Railway Age October 2017

O c to b e r 2 0 1 7

w w w. r a i lwaya g e .c o m

AILWAY GE S e r v i n g t h e r a i lway i n d u s t r y s i n c e 1 8 5 6

CSX’s Hunter Harrison

You get paid for the service you provide

2018 Railroad Financial Desk Book

Is growth in freight rail an oxymoron?

New York MTA: $29 Billion Capex

Suppliers seek success in The Big Apple

Focus on Fasteners

There’s more than one way to hold rails to ties

railwayage.com

August 2017 // Railway Age 1

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AILWAY GE

October 2017 OCTOBER 2017

17 FEATURES

13

Hunter Aims for Three

17

Financial Desk Book 2018

30 33

Is CSX finally settling down?

Is Rail Growth an Oxymoron?

Renew, Enhance, Expand How NYMTA invests $30 billion

Hold on Tight!

Customized fasteners take hold

DEPARTMENTS 4 6 7 35 35 35 36 38 39 39

Industry Indicators Industry Outlook Market People 100 Years Ago Meetings

NEWS/COLUMNS 2 8 11 40

From the Editor Update Watching Washington Short Line/Regional Perspective

Products Advertising Index Professional Directory Classifieds

On the Cover: CSX President and CEO E. Hunter Harrison.

Photo: CSX

Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 55 Broad St., 26th Fl., New York, NY 10004. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 217, No. 10. Subscriptions: Railway Age is sent without obligation to professionals working in the railroad industry in the United States, Canada, and Mexico. However, the publisher reserves the right to limit the number of copies. Subscriptions should be requested on company letterhead. Subscription pricing to others for Print and/or Digital versions: $100.00 per year/$151.00 for two years in the U.S., Canada, and Mexico; $139.00 per year/$197.00 for two years, foreign. Single Copies: $36.00 per copy in the U.S., Canada, and Mexico/$128.00 foreign All subscriptions payable in advance. COPYRIGHT© 2016 Simmons-Boardman Publishing Corporation. All rights reserved. Contents may not be reproduced without permission. For reprint information contact PARS International Corp., 102 W. 38th Street, 6th floor, New York, N.Y. 10018, Tel.: 212-221-9595; Fax: 212-2219195. Periodicals postage paid at New York, NY, and additional mailing offices. Canada Post Cust.#7204564; Agreement #41094515. Bleuchip Int’l, PO Box 25542, London, ON N6C 6B2. Address all subscriptions, change of address forms and correspondence concerning subscriptions to Subscription Dept., Railway Age, P.O. Box 1172, Skokie, IL 60076-8172, Or call toll free (800) 895-4389, or (402) 346-4740. Printed at Cummings Printing, Hooksett, N.H. ISSN 0033-8826 (print); 2161-511X (digital).

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October 2017 // Railway Age 1

FROM THE EDITOR

AILWAY GE Subscriptions: 800-895-4389

Changing of the Guard at CSX

T

he past few months have been, to put it simply, rough for CSX. President and CEO E. Hunter Harrison’s efforts to transform the company through his Precision Scheduled Railroading model—which worked rather well at CN and Canadian Pacific—have been met with internal resistance, compounded by some fairly serious service problems.

Nevertheless, Harrison, a two-time Railway Age Railroader of the Year, presses on. After some major hiccups, the company appears to be settling down. As he told me for this month’s cover story (p. 13), “The railroad is back to where we were, and probably a little better. At this point, we are ahead of schedule. We had predicted that there would be some bumps, and we wish that we would not have had the problems we experienced, but that’s all behind us now. There will be more changes to make.

I see a potential for some resistance to those changes, but I am not anticipating any major problems. Change is change.”

Indeed.

It turns out some of that change is occurring at the very top. Three long-time key CSX executives will be leaving the railroad on Nov. 15—Executive Vice President and Chief Operating Officer Cindy M. Sanborn; Executive Vice President and Chief Sales and Marketing Officer Fredrik J. Eliasson; and Executive Vice President Law and Public Affairs, General Counsel

and Corporate Secretary Ellen M. Fitzsimmons. Sanborn and Eliasson are resigning “to pursue other interests.”

Fitzsimmons is retiring. All “will remain engaged in supporting the transition until early 2018,” CSX said in a late October announcement.

Railroad industry veteran James M. Foote is joining CSX as Chief Operating Officer. He will have responsibility for both operations and sales and marketing— replacing both Eliasson and Sanborn—and will be based at the railroad’s headquarters in Jacksonville, Fla. Foote has more than 40 years of experience, starting with the Chicago & North Western and then with CN as Executive Vice President Sales and Marketing. Most recently, he was President and CEO of Bright Rail Energy, a company involved with natural gas fuels for locomotives. Foote, who worked under Hunter Harrison at CN, is an accomplished person who “will be a significant asset as we continue to drive value for shareholders and customers,” Harrison said.

CSX Vice President Risk Compliance and General Counsel Nathan D. Goldman will be promoted to Executive Vice President, Chief Legal Officer and Corporate Secretary, replacing Ellen Fitzsimmons.

More changes to come? Stay tuned.

WILLIAM C. VANTUONO Editor-in-Chief

Railway Age, descended from the American Rail-Road Journal (1832) and the Western Railroad Gazette (1856) and published under its present name since 1876, is indexed by the Business Periodicals Index and the Engineering Index Service. Name registered in U.S. Patent Office and Trade Mark Office in Canada. Now indexed in ABI/Inform.

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Industry Indicators Canada Sets the Pace; Piggyback Makes a Comeback It was a tale of two countries for rail freight traffic in August. Commodity shipments on U.S. railroads were flat compared with the same month in 2016 while their Canadian counterparts enjoyed healthy volume increases, up better than 10% on-year on robust gains in petroleum products, ore and sand. Intermodal rolled to positive results for August on both sides of the border, notable for U.S. trailer traffic that reversed a decades-long decline to finish ahead by 11.3%, more than double the showing of containers, which were better by 5.1%. There’s speculation that growing e-commerce sales and tighter truck capacity are boosting piggyback shipments as carriers push more trailers to the rails.

Railroad employment, Class I linehaul carriers, august 2017 (% change from AUGUST 2016)

TRAFFIC ORIGINATED CARLOADS

MAJOR U.S. RAILROADS

by Commodity

Total employees: 147,319 % change from AUGUST 2016: -3.56%

Transportation (train and engine)

59,886 (0.43%)

Executives, Officials, and Staff Assistants

8,632 (-5.69%)

Professional and Administrative

12,623 (-7.58%)

Maintenance-of-Way and Structures

FIVE WEEKS ENDING SEPTEMBER 2, 2017

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

JUNE ’16

JUNE ’15

% CHANGE

95,926 3,834 46,848 29,274 152,255 44,411 475,810 5,881 16,480 27,900 32,833 21,410 45,762 18,564 81,814 109,211 197,862 39,276 19,922 28,866

120,491 5,048 48,706 31,118 153,809 52,773 449,884 5,973 16,395 29,000 28,283 21,579 42,951 17,234 92,135 116,938 183,919 39,864 20,661 32,071

-20.4% -24.0% -3.8% -5.9% -1.0% -15.8% 5.8% -1.5% 0.5% -3.8% 16.1% -0.8% 6.5% 7.7% -11.2% -6.6% 7.6% -1.5% -3.6% -10.0%

1,343,405

1,347,976

-0.3%

394,094

357,359

10.3%

1,737,499

1,705,355

1.9%

CANADIAN RAILROADS ALL Commodities

COMBINED U.S./CANADA RR

33,260 (-6.57%)

Maintenance of Equipment and Stores

26,855 (-5.08%)

Transportation (other than train & engine)

5,703 (-5.50%)

Source: Surface Transportation Board

TRAIN & ENGINE ONLY STEADY SEGMENT The results of U.S. railroads continuing to pare the national workforce showed up in August as total employment dipped 3.56% from the same month in 2016, according to the Surface Transportation Board. Train & Engine again was the lone stable segment, and essentially unchanged. Professional and Administrative took the biggest hit, down 7.58% year-on-year as the Class I operators looked for cost-savings in marketing, sales, and back-office positions. Job data month-to-month was little changed from July, so it is possible railroads have reached some state of employment equilibrium.

