include the primary requirements. Around 1980, the AAR attempted to have some updates made to FRA safety appliance regulations, but FRA never approved them. Thus, someone developing a new safety appliance arrangement for a freight car, especially a car of a type not specifically addressed by the FRA or AAR regulations, may encounter difficulties interpreting exactly how the safety appliance requirements should be applied to the car. The present FRA regulations do provide some guidance for cars not specifically covered. Title 49, Part 231.18, “Cars of Special Construction,” states that cars not specifically addressed elsewhere in the regulations “shall have, as nearly as possible, the same complement of handholds, sill steps, ladders, handbrakes, and running boards as are required for cars of the nearest approximate type.” This naturally leads to the question, “What is the car of the nearest approximate type?” Not surprisingly, differences of opinion sometimes arise between car designers and the FRA over whether the proposed safety appliance arrangement on a new car design is based on a correct interpretation of the safety appliance regulations, or whether it does not comply with the regulations. Finding out after production has started that the proposed arrangement is not acceptable can be very disruptive, so carbuilders often submit safety appliance arrangements in advance to the FRA Office of Safety for an interpretation. But it is not always possible for the FRA to reply in as timely a manner as the carbuilder would like.
Early in 2002, I was responsible for new car engineering at TTX, and had become frustrated with attempts to resolve safety appliance issues on several new car types under development. Since I also happened to be a member of the AAR’s Equipment Engineering Committee (EEC), I proposed, first to the FRA and then to the EEC, that the AAR establish a group incorporating FRA participation that would investigate ways to eliminate as much uncertainty as possible from the existing safety appliance requirements of both organizations. The result would then be submitted both to the FRA and to the AAR for approval. Both agreed with the concept, and the AAR established the Safety Appliance Task Force (SATF), reporting to the EEC. The SATF included representatives of operating railroads, private car owners like TTX and GE Railcar, railcar manufacturers, and the FRA Office of Safety. I am the current chairman; Norfolk Southern’s Tom Glasscock is vice chairman. Opposite page: A UTLX tank car with AAR S-2044 safety appliances installed. Compare the application of handholds and steps with the existing arrangement (below).
At the first meeting, the FRA representative requested that Transport Canada, the Canadian regulatory agency comparable to the FRA, and railroad labor unions also be represented on the SATF. The AAR agreed and representatives of three unions plus Transport Canada have participated in SATF activities ever since. The SATF also includes shippers and trained ergonomics professionals. May 2014 RAILWAY AGE 43
The SATF soon concluded that the best way to accomplish its objective would be to establish a new AAR safety appliance standard that would replace the existing FRA and AAR requirements for new cars. It was decided to make the new standard applicable to new cars only and not have it apply retroactively to existing cars. When developing the new standard, the SATF did not want to be limited to changes that could be readily applied to existing cars. When the SATF concluded that the present requirements of the FRA regulations were adequate, it repeated them, but restated them so as to be less ambiguous. However, it found a number of areas where the present regulations could be improved upon, and in those cases it either revised the requirements or created new ones. The resulting document, AAR Standard S-2044, incorporates a base standard, with definitions and
44 RAILWAY AGE May 2014
requirements common to all car types, and a series of appendices with the specific requirements for individual car types. There are appendices for 16 car types, most of which were not specifically addressed in the FRA regulations. The car types covered are boxcars,
coil cars, cars with recessed carbody ends (like aggregate hopper cars), sidedump cars, enclosed vehicle-carrying cars, and rail-compatible vehicles (like RoadRailer and Rail Mate). Relatively few changes were made to the requirements for boxcars and
Compliance with AAR safety appliance specification S-2044 will be mandatory for all cars of the eleven approved types built new on or after Jan. 1, 2015.
