Aug 2012 Railway Age Magazine

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Features Profitable under pressure 18 Maximizing productivity

24

U.S. HSR accelerates

30

News/Columns From the editor Update

2 10

Short line & Regional Perspective Financial edge

16 44

18

Departments industry indicators

4

industry Outlook

6

Market

8

People

36

100 years Ago

36

Meetings

36

Products

39

Advertising index

41

Professional Directory

42

Classified

43

24

On the COver A Union Pacific train hauls potash south of Clagstone, idaho.

Photo by Bruce Kelly

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Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 345 Hudson St., 12th Fl., New York, NY 10014. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 213, No. 8.

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August 2012 RAilwAy Age 1

From the Editor william C. Vantuono

Editorial and ExEcutivE officEs Simmons-Boardman Publishing Corp.

345 Hudson Street, 12th Fl. New York, NY 10014 212-620-7200; Fax: 212-633-1863

Crossed up on crossties

J

ohn D. Rockefeller IV, the Democratic Senator from West Virginia and chair of the Senate Committee on Commerce, Science, and Transportation, has made many efforts to impose new regulations on the railroads that some industry observers say are as onerous as those that existed prior to passage of the Staggers Act. That’s why I view, with some puzzlement, a recent positive statement he made about railroads.

I refer you to the item on p. 6 describing how 51 U.S. Senators have co-sponsored a piece of legislation that’s extremely important to the small-railroad industry: extension of the 45G short line rehabilitation tax credit. The Senate’s version of the bill is S.672. Its chief sponsors are Rockefeller and Mike Crapo (R-Idaho).

Rockefeller had this to say about S.672 and his sponsorship: “West Virginia is the second biggest producer of railroad ties in this country, and rural communities across the state rely on these short line railroads to maintain business and create jobs. This credit has translated directly into jobs, not just for the people of West Virginia, but all across America.”

Thank you, Sen. Rockefeller, for sponsoring this very important piece of legislation. What you said about the railroads maintaining business and creating jobs is quite true.

There are a few points I’d like to add: • You specifically referred to the fact that West Virginia is a major producer of railroad crossties. That is true.

• You also correctly inferred that extension of 45G would enable small railroads to purchase new ties to improve their rights-of-way.

RailwayAge

• The railroads, on average, purchase approximately 20 million crossties per year.

• The vast majority of those crossties are purchased by Class I railroads.

Those Class I’s are the very railroads that you are so passionately attempting to re-regulate with antitrust legislation and other onerous re-regulatory measures that would dilute their pricing power with respect to coal, grain, and chemicals—three major lines of business.

If your efforts on that front are successful, the Class I’s, which annually invest billions of dollars of maintenance and growth capital in their physical plant, may have little choice but to scale back their investment. Undoubtedly, crosstie purchases will be impacted by those scalebacks.

I would think that he companies in your home state that produce those ties will suffer loss of business, and hence, loss of jobs. Aren’t you trying to (as you should) preserve those jobs?

It’s difficult to understand Washington politics as well as the folks that work the trenches on Capitol Hill, getting things done—people like ASLRRA President Rich Timmons, or that most astute lobbyist and NRC President, Chuck Baker of Chambers, Conlon & Hartwell.

They are perhaps the most important people behind the 45G extension. Few could do what these people do—that is, deal with the complex, sticky spiderweb (often populated by huge egos) that must be navigated on Capitol Hill.

What must be particularly difficult is figuring out how to deal with someone who is trying to slap and then bind an industry’s right hand while at the same time warmly embracing its left hand.

Website: www.railwayage.com ARTHUR J. McGINNIS, Jr., President and Chairman JONATHAN CHALON, Publisher jchalon@sbpub.com WILLIAM C. VANTUONO, Editor wvantuono@sbpub.com ROBERT P. DeMARCO, Publisher Emeritus bdemarco@sbpub.com DOUGLAS JOHN BOWEN, Managing Editor dbowen@sbpub.com LUTHER S. MILLER, Senior Consulting Editor: lmiller@sbpub.com CONTRIBUTING EDITORS: Alex Binkley, Roy H. Blanchard, Lawrence H Kaufman, Anthony D. Kruglinski, Ron Lindsey, Jason H. Seidl Corporate Art Director: Wendy Williams Associate Art Director: Phil Desiere Corporate Production Director: Mary Conyers Production Manager: Jessica Cajas Production Director: Eduardo Castaner Marketing Director: Erica Miller Conference Director: Jane Poterala Circulation Director: Maureen Cooney WEstErn officEs 20 South Clark Street, Suite 2450, Chicago, IL 60603 312-683-0130 ; Fax: 312-683-0131 GEORGE SOKULSKI, Associate Publisher gsokulski@sbpub-chicago.com Engineering Editor: Mischa Wanek-Libman mwanek@sbpub-chicago.com Assistant Editor: Jennifer Nunez jnunez@sbpub-chicago.com intErnational officEs 46 Killigrew Street, Falmouth, Cornwall TR11 3PP, United Kingdom Telephone: 011-44-1326-313945 Fax: 011-44-1326-211576 International Editors: David Briginshaw, Keith Barrow, Kevin Smith customEr sErvicE: 800/895-4389 Reprints: PARS International Corp.

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industry indicators tRaffiC oRiginated carLoaDS

maJoR u.s. RailRoads

By Commodity grain farm Products ex.grain metallic ores coal crushed Stone / Sand / gravel nonmetallic minerals grain mill Products food & Kindred Products Primary forest Products Lumber & Wood Products Pulp, Paper & other chemicals Petroleum Products Stone, clay & glass coke metals & Products motor Vehicles & equipment Iron & Steel Scrap Waste & nonferrous Scrap all other carloads total CaR loaded

Canadian RailRoads all Commodity

meXiCan RailRoads all Commodity

WeeK 28 enDIng JULY 14, 2012 2012 18,209 728 7,724 122,507 19,415 5,235 10,019 6,683 1,592 3,199 6,030 28,873 11,049 8,041 3,480 9,623 12,485 3,815 3,280 4,169 286,156

2011 19,377 842 8,977 119,547 19,245 5,656 9,172 6,205 1,539 2,824 5,906 30,310 7,939 7,842 3,793 10,150 8,516 5,088 3,357 5,225 281,508

% Change -6.0% -13.5% -14.0% 2.5% 0.9% -7.4% 9.2% 7.7% 3.4% 13.3% 2.1% -4.7% 39.2% 2.5% -8.3% -5.2% 46.6% -25.0% -2.3% -20.2% 1.7%

77,039

74,665

3.2%

15,281

13,931

9.7%

28 WeeKs 7,854,130 2,145,397 393,695 10,393,222

u.s total Canadian total meXiCan total noRth ameRiCan total

% Change fRom 2011 -2.6% 3.4% -1.4% -1.4%

WeeK 28 enDIng JULY 14, 2012

InTermoDaL u.s. RailRoads TraILerS conTaInerS total unit

Canadian RailRoads TraILerS conTaInerS total unit

meXiCan RailRoads TraILerS conTaInerS total unit

28,471 217,444 245,915

31,899 198,435 230,334

-10.7% 9.6% 6.8%

1,427 52,923 54,350

1,479 49,878 51,357

-3.5% 6.1% 5.8%

8 10,760 10,768

0 9,323 9,323

28 WeeKs 6,499,007 1,411,619 260,209 8,170,835

u.s total Canadian total meXiCan total noRth ameRiCan total

— 15.4% 15.5%

% Change fRom 2011 3.5% 7.1% 18.3% 4.5%

estimated ton-miles (Billions), u.s. Class i RailRoads 2012 33.3 895.3

WeeK 28 total WeeK 1-28

2011 32.5 911.8

% Change 2.5% -1.8%

Source: Weekly railroad Traffic, association of american railrods

Rail fReight tRaffiC tRends, u.s. Class i RailRoads 38

estimated billion ton-miles

2011

36 34 32 30

2012

28 26

4 8 week

12 16 20 24 28 32 36 40 44 48 52

Week-ended number 4

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august 2012

shoRt line and Regional tRaffiC indeX carLoaDS

oRiginated June ’12 41,616 21,585 27,059 12,190 23,883 7,146 9,085 6,151 21,442 11,690 1,360 2,142 17,388 12,600 39,644 10,210 93,311

By Commodity chemicals coal crushed Stone / Sand / gravel food & Kindred Products grain grain mill Products Lumber & Wood Products metallic ores metals & Products motor Vehicles & equipmet nonmetallic minerals Petroleum Products Pulp, Paper & allied Products Stone, clay & glass Products Trailers/containers Waste & nonferrous Scrap all other carloads

oRiginated June ’11 40,695 18,498 24,638 12,503 24,085 7,308 8,527 6,358 20,819 8,934 2,454 1,908 18,157 13,014 38,231 11,435 91,241

% Change 2.3% 16.7% 9.8% -2.5% -0.8% -2.2% 6.5% -3.3% 3.0% 30.8% -44.6% 12.3% -4.2% -3.2% 3.7% -10.7% 2.3%

total CaRloads, June 2012 vs. 2011 June 2012 - 358,502 June 2011 - 348,805 290,000 300,000 310,000 320,000 330,000

340,000 350,000 360,000 370,000 380,000

copyright © 2012. all rights reserved.

RailRoad employment, Class i linehaul CaRRieRs, June 2012 (% change from JUne 2011)

Transportation (train and engine) 65,606; +2.33%

executives, officials, and Staff assistants 9,661: +3.54%

Professional and administrative 14,040; +1.56%

total employees: 163,159 % Change fRom June 2011: +2.40% Transportation (other than train & engine) 6,842; +2.59%

maintenance of equipment and Stores 29,751; +2.15%

maintenanceof-Way and Structures 37,259; +2.70%

Source: Surface Transportation Board

employment up yeaR-oveR-yeaR and fRom past month figures released by the Surface Transportation Board show class I railroads employed 163,159 people in mid-June, up 2.4% from June 2011. all categories gained year-over-year, with executives, officials and Staff assistants again leading the pack, up 3.54%. employment also rose 0.38% from may 2012, paced by Professional and administrative hires, but was down slightly in three of six categories, led by maintenance of equipment and Stores, which fell 0.52%.

Industry Outlook ASLRRA: 51 Senate cosponsors support tax credit

USPS mulls moving more mail by rail The U.S. Postal Service is once more eyeing freight railroads as a way to lower costs and improve efficiency. a 26-page report dated July 16, prepared by the USPS Office of inspector general, recommends pursuing intermodal mail movement to “save transportation costs, gain long-term strategic advantages, and still continue to meet existing service standards.”

“Competitors such as UPS and Fedex have become major users of freight rail over the last decade just as the Postal Service has moved away from it. in fact, UPS is now the single largest user of intermodal rail service in the United States. J.B. Hunt, one of the Postal Service’s largest highway trucking contractors, now earns about 60% of its revenues from intermodal rail operations.” the report says.

USPS spent more than $3.3 billion on road-based contracts in 2011, but only $40 million on rail-based alternatives. with a nod to the Staggers act, 6

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the report notes, ““The rail industry has invested more than $460 billion in capital improvements since deregulation in 1980 and continued to invest heavily even during the recent recession. Such private investment is under the industry’s control and is greatly expanding the efficiency and capacity of the rail network. in contrast, highway improvements are largely outside of that industry’s control and capacity is not expanding sufficiently to meet demand.”

tax provisions that have or will expire shortly. The 45g tax credit has been extended twice through inclusion in previous extender packages. Timmons said he believes that this strong cosponsor showing will help keep 45g in the current package. The leading sponsors of the legislation in the House are Rep. lynn Jenkins (R-Kan.) and Rep. earl Blumenauer (D-Ore.).