4 Railway Age // October 2017

Intermodal

FIVE WEEKS ENDING SEPTEMBER 2, 2017

MAJOR U.S. RAILROADS

by Commodity

AUGUST ’17

AUGUST ’16

% CHANGE

Trailers Containers TOTAL UNITS

120,644 1,280,437 1,327,291

108,438 1,218,253 48,706

11.3% 5.1% 5.6%

5,584 347,392 352,976

5,000 307,470 312,470

11.7% 13.0% 13.0%

Trailers Containers

126,228 1,627,829

113,438 1,526,323

11.3% 6.7%

TOTAL COMBINED UNITS

1,754,057

1,639,761

7.0%

CANADIAN RAILROADS Trailers Containers TOTAL UNITS

COMBINED U.S./CANADA RR

Source: Monthly Railroad Traffic, Association of American Railroads

railwayage.com

AILWAY GE

TOTAL CARLOADS, AUGUST 2017 VS. 2016

1,347,976

1,343,405 AUGUST 2017

AUGUST 2016

Short Line And Regional Traffic Index CARLOADS

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

ORIGINATED AUGUST ’17

ORIGINATED AUGUST ’16

% CHANGE

47,578 29,775 30,326 10.972 22,638 6,812 9,874 2,999 16,707 9,684 1,520 2,324 18,128 47,344 10,255 90,079

46,252 24,378 25,283 11,067 24,318 6,570 9,714 3,338 16,605 9,246 1,732 2,012 17,773 51,681 9,495 87,913

2.9% 22.1% 19.9% -0.9% -6.9% 3.7% 1.6% -10.2% 0.6% 4.7% -12.2% 15.5% 2.0% -8.4% 8.0% 2.5%

Copyright © 2017 All rights reserved.

average weekly U.S. Rail Carloads: all commodities (not seasonally adjusted) 360,000 340,000 2006 (peak year)

320,000

2015

300,000

ARE YOU A RAILROAD OR SUPPLIER SEARCHING FOR JOB CANDIDATES?

2017

280,000 260,000

240,000 220,000

2016

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Data are 6-week moving average originations, are not seasonally adjusted, do not include intermodal, and do not include the U.S. operations of CN and CP. Source: AAR Data are six-week moving average originations, are not seasonally adjusted, do not include intermodal, and do not include the U.S. operations of CN and CP. Source: AAR

railwayage.com

Visit http://bit.ly/railjobs To place a job posting, contact: Jeanine Acquart 212-620-7211 jacquart@sbpub.com

October 2017 // Railway Age 5 RA_JobBoard_1/3Vertical.indd 1

8/17/17 10:59 AM

Industry Outlook

Scott Mason, a member of President Trump’s transition team, addresses the advocacy panel at Railway Interchange 2017 in Indianapolis.

Wait Until 2018 for Infrastructure Bill It will likely be 2018 before Congress makes good on President Trump’s pledge to pass an infrastructure spending bill, according to a member of his inner circle, just one item on a long waiting list of legislative issues concerning the rail industry.

“Infrastructure is still on the President’s agenda, but it has faded in priority order, behind health care reform and tax reform,” said Scott Mason, Senior Policy Advisor for the Washington office of law firm Holland & Knight and an original member of Trump’s Washington campaign team.

Mason spoke at the Railway Supply Institute Advocacy Panel at Railway Interchange 2017.

“Congress and the President are still working on a trillion-dollar infrastructure bill, but they are focused not on the process but outcome,” Mason said. “There are multiple agencies working on it. I think second- or third-quarter 2018 would be a good time to pass it, then elected representatives can go back to their constituents ahead of the midterm election and say, ‘I got you a road, I got you a bridge.’ At the end of the day, they [Congress] are going to have to pass a bill.”

It’s critical, Mason said, for RSI and other businesses to play a part in the process.

“Your voice is critical, and must be heard.”

6 Railway Age // October 2017

Mason acknowledged that funding for infrastructure was initially expected to come from savings realized by repeal and replacement of the Affordable Care Act, and from tax reform legislation. Healthcare has been set aside, and tax reform is in process. Mason predicted a new tax bill could be passed as early as the fourth quarter of this year, or the first quarter of 2018 “at best”.

As well, there’s been little progress on RSI’s checklist of rail-related legislative issues that runs from Buy America, fair trade and rail capacity, to opposing increased truck weights and lengths, the short line tax credit, Positive Train Control, intercity passenger rail, hazmat tank cars and ECP freight train brakes.

“There’s been a lot of output by us, but no outcomes,” said Mike Friedberg, also a senior policy advisor for Holland & Knight, and a member of its Transportation Team.

The House of Representatives last month passed its version of an omnibus appropriations bill with substantial funding for transportation, including $900 million for Amtrak and the Northeast Corridor.

“Hopefully, something will get done on this bill [by the Senate] in December,” Friedberg said, adding RSI has been invited to testify at rail infrastructure hearings in Washington.

It’s Official: Siemens AG and Alstom SA on Sept. 26 signed a Memorandum of Understanding “granting exclusivity to combine mobility businesses in a merger of equals.” The combination is largely viewed as a move to remain competitive in a global market in which Chinese rolling stock manufacturers have gained considerable market share.

Based on how the merged company, “Siemens Alstom,” will be structured and named, Siemens is the lead company, with 6 of 11 board members.

The announcement followed numerous reports in the French press on Sept. 21 and 22, “most (correctly) suggesting a deal would be announced on Sept. 26,” according to International Railway Journal Senior Editor Keith Barrow. “Alstom finally came clean in a statement issued on Friday evening, Sept. 22 (Paris time) that it was in talks with Siemens.”

At the time, Siemens had been in talks with Canada’s Bombardier, Inc. about merging their railway businesses. Siemens did not comment on whether its discussions with Alstom meant talks with Bombardier had stalled. But according to reports, there will be no further discussions with Bombardier.

“The transaction brings together two innovative players of the railway market with unique customer value and operational potential,” Siemens and Alstom said in a joint statement. issued late in the day (Paris time) on Sept. 26. “The two businesses are largely complementary in terms of activities and geographies. Siemens will receive newly issued shares in the combined company representing 50% of Alstom’s share capital on a fully diluted basis and warrants allowing it to acquire Alstom shares representing two percentage points of its share capital.”

railwayage.com

Stuart Chirls

Siemens, Alstom Set to Merge

Market For Greenbrier, 50,000 Hoppers The Greenbrier Companies, Inc. last month announced production of its 50,000th covered hopper. Greenbrier builds hoppers with freight carrying capacities from 3,250cf up to 6,580cf.