covered hopper cars, bulkhead flatcars, plain flatcars, chain-tie-down flatcars, cars of well and spine construction (both with side-mounted handbrakes and end-mounted handbrakes), tank cars with side ladders, tank cars with end ladders, open-top hopper and highside gondola cars, low-side gondolas,
covered hopper cars, but the requirements for the other car types were either new or incorporated significant differences from the existing FRA regulations. Locating hand brakes low enough that they can be operated from the ground eliminates the need for employees to climb on or off freight cars to apply or release hand brakes. The FRA, however, requires that hand brakes be located so that they can be safely operated while the car is in motion. This eliminates the possibility of placing hand brakes low at the center of the sides of cars, as is often done in Europe. However, other locations are possible where the hand brakes are low enough to be operated from the ground, but can also be operated while standing on a sill step. S-2044 requires the hand brakes on many car types, including flatcars, well and spine cars, low-side gondolas, and coil cars, to be located so that they can be operated either from the ground or the sill step. The present tank car safety appliance arrangement calls for a single vertical handhold at the sides of the end platform plus a horizontal handhold over the sill step. When standing on the sill step the horizontal handhold is awkwardly located and the FRA-mandated arrangement provides only a single vertical handhold for a person to climb onto the end platform. S-2044 improves the arrangement by requiring two vertical handholds, one on either end of the sill step. The
difference between the two arrangements can be seen in the photos. S-2044 also provides requirements for the running boards on top of the tank on cars with end ladders rather than side ladders. Tank cars that carry low-density commodities are built with large interior volume. They often use end ladders, so that the diameter of the tank can extend all the way out to the clearance limits without having to leave room for side ladders. Another car with a safety appliance arrangement that has disadvantages is the centerbeam car. Because the end bulkheads are braced by the center beam, they can be made much thinner than the bulkheads on a flatcar with conventional free-standing bulkheads. Consequently, early centerbeam cars had only a low horizontal handhold and a single vertical handhold over each sill step. This arrangement is similar to the single vertical handhold on tank cars and, even though recent centerbeam cars have generally had two vertical handholds, they are still so close together that there is little difference from the single handhold. The SATF now requires that all bulkhead flatcars, including centerbeams, have four horizontal handholds over the sill steps. Although handholds above the deck can be 12 inches long instead of the usual 16, they will still require the end bulkhead to be thicker on center beam cars than they would otherwise be for purely structural reasons. FRA regulations for open-top hopper cars and high-side gondolas call for ladders at the corner of the car adjacent to the handbrake and at the diagonally opposite corner with a short brake step beneath the handbrake. The other two corners of the car only have two handholds and there are no end platforms to enable a person to cross from one side of the car to the other. In recent years, many open-top cars have used safety appliances similar to those on boxcars and covered hopper cars, with four or more handholds on the sides and ends at every corner of the car and with a crossover platform at each end. S-2044 requires this arrangement on all open-top hoppers and high-side gondolas. The requirements for 11 of the 16 car types covered by AAR Standard S-2044 were completed by the SATF, approved by the EEC, submitted to the FRA in a petition, and approved by the FRA on Feb. 10 of this year. Although freight cars may be built to its requirements immediately, compliance with S-2044 will be mandatory for all cars of the 11 approved types built new on or after Jan. 1, 2015. Existing cars are not required to be modified to comply with S-2044 and will continue to be subject to existing FRA and AAR requirements. Of the five car types not yet approved, requirements for plain flatcars, enclosed vehicle-carrying cars, and cars with recessed carbody ends have been completed and will soon be submitted to the FRA for approval. Requirements for side-dump cars and rail compatible vehicles are under development. RA
If you bought Steel Products from one or more Defendants between April 1, 2005 and December 31, 2007, you may be affected by three Class Action Settlements. What are the Settlements about? Eight steel manufacturers, ArcelorMittal, Nucor Corporation, United States Steel Corporation, Gerdau Ameristeel Corporation, AK Steel Holding Corporation, Steel Dynamics, Inc., SSAB Swedish Steel Corporation and Commercial Metals Company (collectively, “Defendants”) were sued by several businesses (“Plaintiffs”) who allege that the Defendants conspired, in violation of the U.S. antitrust laws, to restrict their output and therefore raise or “fix” the prices for certain steel products sold for delivery in the United States between April 1, 2005 and December 31, 2007. Settlements have been reached with three of the Defendants: Commercial Metals Company, AK Steel Holding Corporation, and Gerdau Ameristeel Corporation. These “Settling Defendants” collectively will pay $15.9 million into a Settlement Fund. The Settling Defendants deny the allegations. The litigation is continuing against the other five Defendants.