Said Sen. Rockefeller, “west Virginia is the second biggest producer of railroad ties in this country, and rural communities across the state rely on these short line railroads to maintain business and create jobs.

This tax credit would mean better, safer railroad track and more reliable, competitively priced railroad service for companies to transport their products. it is particularly important for rural areas like west Virginia, where short line service is often the only railroad service available for many companies.”

FRA, OSHA pact for whistleblowers The Federal Railroad administration and the Occupational Safety and Health administration (OSHa) have reached agreement “to improve coordination between the two agencies in enforcing the whistleblower provision of the Federal Railroad Safety act (FRSa).”

FRSa protects employees from retaliation when they report safety violations to the government or report work-related personal injuries or illnesses.

Between 2007 and 2012, OSHa received more than 900 whistleblower complaints under the FRSa. almost 63% involved an allegation that a worker was retaliated against for reporting an on-the-job injury.

FRa and OSHa sent a joint letter to railroad and transportation associations providing ways that the associations’ member organizations can improve workplace safety.

WILLIAM C. VANTUONO (BOTH PHOTOS)

The american Short line and Regional Railroad association (aSlRRa) said last month it had reached a major milestone “by securing the 51st Senate co-sponsor of legislation to extend the short line rehabilitation tax credit (45g). The legislation has now been sponsored by a majority of both Houses of Congress.”

House bill H.R. 721, with 257 cosponsors, has been over the 50% mark since last December, aSlRRa said.

“The Senate bill, S. 672, is now likewise supported by over half of the Senate.”

Both bills are backed with bipartisan

support, aSlRRa noted.

Said aSlRRa President Richard F. Timmons, “The short line rehabilitation tax credit has been tremendously successful in maximizing private investment in railroad infrastructure. it allows small businesses to invest more of what they earn in track improvements.”

Timmons said the industry was deeply grateful to the tax credit legislation’s chief Senate sponsor, Sen. Jay Rockefeller (D-w.Va.) and leading Republican co-sponsor Sen. Mike Crapo (R-idaho). “at a time when there is more partisan gridlock in Congress than ever before, these two Senators have put together a truly bipartisan effort on behalf of legislation that encourages private investment and creates jobs,” he said. aSlRRa said both the Senate and House tax writing committees are considering a so-called “extenders package” which includes a variety of

Market

GE, UP herald 5,000th Evolution Series locomotive erie, Pa.-based ge Transportation July 20 announced the rollout of the 5,000th evolution Series locomotive. The series has been in production since since 2005. The 5,000th unit was delivered to Union Pacific as road number 7964. The locomotive was to be featured in the Denver Post Cheyenne Frontier Days event that is part of the UP’s 150th anniversary celebration, with UP steam locomotive No. 844 on the point, followed by the evolution Series diesel electric locomotive. Dick Hartman, UP director of Public affairs in Colorado and wyoming, said, “we are proud to continue to be a part of the Frontier Days celebration by pulling such a historic passenger special with the legendary steam locomotive No. 844 along the northern Colorado Front range.”

North America MBTA: Committed $38 million to acquire seven new locomotives from MotivePower, inc., with 80% of the purchase priced funded by federal sources. MotivePower previously was awarded a $115 million contract from MBTa for 20 locomotives, expected to arrive for service this year and during 2013. The seven locomotives ordered

by MBTa will follow.

Metropolitan Transit Authority of Harris County (Houston): Tapped Mississauga, Ontario-based Trapeze group for enterprise asset Management (eaM) technology for Metro’s rail and bus operations. eaM will be used to improve Metro’s operations performance through increased equipment/asset availability, decreased maintenance and repair (M&R) costs, and increased bus and rail utilization, MTa officials said.

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MTA Metro-North Railroad: is working with Masabi US ltd. to test a smartphone app “that will let people buy their train tickets anywhere, anytime, and never have to hold a piece of paper.” The pilot, beginning this month, will have Metro-North employees act as customers as they download the free app to iPhone, android, or Blackberry phones. The app will permit purchase of any type of ticket with any origin and destination, using credit or debit cards.

Rio Grande Pacific Corp: Selected Fairport, N.y.-based RailComm to provide its state-of-the-art Domain Operations Controller (DOC®) train control system for the company’s operations in six states. The system will have functionality for Track warrant Control (TwC) through web-enabled software-as-a-service (SaaS) delivery, using a “pay-as-you-go” model.

Railroads can be remotely dispatched

by Rio grande Pacific wherever an internet connection is available.

Worldwide Railroad Development Corp.: Said it “has prevailed in its five-year international arbitration against the Republic of guatemala brought under the Dominican Republic Central america Free Trade agreement (CaFTa).” a dispute tribunal ruled that guatemala had violated the pact “by engaging in conduct that was ‘arbitrary, grossly unfair, [and] unjust’ and awarded RDC full reparations.” RDC guatemalan affiliate Ferrovías guatemala (FVg) initially was awarded a 50-year concession by guatemala in 1997 to revive, operate, and develop the assets the national railway, but after RDC revived and operated the railway for seven years, guatemala reneged on the agreement, and the action “caused FVg’s railway business to collapse.”

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Update Supply BriefS

Harrison installed as CP CEO

COlD TrAiN eXpANDS VOluMe, reACH, fleeT Rail logistics says that due to “continued growth,” its Cold Train refrigerated container fleet will grow to 300 53-foot containers, and the company also be expanding service into east Coast markets. The “Cold Train” Pacific Northwest-Chicagoland express Refrigerated intermodal Service, in partnership with BNSF and the Port of Quincy, wash., serves shippers in washington State and numerous Midwest states.

l.B. fOSTer geTS HONOlulu CONTrACT l.B. Foster Co. has been awarded a $60 million contract by Kiewit/ Kobayashi, a joint venture for the construction of the Honolulu authority for Rapid Transportation (HaRT) passenger transit system in Hawaii. l.B. Foster rail, concrete ties, direct fixation fasteners, third rail with accessories ,and special trackwork will be installed throughout the HaRT project’s new elevated railway system and maintenance yard, the first major passenger rail transit project on the island of Oahu and in the state.

WABTeC COMpleTeS TeC TrAN ACquiSiTiON On July 16 wabtec Corp. announced it had completed the acquisition of Tec Tran Corp., which manufactures hydraulic braking systems and related components.

Tec Tran is the only U.S.-owned producer of hydraulic braking systems for transit cars. it has annual sales of about $10 million. “with its expertise in hydraulic braking equipment, Tec Tran offers new capabilities and technology to complement our product portfolio,” said albert J. Neupaver, wabtec’s president and CeO. 10

Railway age

august 2012

J

ust in time for Canada Day (July 1), Canadian Pacific officially made its long-anticipated move of appointing E. Hunter Harrison president and chief executive officer, completing a significant revision of CP leadership that included a revamped board of directors.

CP noted, “With nearly 50 years of railroad experience, Mr. Harrison previously served as the president and CEO of Canadian National Railway Company (CN) and, prior to that, as president & CEO of Illinois Central Railroad (IC).”

“Following a thorough CEO selection process, the Board of Directors has endorsed and appointed Mr. Harrison as CP’s president & CEO,” said Paul Haggis, CP’s chairman of the Board of Directors. “The Board welcomes Mr. Harrison’s experience and leadership to CP. We look forward to benefiting from his strong track record of service reliability, efficient asset utilization, and strategic capital expenditure.”

“CP is an incredible franchise with significant market opportunity, solid infrastructure, and innovative and hardworking employees,” said Harrison (pictured above). “I am proud to be

working with one of North America’s iconic companies and I look forward to quickly getting to know the priorities of CP’s customers, shareholders, employees, and the communities served by the railway.”

CP noted Harrison has received numerous accolades, including Railway Age’s Railroader of the Year (2002) and CEO of the Year by the Globe and Mail’s Report on Business magazine.

Responding to its longtime rival, Canadian National released a statement congratulating Harrison while simultaneously reserving CN’s right to pursue legal action on the move. “CN wishes to congratulate E. Hunter Harrison on his appointment as president and chief executive officer of Canadian Pacific Railway. We look forward to fair and vigorous competition with CP under his leadership. We know a healthy and productive CP is good for the rail industry and good for the economy,” CN’s statement began.

But CN also noted, “CN’s legal proceeding against Mr. Harrison is ongoing, and the company reserves the right to exercise any and all legal options available to it in connection with this action.”

BUSINESSWIRE

Genesee & Wyoming Inc. set to acquire RailAmerica Inc. Greenwich, Conn.-based Genesee & Wyoming Inc. on July 23 announced it will acquire Jacksonville, Fla.-based RailAmerica Inc. in an all-cash transaction valued at $27.50 per share, or roughly $1.4 billion. GWI said its acquisition will combine the two largest short line and regional rail operators in North America.

Both companies said the combination also “should yield significant synergies and provide strong leverage to the eventual recovery of the U.S. economy, while creating a powerful platform for future industrial development along railroads in the 37 U.S. states in which GWI will do business.”

Industry observers estimated the combination could account for up to 4% of all freight carload traffic in the U.S. “A few more consolidations and we’ll have the first non-contiguous Class I railroad,” one observer quipped upon hearing the announcement.

GWI expects to fund the transaction and GWI’s acquisition of RailAmerica will form a company with business in 37 states. the simultaneous refinancing of its existing debt with approximately $2.0 billion of new debt and $800 million of equity or equity-linked securities.

GWI has received $2.3 billion of committed debt financing from Bank of America’s Merrill Lynch and $800 million of committed equity financing from The Carlyle Group, of which it has agreed to take a minimum of $350 million through a private placement of two-year mandatorily convertible preferred stock (“The Carlyle Convertible”) from Carlyle Partners V, a $13.7 billion U.S. buyout fund.

Jack Hellmann, president and CEO of GWI, said, “The acquisition of RailAmerica by GWI is a straightforward combination of two organizations with overlapping holding company structures and complementary railroad geographies. As a result, the synergies between the companies are expected to be significant and we anticipate unlocking significant shareholder value.”

Hellmann noted “ GWI will now operate 108 railroads over more than 12,000 track-miles. From a commercial standpoint, we believe that this footprint not only provides us with strong leverage to any eventual recovery of the U.S. economy but also creates a powerful platform for future industrial development along railroads in the 37 U.S. states in which we will do business.”

RailAmerica President and CEO John Giles said the sale “represents validation of the improvements our management and employees have made since acquisition of the business in 2007 by investment funds managed by affiliates of Fortress Investment Group LLC.” It also is “the logical next step” in forming a “powerful driver of North American rail traffic.”

August 2012 RAilwAy Age 11

Update Streetcar lines advance in Virginia’s D.C. suburbs Arlington County, Va., continues pursuing two streetcar line projects, each extending from the Washington, D.C. Metrorail Pentagon City Station. Last month the Columbia Pike Streetcar line, running roughly five miles west from Pentagon City, was approved by the County Board, allowing county staff to apply to the Federal Transit Administration for funding assistance with the project, currently estimated to cost $199 million.