There are two new medium-cube models. One is designed to transport lighter weight agricultural products. It features a carrying capacity of 5,446cf with a length of 56 feet and a light weight of 59,500 pounds. The other, designed for transporting heavy agricultural products, is 54 feet long, with a carrying capacity of 5,100cf and a light weight of 58,700 pounds. Greenbrier also noted that its covered hoppers feature an updated roofline “that improves loading and unloading access.”

WORLDWIDE Sweden’s national passenger operator, SJ, has launched a global tender for the supply of 30 trains with a maximum speed of 155 mph at an estimated cost of up to $750 million. Each train will have more than 350 seats, and will be based on proven technology, while being adapted for the harsh Nordic climate as well as wildlife straying on to the track. SJ says it wants the trains to be intelligent in everything from technical equipment and maintenance to passenger information. SJ plans to introduce the trains in early 2021 on the

Stockholm-Malmö-Copenhagen route as well as on services to Norway. They will also be suitable for operation on the planned Järna-Linköping and Lund-Hässleholm high-speed lines, which will also have a maximum operating speed of 155 mph.

Siemens AG and Alstom SA have signed a Memorandum of Understanding “granting exclusivity to combine mobility businesses in a merger of equals.” The combination is largely viewed as a move to remain competitive in a global market in which Chinese rolling stock manufacturers have gained considerable market share.

Based on how the merged company, “Siemens Alstom,” will be structured and named, Siemens is the lead company, with 6 of 11 board members.

NORTH AMERICA The AAR has approved freight car castings from TVSZ (Tikhvin Freight Car Building Plant, Russia, a subsidiary of United Wagon Co.) for unrestricted interchange service on North American railroads. TVSZ has begun shipping the castings; the planned scope of supply is up to 5,000 carsets per year. AAR railwayage.com

certification was needed to fulfill a decadelong export contract between United Wagon Co. (UWC) and Wabtec Corp. TVSZ said its castings are intended for three-piece trucks such as the Barber S-2-HD “and feature a reduced-weight design preferred by North American customers. The S-2-HD is a standard 32.5-ton-axle load truck approved for general use. Freight cars equipped with these castings will operate over the entire North American rail system.”

Amtrak has signed an agreement with Rockwell Collins to implement the company’s ARINC RailwayNet service, a hosted network, messaging and application platform designed to meet PTC requirements.

Amtrak plans to equip approximately 310 diesel-electric locomotives with Positive Train Control (PTC) technology to comply with the Dec. 31, 2018 federal deadline. RailwayNet will allow Amtrak’s national dieselelectric locomotive fleet to interface with the PTC systems of host railroads. Under the agreement, Rockwell Collins will initialize the fleet to operate on 19 railroads, including commuter and freight lines that host Amtrak services, among them state-sponsored routes in the East and Midwest.

October 2017 // Railway Age 7

Update

NJT AND SAFETY

“No Compromise or Negotiation”

O

n Sept. 21, the same day the National Transportation Safety Board opened the docket on New Jersey Transit’s Sept. 29, 2016 Hoboken Terminal crash and the Jan. 4, 2017 Long Island Rail Road Atlantic Terminal wreck to the public, NJT announced it “has implemented a variety of rail safety upgrades over the past year and is looking at additional enhancements for the future, as part of its commitment to safety.”

NJT Rail Operations is currently replacing all the old (and by some accounts weakened) stub-end-track steel bumpers at Hoboken Terminal with new sliding friction bumper blocks as well as installing a speed control system for trains approaching platform ends at Hoboken Terminal.

Other initiatives include enhanced sleep apnea screening and testing, adding personnel to the head end of trains entering certain stations, and reducing speed limits.

NJT reports that it has implemented the following safety initiatives: • An interim measure where any safetysensitive rail employee who exhibits any indication of potential fatigue symptoms is removed from service until they obtain the appropriate documentation attesting to the 8 Railway Age // October 2017

satisfactory results or the condition is not present. All locomotive engineers have been screened for obstructive sleep apnea.

• Installation of forward- and inward-facing cameras on trains. NJT expects to have both types of cameras installed in the entire fleet by year’s end.

• Requiring the conductor to ride in the head end of trains, along with the engineer, when entering terminal tracks at certain stations. Speed limits at some of these locations have been reduced from 10 mph to 5 mph as a proactive measure.

• Increased the penalty for cell phone infractions, now up to a 90-day suspension for a first-time violation.

• The Office of System Safety (OSS) continues to hire and backfill key safety positions.

• OSS conducted 16 safety blitzes at key grade crossings and stations to educate and reinforce rail safety to customers and the public.

• This past year, the NJT Police Department provided emergency response training for 750 first responders, and rail safety training for an additional 550 first responders.

NTSB is also preparing a Special Investigation Report focused on the findings from both the NJ Transit and LIRR accidents. This report will include

recommendations based on those findings, NTSB said.

“The commonalities in the accidents— both involving bumping post collisions at the end of a track in a terminal—warrant a singular discussion of the related safety issues,” NTSB said. “Combining each accident report with a Special Investigation Report allows each to be addressed in a single board meeting.”

NTSB has scheduled that board meeting for Feb. 6, 2018, in the NTSB Board Room and Conference Center, 429 L’Enfant Plaza SW, Washington, D.C., beginning 9:30 a.m.

(Eastern Standard Time).

all locomotive engineers have been screened for sleep apnea.” railwayage.com

Update

William C. Vantuono

New from Amsted Rail: TrakMaster™ How many times can the three-piece freight car truck—a basic and proven design that has been in use since the 19th century— be improved? For Amsted Rail, there appears to be no limit.

At Railway Interchange 2017 in Indianapolis, Amsted Rail introduced the TrakMaster™, its latest iteration of the threepiece truck.

“Totally redesigned top to bottom with the latest cutting-edge technology, TrakMaster™ goes beyond anything before possible in a three-piece bogie,” the company says. “If you’re looking for next-generation performance tailor-made for high-mileage, heavy-axle-load railcars, TrakMaster is the right track to take.”

Amsted Rail says the TrakMaster™ is “the first bogie to pass the latest Association of American Railroads specification criteria with updated track profiles (as published in the AAR Manual of Standards and Recommended Practices, Effective 9/15/2017).

It offers better curving performance to reduce wheel flange wear, and provides longer wheel and component life. It has a re-engineered dual-rate suspension, and also offers lower maintenance costs.”

The TrakMaster™ features Amsted Rail’s IBEX™ TMB (Truck Mounted Brake) system for heavy-haul applications, which the company says “is designed to be extra light, extra balanced and extra durable.”

These systems, Amsted notes, are “engineered for greater safety, efficiency and seamless performance.”

Amsted Rail says the IBEX™ TMB “provides less weight and therefore more payload; superior alignment for longer wheel life; a better balance for longer brake shoe life; a versatile modular design for a longer life cycle; increased durability for longer brake system life, and a brake-beammounted slack adjuster with connecting rods for additional clearance.”

The TrakMaster also offers built-in information technology. It’s equipped with IONX® integrated sensors that deliver “actionable intelligence,” and are part of an onboard network “that turns the freight railcar into a wireless hotspot, letting you track, trace, monitor and manage your assets across even the harshest operating railwayage.com

environments in near-real-time. The result is greater efficiency, improved processes, enhanced connectivity, and more intelligent fleet decisions.”

IONX® technology, Amsted Rail says, offers “safer operations by using predictive analysis of wheels and bearings; decreased

out-of-service time and associated false setouts; reduced maintenance events; and improved scheduling for maintenance.”