Who is a Settlement Class Member? You are a Settlement Class Member if you Purchased certain Steel Products directly from any of the Defendants or their subsidiaries or controlled affiliates at any time between April 1, 2005 and December 31, 2007 for delivery in the United States. In general, “Steel Products” include carbon steel slabs, plates, sheet and coil products, galvanized and other coated sheet products; billets, blooms, rebar, merchant bar, beams and other structural shapes; and other steel products derived from raw carbon steel and sold by Defendants. The terms “Steel Products” and “Purchased” are more specifically defined in the full Notice and the Settlement Agreements.
Will I get a payment? If you are a Settlement Class Member and do not opt out, you will be eligible to file a claim at a later date to receive money from the Settlements.
What are my rights? If you are a Settlement Class Member and do not opt out, you will release certain legal rights against the Settling Defendants, as set forth in the full Notice and in the Settlement Agreements. If you do not want to take part in the Settlements, you have the right to opt out. To opt out of the Settlements, you must do so by June 16, 2014. Settlement Class Members have the right to object to the Settlements. If you want to object, you must do so by June 16, 2014. Information on how to opt out or object to the Settlements is contained in the full Notice and at www.SteelAntitrustSettlement.com. You may speak to your own attorney at your expense for help.
When is the Approval Hearing? A Final Approval Hearing to consider approval of the Settlements and Plaintiffs’ request for reimbursement of litigation expenses is scheduled to be held in Courtroom 2503, Everett McKinley Dirksen United States Courthouse, 219 South Dearborn Street, Chicago, IL 60604, on July 10, 2014, at 12:00 pm. You may appear at the hearing, but your attendance is not required. The date and location for this hearing may be changed on further Order of the Court.
This is a Summary, where can I get more information? You can get complete settlement information, including a copy of the full Notice and the Settlement Agreements, by visiting www.SteelAntitrustSettlement.com.
www.SteelAntitrustSettlement.com May 2014 RAILWAY AGE 45
HIGH PROFILE BART has named Roy Aguilera its Chief Transportation Officer. He will oversee the largest number of employees of any division at BART, including workers on passenger trains and in stations, and in the central control system. “A safety culture will come first in our thought process and in everything we do,” he said, concerning the 1,055 employees he oversees. The CTO is leading the development of new rules to bring BART into compliance with GO175, the new comprehensive rail safety regulations being established by the Aguilera California Public Utilities Commission. These requirements, BART when finalized, will add extra procedures and protections for BART trackside crews throughout the system during both operating and non-operating hours. Aguilera joined BART in 1984 through a summer high school intern program.
KANSAS CITY SOUTHERN— M. Christopher Mitchell promoted to Assistant Vice President System Mechanical. M-1 RAIL (DETROIT)—Timothy Fischer named Chief Administrative Officer; Nicole Brown named Community Relations Manager. NEBRASKA CENTRAL RAILROAD— Eldon Vohs appointed Vice President of Operations.
SUPPLIERS Harsco Corp. named F. Nicholas Grasbergeras President and Chief Operating Officer. Harsco Rail hired Craig Fairley as the new Plant Manager of the company’s Columbia, S.C. production facility. Holland LP promoted Gerry Coyne to Director of Business Development & Engineering of the Railway Measurement Systems & Services division. Barton Tabah was hired as Regional Sales Manager for the Eastern Canada region. Keolis Commuter Services named Scott Trease head of Transportation for the company’s Massachusetts Bay Transportation Authority (MBTA) contract. Rita Hardiman was named Director of Equal Employment Opportunity (EEO), Diversity, and Disadvantaged Business Enterprise (DBE) programs for the company’s MBTA contract. Justin Vonashek 46
named Chief Safety, Security, Emergency Preparedness and Regulatory Compliance Officer for the MBTA contract. David Mitrou named General Counsel and Director, Labor Affairs for the MBTA contract. Midland Manufacturing named Steve Herbst and Bill Galbreath as Product Managers. Railhead Corp. hired Fred Cozzi as Vice President Sales & Marketing, based in the company’s Alsip, Ill., headquarters.