Arlington voters will be asked Nov. 6 to approve $153.4 million in general obligation bonds to finance four specific infrastructure categories, with the transportation package totaling $31. 9 million; voters will be able to approve or reject each of the four categories.

A second line, “The Route 1 Corridor Streetcar Conversion Project” would create another five-mile streetcar line running east from Pentagon City Station, roughly paralleling U.S. Route 1, and terminating in neighboring Alexandria, Va. Alexandria and Arlington may advance this line first, since plans call for the project to be funded without federal assistance, including from the Crystal City tax increment financing area (TIF), approved in 2010 by Arlington County.

Plans call for the two streetcar lines to eventually operate as one once both are built.

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MBTA taps MotivePower

Massachusetts Bay Transportation Authority’s Board of Directors has committed $38 million to acquire seven new locomotives from MotivePower, Inc., with 80% of the cost funded by federal sources. Boise, Idaho-based MotivePower previously was awarded a $115 million contract from MBTA for 20 locomotives, expected to arrive for service this year and during 2013. The seven additional new locomotives will follow thereafter.

Letters

The Architect of Change article in the July 2012 edition of Railway Age written by Contributing Editor and longtime acquaintance Larry Kaufman, is very much appreciated.

There are a couple of items I would like to clarify.

First, while Kansas City Southern Industries (KCSI) was being dismantled by the board in the 1990s, diversification was very successful for shareholders during the William N. Deramus III era and for over a decade thereafter. Between

1972 and 2002, KCSI was the number one performing stock on the NYSE. Second, KCSI was well known for its civic and philanthropic contributions in Kansas City long before I arrived in 1995 and we moved to the new railroad corporate headquarters building in 2002. There were so many civic and charitable contributions made from the 1960s through the 1990s that they are too numerous to mention.

Finally, I hope everyone appreciates my wit in referring to myself as the “Godfather.” I clearly understand my continuing strategic and corporate oversight responsibilities, but after 17 plus years at KCS with the many challenges we have faced and overcome, it is hard not to view the company as my “godchild.”

Mike Haverty Executive Chairman Kansas City Southern Industries

Since 1968

2012

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Find out how to avoid side load at www.HYTORC.com/FrogNut august 2012 Railway age 13

Update CSX, Furniture Row Racing wrap up 2012 sponsorship

Upper left and right: Regan Smith takes the no. 78 CSX Play It Safe Chevrolet on a qualifying run at Dover. Above: Smith and CSX Director, Corporate Communications Gary Sease.

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starting position for the Pocono 400. Smith ran in the top-20 for virtually the entire race and finished 16th, his seventh top-20 of the season. At Michigan International Raceway, he qualified 12th at a speed of 200.725 mph, one of only 19 drivers in the 43-car field to surpass 200 mph. It was Smith’s fastest qualifying effort of his career.

In 2013, CSX and Furniture Row Racing are expected to team up once again, starting with February’s Daytona 500.

William C.Vantuono, Editor-in-Chief

WILLIAM C. VANTUONO (ALL PHOTOS)

The freight railroad industry’s first venture into a key sponsorship with a race team in NASCAR’s top-tier Sprint Cup Series has concluded for this year on a positive note.

CSX and Furniture Row Racing wrapped up their six-race “Play It Safe Around Railroad Tracks” 2012 associate sponsorship program at Kentucky Speedway on June 30 at the Quaker State 400. The race team, driver Regan Smith, and sponsor CSX feel the program was successful, and CSX is evaluating what the next steps will be.

“It has been a wonderful experience, and Regan Smith is a natural from a spokesman standpoint,” said CSX Director, Community Affairs and Safety Cliff Stayton. “He has been an excellent spokesperson for us, and has been able to get our message out there to Play It Safe around trains and railroad tracks. The number of people we’ve been able to reach has been exactly on spot for us, and we look forward to continuing this program.”

Smith was credited with a 33rd-place finish in the Quaker

State 400—a solid performance spoiled by being in the wrong place at the wrong time at Kentucky Speedway.

While running in 14th place on Lap 209 of 267, Smith hit a large oil slick that was dumped on the track by a blown engine in Ryan Newman’s No. 39 car, which was positioned directly in front of Smith’s No. 78 Furniture Row/CSX Play It Safe Chevrolet.

As soon as the tires on Smith’s car caught the oil in Turn 2, it slid violently and slapped the concrete wall, causing major damage to the right-front side of the car.

“I was right there with Newman,” said Smith. “I saw it, but there is not much you can do. I went sideways as soon as I hit the oil. It was unfortunate because we had a good car. In fact, we were getting better on every run and I truly felt we had a good shot at a top-10.”

Smith was able to drive the crippled car to the garage, where the No. 78 crew worked at blazing speed to make the necessary repairs so Smith could return to action to gain one available position in the final running order.

No doubt, Regan Smith and the Furniture Row Racing organization have what it takes to produce excellent results.

At Pocono on June 10, for example, Smith posted his sixth top-10 qualifying effort of the season, claiming the seventh

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August 2012 RAilwAy Age 15

Perspective: Short Line & Regional RiCHaRD F. TiMMONS

Roundup: Good news, bad news, and no news SAFETEA-LU Reauthorization After 10 short-term extensions of SAFETEA-LU, which expired in 2009, Congress finally passed a two-year renewal of the legislation. Known as MAP-21, the bill was signed into law by the President in late June. It authorizes all spending for surface transportation programs including highways, mass transit, and railroads. It is the first time in modern memory that a transportation bill passed with no Congressional earmarks, the legacy of the infamous “bridge to nowhere” contained in SAFETEA-LU. Some more cynical congressional observers believe it was the inability to horse trade for local pork barrel projects that stalled the legislation for so long.

The final bill includes a two-year study of the impact of bigger trucks on safety, highway repair costs, and traffic diversion. A version of this provision was passed by both the full Senate and by the House Transportation & Infrastructure Committee and is assumed to be in lieu of any increase in truck size and weight during the two year study period.

The bill continues the Section 130 grade crossing program at $220 million per year. The railroad industry fought back a nearly successful effort to eliminate this guaranteed carve-out in the highway trust fund by allowing states to determine whether they would spend those funds on grade crossing improvements or for other purposes. This was a big win for our industry.

Both the House and Senate versions of the bill contained a so-called Rail Title.

There were significant differences between the House and Senate on the Rail Title and in the end the entire Title was abandoned because the House and Senate negotiators could not come to agreement. The most important casualty 16

Railway age august 2012

for the rail industry was the proposed delay for PTC implementation. This means the unrealistic 2015 deadline remains in place. The short line industry had proposed a number of amendments to the RRIF loan program aimed at improving what is clearly a broken process. Various versions of these amendments were included in both the House

Replacing a six-year bill with a two-year bill after 10 tries is not an unparalleled legislative triumph. and Senate bills but were lost when the Rail Title was jettisoned.

Various proposals dealing with Amtrak and STB freight railroad studies and planning efforts were also included in either the Senate or House versions and all of those proposals died with the elimination of the Rail Title. The Amtrak issues are largely related to privatization, are very controversial and are likely to remain unresolved for years to come. The STB provisions were not directly related to the regulatory regime but it is possible their failure to make it into the bill may affect the thinking of the STB with regard to its deliberations in Ex. Parte 705 which does deal with a host of regulatory issues. As of this writing the STB has given no indication how or if it intends to proceed in this matter.

Replacing a six-year bill with a twoyear bill after 10 tries is not an unparalleled legislative triumph.

However, in a Congress where partisan gridlock has brought the legislative process to a virtual halt, it was one of the few times a truly bipartisan coalition in both Houses of Congress came together to get something done. I take some solace in the fact that transportation issues continue to have some ability to bring both political parties to the table.

Short Line Rehabilitation Tax Credit (45G) The struggle to extend the short line tax credit remains a struggle. On the good news side, the legislation continues to attract a large bipartisan number of Congressional co-sponsors—257 or well over half of the Members of the House and 50 or exactly half of the Members of the Senate. Fifty-seven members of the 87 Freshman Republican House representatives are co-sponsors. These numbers continue to be among the highest number of co-sponsors of any currently pending tax bill.

Regretfully, the tax credit is caught up in the same Congressional gridlock that has stalled most other progress in Washington. We believe the credit will be included in a larger package of “extenders.” Also regretfully, it is unlikely the full Congress will deal with any tax legislation until a “lame-duck” session after the election. If that lame duck session can come to agreement on even a short term extension of the Bush tax cuts there is a good chance the “extenders package” will be a part of that deal and 45G would be retroactive for 2012 and good for 2013.

Richard F.Timmons is president of the American Short Line and Regional Railroad Association.

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Profitable

under Pressure

F

ighting strong headwinds, the railroad industry has emerged this year as one of America’s great growth industries—not bad for an old “bricks and mortar” industry that’s nearly 200 years old and was pronounced ready for the scrap yard as recently as 1980.

Even some of Wall Street’s wisest pundits today are wondering how they did it.

The big difference between now and then is that the railroads, since deregulation in 1980, have been able to run their businesses with the same degree of market freedom as most

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other industries. This year, they have shown remarkable resilience in the face of adversity—for example, cheap, abundant natural gas combined with reduced demand for coal, a core rail business for generations.

The railroads’ ability to quickly match the size of their operations to the size of their business; their freedom to price their services according to what the market will bear, rather than by a complex set of government-imposed regulations; the fact that, as Warren Buffett is said to have remarked when he bought BNSF, “They can’t be moved to Mexico”: All

STEVE SCHMOLLINGER

In the face of serious adversity, remarkable resiliency is keeping the railroads on track for continued growth.

period in 2011, according to the AAR. Rail deliveries of crude oil and petroleum products in June alone jumped 51% to 42,000 tanker cars from a year earlier to an average weekly record high of 10,500 tanker cars for the month.

“One tank car holds about 700 barrels,” the EIA pointed out. “This would be equivalent to about 927,000 barrels per day (bbl/d) of oil and petroleum products shipped, on average, during the first half of 2012 vs. 673,000 bbl/d in the same period in 2011. June 2012 shipments were almost 980,000 bbl/d. Railroads are playing a more important role in transporting U.S. crude oil to refineries, especially oil production from North Dakota’s Bakken formation, where there is limited pipeline infrastructure to move supplies. The amount of crude oil and petroleum products transported by U.S. railways during the first half of 2012 increased 38% from the same period in 2011, according to industry data.”

beating the street

By williaM C. VaNTUONO, editor, with lUTheR S. MilleR, senior consulting editor

of this has contributed to what may very well end up as a another record year, in terms of revenues and profits.

Coal may have dropped precipitously in the first half of this year, but the resilient railroads have gained footholds in other markets to more than make up the difference—intermodal and automotive, for example. Another is petroleum products.

The U.S. Energy Information Administration last month reported on “the big jump in oil deliveries by rail during the first half of 2012.” The number of rail tank cars hauling crude oil and petroleum products totaled close to 241,000 during January-June 2012, compared to 174,000 over the same

The proof, as the old saying goes, is in the pudding. Take Union Pacific, for example. The 150-year-old UP was the first of the Class I’s to report its second-quarter 2012 performance. UP has traditionally been heavily reliant on coal traffic, which has been deeply cut into this year. Expectations were not universally high.

So much for expectations: UP reported second-quarter earnings of $1 billion, or $2.01 per share, up 28% from $785 million in the second quarter of 2011. Earnings, along with revenue of $5.22 billion in the quarter, handily outstripped Wall Street consensus analyst estimates of $1.97 earnings per share on revenue of $5.23 billion. Both categories were all-time highs for the company.