The TrakMaster™ is claimed to weigh about 200 pounds less than a comparable three-piece truck, thereby reducing empty weight by 400 pounds per railcar.

Providing expert transit

SOLUTIONS for you and passengers

Rail Vehicle Engineering Revenue Systems and Technology

Rail Systems Engineering Operations Planning and Simulation

www.ltk.com

October 2017 // Railway Age 9

Update

GREX Aurora, the Next Generation Georgetown Rail Equipment Company (GREX) at Railway Interchange 2017 introduced Aurora Xiv™, the newest generation of its Aurora track (ties and ballast) inspection platform.

The Aurora Xiv™ combines several GREX

inspection systems into a single hi-rail truck “with the aim of making inspections more efficient and cost-effective,” the company said. The new platform hosts GREX’s Aurora®, Aurora Xi™ and BallastSaver® technology, “effectively integrating the

company’s trio of machine vision technologies to provide comprehensive tie and ballast profile inspections.”

Camera 1 of the system enables timber tie inspection based on 3D laser profiling scans, while Camera 2 simultaneously scans concrete ties based on the same 3D laser scans. Aurora Xi™ employs backscatter x-ray technology to look inside track components.

BallastSaver utilizes LIDAR (Light Detection and Ranging) to identify ballast deficiencies and clearance envelope issues.

“The goal is to provide our clients with the best, most accurate data,” said GREX Chief Operating Officer Greg Grissom. The first Aurora Xiv™ will be deployed on MTA Metro-North Railroad, with plans to roll out several vehicles in the near future.

LIDAR is a surveying method that measures distance to a target by illuminating that target with a pulsed laser light, and measuring the reflected pulses with a sensor.

Differences in laser return times and wavelengths can then be used to make digital 3D representations of the target.

AEI RF Identification Tags are on over 1,000,000 Railcars

AEI RF Identification allows you to quickly and accurately record railcar numbers on tracks and trains.

Softrail provides a full-line of the AEI products and services, which include: • Portable AEI Tag Readers • Wayside AEI Tag Readers • AEI RF Tags and Tag Programming Services For more information go to:

www.aeitag.com

10 Railway Age // October 2017

GREX

1098 Venetia Road • Eighty-Four, PA 15330 Tel. 888.872.4612 or 724.942.1473 sales@signalcc.com

railwayage.com

Watching Washington

Redux for NMB-Fee Argy-bargy?

A

s the three-member National Mediation Board (NMB) shifts to Republican control for the first time since 2009, a knotty issue lying dormant since 2006 may emerge: Who pays for binding arbitration to resolve grievances over interpretation of collectively bargained labor contracts and employee discipline?

The two new Republicans arrive with clean slates on rail labor issues. Kyle H. Fortson’s strength is her knowledge of labor law. Gerald W. (Trey) Fauth III is strong on rail economics and operations. Democrat Linda A. Puchalla, with an airline labor union background, expertise in alternative dispute resolution and no documented position on rail arbitration user fees, is serving a third term since her first Senate confirmation in 2009.

While political party affiliation has been less evident in NMB decisions than at some other independent regulatory agencies, convention holds that labor unions have more friends in the Democratic Party; carriers more among Republican politicos.

Consider the NMB’s statutory responsibility for the appointment and compensation of neutral arbitrators who resolve, through binding decisions, Railway Labor Act (RLA) “minor disputes” over contract interpretation and employee discipline for which work stoppages are prohibited.

The compensation and travel expenses of the neutral arbitrators assigned to rail cases—a current cost of $1.2 million annually—is funded entirely by taxpayers. One could assume that federal budget hawks of

1.2 M is funded entirely

by taxpayers

railwayage.com

all political stripes, particularly Republicans, oppose the subsidy that is not required by law.

In 2004, Republican NMB member Read Van de Water advanced, as part of proposed changes “to rules and procedures to facilitate the more timely resolution of grievances,” user fees for rail arbitrations.

Notwithstanding that airlines and their unions—also subject to the RLA—share the costs of NMB administered binding arbitration, an argy-bargy erupted. Rail labor unions said the taxpayer subsidy was justified in lieu of a statutory prohibition of work stoppages over “minor disputes”—a small price to pay for labor peace.

Railroads countered that union actions—citing examples of work stoppages over disputes subsequently found to be “minor” and arbitrable—belied the unions’ professed commitment to binding arbitration. Moreover, an absence of user charges discourages less-formal, on-property grievance resolution, and invites frivolous filings.

Predictably, the NMB’s then lone Democrat, Harry Hoglander, opposed imposing user fees, but Van de Water was unable to squeeze a deciding vote out of fellow Republican Edward Fitzmaurice, who allegedly was avoiding controversy while awaiting a renomination that never occurred. His Republican successor, Elizabeth Dougherty, might have provided the deciding vote, but it wasn’t sought, and the pending rulemaking languished.

Concern developed that the case consolidation and scheduling provisions of the Van de Water proposed rules change—not the user fee provision—could not survive a court challenge. In fact, a federal court later ruled that the NMB’s subsequent cost-saving consolidation of 31 separate grievances filed by the Brotherhood of Maintenance of Way Employes against CSX was “a gross violation” by the NMB of the RLA. Yet the proposed rulemaking wasn’t withdrawn by the NMB. It remains outstanding and could be finalized, even with tweaks, absent new preliminaries. Thus, the new Republican majority of Fauth and Fortson could dust it off—perhaps separating out for voting the user fee provision—and defend it under the Independent Offices Appropriation Act rather than the RLA, which carriers had

Who pays for binding arbitration to resolve grievances?” suggested when the rule was first proposed.

There is no present reason to suppose that new Republicans Fauth and Fortson, or incumbent Democrat Puchala, have staked out a position, or that any of them is steeped in the pro and con arguments of a rulemaking lying fallow for more than a decade— and since before Puchala arrived in 2009.

Yet, less government, and assuredly, less government spending, is the very DNA of the Trump Administration and the Republicancontrolled Congress. Moreover, there have been numerous occasions where the NMB had to curtail these arbitration activities, owing to late-fiscal-year budget shortfalls.

Although in 2004 railroads advocated even higher fees than the NMB proposed, railroads say they now have zero interest in pursuing the shift of cost responsibility from taxpayers to the interested parties.

As for the new NMB Republican majority, they have inherited budget responsibilities in an era of continuingly diluted federal spending, and they further must contend with those who put them at the NMB—Republican lawmakers who have congressional oversight of the agency , little patience for bureaucrats who hesitate where and when federal spending may be reduced, and an urgent need for spending reductions to fund tax cuts.

FRANK N. WILNER Contributing Editor October 2017 // Railway Age 11

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CSX

BY WILLIAM C. VANTUONO, EDITOR-IN-CHIEF

Hunter Aims for a Three-Peat After “a very ragged 90 days,” CSX seems to be settling down as its CEO gives his Precision Scheduled Railroading one more go.

CSX

C

SX President and CEO Ewing Hunter Harrison’s Precision Scheduled Railroading can be compared to legendary bandleaderpianist-composer-arranger Stan Kenton’s Progressive Jazz: If you’re not anticipating it, you might get run over by it.