100 YEARS AGO in
(MAY 1914) SAFETY-FIRST EFFORTS BY PENNSYLVANIA RAILROAD Motion pictures were a prominent feature of the last meeting of the Safety-First Committee of the New York Division of the Pennsylvania [Railroad], which was held at Trenton, N.J., on Friday evening, April 24. The meeting was held in a large theater and was attended by 2,000 persons. The motion pictures were from films made immediately after a number of important passenger train wrecks during the past year or two, one of them showing scenes in Germany. Another motion picture gave lessons in first aid to the injured, and the final one was a stirring dramatic play entitle “The Red Signal.”
RSSI Annual Exhibition Gaylord Opryland Resort & Convention Center, Nashville, Tenn. Tel.: 502-327-7774; Email: email@example.com; Website: www.rssi.org.
May 28-30 North American Rail Shippers (NARS) Meeting Parc 55 Wyndham Hotel, San Francisco, Calif. Email: Nars@Railshippers.com; Website www.railshippers.com.
June 1-4 ARDA Annual Meeting “Navigating the Changing Landscape” Calgary, Alberta Email: amraildev.@gmail.com; Website: ARDA.Bartwest.com/
June 12-13 Railway Age Crude by Rail Conference & Expo Arlington, Va. Tel.: 212.620.7208; Email: firstname.lastname@example.org; Website: www.railwayage.com.
June 15-18 APTA Rail Conference Montreal, Quebec Tel.: 800-999-2782; Website: www.apta.org.
June 30-July 2 AAR Damage Prevention & Freight Claim Conference Orlando, Fla. Tel.: 919-651-5027; Email: email@example.com; Website: www.regonline.com/ DPFC2014.
September 14-16 AARS 118th Annual Meeting Union League Club, Chicago, Ill. Tel.: 331-643-3369; Email: firstname.lastname@example.org; Website: www.supt.org.
Products Midland Manufacturing offers stronger pressure relief valve
Midland Manufacturing Company has completed development of the A-22039 Smart-Flow™ Pressure Relief Valve (PRV), “recognizing the severity of the CBR safety issue, and knowing that a long-term solution needed to be found,” says Global Director Kevin Cook. Skokie, Ill.-based Midland Manufacturing is a supplier of valves and level-measurement devices for the rail tank car market since 1951, is among the equipment manufacturers on a CBR (crude by rail) tank car safety task force convened by the Railway Supply Institute Committee on Tank Cars (RSICTC), the Association of American Railroads (AAR) Tank Car Committee, and various rail equipment manufacturers. The task force’s main focus is the safety level of DOT-111 tank cars,
92,000 of which are used to move flammable liquids such as crude oil and ethanol. All DOT-111 tank cars ordered since October 2011 and built to transport crude oil adhere to tougher CPC-1232 AAR Tank Car Committee standards. They are equipped with a thicker, more puncture-resistant shell or jacket, half-height protective head shields, additional protection for top fittings, and also high flow pressure relief valves. In November 2013, the AAR offered additional, stricter recommendations designed to toughen federal safety standards. These included an outer steel jacket around the tank car and thermal protection, full-height head shields,and higher-flow-capacity pressure relief valves. They also included design modifications to
prevent bottom outlets from opening during an accident. The Railway Supply Institute agreed that higher-flow-capacity pressurerelief devices that protect against over-pressurization of the tank car and reconfigured bottom outlet valve handles that ensure full containment in the event of a derailment be made standard equipment on all current and newly ordered tank cars that will be used to ship crude oil. “In analyzing the causes and effects of the recent CBR derailment incidents, the FRA’s Analysis of Fire Effects on Tank Cars (AFFTAC) Program determined existing PRV valves did not operate quickly enough and minimized the amount of time that first responders had to mitigate the situation,” Cook observed. For more information, visit www. midlandmfg.com.