UP’s fifth consecutive quarter of double-digit growth was fueled in part by increases in automotive movement (up 15%) and chemicals traffic (up 12%) compared with the second quarter of 2011, offsetting the decline in coal (down 17%) that has affected U.S. railroads large and small throughout 2012. The railroad’s operating ratio dropped to 67%.

“Volume growth across many of our market sectors offset the 17% decline in coal volumes,” President and CEO Jack Koraleski said. “The net result was our best-ever quarter by nearly every financial measure.”

Second-quarter sales rose 7.5% to $5.22 billion, in line with analysts’ estimates, from $4.86 billion. UP also noted diesel fuel prices fell 2%, aiding the railroad’s bottom line.

“UP delivered another quarter of record revenues and earnings,” noted Dahlman Rose & Co. Director and Railway Age Contributing Editor Jason Seidl. “Coal has moved past its trough, with stockpiles potentially normalizing later in the year if weather patterns are favorable. The second-quarter EPS of $2.10 was well above our and consensus estimates.

Also contributing to the strong earnings was the company‘s ability to manage costs, limiting the increase in operating expenses to 1%.”

“Although coal volumes should be down throughout 2012, with y/y comparisons becoming even more difficult in the second half, on an absolute carloading basis, coal traffic declines hit a trough in 2Q12 and have been improving sequentially for the past five weeks,” Seidl noted. “UP is now august 2012 Railway age 19

CsX

Exceeding analysts’ expectations, CSX Corp. reported second-quarter net earnings of $512 million, or $0.49 per share, vs. $506 million, or $0.46 per share, in the same period last year—a 7% year-over-year improvement. The company beat earnings estimates as it grew intermodal and automotive revenue at a solid clip, which helped offset the well-anticipated dropoff in coal traffic.

CSX said revenue and volume were essentially flat compared to the same period last year, as increased shipments of export coal, intermodal, and automotive products helped offset declines in utility coal.

The railroad said train crew productivity along with resource alignments made in response to changes in the mix of the business drove an increase in operating income to $943 million, leading the operating ratio to improve to 68.7% for the quarter, a 60 basis point improvement year-over-year.

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“CSX delivered its tenth straight quarter of year-over-year earnings growth despite significant headwinds in its utility coal business,” said Chairman, President, and CEO Michael Ward.

“The company continues to perform well across a wide range of economic and market conditions. Looking forward, even with the continued headwinds in the utility coal market, we remain on track for earnings growth for the full-year 2012. In addition, while more challenging, we continue to have line of sight to a 65% operating ratio by 2015.”

norfolk southern

For this year’s second quarter, Norfolk Southern earned a net income of $524 million that edged 6% below that for the second quarter of 2011, but it also had an impressive string of records to report.

CEO Wick Moorman said that “income from operations, diluted earnings per share, and improved operating ratio all set records, despite the slow economic recovery and softness in our coal franchise.”

Diluted earnings per share were an all-time record $1.60, up 3%, beating Wall Street analyst estimates. Second-quarter 2011 net income included favorable, non-recurring income tax-related benefits totaling $63 million, or 18 cents per diluted share Income from railway operations for the second quarter was $934 million, up 7% from the same period last year. The railway operating ratio improved 2 percentage points to an all-time record 67.5%.

“In the second quarter, Norfolk Southern continued to deliver outstanding results,” Moorman said. “Our railroad continues to operate extremely well, and that enables us to control costs and operate efficiently while providing high levels of service for our customers. On the expense side, we reaped the benefits of improved rail operations, which provided for higher asset velocity, larger roadway maintenance windows, and reduced equipment usage. These allowed

BRUCE KELLY

running about 30 Powder River Basin trains per day, up from 23 trains at the trough. If September proves to be hotter than average, and a repeat of last winter’s unusually warm temperatures does not occur, utility coal stockpiles should near normal levels by the end of the year.”

“We are raising our earnings estimates to reflect the earnings beat and improving outlook,” concluded Seidl. “Our new 2012 EPS estimate is $8.35 vs. our prior estimate of $8.05. Our 2013 EPS estimate changes to $9.45, from $9.20. We are raising our price target to $132, from $126, based on applying the same 14x multiple to our new 2013 estimated EPS. UP is currently trading at 12.6x our new 2013 estimated EPS vs. the Class I average of 14x. UP remains one of our favorite railroads due to sound execution, more legacy contracts to be re-negotiated, and the ability to be agile in responding to prolonged weakness in one of its key businesses.”

Here is the rest of the story, railroad-by-railroad:

PROFiTaBle UNDeR PReSSURe

NORFOLK SOUTHERN

KANSAS CITY SOUTHERN

KCS boosted 2Q intermodal revenues by 23% and automotive by 15%, easing the sting of a 14% slump in utility coal. us to hold down cost increases in wages, purchased services and equipment rents, as well as providing a high level of customer service. We were able to maintain our superior service levels from the previous quarter as the second-quarter composite service index remained at 83%. In addition, we handled the 1% increase in traffic volumes with a reduction in crew starts of 2%. On all fronts, we continue to strive for improvement. Our capital program and technology initiatives, both of which should benefit future quarters and years, are on or ahead of schedule and meeting our return expectation. These items are clearly indicative of our belief in the continued success of Norfolk Southern.”

NS operating revenue of $2.9 billion were essentially flat compared to 2011. General merchandise revenues improved 9% to $1.6 billion. Coal revenues declined 15% to $755 million.

Intermodal revenue increased 4% to $563 million, with domestic intermodal volume rising 10%. Automotive volume and revenue rose 16% and 9%, respectively. Railway operating expenses fell 3% to $1.9 billion, compared with 2011.

“While the short-term outlook may be cloudy, we remain very optimistic about our longer-term prospects,” said Moorman. “We have a great franchise and we are investing in smart ways to make it even stronger. The new Crescent Corridor Intermodal terminals are a terrific example of building facilities that will provide a significant competitive advantage for us and sets the stage for even more growth in our Intermodal network. We’re also optimistic about our ability to grow over the longer-term. Our combination of superior service and network abilities, along with projectdriven growth, should enable us to drive our Merchandise and Intermodal businesses to growth at higher than GDP rates and at pricing levels that continue to meet or exceed

the rate of rail inflation. As for coal, the weather will normalize and natural gas prices will eventually go up. And we are optimistic about the prospects for continued growth in export thermal coal in the near term, as well as for export metallurgical coal over the longer-term.”

True to Moorman’s prediction, natural gas prices are starting to climb. The Wall Street Journal said on July 24 that prices “have surged as the scorching weather has forced utilities to use more of the fuel to generate the electricity needed to keep air conditioners humming across the U.S.”

Kansas City southern

With a 23% increase in intermodal revenue taking some of the sting out of 14% slump in revenue from utility coal, Kansas City Southern reported second-quarter 2012 revenue of $545 million. That’s an increase of 2% over the second quarter of 2011. KCS also reported a 15% increase in automotive revenue and 10% growth in revenue in industrial and consumer products.

Operating income was $204 million compared with $152 million a year ago. Adjusting for a one-time benefit from the elimination of a net deferred liability resulting from an organizational restructuring, operating income was $161 million, 6% higher than the second quarter of 2011. KCS reported an adjusted second-quarter 2012 operating ratio of 70.5%, a 1.2 point improvement from second-quarter 2011.

Operating expenses in the second quarter were $341 million compared with $383 million in the corresponding 2011 period.

Adjusted operating expenses in the second quarter were $384 million, comparatively flat with the same period in 2011.

Reported net income in the second quarter of 2012 totaled $120 million, or $1.09 per diluted share, compared with $71 million, or 64 cents per diluted share, in the second quarter of 2011. Adjusted diluted earnings per share for the second quarter of 2012 were $0.85, compared with adjusted diluted earnings per share of 71 cents in the second quarter of 2011.

“While lower-than-anticipated coal traffic clearly had an impact on second quarter results, KCS still reported a 4% increase in carloads, and excluding utility coal, our volumes rose 7% compared to second-quarter 2011,” stated KCS Continued on p. 37

august 2012 Railway age 21

Finding common ground

passenger trains on RailwayAge Nineteenth Annual Conference

presented by

freight railroads October 10-11, 2012

Washington Marriott Hotel • Washington, D.C.

North America’s freight rail system plays host to a growing network of regional, intercity, and light rail passenger services. Now, high- and higher-speed have been added to the mix. Passenger and freight rail interests must deal with issues of compensation, liability, operational and grade crossing safety, signaling and train control requirements, capacity constraints, and maintaining the integrity of freight service. Finding common ground can be problematic.

Join Railway Age at this premier event—the industry’s only conference on freight-plus-passenger railroading.

Robert VanderClute, AAR supporting organizations

PTMW, INC.

O.E.M. METAL FABRICATION & ASSEMBLY

2012 Recipient W. Graham Claytor, Jr. Award for Distinguished Service to Passenger Transportation

agenda

Moderator: William C. Vantuono, Editor, Railway Age

October 10

October 11

Registration | Continental Breakfast sponsored by MARSH Global Rail Practice and Oliver Wyman Inc.

Registration | Continental Breakfast sponsored by PTMW, Inc.

Keynote Address Michael Melaniphy, President and CEO, APTA The Choice Between Speed and Frequency: A Global Perspective Kevin Foy, Surface Transportation Practice, Oliver Wyman (moderator); David Kutrosky, Managing Dir., Capitol Corridor Joint Powers Authority; Steve Potter, AVP, Passenger Planning, CSX; Rod Case, Partner, Oliver Wyman Inc. Coffee Break | Sponsorship Available Understanding MAP-21 (Mapping American Progress for the 21st Century) and Its Implications for Passenger and Freight Rail Art Guzzetti, VP—Policy, APTA

Progress Report: Building and Operating the Chicago-Detroit Higher-Speed Rail Corridor Kevin Sheys, NOSSAMAN LLP (Moderator); Speakers from Amtrak, Norfolk Southern, and Michigan DOT TBA Coffee Break | Sponsorship Available Blending Regional, Intercity, and Freight Rail with Municipal Transit Initiatives Kenneth R. Peel, Counsel in Transportation Law & Dispute Resolution; Additional Speakers TBA Luncheon | Sponsorships Available

Luncheon | Sponsorships Available Guest Speakers: Ray Chambers, Transportation Policy Advisor & Executive Dir., Association of Independent Passenger Rail Operators; Stan Feinsod, Passenger Rail Consultant

Presentation of the 19th Annual Railway Age W. Graham Claytor, Jr. Award for Distinguished Service to Passenger Transportation to Robert VanderClute, Senior Vice President, Safety and Operations, Association of American Railroads

Progress Report: Building and Operating the Chicago-St. Louis Higher-Speed Rail Corridor Mike Franke, Senior Director, Planning and Business Development, Amtrak; Speakers from Union Pacific and Illinois DOT TBA

Getting Complex Railroad Insurance Claims Paid Just Might Be Getting Easier Jim Beardsley, Managing Dir., Marsh Global Rail Practice

Energy Break | Sponsorship Available All Aboard Florida: A Freight Railroad Running Passenger Trains!