The Kenton Orchestra’s “wall of sound”— frequently loud, dissonant, polytonal, bombastic—evoked extreme reactions, back in the late 1940s and early 1950s. You either loved it or hated it. There was no middle ground. Kenton, a brilliant, complex jazz innovator, passionately believed in what he was doing—critics be damned. And most of the musicians and arrangers who worked with him over the years were fiercely loyal.

Hunter Harrison, arguably among this industry’s most heralded operating officers, and this publication’s two-time Railroader of the Year, has evoked similar feelings. He tells you exactly what he wants to be done and how it’s going to be done.

“Some people would describe you as a railwayage.com

‘tough guy,’” this writer told him during his 2015 Railroader of the Year interview (RA, January 2015, p. 20). “I don’t see you that way at all. I see you as someone who is very focused, very determined. You know exactly what you want to do, and you know how to get it done.”

“Well, it’s kind of a matter of semantics,” Harrison responded. “Sometimes, you might call it tough. But I think there are times, when you’re trying to lead and motivate people, when they need a kiss on the cheek and a hug, and times when they need a kick in the ass. So people kind of describe that as tough. I think it’s a case where somebody has to do it. And, you know, some of those things are distasteful. Some are not.

I don’t know any of us that get pleasure out of doing those things, but they need to be done at times.”

Based on what Harrison accomplished at Illinois Central, CN and Canadian Pacific (coming out of retirement to take over and transform a railroad that had been lagging behind its Class I peers), it’s difficult to

argue with his methods, or with his success.

But with CSX—the second railroad where Harrison was installed as CEO largely through the actions of an activist hedge fund—the transition to Precision Scheduled Railroading has not been all that precise. Certainly, it has been tough.

Opinions vary.

Harrison’s “boisterous March arrival as CEO of CSX put in motion warp-speed, backfiring directives, changing culture, operating practices and marketing practices,” wrote Contributing Editor Frank N. Wilner in mid-August. “The results, so far, threaten to shred a hall-of-fame quality reputation earned at Illinois Central, CN and CP—a supernatural ability to mend struggling railroads using a trademark ‘precision scheduled railroading’ that delivers, through an obsession with efficiency, better, faster and lower-cost operations.

“Yet at CSX, service is melting faster than a frozen Daiquiri in the Florida midday summer sun. While a slippery slope of deteriorating service began well before October 2017 // Railway Age 13

CSX

cannon firing from all sides.”

“I think Hunter has made some missteps, but some mistakes are inevitable in a transformational change,” says Chip Kraft, Director, Operations Planning at Transportation Economics & Management Systems, Inc., and a Railway Age contributor. “Perhaps Hunter has a ‘shoot first, ask questions later’ mentality, due to his

CSX

Harrison’s arrival, his world-renowned ‘Dr. Fixit’ ability was a primary reason for his recruitment. Yet here is Harrison at CSX, suffering a well-publicized siege from customers, the Surface Transportation Board, employee labor unions, and even some once-fawning investors. Harrison’s anticipated glory days running CSX are mutating into volleys and thunder of

own self-imposed urgency. I believe this is causing him, at times, to proceed without having really thought through or modeled the consequences—sort of like running experiments in the real world. The key is, if you do make a mistake, reverse it quickly.”

“Perhaps Hunter has some well-deserved self-confidence—may I say ‘ego’—in play,” says Kraft. “Even if he has special insights, as I believe he does, there are still limits to what anyone can solve in their head.

There should still be a place for analytics, modeling and engineering expertise to make their contributions. I call this a ‘reasoned approach,’ and I wish Hunter had been willing to make greater use of it. He is in such a hurry to proceed that he is, for example, pulling out locomotives before his scheduling discipline is fully in place, with predictable results. As such, he has placed the cart before the horse. He is such a good operator that he gets away with it some of the time, but no one can get away with it all of the time.”

“Our concerns about service stem primarily

By William C. Vantuono 14 RTandS-TRACK-AD-Full-page-horizontal-09-18-17-A.indd Railway Age // October 2017

1

railwayage.com

CSX from direct channel checks with a number of rail customers as well as our most recent shipper survey, in which shippers expressed some displeasure with CSX’s service, with 24% calling it ‘poor,’” said Cowen and Company Managing Director and Railway Age Wall Street Contributing Editor Jason Seidl in late July. “No other railroad received a ‘poor’ rating from more than 6% of shippers.

“However, we suspect this view of CSX is related to a reduction in the number of offerings rather than the poor quality of service, given the company’s fairly solid productivity metrics. In addition to potentially impacting the company’s ability to get price, the service issues could lead to some market share loss. A key point here is that we believe the percentage of the rail network in the east that is peer- and truck-competitive is materially greater than that north of the U.S. border, where Harrison achieved two of his big successes.”

By early September, the situation seemed to be improving. “Is CSX emerging from

what many observers, including customers, say is an operational and service meltdown created by a ‘too much, too soon’ rush to implement Precision Scheduled Railroading on an arguably complex network?”

Railway Age asked on Sept. 6. “Hunter Harrison says ‘yes.’”

“CSX has made very good progress in the past 60 days in transitioning its operating model to Precision Scheduled Railroading, and I’m confident that many of the challenges we and our customers have recently faced are behind us,” Harrison said in a statement. “The CSX team of dedicated railroaders has worked tirelessly over the past few months to implement our new operating model and moved as quickly as possible to address customer issues when they arose.”

Let’s set aside, for now, lengthy analysis from experienced observers, and go right to the source: Hunter Harrison himself.

Following is a conversation this writer had with him in late September: RA: How would you characterize CSX at

this point?

EHH: The railroad is back to where we were, and probably a little better. At this point, we are ahead of schedule. We had predicted that there would be some bumps, and we wish that we would not have had the problems we experienced, but that’s all behind us now. There will be more changes to make. I see a potential for some resistance to those changes, but I am not anticipating any major problems. Change is change.

RA: Do you think you moved too quickly making changes—for example, closing hump yards?

EHH: We didn’t forecast correctly, in terms of closing hump yards. Maybe we got a little aggressive with that. But let me tell you where I think we ran into problems. Three key things happened. Number one, the employee cutbacks were not well-received.

However, I need to point out that 85% of those cutbacks were from the management and contractor and consultant ranks. The first 1,000 people left before I actually got

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9/18/17 1:32 PM October 2017 // Railway Age 15

CSX there. That move was made without consulting with me. Some people couldn’t deal with the changes we were making, and some didn’t want them to occur.

There was an incident where some officers falsified computer records with car movements that actually never took place. They took them off the delay reports. They didn’t want to be criticized.

We had to dismiss about nine people because of that incident. They were showing cars moving that actually weren’t moving.

We experienced two bad derailments. The one that took place in Pennsylvania took us out of service six days on that line. Of course, we had to route traffic around that incident. In some circles, this was interpreted as cars being misrouted. It actually wasn’t.

The other derailment, we are reasonably sure, was an act of sabotage. It’s currently under investigation. It took place in the Carolinas. A bulldozer was placed on the tracks and covered with pine saplings. Now, it’s not uncommon to find pine saplings falling on the tracks in this area. But in this case there was a bulldozer hidden by them. The crew didn’t see the bulldozer until it was too late, and they derailed the train.

We had a very ragged 90 days. But we’ve recovered and are a lot stronger now. We’re operating better, with fewer people. In terms of metrics, business is up moderately.

RA: You’ve been criticized by some shipper groups. You’ve lost some business—some to truckers, some to Norfolk Southern.

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“There isn’t so much complexity that you can’t make changes. You are paid relative to your competition.”