2014 Annual Conference & Exposition September 28 - October 1 Chicago, IL
Phoenix rises with HDL-LED series Phoenix Products Co. has introduced its HDL-LED series designed to replace linear fluorescent fixtures. Designed to withstand the elements, the HDLLED features a versatile, compact design and provides the essentials for almost any project including several output levels, optic options, mounting capabilities, and emergency battery backup. The standard fixture is designed for continuous row mounting. It is designed for machine houses, engine rooms, mining equipment, conveyor lighting and various other demanding applications.
The series provides 30W, 60W, and 90W configurations delivering 3,000, 6,000, and 9,000 lumens, respectively. The fixture features an AC or DC driver with a dimmable option. ETL listed to UL 1598 and 1598A with a pending UL 844 (Class I, Div II; Class II, Div I & II; Class III) listing. The HDL-LED Series easily retrofits to existing Phoenix installations. Repair parts are also available. The series comes with a five-year limited warranty. For more information on Phoenix Products Co., visit: www. phoenixlighting.com.
REGISTER NOW! Registration is now open for the AREMA 2014 Annual Conference & Exposition. Easily register online by visiting www.arema.org. +1.301.459.3200 May 2014 RAILWAY AGE 47
RAWrkSiteTrn1_2pg2014AllClass_Layout 1 1/22/14 2:53 PM Page 1
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Freight Car: • Freight Car Inspection and Repair • Single Car Air Brake Test • FRA Part 232 Brake System Safety Standards for freight and other non-passenger trains • Train Yard Safety
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Railroads owning tank cars? To the Editor: America’s history and development is so closely intertwined with that of certain industries that it is hard to separate them. Such is the case of U.S. railroads, and there are a few important issues that I believe are immensely important given two recent announcements, one by BNSF that it plans to acquire 5,000 tank cars for the transportation of crude oil, the other by CP that it plans to place restrictions on tank cars in TIH service. In 1918, the Interstate Commerce Commission issued a ruling that made it possible for private industry to provide its own railroad rolling stock (specifically tank cars) over the objections of most carriers. Since then, the tank car industry has performed very well without the direct involvement from carriers, in large part because the carriers were not directly involved in owning or offering tank cars to customers. With BNSF about to enter the tank car market in a material way, a number of questions and concerns come to mind: • Will BNSF (and other carriers) be allowed to differentiate with rates, service or routes between shippers who use BNSF tank cars and those who do not? • Under what terms, if any, will BNSF assign its tank cars to shippers who do not originate loads on BNSF but travel a significant portion of the route on BNSF? • How will such segregation of the BNSF tank car fleet impact refineries and other end-users of the crude oil expected to move in these cars? • Does this move by BNSF impede or enhance the competitive landscape for the development of the oil reserves and the development of pipelines? • How long before other Class I’s follow suit and acquire their own equipment, thus squeezing out the “privates,” and what will protect the market from potentially predatory practices by the railroads (recall the coal slurry pipeline lawsuit of the 1970s)? • Everyone from wellhead producers to refineries to repair facilities to equipment lessors to the investment community will be impacted by this shift in practice. We need to recognize that it was this very issue—crude oil shipments by rail—that caused so much of U.S. transportation law to be enacted. • If CP is successful in its efforts to restrict TIH cars, how long will it be before other classes of cars are affected or other carriers impose new/other restrictions of their own? • Will each carrier be permitted to set its own standards irrespective of AAR/DOT/FRA industry standards? These and many other issues remain unanswered and unaddressed. Before our industry accepts this tectonic shift in practices, I strongly urge those of us in the business to carefully consider the old adage: “Those who fail to learn from history are destined to repeat it.” Peter R. Urban Vice President Rail Marketing, Compass Capital Corp., Chicago
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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.