Gene Skoropowski, Sr. VP, Passenger Service Development, Florida East Coast Railway; John Flint, All Aboard Florida Engineering Officer, FECR Amtrak’s Long-Term Equipment Plan

Progress Report: Planning, Financing, and Building California’s High Speed Rail Corridor David L. Borger, Sr. VP, STV; Additional Speakers TBA Lanyards sponsored by URS Corporation Program subject to change/augmentation.

Cocktail Reception | Sponsorship Available

REGISTER ON THE WEB: www.railwayage.com SPONSORSHIPS AVAILABLE: Contact Jane Poterala at (212) 620-7209; jpoterala@sbpub.com

Registration form Please register me for the Passenger Trains on Freight Railroads conference, Oct. 10-11, 2012 in Washington, D.C. Registration fee is $895 per participant, payable in advance. [ ] Check enclosed (Payable to Railway Age) [ ] Bill my company [ ] Bill me Charge my

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CONFERENCE FEE AND HOTEL: The registration fee for Passenger Trains on Freight Railroads is $895, which includes admission to all conference sessions, conference documentation containing all available proceedings, and social events. The Washington Marriott Hotel, 1221 22nd Street NW, Washington, DC 20037, has set aside a block of rooms at $289 single/double for attendees. These will be held until 30 days prior to the conference; those reserving after that date will rely upon room availability. Contact the hotel directly at (202) 872-1500 for room reservations (mention group code “Railway Age”). You will receive room confirmation directly from the Washington Marriott Hotel.

CANCELLATION POLICY: Confirmed registrants who cancel less than one week prior to the conference are subject to a $250 service charge. Registrants who fail to attend are liable for the entire fee unless they notify Railway Age in writing prior to the conference.

geneRal SubJect HeaD

M AxIMIzING

IN “ThE

by williaM c. VantuOnO, editor-in-chief

T

he question facing the rail industry is not whether coal traffic will come back, but rather, when will it come back. When it does, the railroads will be ready, as evidenced by ongoing capacity and efficiency improvement projects.

Among these is a major improvement program at BNSF Railway’s Alliance Terminal in Alliance, Neb., the railroad’s major unit coal train central processing yard. BNSF, according to Terminal Superintendent Ryan Shoener, calls Alliance “the heart of coal.”

Alliance, which employs 660 (140 yard employees and 520 locomotive shop employees in several crafts), supplies empty coal trains to the Powder River Basin mines, and services loaded trains operating east to electric power utilities in Nebraska, Iowa, Kansas, Missouri, Wisconsin, Colorado, Oklahoma, and Texas. At present, on average, 65 trains (30 coal loads, 30 coal empties, and five mixed freight) pass through Alliance Terminal each day, though the facility is capable of processing up to 72. Alliance also includes a major locomotive maintenance and repair shop, where, each day, 40-50 locomotives are serviced in the Diesel Service Facility and 70-80 locomotives are serviced by mechanical teams at RSLs (remote service locations).

The facility’s Locomotive Shop is responsible for close to 1,000 units (a mix of EMD SD70MACs, SD70ACEs, and GE EVOs) that are assigned to it for servicing and inspection. “We’re a very power-hungry terminal,” says Locomotive Shop Superintendent Bruno Soto.

24

Railway age

august 2012

PRODuCTIVITY

hEART OF COAL”

Alliance’s most important performance metric is how efficiently it builds unit coal trains to tender size, which is the number of cars in a train required by the particular mine/electric utility pair being served. This number is typically 120 cars, but it can be as low as 105 and as high as 150. There needs to be about 900 “fill cars” available for this purpose. Yardmasters and trainmasters spend a great deal of time analyzing switching and lead times, and planning locomotive and car movements. As Division Manager Steve Nettleton puts it, “Doing a five-car fill may sound simple, but it’s really not. Our goal is a 10% improvement in building trains to tender.”

That’s because there are a lot of variables that must be addressed in processing a unit coal train. Typically, yard and trainmasters need to be able to look out anywhere from 36 to 48 hours to determine what’s coming into Alliance, and identify equipment by train and car I.D., origin, pool type, train size, and other factors. “Stripe alignment”—the direction in which rotary-dump coal gons are facing, determined by the paint stripe on one end of an otherwise bare-aluminum carbody—is critical. According to Nettleton, an average of one train per day needs to be adjusted for stripe alignment. All switching and car repair/maintenance work needs to be performed on the empty-car side of a move, before the train is dispatched to the mine. BNSF’s web-based TSS (Transportation Support System) xpress system is used to keep track of all this information. TSS xpress, which provides communication in real time, “gives us excellent

Coal traffic is down, but that won’t last forever. That’s why processing facilities at yards like BNSF’s Alliance Terminal are being improved.

interaction between our Transportation and Mechanical departments,” says Shoener. “Our focal point is ontime train performance.” TSS xpress also helps balance train power requirements with what power is ready for service.

Alliance is a flat-switching yard with one RCL and eight conventional switch jobs operating at one time. BNSF is currently installing about 60 remote control switches, where primary control is from the tower, for better efficiency.

RailComm is BNSF’s primary contractor for process control improvements at Alliance Terminal. “Whereas some benefits are very specific to the mechanical or the transportation groups, some of our solutions can tie together benefits

Typically, yard and trainmasters need to be able to look out anywhere from 36 to 48 hours to determine what’s coming into Alliance Terminal. for both, and therefore the railroad can share different budgets to fund solutions for a common goal,” says President and CEO Joe Denny. “For instance, automatic switching benefits the Transportation group by having the ability to remotely line trains into the yard. These same switches will be part of the track protection system to protect the

august 2012 Railway age 25

Part of BNSF’s objectives is eliminating CTC within yard limits. Why does BNSF wish to do this and what benefits does it expect to derive? In general, what are the advantages of doing this?

“Some CTC interlockings are located very close to yard entrances and exit points,” explains Denny. “When dispatching a train, the main line dispatcher has no special interest in those interlockings located next to yard limits. Therefore, these CTC interlockings can become a bottleneck for the yard. To minimize this problem, we offer the option to take the CTC interlocking out of the main line dispatch control and create a yard system that includes these locations, or to add these interlockings to the existing yard system. This option gives the main line dispatcher the ability to see the status of the CTC interlocking but not the ability to control it. The yardmaster has that responsibility. Thus, integration of CTC interlockings to the yard application gives the yardmaster the ability to release bottlenecks in traffic coming into and out of the yard.”

“This solution only makes sense in certain cases, so it cannot be applicable across the board, and the railroad must have a substantial case for this integration,” says Denny.

“However, if the railroad requires following this approach,

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we have a very seamless integration for these CTC interlockings’ interface based on our mainline CTC experience.”

RailComm points out that it has a long history implementing solutions for yard automation, “from our first standard switch machine remote control to our current automation of yard ladders using remote control from a central location, local control panels strategically located in the field and remote control through mobile devices,” says Denny. “Our DOC® system capabilities have migrated from single isolated locations to a full control of receiving to departure areas of the yard to make inbound and outbound movements more efficient.”

RailComm’s Connected Automation™ platform for yards “integrates best-in-class switch and signal components with a command and control architecture that scales as the customers need it—from a few switches, to an entire yard, to an entire railway, increasing efficiencies, safety, and protection,” says Denny. “Our solutions include automated switching, car tracking, track protection, heater control, mobile worker, and more. Our largest customers, the Class I railroads, benefit from our Connected Automation in many ways. Rail yards are typically measured on safety, terminal capacity, throughput, and on time departures. Any solution that can help

august 2012 Railway age 27

MaXiMiZiNg PRODUCTiViTy

Main line dispatchers have no special interest in CTC interlockings located next to yard limits. Therefore, these interlockings can become a bottleneck for the yard.

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An important performance metric is how efficiently Alliance builds unit coal trains to tender size—the number of required cars in a train.

improve these metrics represents high benefits to the railroad.”

RailComm says the most important benefits its technology offers are improved efficiency and safety: “Safety to workers is significantly improved by not having a switch tender standing on the tracks or walking in front of the locomotive to line manual switches. Automatic switching reduces the risk of having yard crews performing inefficient and hazardous tasks, in addition to other safety conditions such as having back injuries, or walking on unsafe terrain.

“Time reductions, which represent a high return to railroads, can be achieved by automating the track protection process with our Blue Flag Protection System. Wireless remote control saves hours of time on each maintenance operation by eliminating the need to physically travel to both ends of a protected zone to manually line switches and place blue flags, and again to remove them once work is complete.

“Our Shove Track System provides protection zones on the blind side of shove tracks allowing yard crews to quickly fill shove tracks without overruns or track fouling, eliminating the need to station a worker at the end of the track to monitor shove track operations. The railroad reduces dwell time and the risk of damaging tracks, cars, or car contents.”

“All these benefits are significant, based on the investment that the railroads are making every year on these technologies,” says Joe Denny. “The railroads’ measurements are closely tied to their ROI. If there is no return, they will stop investing in the technology.”

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Amtrak’s concept for a new fleet of Northeast Corridor high speed trainsets may be modeled after contemporary European equipment, but has a distinctively American character.

30

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U.S. HSR ACCElErAtEs

By Douglas John Bowen, Managing eDitoR

The global high speed rail community, meeting in Philadelphia last month, celebrated improving U.S. HSR prospects, ready to welcome the nation into the “true HSR” ranks. But more work lies ahead.

AMTRAK

G

ood timing can matter.

Enthusiasm, bordering on outright exuberance, categorized the overall mood among those attending last month’s UIC Highspeed 2012 (8th World Congress on High-Speed Rail) , held in Philadelphia. The upbeat mood was generated in large measure by California’s legislative commitment to advance a statewide high speed rail network, narrowly approved just four days prior.

And while California was a primary topic of discussion and planning, Amtrak’s own merged plans (short- and long-term) for its venerable Northeast Corridor continued to draw interest from global suppliers doggedly believing that the U.S. could not continue to ignore HSR development indefinitely.

While HSR developments elsewhere in the world were covered extensively during the nearly weeklong gathering, a decided emphasis on nascent U.S. HSR efforts was unmistakable, drawing keen interest from the roughly 1,000 attendees representing 37 countries. An introductory slide show presented by

UIC at the conference’s outset was telling: It offered a “global tour” of various HSR and higher-speed rail (HrSR) projects, with the final slides figuratively arriving at U.S. projects (although Canada was diplomatically included for its own modest HrSR efforts).

Did the Philadelphia conference, perhaps, influence the California decision in any way? The chief executives of both cosponsors—the International Union of Railways (UIC) and the American Public Transportation Association (APTA)—were wary of making any direct linkage, but allowed that the show’s timing couldn’t have hurt.

“We were certainly fortunate, weren’t we?” offered UIC Director-General Jean-Pierre Loubinoux, acknowledging that had California fallen from the HSR ranks, the mood in Philadelphia would have been very different.

“You hesitate to make any direct link [between the California vote and the conference], but perhaps it influenced events in some small way,” observed APTA President and CEO Michael Melaniphy. august 2012 Railway age 31

high speeD Rail

Transportation Secretary Ray LaHood, offering a keynote speech to delegates July 11, saluted and thanked global HSR “colleagues” for their longstanding efforts to lure the U.S. into the HSR club. “We have learned so much from you,” LaHood said in earnest.

LaHood unabashedly also heralded California’s impending arrival into the HSR world, declaring, “The leadership in California reminds us that California has always led the way.”

He added that in terms of U.S. HSR development, “This is a historic step not just for California but the whole country.