EHH: There are people who don’t want to see us do well. The most vocal critics are a shipper coalition that has taken our difficulties and tried to turn them into an opportunity to push their agenda.

They never talked to us.

I’ve been visiting with a lot of customers personally, and have had some very good dialogue with them. In the long run, we will all be better off, and I think our customers understand that.

In terms of the customers we lost, if they can get a better deal right now, then by all means they should do it. But they all told us, “We used you for a reason. Your service and price were the best.” I understand that if we have problems, we will be penalized.

Most shippers have said to me, “You didn’t hurt us; you scared us. We were used to something else.” Some of the stories out there have been exaggerated. I’ve been very hands-on through this whole thing. For example, a major paper shipper, who I met with personally, was saying that they were experiencing a 54% fill rate on their cars. I checked the numbers myself. The fill rate was actually 88%.

RA: Is CSX operationally more complex than CN or Canadian Pacific or Illinois Central, which geographically are essentially linear systems? CSX is a complex network. Is it more difficult to implement Precision Scheduled Railroading on a railroad like CSX? EHH: Yes, CSX is more complex, but that is not an excuse for having worse metrics. You get paid for the service you provide. I believe that complexity offers more opportunity. We’re operating the railroad today with 26,000 fewer cars and 800 fewer locomotives. We’ve gone from 12 hump yards to four. The workforce has been reduced by approximately 3,500. We are consolidating our dispatching into Jacksonville, so we are going from nine dispatch centers to one.

There isn’t so much complexity that you can’t make changes.

Yes, it was easier to operate CP and CN, but you are paid relative to your competition.

RA: The STB has gotten involved. There is a hearing scheduled for Oct. 11. What are you anticipating?

EHH: I’m perfectly willing and happy to go and testify before the STB. I have no secrets, and I will be completely transparent. There may be some lobbyists there who are going to be pushing their agenda. And I’m going to say to them, tell me where and when and who and I’ll guarantee they’ll get their problem fixed. I can’t deal with anonymity.

STB hearings and vocal shippers notwithstanding, the jury will be out on Hunter Harrison and CSX for a while. We’re going to give it a few months, and revisit the railroad and its determined CEO in the April 2018 issue. railwayage.com

AILWAY GE S e r v i n g t h e r a i lway i n d u s t r y s i n c e 1 8 5 6

Railroad Financial

Desk book

2018

19

Is Growth in Rail an Oxymoron?

By David Nahass, Financial Editor

26

company profiles

2018 FINANCIAL DESKBOOK

IS GROWTH IN RAIL

AN OXYMORON ?

W

elcome to the 2018 Railway Age Railroad Financial Desk Book.

Through the month of September, 2017 has been a year filled with high drama at CSX, service disruptions, increasing freight traffic and what seems to be a stabilizing, if not rebounding, freight car market.

An interesting discussion happening in today’s rail market is about rail’s next “big thing,” or in other words, from where will railwayage.com

loadings growth come in the future? It is a discussion that has increased in prominence through this year.

To many industry observers, the railroads do not seem to be pursuing business growth, preferring instead to focus on core bulk commodity groups (e.g., grain, sand, steel, automotive, chemicals, aggregates, building materials, a diminished level of coal, and intermodal). From the perspective of parties involved in the industry (railcar manufacturers, lessors and customers) North America’s railroads do not prioritize

customer service, growth and expansion.

They prefer to focus on operating ratio over increasing and growing top line gross revenue.

This may be a casualty of the Hunter Harrison “Precision Railroading” era of railroad operations. Over his career at CN, Canadian Pacific and CSX, Harrison has not been afraid to dispense with certain types of carload traffic in pursuit of low operating ratios (OR, operating expenses expressed as a percentage of revenue). Additional cuts in railcar capacity and manpower seemed to October 2017 // Railway Age 19

All illustrations including cover: Sean Kelly

BY DAVID NAHASS, FINANCIAL EDITOR

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leave (even as things appear to be turning for the better) CSX with disorder on the track and customer fury in the press and at the STB. The pursuit of new business and providing high quality customer service?

Nowhere to be found!

Today’s approach to railroad operations, while seemingly favoring OR over growth, may create additional opportunities for trucking, even as trucking struggles and stumbles along with the cost and procedure of implementing federally mandated Electronic Logging Devices (ELDs) for truck drivers. With the threat of driverless trucking on the horizon (beginning with truck platooning), many are concerned that the competitive assault on rail is ever

railwayage.com

growing. This adds to the sense that North American railroads are not in growth mode and increase worry about where the rail economy may be headed.

In response to questions about the trajectory of railroad growth, I spoke with Anthony “Tony” Hatch (while he was on a passenger train), noted industry consultant and perennial Rail Equipment Finance speaker, about what the railroads are doing in regards to growth of their franchise.

Hatch told me that the sometime public perception about railroads not being interested in growth is the opposite of the truth in today’s railroad business. He concedes that there is some merit to the perception that railroads are too OR-focused.

But Hatch suggests that OR-centric focus is the result of shareholders not fully understanding the railroad business and using OR as a convenient metric that can be utilized to measure a kind of success. Calculating ROI (Return on Investment) vs. OR for a railroad is difficult to do. Even the STB, which puts out the railroad cost of capital, does so belatedly, having recently published the 2016 number (8.8% if you missed it, down from 9.61% in 2015).

Having productivity measured by OR, Hatch says, “can lead to the impression that the railroads are not taking risks and that there is a prioritization of expense reduction over investment in growth.”

Additionally, decreases in OR increase the pressure for further OR reductions. Hatch suggests that the capex spending of the railroads is, at 15% to 20% of revenue on average across the Class I railroads, the main indication to the contrary. Using OR vs. ROI to measure railroad success or failure discounts the value added from that significant capex spending.

However, many of today’s improvements in OR and in asset optimization are driven by improvements in technology and the railroad’s capex spending. Harrison’s Precision Railroading, to the chagrin of some observers, is a starting point for these improvements. As Hatch notes, the ongoing success of what Harrison started at CN and CP, and which has begun at CSX, has to be carried forward by the people at those railroads that come after Harrison. Hatch feels that this has been the case at CN, which he feels is a “best in class freight railway in North America … leveraging technology, balancing a history of operational excellence and

October 2017 // Railway Age 21

FINANCIAL DESKBOOK business that chases carloads and volume at all costs vs. being a business that walks away from carloads that are not profitable is what good companies do for their shareholders.

The bygone railroads were not those types of companies. When loads were available, they took on equipment to move it. It was a volume business. Now the railroads, in some cases, are looking to shed equipment and are expecting customers to put out the capital for railcars. A “hook and haul” railroad may not satisfy expectations of a broad supplier base.

Hatch suggests that the other railroads can replicate the CN model. Business optimization could mean that railroads may need to walk away from unprofitable legacy opportunities to move freight. This could increase stress on an equipment market already dealing with excess capacity in many segments. It could also be a harbinger for additional shifts in the current landscape for railcar ownership.

supply chain collaboration.”

To give equal treatment, it is fair to say that there has been a focus on growing intermodal loadings over general freight car loadings, and that may account for some of the concerns offered by some industry watchers. (It also bears noting that intermodal loadings growth is actually a drag on OR.) CN has put in place a five-year plan to increase general freight loadings and to pull more freight onto the rails. However, that does not mean CN will chase loads that do

not support their target ROI. The desire to bring on loads that support and elevate, rather than decrease, ROI may conflict with public (and industry) perception of the common carrier obligation. This may mean, in some cases, that some “core” loadings, such as some paper loads, may have margins that are too thin to be priced to bring loads onto the rails. Perishable goods, long a niche business that seems for the most part, untapped, may be another.