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May 2014 RAILWAY AGE 49
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May 2014 RAILWAY AGE 51
Perspective NATE CLARK
Overcoming the other meaning of “J-I-T”
here are new challenges facing North America’s rail industry as a result of the massive demographic bulge of the Baby Boom Generation working its way toward retirement. Noted author Landon Y. Jones coined the term “Baby Boomer” in his 1980 book Great Expectations: America and the Baby Boom Generation. Jones likened this to “the pig in the python,” as the generation’s huge shockwave of more than 75 million people gradually moves through the stages of life. Already, the collective decisions, preferences, and attitudes of Boomers have profoundly influenced such things important to transportation providers as where population centers (and thus, people to feed, clothe, house, and entertain) have shifted in the past third of a century, what types of motor vehicles they drive, and even what forms of energy they want to use to generate their electricity. From a human resource perspective, railroads are already beginning to lose huge percentages of “Boomer” employees to Railroad Retirement pensions. This unavoidable trend, in both labor and management ranks, will only increase in the next several years. While this sudden change in the age distribution of the rail workforce will be good news for bright, energetic younger people seeking careers in this industry, it also means that personnel concerned with marketing and selling rail freight services could be facing a steeper grade to climb with their shipper purchasing counterparts. Anyone reading Railway Age is almost certainly familiar with the inventory management and time-value-of-money concept of J-I-T, the convenient shorthand for “Just In Time” delivery. In the last quarter of the 20th century, the growing realization that holding large inventories at a destination facility costs real dollars that are tied up in materials
led many companies to a more truckcentric, smaller-lot distribution model. Managements across the continent recognized that having several days’ or even more than one week’s worth of inventory arrive in carload quantity put the ownership of all that material on their books for the duration, sometimes even as soon as the car was shipped vs. received, depending on the terms of sale. Many shippers were forced to hold inventory on their end and ship only as needed in truckload quantities.
There are many shippers who still believe that J-I-T means “Just In Trucks” as well as “Just In Time.” Others employed remote storage options closer to their receivers, such as forwarding warehouses or rail-truck transload centers that offer the cost benefits of volume shipping to these points, followed by the J-I-T delivery timing requirements of their customers. Still others have adopted lean manufacturing techniques that produce only what is needed by the customer and with only enough lead time to truck it to the receiver. Some firms, notably in the automotive supplier industry, opted (or were strongly encouraged) to eliminate long-distance finished-components transportation altogether, by co-locating production with their receiving customers’ facilities. This
means raw materials travel the long distances to suppliers, while their higher-valued (and therefore higherfreight-rated) output can be truck-shuttled or even automatically conveyed into the appropriate line location at assembly plants. What has all of this got to do with marketing and selling rail services? It presents a formidable railroad challenge: overcoming J-I-T’s other meaning —“Just In Trucks.” There is now a generation of purchasing managers and traffic decision-makers rising in the ranks who may not be considering how rail freight might fit into their supply chain. There are those who buy or influence the purchasing of freight transportation services who have never had a single contact with a railroad, but might arguably have a viable business case for using rail. There are a surprising number in influential roles who not only don’t understand that rail might be a freight option, but are largely unaware of the fact that railroads can serve their needs as well as trucks. Much of that dearth of direct railroad contact is because of the convenience offered by modern third parties who, nevertheless, manage a growing wave of trailers and containers for rail intermodal movement. They thus insulate the owners of such freight from the need for any direct railroad interface. There remains, however, a significant amount of tonnage that moves by rubber tires that might be more efficiently and economically moved by rail, but for the fact that the decision-makers may not be inclined to “think rail,” because they’ve never “done rail.” That should be at least some inspiration for the commercial departments of Class I and short line and regional carriers, as well as third-party transloaders. There just might be lots of low-hanging fruit that railroads can still pick.
Do you have the most up-to-date FRA Regulations?