What we are leaving to the next generation is the next generation of transportation: high speed rail. High speed rail is not something we can afford to put aside until later.”

LaHood also peppered historical antecedents within his speech, again citing the creation of the U.S. transcontinental rail network, the Interstate highway system, and (following an informal coffee klatsch among attendees just prior to his speech), adding construction of the Panama Canal to the list of visionary U.S. development projects. “We’ve done it before; we intend to do it again,” he said.

Mindful of spreading the political risk (and reward), LaHood made sure Amtrak’s Northeast Corridor (NEC), and indeed other U.S. passenger progress, was not forgotten.

Claiming 153 HSR and HrSR projects were currently under way in the nation, he said 2012 would see the “busiest [passenger] rail construction season” in recent years.

The secretary’s passion set the tone for the conference, and impressed UIC Director-General Loubinoux. “Well! What a speech!” he enthused to the audience immediately following LaHood’s remarks.

Flexible terminology employed

Considerable effort seemed apparent to enhance North American project numbers, with “higher-performing rail” efforts cited by LaHood and others. At a session entitled “North American High Speed Corridors,” VIA Rail Canada

GLobaL view: U.S. StiLL a HiGH Speed SmaLL Fry notwithstanding the u.s. emphasis in philadelphia (or the related cheerleading), the uiC highspeed 2012 (8th world Congress on high-speed Rail) offered pointed reminders that the nation is, and will likely remain, a bit player in the global hsR field for quite some time. uiC’s “global tour” slide show shown to a general session catalogued 2,777 high speed rail trainsets worldwide, generously categorizing hsR as 125 mph or more. that graciously allowed amtrak’s modest total of 20 acela trainsets to be included. uiC tallied 1.15 billion hsR passengers worldwide in 2010, led by China, which carried 485 million, or 42% of the total. China’s rapidly growing hsR system already was the “equivalent to the european system” in size, uiC Director-general Jean-pierre loubinoux observed.

Japan was second in ridership numbers, with 300 million passengers (26%) in 2010, and France was third with 125 million (about 11%). “other” hsR riders, including operations in germany, italy, spain, turkey, taiwan, and south Korea, accounted for 240 million riders (21%) in 2010.

CEO Marc Laliberté claimed “more than 40 projects” were ongoing within North America, though no list was immediately offered to substantiate the observation.

A presentation by Tranports Quebec’s Josée Hallée, outlining plans by Quebec, Ontario, and the Canadian federal government for enhancing VIA’s Windsor-Toronto-MontrealQuebec City speeds, played down the speculative nature of such improvements; Hallée emphasized the need to “ include high speed rail in a broader transportation plan” and to “create a high speed rail agency,” suggesting coordination of any Canadian HSR effort, modest or otherwise, remains a distant goal.

The best of old and new will continue to typify Amtrak’s Northeast Corridor when new HSR trains are deployed, as this depiction of a train at the restored Wilmington, Del., station suggests.

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AMTRAK

LaHood thanks world, touts U.S. moves

CHSRA

high speeD Rail

(An American audience member asked whether Chicago, not Windsor, might serve as a better corridor terminus; Hallée’s response strongly implied that it was difficult enough to coordinate the needs of two provinces and Ottawa, let alone inject three U.S. states and Washington into the mix.)

By contrast, Michigan Department of Transportation’s Timothy H. Hoeffner, director of MDOT’s Office of Rail (created in January), noted that the Midwest Regional Rail Initiative, covering nine states and 3,000 miles of right-ofway, was modest in scope compared with global HSR efforts, but it was slowly adding 110 mph speeds to Chicago-Detroit and Chicago-St. Louis routes.

By contrast, California High-Speed Rail Authority attendees, basking in the glow of the state’s affirmation, could point to the Golden State’s planned 700-mile system as true HSR. But CHSRA had its own terminology for the project, emphasizing the “blended” system of initial HSR segments on dedicated right-of-way combined with “connectivity” to existing rail routes near urban centers in the Bay Area and the Los Angeles basin. CHSRA CEO and Executive Director Jeffrey P. Morales, noting he had been in his position for only three weeks, argued that the “blended” system included not just adding HSR into existing conventional rail services (similar to how France grew its HSR network), but also included coordination with rapid transit services such as BART and MUNI (in the north) and Metrolink (in the south).

Responding to rail critics who deride the $6 billion Phase I portion of the project, to commence in California’s Central 34

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California high speed trains could stop, or swiftly pass through, various intermediate stations in the Golden State depending on customer demand, as illustrated here.

Valley, as HSR to “nowhere,” Morales said, “You can take Amtrak from northern California to southern California right now; the problem is, half of that trip is on a bus.” HSR’s initial segment would glue disparate existing rail pieces together, offering immediate benefits to riders as well as form the core for future upgrades, Morales said.

The Golden State is backing Phase I with $2.6 billion in state bonding authority, approved by voters in 2008, with matching federal funds totaling $3.2 billion. Amtrak representatives at the conference diplomatically deferred to and lauded California’s victory celebration, simultaneously making it clear that its own plans to improve and grow Northeast Corridor HSR were taking shape. The company publicly revised its overall NEC approach just prior to the Philadelphia gathering, itself “blending” short-term upgrades outlined in its “Stair-Step” approach (RA, July 2012, p. 28), such as Gateway Tunnel improvements under the Hudson River, with longer-term additions of HSR dedicated right-of-way within, or in many cases parallel to, the existing NEC infrastructure.

Amtrak is working with the Federal Railroad Administration to prepare an Environmental Impact Statement for the ambitious $151 billion, multiyear plan to achieve top NEC speeds of 220 mph. RA

August 2012 RAilwAy Age 35

People

Hawthorne New York Air Brake

Meetings HigH Profile New york air Brake has appointed Michael J. Hawthorne as president, effective July 1, 2012, upon the retirement of J. Paul Morgan. in his prior position as Vice President and general Manager, Hawthorne was responsible for all technical and operational functions of New york air Brake and its subsidiaries—Knorr Brake limited (KBl) in Kingston, Ontario; Train Dynamic Systems (TDS) in irving, Tex.; anchor Brake Shoe in west Chicago, ill.; Kansas City Service Center in Riverside, Mo.; and Premtec in China grove, N.C. Hawthorne joined the company in 1995, and became Director of Train Dynamic Systems (TDS), a division of New york air

Brake, in 2001. in January 2012, he was promoted to Vice President and general Manager. He holds a B.S. in electrical engineering from Clarkson University, an M.S. in Control Systems from Rensselaer Polytechnic institute, and an M.B.a. from Syracuse University.

“Mike brings the energy of a focused leader possessing both technical and business skills to his new position,” said Paul Morgan. “He is an innovator with an established track record of identifying opportunities and converting concepts into profitable product offerings.” Hawthorne accepted a Knorr excellence award on behalf of TDS at the March 2012 world Meeting of Knorr-Bremse in Munich.

SUPPLIERS Gannett Fleming named Bryan Mulqueen national manager of gannett Fleming’s Transit & Rail Practice, based in the company’s Raleigh, N.C., office.

OmniTRAX, Inc. said Managing Director and executive Vice President Mike Ogborn will be retiring; Ogborn will continue to serve as a member of the OmniTRaX advisory Board.

Parsons Brinckerhoff named Brock LaForty area manager of its Charlotte, N.C., office, responsible for overseeing operations throughout the Charlotte region. Alexander King was named a consultant in the strategic consulting group, based in glastonbury, Conn., responsible for developing goods movement studies, rail plans, corridor plans, intermodal feasibility studies, grant applications, and passenger rail service development plans.

Watco Cos. named Gary Vaughn senior vice president, regulatory relations and compliance, focusing primarily on regulatory changes in the rail market.

Joe Via hired as watco Transportation Services’ director of switching for the west Region.

36

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100 YEARS AGO in

September 13-14 2012 Ohio Conference on Freight Kalahari Convention Center, Sandusky, Ohio Christine Drennen, Tel.: 419-2419155 ext. 119; email: drennen@ tmacog.org; website: www. ohiofreight.org.

September 16-19 AREMA 2012 Annual Conference & Exposition Hilton Chicago, Chicago, ill. lisa M. Hall, Tel.: 301-459-3200. website: arema.org/meetings/ 2012Confindex.html.

September 18-21 InnoTrans 2012

Berlin, germany

Tel.: 732-933-1118; email: mjbalve@globaltradeshow.com; website: www.innotrans.com.

September 22-25 RSI/CMA 2012

(AUGUST 1912) PRR CONSTRUCTION An officer of the Pennsylvania Railroad writes that plans have been prepared and contracts let for the extension of the present bridge on the New York division, over the Schuylkill river, and the reconstruction and extension of the bridges over Girard Avenue, Lansdowne Drive (Fairmount Park), and the Philadelphia & Reading in Philadelphia. The bridge over the river and East and West Park drives consists of seven 60-ft. span masonry arches, with a 241-ft. truss span over the river channel. The plans provide for rebuilding the bridge over Girard Avenue and Lansdown Drive for five tracks, using steel girders incased in concrete; the abutments and column foundations to be built of concrete.

The present 21-ft. span arches over Lansdowne Drive will be taken down and replaced with two 45-ft. spans, reinforced concrete arches. In place of building a truss span to carry the new tracks over the river channel, two 103-ft. span arches will be built.

Sheraton Chicago Hotel & Towers, Chicago, ill. amanda Patrick, Tel.: 202-3474664; email: patrick@rsiweb.org; website: www.rsiweb.org.

October 3-4 Southwest Association of Rail Shippers Conference

The woodlands waterway Marriott Hotel, The woodlands, Tex. Jack Dail, Tel.: 425-818-8240; Fax: 425-358-5035; email: jdailconsulting@comcast.net; website: www.railshippers.com/ regional/southwest.

October 10-11 Railway Age Passenger Trains on Freight Railroads

washington Marriott, washington, D.C.

Jane Poterala, Tel.: 212-6207209; email: jpoterala@sbpub. com; website: www.railwayage.com.

PROFITABLE UNDER PRESSURE Continued from p. 21

President and CEO David L. Starling. “We also ended the quarter on a strong note by achieving the highest average daily carloads.

“In the face of lower than anticipated utility coal carloads, some foreign exchange headwinds, and an uncertain economy, KCS had a good quarter and in certain areas a very good quarter. That we set second quarter records for revenues, carloads, and operating income speaks to the overall strength of the KCS rail franchise and underlines the fact that our growth story is very much intact, and that our key growth areas gained significant momentum.

“For example, look at our cross-border intermodal business. In 2011, cross-border intermodal carloads increased by 56%. We were very impressed by that until the first quarter of 2012 when carloads increased by 78%. Again, we were impressed with this growth until the second quarter when the year-over-year volume growth hit 106%. This growth is extremely important for us for a number of reasons. First, it validates what we have said for a while now: There’s a huge market for a premium intermodal product between the U.S. and Mexico, and that market will continue to grow.

“While there are certain mixed signals regarding the direction of the economy, we do feel that some of the bright spots in the economy are having positive impacts on our business. Most notably the surge in automotive sales is certainly being felt in a number of our commodity groups.

More over, the very solid manufacturing numbers we’re seeing related to Mexico are being reflected in our KCS volumes.

“I don’t by any means want to suggest that KCS is immune from the mood of uncertainty which is prevalent regarding the direction of the global economy. We are certainly impacted by it, but there are enough positives in the economy for KCS to maintain strong volume growth in the present business environment.”