Moving the railroads from being a

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It laid out long-term growth possibilities depending on the number of drilling rigs, pounds of sand per well and railcar cycle times. This push for increased growth is being tempered by the development of “brown sand” mines located closer to the frac wells (vs. northern white sand available in Wisconsin) in locations such as the Permian Basin. This sand can be delivered by truck or possibly containerized in

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2018 FINANCIAL DESKBOOK short-haul rail moves. The overall thesis of that piece was that the frac sand market is, generally, unlike any bulk commodity market that exists in rail today.

Five months later, those assumptions are still under scrutiny, as investors in sand and covered hopper cars for hauling sand try to plot out that market’s next move after its recent runup. On its second-quarter earnings call (July 24, 2017), oilfield services giant Halliburton President and CEO Jeff Miller made a definitive statement that can be viewed as putting a ceiling, if not a cap, on the use of sand in frac wells.

“For the first time in years, in the second quarter we experienced our first decline in average sand pump for well,” Miller said.

This is important. While this is only one data point, it’s something we will be watching. We believe current sand price levels have encouraged operators to optimize their completion design using more science as opposed to simply maximizing sand and trade for increased production.”

For some time, the amount of sand being

pressured into wells seemed to follow a trajectory not unlike Moore’s Law, which says the number of transistors in an integrated circuit doubles every two years.

Halliburton’s announcement, essentially putting a cap on the balance between tons of sand per foot and the ability to increase extraction, potentially fixes a number in the equation for those parties looking to determine the number of sand cars needed to serve the fracking business.

Miller goes on to say that sand use is all about economics and the interplay between technology, cost and extracted volume.

While that is no surprise, it emphasizes the risks to anyone looking at the current sand market and thinking that the appetite for additional new car capacity along with the appetite for frac sand is exponential.

As fracking matures as a business, sophisticated companies will continue to invest in improving technology geared toward increasing the amount of oil and gas being extracted from frac wells at the lowest cost.

Frac sand in a well is a cost item. Reduce the

distance between the sand and the well or reduce the amount of sand going into a well, and you have reduced the cost of extraction.

Halliburton’s message should serve to remind investors that running full throttle in this market might lead to a cycle of overbuilding like what occurred in 2015 and 2016. While the opportunities for sand remain numerous, the growth curve for this market is littered with pitfalls for investors.

Around the Market The railcar market remains weak. While there are pockets of strength (sand, some mill gons, coil steel cars), core markets remain soft, with available cars in excess of demand. It is a tough market (don’t let anyone tell you being an operating lessor is easy!). How tough? Some investors remain pessimistic enough to believe that a general rental rate rebound will not begin before 2020, while most have already conceded 2018 will be a year without much improvement, hoping for 2019 to be a rebound.

Following is a summary of the market:

USE OUR CAPITAL – NOT YOURS Enjoy the benefits of leasing new MOW equipment for a fraction of the cost of owning. Progress Rail’s Equipment Leasing team offers several programs tailored to meet your financial needs.

We offer: • Diverse, well-maintained inventory • Competitive options for any budget • No hidden fees Contact Progress Rail today to learn about the advantages of leasing. Enjoy the benefits of new MOW equipment for a fraction of the cost of owning.

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810-714-4626 • progressrail.com •

railwayage.com

Progress_Rail

October 2017 // Railway Age 23

2018 FINANCIAL DESKBOOK Coal Gondolas and Rapid Discharge Hoppers: Railcars hauling coal remain excess to overall fleet needs. As noted last month, some scrapping is occurring, but it is not enough to change supply and demand dynamics. Aluminum gondola rates are in the low-$100s per car per month (PCPM).

Even though rapid discharge hoppers are a smaller market segment with less oversupply, rates remain depressed here as well hovering around and/or just below $200 PCPM. Covered Hoppers for Grain: There is not much good news here. Rates on 4,750cf (cubic-foot) covered hopper cars are still hovering in the low-$200s PCPM full service, with exposure to the downside on that $200 threshold due to overcapacity in the market. Jumbo hoppers (~5,200cf) continue to be oversupplied with used and new cars both stressing the market.

The market remains weak even with yearover-year increases in loadings from 2015 to 2016. While Class I’s have been ordering some new equipment, a high velocity and

efficiency have allowed the same railroads to optimize fleets and return equipment to lessors. Rates on jumbo cars are in the low-

One of the only bright spots, sand covered hoppers remain in demand and are continuing to be built. $300s, with exposure to the downside on that $300 threshold. Rents may head below that important threshold before a rebound.

Covered Hoppers for Plastic Pellets:

Investors continue to wait for opportunities to lease these cars at premiums since demand for new builds of this car type show relative strength. There is a small market disconnect here as new facilities coming on line generally will not require short-term cars until operational commencement.

This has led to oversupply and weak rates.

6,200cf cars are in the mid $500s, with smaller 5,800cf cars in the mid- to high$300s. There is near-term stability here, with optimism for the future if overbuilding does not occur.

Covered Hoppers for Sand: One of the only bright spots, sand covered hoppers remain in demand and are continuing to be built new. Still, challenges abound amid the success (see “Moore’s Law and Frac Wells,” above). Lease rates on new cars are in the low- to mid-$500 PCPM. For older cars, rents range in the mid-$400s to the low-$500s.

Mill Gondolas: Recent drama at CSX and its offloading of older mill gons has led to an uptick in demand for this car type.

CONNECT The right car when you need it Access one of the largest growing fleets in North America. We welcome the opportunity to speak with you about all your rail needs.

SMBC ©2014

1-888-4RAILCAR | smbcrail.com | sales@smbcrail.com

24 Railway Age // October 2017

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2018 FINANCIAL DESKBOOK For 52-foot 6-inch 263,000-pound GRL cars, rates are in the high-$300s PCPM. For 52-foot 6-inch 286,000-pound cars, the number is in the mid-$400s. There may be a little price sensitivity/improvement for cars going into service on CSX. 66-foot foot cars operating in western service are in the mid$500s PCPM, but demand is inconsistent.

There may be some stability at these levels.

Coil Steel Cars: Rates on new cars are in the mid-$500s PCPM, with older cars sitting a bit lower in the $400s. There seems to be some stability at these levels and overbuilding is not a concern right now.

Boxcars: There are some questions about this market regarding investors’ ability to receive a return on investment.

This is partially due to TTX’s leadership position in the space and to concerns about what happens to certain products shipped in boxcars (e.g., paper) long-term on rail. Rates on standard boxcars (50- and 60-foot) are hovering in the low- to mid$500s PCPM. We are unlikely to see much improvement from here.

Pressure Tank Rail Cars (LPG style): After a weak period where new cars headed directly into storage, this market is rebounding slightly, and rates have increased by approximately 30% Y-O-Y, having moved from the high-$300s to the high-$400s. Investors are happy to see that improvement. Barring additional overbuilding, this market should see some stability and improvement.

General Purpose Tank Railcars (25,000 gallons): There is stability here, but prices are lower than what investors expect. Rents are in the high-$400s to low$500s. Price pressure is driven by new car availability and prices and by the split in product lines between flammable commodities requiring DOT-117 tank railcars and non-flammable commodities using DOT111s. Expect prices to stay in this range, near-term.