Use this handy index to verify that you have the most up-to-date version of the FRA regulations. The left-hand column lists the FRA Part number and the right-hand column list the latest revision date. Items highlighted in red denotes recent changes. (IFR = Interim Final Rule) FRA Part #
Last Update Effective:
FRA Part #
Last Update Effective:
40 . . . . . . . . .10-3-12 209 . . . . . . . .2-12-13 210 . . . . . . . .8-14-89 211 . . . . . . . .7-20-09 213 A-F . . . . .3-25-14 213 G . . . . . .7-11-13 214 . . . . . . . .6-25-12 215 . . . . . . . .6-25-12 216 . . . . . . . .6-25-12 217 . . . . . . . .6-25-12 218 . . . . . . . .6-25-12
219 220 221 222 223 224 225 228 229 230 231
. . . . . . . . .5-6-13 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . . .1-1-14 . . . . . . . .6-25-12 . . . . . . .12-19-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12
FRA Part #
232 233 234 235 236 237 238 239 240 242
Last Update Effective:
. . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .5-14-13 . . . . . . . .6-25-12 . . . . . . . .7-13-12 . . . . . . . .6-25-12 . . . . . . . .1-28-14 . . . . . . . .1-28-14 . . . . . . . .6-25-12 . . . . . . . .6-25-12
Mechanical Department Regulations
The following is a list of booklets reprinted from the Department of Transportation Code of Federal Regulations 49 CFR Parts 200 to 399 that apply to the rail industry. They are printed in a convenient format and are kept current with updates from the Federal Register which may be supplied in supplement form. Item FRA 50 or Code Part # Each more
209 211 BKTSSAF 213 BKTSSG 213 BKWRK 214 BKFSS 215 BKROR 217 218 BKRRC 220 BKEND 221 BKSEP
Railroad Safety Enforcement Procedures & Rules of Practice Track Safety Standards (Subpart A-F) (Soon) Track Safety Standards (Subpart G) Railroad Workplace Safety Railroad Freight Car Safety Standards Railroad Operating Rules and Practices Railroad Communications Rear End Marking Device, Passenger, Commuter & Freight Trains BKHORN 222 Use of Locomotive Horns BKRFRS 224 Reflectorization of Rail Freight Rolling Stock BKHS 228 Hours of Service BKLSS 229 Locomotive Safety Standards BKSLI 230 Steam Locomotive Inspection BKSAS 231 Railroad Safety Appliance Standards BKBRIDGE 237 Bridge Safety Standards BKLER 240 Qualification and Certification of Locomotive BKCONDC 242 Conductor Certification BKBSS
Brake System Safety Standards
9.95 8.55 9.50 7.25 9.50
8.95 7.85 8.55 6.55 8.55
6.25 10.50 11.00 22.95 9.35 6.25 12.75
8.50 5.60 11.50
Passenger Safety Standards 22.80 Part 238, 239 - Order 25 or more and pay only $20.50 each
Signal and Train Control Systems Includes Part 233, 234, 235, 236 Order 25 or more and pay only $17.55 each
Drug and Alcohol Regulations in the Workplace Part 40 & 219
Track and Rail and Infrastructure Integrity Compliance Manual - Volume II, Track Safety Standards Order 25 or more and pay only $30.00 each
Ph: (402)346-4300 • Fax: (402)346-1783 Email: email@example.com
Mech. Dept. Regs. Order 25 or more and pay only $24.50 each
Part 240–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.
Technical Manual for Signal and Train Control Rules. Includes Part 233, 234, 235, 236 - Spiral Bound Order 25 or more and pay only $39.10 each
1809 Capitol Ave, Omaha, NE 68102
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 Eff: 1-1-14 229 Locomotive Safety Standards 231 Safety Appliance Standards 232 Brake System Safety Standards
Qual. and Certif. of Loco. Engineers Order 50 or more and pay only $11.50 each
25 or more
The Railway Educational Bureau
Part 238 - Passenger Train Exterior Side Door Safety, Proposed Rule: FRA is proposing to improve the integrity of passenger train exterior side door safety systems and promote passenger train safety overall through new safety standards relating to the safe operation and use of passenger train exterior side doors. This proposed rule is intended to limit the number and severity of injuries involving passenger train exterior side doors and enhance the level of safety for passengers and train crewmembers. DATES: Written comments must be received by May 27, 2014.
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.
Conductor Certification Order 50 or more and pay only $9.90 each
800-228-9670 8 a.m. to 5 p.m. C.S.T., Monday/Friday
Add Shipping & Handling if your merchandise subtotal is: U.S.A. CAN U.S.A. CAN UP TO $10.00 $4.10 $8.55 25.01 - 50.00 9.80 15.70 10.01 - 25.00 7.20 11.80 50.01 - 75.00 10.90 19.80 *Prices subject to change. Revision dates subject to change in with laws published by the FRA. 5/14
Orders over $75, call for shipping accordance