Canadian Pacific

Canadian Pacific Railway earned net income of C$103 million (roughly US$101 million) and diluted earnings per share of 60 Canadian cents, “inclusive of the negative impact of approximately C$0.30 from significant items including management transition and advisory costs.”

In addition, a nine-day strike following the railroad’s takeover in a proxy fight is estimated to have reduced EPS by 25 to 30 Canadian cents.

Total second-quarter revenue was C$1.4 billion, an increase of C$93 million. Operating income was C$239 million, an increase of C$8 million. Operating ratio was 82.5%, an increase of 80 basis points. Net income was $103 million, a decrease of $25 million.

For the first half of 2012, net income was C$245 million, an increase of 51%, and diluted earnings per share came to C$1.42, an increase of 49%. CP said these increases were “primarily due

to increased volumes and improved operating performance.”

CP President and CEO E. Hunter Harrison said, “I look forward to working with a solid team of dedicated railroaders to improve CP’s service offering and drive long-term shareholder value. Canadian Pacific is a strong franchise with positive market opportunities.”

CN

CN earned net income of C$631 million in this year’s second quarter, or C$1.44 per diluted share, up from C$538 million, or C$1.18 per diluted share, in the second quarter of 2011.

Adjusted diluted EPS, excluding a net income tax expense of six Canadian cents per share, rose 19% to C$1.50. The tax expense resulted from enactment of higher provincial income tax rates, partly offset by an income tax recovery from the recapitalization of a foreign investment.

Second-quarter revenue rose 13% to C$2.5 billion, on an 8% increase in revenue ton-miles and a 4% increase in carloadings. Operating income increased 13% to C$985 million. The operating ratio was 61.3%, unchanged from a year earlier.

Net income for first-half 2012 was C$1.4 billion, or C$3.18 per diluted share, compared with net income of C$1.2 billion, or C$2.63 per diluted share, for the comparable period of 2011. Adjusted net income for the first six months of 2012 was C$1.18 billion, with adjusted EPS increasing 24% to C$2.67.

CN said performance so far this year and assumption of continued positive economic conditions have prompted an upward revision of the company’s 2012 outlook. The railroad said it now expects up to 15% growth in EPS for the year.

“Bullish signs”

“Railroad stocks are rising for a variety of factors,” said Jonathan Yates of The Motley Fool Blog Network. “The recovery of the U.S. home building sector has increased lumber shipments by 11.8% for the first half of the year.

This should be followed by more products that are needed in new homes, which will increase rail traffic. Greater coal demand from abroad is also contributing. While U.S. coal usage is declining, exports were at a decade’s high last year. When the factories of China, India, Japan, and other countries recover, coal exports will rebound and climb higher. Railroad companies offer double digit profit margins, solid dividend yields, and high institutional ownership—bullish signs for those looking for a solid, long term investment.”

Said another Wall Street analyst: “The consensus on railroads is that they are experiencing strong operational growth, despite lower coal volumes. This is welcome news for railroad investors who may have some concerns regarding the impact of decreased coal volume. The railroads should all thrive for the long term.” RA August 2012 RAILwAy AgE 37

Do you have the most up-to-date FRA Regulations?

Reb Says...

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:

FRA Part #

Last Update Effective:

40 . . . . . . . . .7-3-12 209 . . . . . . . .6-25-12 210 . . . . . . . .8-14-89 211 . . . . . . . .7-20-09 213 A-F . . . . .6-25-12 213 G . . . . . .6-25-12 214 . . . . . . . .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

. . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12

232 233 234 235 236 237 238 239 240 242

. . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .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.

50 or Item FRA 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) 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

232

Brake System Safety Standards

26.40

8.95 8.55 8.55 6.25 8.55

8.25 7.85 7.85 5.85 7.35

4.15 3.50

3.80 2.75

12.25

10.95

5.25 9.40 10.00 19.95 8.35 5.25 11.75

4.75

7.85 4.75 11.00

10.00

9.00

9.00

Each

25 or more

13.75

12.50 Each

BKTM

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

BKPSS

Passenger Safety Standards 20.80 Part 238, 239 - Order 25 or more and pay only $18.95 each

46.00

BKSTC

Signal and Train Control Systems Under Revision Part 233, 234, 235, 236 Coming Soon!

BKMPIE

Motive Power & Equipment Inspection Under Revision Defect codes for 215, 218, 223, 229, 231, 232 Coming Soon!

BKCAD

Drug and Alcohol Regulations in the Workplace Part 40 & 219

The Railway Educational Bureau 1809 Capitol Ave, Omaha, NE 68102

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There are no new proposals or final rules to report for this issue. Be sure to check back next month to see if there are any changes to FRA regulations.

35.00

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 229 Locomotive Safety Standards 231 Safety Appliance Standards 232 Brake System Safety Standards

Mech. Dept. Regs.

BKMFR

$26.95

Order 25 or more and pay only $24.50 each

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.

BKCONDC

Conductor Certification

$10.00

Order 50 or more and pay only $9.00 each

Part 215窶認reight Car Safety Standards (FRA) Prescribes the minimum safety standards for freight cars allowed by the FRA (Federal Railroad Administration).

Includes safety standards for freight car components such as wheels, axles, bearings, and trucks. Also covers draft system components such as couplers, uncoupling devices, and cushioning devices. Car bodies and restricted equipment included.

Includes stenciling regs for restricted cars and maintenance of way cars. Softcover. Spiral bound. 68 pages.

BKFSS

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Add Shipping & Handling if your merchandise subtotal is: UP TO $10.00 10.01 - 25.00

$6.25

Add $4.10 Add 7.20

25.01 - 50.00 50.01 - 75.00

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*Prices subject to change. Revision dates subject to change in accordance with laws published by the FRA. 8/12

Products Custom designed HMI systems from EAO Corp.

eAO Corp. offers custom designed and produced HMi (human-machine interface) systems and components for use in modern industrial machinery. with more than 60 years of experience, eAO is able to propose and integrate intuitive and innovative HMi systems and components to meet the specific needs and challenges often found within these hazardous environments.

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Boost locomotive pulling power ZTR Control Systems says it NeXSyS™ iii-i combines locomotive adhesion improvement with leading AeSS technology, resulting in a better return on investment on any locomotive modernization. The microprocessor-based locomotive control system also offers a combination of increased locomotive reliability and availability.

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For more information on the NeXSyS iii-i, contact ZTR Control Systems, 901 west 94th Street, Minneapolis, Minn. 55420, Tel.: 952-233-4340; email: railinfo@ztr.com; website: www.ztr.com/ nexsys.php.

team of in-house experts.

A use of “mixed technology” is often employed in order to provide a complete solution. These can include a touch screen or display, membrane keypads, discrete pushbuttons, and emergency stop functions all combined into a rugged housing and connected through an appropriate serial bus interface.

Supplied HMi components can range from a comprehensive offering of pushbuttons, indicators, key locks, rotary selectors, and emergency stop switches critical to machine safety.

All eAO products are available in a wide choice of industry accepted mounting configurations including standard panel or the ever increasingly popular flush mount style.

Contact eAO Corp., Tel.: 203-8774577; Fax: 203-877-3694; email: sales.eus@eao.com; website: www. eao.com.

AREMA 2012

Annual Conference & Exposition

September 16-19, 2012 Hilton Chicago Chicago, IL • USA The Conference will include 68 Technical Presentations and this will be the LARGEST AREMA EXPOSITION to date with close to 300 exhibit booths in three exhibit halls. In addition, there will be 8 Seminars and Workshops, the Annual Chairmen’s Luncheon, Meet the Next Generation Event and MORE all being held in conjunction with the AREMA 2012 Annual Conference & Exposition!

REGISTER NOW!

To register online, please visit

www.arema.org

August 2012 RAilwAy Age 39

Ad Index Company

Phone #

Fax

Email address

Arema

301-459-3200

301-459-8077

marketing@arema.org

Page # 39

Balfour Beatty

888-250-5746

904-378-7298

info@bbri.com

26

Bhulai engineering Corporation lTD

+91 11 29227142

+91 98 10205022

neera@bec-group.com

7

electro-Motive

800-255-5355

708-387-6626

genuineparts@emdiesels.com

C3

ellwood Crankshaft & Machine

724-347-0250

724-347-0254

ecgsales@elwd.com

35

global Rail Systems

866-883-2213

sales@globalrailsystem.com

15

Helm Financial Corp.

415-398-4510 ext 347

415-398-4816

jzimmerman@hlmx.com

35

Holland Co.

708-672-2300 ext.382

708-672-0119

gpodgorski@hollandco.com

12

Hytroc

201-512-9500

201-512-9615

btapp@hytorc.com

13

Miller Flepax

612-865-9382

507-452-2463

davefisher@millerfelpax.com

27

Miner enterprises

630-232-3000

630-232-3055

sales@minerent.com

C2

New york air Brake

607-257-7000

607-257-2389

paula@onlinesms.com

5

ORX

814-684-8484

glenn@orxrail.com

C4

RailComm, inc.

585-377-3360

585-377-3341

sales@railcomm.com

3

Railquip, inc.

770-458-4157

770-458-5365

sales@railquip.com

28

Rails Co.

973-763-4320

973-763-2585

rails@railsco.com

15

Railworks

866-905-7245

952-469-1926

jrhansen@railworks.com

9

Railway educational Bureau, The

402-346-4300

402-346-1783

bbrundige@sb-reb.com

Ritron, inc.

800-USa-1-USa

317-846-4978

sales-info@ritron.com

29

Sealeze Unit Of Jason

804-275-1675 ext.235

smaclaughlin@sealeze.com

15

VgT Rail

618-343-0600

618-343-9015

jwhite@sircrail.com

11

western-Cullen Hayes

773-254-9600

773-254-1110

co@wch.com

35

41, 33, 37, 38

The advertisers index is an editorial feature maintained for the convenience of readers. it is not part of the advertiser contract and Railway age assumes no responsibility for the correctness.

Advertising Sales MAIN OFFICE Jonathan Chalon, Publisher 345 Hudson St., 12th Floor New york, Ny 10014 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com AL, AR, IN, KY, LA, MI, MS, OH, OK, TN, TX emily Kalmus 20 South Clark Street, Suite 2450 Chicago, il 60603 (312) 683-5021 ekalmus@sbpub.com CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, PA, RI, SC, VT, VA, WV, CANADA – QuEbEC AND EAST, ONTARIO Mark Connolly 345 Hudson St., 12th Floor New york, Ny 10014 (212) 620-7260 Fax: (212) 633-1863 mconnolly@sbpub.com

40 Railway age

august 2012

AK, AZ, CA, CO, IA, ID, IL, KS, MN, MO, MT, NE, NM, ND, NV, OR, SD, uT, WA, WI, WY, CANADA – Ab, bC, Mb, SK Heather Disabato 20 South Clark Street, Suite 2450 Chicago, il 60603 (312) 683-5026 Fax: (312) 683-0131 hdisabato@sbpub.com GLObAL ADVERTISEMENT SALES, EXCEPT ITALY, ITALIAN-SPEAKING SWITZERLAND, JAPAN, AND NORTH AMERICA Donna edwards advertisement Manager Suite K5 & K6 The Priory, Syresham gardens Haywards Heath, RH16 3lB United Kingdom +44-1444-416368 Fax: +44-1444-458185 de@railjournal.com.uk

AuSTRALIA, CZECH REPubLIC, HONG KONG, INDIA, KOREA, MIDDLE EAST, NETHERLANDS, NEW ZEALAND, RuSSIA, SCANDINAVIA, SOuTH AFRICA, SOuTH AMERICA, SPAIN, WORLDWIDE RECRuITMENT Steve Barnes international area Sales Manager Suite K5 & K6 The Priory, Syresham gardens Haywards Heath, RH16 3lB, UK +44-1444-416368 Fax: +44-1444-458185 sales@railjournal.co.uk ITALY, ITALIAN-SPEAKING SWITZERLAND Dr. Fabio Potesta Media Point & Communications SRl Corte lambruschini Corso Buenos aires 8 V Piano, genoa, italy 16129 +39-10-570-4948 Fax: +39-10-553-0088 info@mediapointsrl.it

JAPAN Katsuhiro ishii ace Media Service, inc.

12-6 4-Chome, Nishiiko, adachi-Ku Tokyo 121-0824 Japan +81-3-5691-3335 Fax: +81-3-5691-3336 amkatsu@dream.com CLASSIFIED, PROFESSIONAL & EMPLOYMENT Craig wilson 345 Hudson St., 12th Floor New york, Ny 10014 (212) 620-7211 Fax: (212) 633-1325 cwilson@sbpub.com

products & services

New High Speed Turnout Design For a free report in PDF format send request to HerbLandow@yahoo.com employment

Reidler Decal Corporation St. Clair, PA 17970 Fax: 570-429-1528 marketing@reidlerdecal.com The Federal Railroad Administration's proposed new delineator configuration

Columbus Castings is the largest steel foundry in North America dedicated to the production of high quality steel castings for the freight rail, mass transit, and heavy industry markets. We are seeking a Sr. Product Rail Engineer with the following requirements: • • • • •

Reidler can help you comply with the FRA ruling by offering prismatic reflective yellow delineators that meet their specifications.

• 4" x 150 fl Rolls (kiss-cut available) • 400 candlepower retroreflection • Application instructions provided

Give us a call at 800-628-7770 for more information The Leader in Railroad Markings since 1926

proFessionAl directory

Kansas City (913) 661-2424

www.rrtemps.com

42

Railway age

We offer: - Certified Locomotive Engineers - Certified Conductors - Train Dispatchers - Yardmasters - Brakemen/Switchmen - Mechanical For Your Temporary Needs!

august 2012

• • • • • • • • • • •

Specification review Order approval Develop designs for new products and applications Component analysis (calculations, documentation, stress analysis) Procedure development (i.e. test procedures, measurement procedures, etc.)

Test Programs (@ CC test center static and outside) Report preparations (stress analysis and testing) Component manufacturing methods Continuous improvement in manufacturing processes Process flow development Gauging and measurement check criteria Process evaluation for freight and transit jobs Vendor interface- get quotes, evaluate quotes, compare (transit projects) Vendor selection, inspection, approval and product accetance Customer interface and correspondence Shop liaison: assist with manufacturing questions and eval ate solutions

Bachelor of Science in Mechanical Engineering, 5-10 years minimum experience.

Windows proficient (Excel, Power point, WORD, etc), stress analysis background (classical and FEA) preferred.

Columbus Castings offers competitive salaries and a premier benefits package. If you meet these qualifications, please send your resume to taugustus@columbuscastings.com

recruitment

EDNA A. RICE, EXECUTIVE RECRUITER, INC (713) 667-0406 FAX (713) 667-1651 Web address: www.ednarice.com Email: resume@ednarice.com

EDNA A. RICE, President 6750 West Loop South Suite 735 Bellaire, Texas 77401-4111

equipment Sale/leaSing

Available For Lease

◆ 4,200 cu. ft. Gondolas - Interior bracing removed and tub bottoms reinforced for C&D, coke, scrap, aggregates, etc. ◆ 3,600 cu. ft. Open Top Hoppers.

45 degree slopes for aggregate or coke service, etc. ◆ 5,750 & 5,852 cu. ft. Pressure Differential (PD) Covered Hopper Cars.

For additional information and pricing, please contact John Goodwin phone (605) 582-8318 fax (605) 582-8304 www.carmathinc.com e-mail jgoodwin@mwrail.com

employment

MULTIPLE POSITIONS AVAILABLE! TransitAmerica Services, Inc. (TASI, a division of Herzog Transit Services, Inc.) is looking for talented people to join our team. We offer an exciting work environment with excellent opportunities for development and advancement. We consider employees our most valuable asset and integral to our current and future success.

We currently have needs for the following positions at the Caltrain Commuter Service in the San Jose/San Francisco, CA area: Locomotive Engineers, Qualified Mechanical Person (QMP), Carmen, Coach Cleaners, Utility Workers, Electricians and Locomotive Diesel Mechanics. For more information and to apply online please visit www.htsi.com and apply under careers tab.

TASI is an EOE. Warranty Technician

Rail-SeRved Real eState

HOUSTON AREA LAND FOR SALE

(ROSENBERG, TEXAS) • 216 ACRES, KANSAS CITY SOUTHERN & HWY 59 FRONTAGE • 214 ACRES, UNION PACIFIC & HWY 90A FRONTAGE Call for Other Rail-served Properties Contact FRANKLIN DENSON, Broker, at 713-334-1114 fmdenson@yahoo.com F.M. DENSON & Co

tRaining

Part 243 Training & Certification Part 242 Conductor Training Part 240 Engineer Training and re-certification -------------------------------------------------------Modoc Railroad Academy 916-965-5515 info@modocrail.com

TrinityRail is searching for a Warranty Technician based out of our HQ in Dallas, Texas.

Duties may include: *Responsible for the execution of the investigation pertaining to the Railcar warranty process *Ability to make sound decisions in the field *Thorough knowledge of new car/wreck repair manufacturing essential *Extensive travel required *Excellent computer skills with emphasis on Access, Outlook, Excel, PowerPoint and BPCS necessary *Comprehensive documentation skills.

Required Skills: *Bachelor’s degree in manufacturing engineering or business preferred *5-8 years of relevant experience *Effective communication skills, both verbal and written *Railcar field inspection, manufacturing or repair background with sourcing experience *Proven track record of customer support/interaction/training *Highly organized and deadline driven.

It is not necessary to relocate to Dallas,Texas for this position.

To apply for the position, visit http://trinityjobs.silkroad.com and apply to job number 505-373.

An EEO/AA Employer TO ADVERTISE CONTACT Craig Wilson PH 212.620.7211 • FAX 212.633.1325 E-MAIL cwilson@sbpub.com August 2012 RAilwAy Age 43

Financial edge anthony KRuglinsKi

The market for new cars stays hot

T

he other day, someone came to me with news that he had a newbuild “slot” available for tank cars for the third calendar quarter of 2013, and did I know of anyone who would want to sign up to lease these verymuch-in-demand cars he was going to build? I was to tell the market that this new car building opportunity would be snapped up quickly and that anyone interested should act quickly to assure that they would not be disappointed.

Déjà vu set in as I remembered the bad old days of overbuilding of railcars when a hot railcar market traded building slots like trading cards before that same market crashed. (By the way, it turned out that this “slot” and others are available during the 2013 buildyear, but are apparently not exclusive to the guy who contacted me.)

As one who has lived through multiple boom-and-bust railcar building cycles, it troubles me to say this, but the new railcar building marketplace is still smoking hot. Why am I troubled?

Because all good things must end.

When this market turns, will a robust market in new car building drop like a stone, leaving thousands of overbuilt railcars sitting parked, and production lines at builders and suppliers idle? Maybe, maybe not—at least not perhaps not as disastrously as in prior cycles.

What may be different this time out?

To begin with, there are some unusual reasons for the unusual strength of this market. I am using the word “unusual” with reference to my experience in the market of the late ’70s and early ’80s, when overbuilt boxcars and covered hoppers tanked the new car building and leasing market for most of the 1980s. Back then, it was regulatory intervention and significant investment

44

Railway age

august 2012

tax credits that were the primary reasons for overbuilding. This time, the building surge is being primarily driven by industrials acquiring efficient new cars to update their owned and rented private railcar fleets, and new oil and gas players seeking equipment to move those commodities.

It may be impossible to overemphasize the importance of North America becoming a net energy exporter as a driver of this new car building drama.

Limited pipeline resources exist to carry hydrocarbons from where they are currently being extracted to where they need to go, and a good slug of new tank car building is being driven by the needs of the oil and gas industries.

There is also the lift that new sand car building for fracking is giving to the new car industry. (Even the chemical industrials that are re-equipping are likely driven in part by the cheap natural gas that is in the market now and for the foreseeable future.)

The building surge is being driven by industrials acquiring efficient new cars to update their private railcar fleets.

And have any of us seen lower interest rates in our lifetimes? Remember, while the new cars we are discussing are being built in what may later be seen as a “bubble” of new construction, they are still going into service with historically cheap money embedded in

the long-term financing that comes with many of them. It’s also this cheap, long-term money that has helped cushion the impact of new car prices which are hitting new all-time highs. I also note that today’s new cars are significantly more efficient than earlier versions, and that in 2012 dollars the price differences from earlier times are less dramatic than they may seem.

Speaking of OEMs, our industry has fewer builders and component suppliers than in other prior boom cycles. So the capacity that was around in prior years to ramp up beyond 60,000 or 65,000 cars a year has been reduced.

Builders and component suppliers are also more likely this time to want to stretch full order books out for a longer period rather than see their orders drop like a stone when a boom cycle shifts to bust.

Another difference: The ’70s and ’80s saw rampant speculation by leasing companies seeking to take advantage of regulatory and tax intervention, while today’s operating lessors, which are certainly in the market for new cars, are controlling their buying on pure speculation. While bulk purchases with forward delivery dates are being negotiated, lessors are usually finding homes for the cars before the scheduled delivery dates. It’s the guys who actually need the cars that are lining up to make the day for new railcar OEMs this time.

Can we still have a “bust” of sorts at the end of this cycle? Of course. But long-term readers of this column will recall that this writer has predicted more than once that an average North American build of 50,000 would likely be needed just to keep up with new equipment needs due to fleet retirements—and that’s without traffic growth.

Parts of the bigger picture.

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This combination of methodology and creative thinking is integral to the original product concept and cannot be reverse engineered. EMD products work in the toughest applications – from extreme temperatures and altitudes, to heavy loading and load cycling. Advanced techniques, such as automated assembly, electronic profile verification, high-energy laser hardening and metallurgical testing are incorporated throughout the manufacturing process.

All EMD parts are carefully integrated in the overall product design to maximize efficiency and reliability. And the worldwide network of Progress Rail and EMD facilities provides the parts and services necessary for any maintenance requirements. Feel the power that drives the railroad industry. Insist on genuine EMD Parts.

Electro-Motive Diesel is owned by Progress Rail Services, A Caterpillar Company

Electro-Motive Diesel emdiesels.com 800.255.5355

We don’t know exactly who invented the wheel.

We do, however, know who perfected it.

There’s a long history to the technology and precision of the ORX wheel set — a history that is recreated every day by the singular dedication of each ORX employee. Evidence of our commitment to honor the promise of “The World’s Highest Standards in Railroad Wheel Sets.” www.ORXrail.com | 814.684.8484