Some additional problems being encountered by lessors include softening in recently strong markets (such as aggregates), where investors may have already missed the

run-up or are hoping for a rebound in 2018.

There are concerns about the approximate 45,000 cars being delivered in 2017 and a similar projection for delivered units in 2018 into already weak markets. Another worry?

Continued influx of additional capital looking for investment opportunities that is driving railcar prices to unhealthy (and possibly unsustainable) levels.

Next up? Car demand in certain lowmargin commodities is challenged by the high price of the railcars needed to carry those commodities. A product like wood chips requires a significant new car investment. Shipper rental rate expectations are more in line with cars built in the 1980s than 2017. Railroads may not want to provide equipment. It is an example of the changing investment analysis for railcars as the industry moves forward.

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

Desk Book Directory follows on p. 26.

CIT Knows

Rail Leasing Optimized rail equipment solutions based on industry-leading leasing and financing expertise.

CIT Rail keeps your operations on-track with innovative leasing solutions for your railcar and locomotive transportation needs. Our full suite of leasing and management services is designed to free up capital for your growth and operating priorities. With one of the most diversified and high-capacity fleets, we are committed to serving a wide range of industries in North America. CIT knows rail leasing and we are eager to power your growth.

Visit citrail.com, call 312-906-5701 or follow @CITgroup ATTRACTIVE ASSETS • FLEET MANAGEMENT CAPABILITIES CAPITAL PRESERVATION

©2017 CIT Group Inc. All rights reserved. CIT and the CIT logo are registered trademarks of CIT Group Inc.

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October 2017 // Railway Age 25

2018 FINANCIAL DESKBOOK DIRECTORY FINANCE COMPANIES ECN CAPITAL CORP. – RAIL FINANCE 150 N. Wacker Drive, Suite 2450, Chicago, IL 60606; Tel.: 312-982-8700; Harry Zander, Senior Vice President, Rail Finance, Email: hzander@ecncapitalcorp.com.

Website: ecncapitalcorp.com. MAKING CAPITAL WORK. With total owned and managed assets of more than $8.5 billion, ECN Capital is one of North America’s leading commercial finance companies. ECN Capital operates across North America in three verticals of the equipment finance market – Rail Finance, Aviation Finance and Commercial & Vendor Finance. Our Rail Finance group has a longstanding track record of delivering tailored financing solutions for all types of rolling stock including tank and general freight railcars. As trusted advisors on complex transactions, we put our experience to work by adding value through our counsel as well as our capital.

PROGRESS RAIL, A CATERPILLAR COMPANY – EQUIPMENT LEASING 15173 North Road, Fenton, MI 48430; (810) 714-4626. Trent E. Marshall, VP Leasing. The largest lessor of maintenanceof-way equipment in North America is a full-service leasing firm offering a host of programs and services specifically tailored to meet your exact financial needs. With more than 60 years of specialized experience in the railroad industry, our experts’ dedication and uncompromising focus on quality sets us apart from the competition.

We develop leasing programs to cut equipment costs and provide leasing structures that are tailored to meet the rail industry’s specific and ever-changing needs.

Visit us on the web at www.progressrail. com/leasing.

ARRANGERS THE DAVID J. JOSEPH COMPANY 300 Pike Street, Cincinnati, Ohio 45202; Tel.: 513-419-6200; Fax: 513-419-6221; Trey W. Savage, VP Rail Group; Ryan Eckert, General Manager-Rail Equipment Group; Keith Kelsey, Jeff Schmutte, Jeff Blake and Eric Hausfeld, Regional Sales Managers; Dan Dorsey, General Manager-Private Fleet; Steven R. Skeels, Chief Mechanical Officer; and Ann Edwards, Mgr. Retired 26 Railway Age // October 2017

Rail Assets (502-212-7365). The David J. Joseph Company’s Rail Group provides a broad range of transportation services throughout North America: single investor, leverage leases, freight cars, portfolio evalu­ation, remarketing fleet management, purchases and sales of portfolios, and private fleet management. Other services include freight car inspections and engineering services from design of new cars to complete ISL extended life, modifications and analysis; in addition to railcar dismantling for scrapping and parts reclamation.

RAILROAD FINANCIAL CORPORATION 676 N. Michigan Avenue, Suite 2800, Chicago, IL 60611; Tel.: 312-222-1383; Fax: 312-222-1470; David G. Nahass, President, Email: dnahass@railfin.com; William J. Geiger, Senior Vice President, Email: wgeiger@railfin.com. RFC represents domestic and international clients in the following areas: debt and lease financing of all railcar types including coal cars, tank cars and covered hopper cars for sand and plastics; railcar and locomotive fleet acquisitions and sales; lease brokerage; mergers and acquisitions; equity and debt financing of rail property acquisitions, fleet and lease restructurings and/or refinancing.

RFC also provides continuing education for the industry.

STRATEGIC RAIL FINANCE 1700 Sansom St., Suite 500, Philadelphia, PA 19103; (215)564-3122. Michael Sussman, President and CEO. SRF has served for 23 years as trusted advisor to Class I and short line railroads, rail shippers, public sector agencies, and industrial developers. The firm has brought capital, clarity, and velocity to infrastructure development projects in 38 states and Canadian provinces. SRF integrates capital from public programs and private sources with growth marketing strategies and management consulting to position executives toward short-term objectives and long-term opportunities.

LESSORS THE ANDERSONS RAIL GROUP 1947 Briarfield Blvd., P.O. Box 119, Maumee, OH 43537; Fax: 419-891-2749;

Rasesh Shah, President Rail Group, 419-891-2958; Sean Hankinson, Vice President Sales/Commercial, Tel.: 419-891-6352; Email: Sean_Hankinson@andersonsinc. com. Formed in 1989, The Andersons Rail Group has enjoyed steady growth in the number of cars leased and managed from Maumee, Ohio. Currently, our portfolio consists of approximately 23,000+ rail cars. To better serve our customers, The Andersons Rail Group operates a large fleet of mobile units, 23 repair facilities, and a steel fabrication facility to produce custom rail components. Sam Anderson, Vice President Repair Operations, Tel.: 419-8914436; Email: Sam_Anderson@andersonsinc. com. We understand the importance of having extensive knowledge about taxation, government regulations and railroad requirements. As a valued customer of The Andersons Rail Group, you can expect reliable equipment, flexible lease options and superior customer service. Please visit our website at:www.andersonsrail.com.

AMERICAN RAILCAR INDUSTRIES, INC. 100 Clark Street, St. Charles, MO 633012075. Tel.: 636.940.6020; Fax: 636.940.6100; Email: sales@americanrailcar.com; Website: www.americanrailcar.com. Agile, Responsive, Innovative.

• Design • Manufacturing • Repair • Railcar Fleet Management • Railcar Leasing Contact us to find out how ARI can be your preferred railcar supplier.

ATEL LEASING CORPORATION The Transamerica Pyramid, 600 Montgomery Street, San Francisco, CA 94111; Tel.: 415-616-3486; Ken Fosina, Executive Vice President, Email: kfosina@atel.com.

Since 1977, ATEL has leased rail assets to America’s largest railroads and shippers.

ATEL specializes in the leasing of all types of rail assets, including railcars, locomotives and maintenance-of-way equipment.

ATEL targets railcars and locomotives built prior to 2005, but prefers new maintenanceof-way assets. Leases can be full service, but net leases are preferred. ATEL executes lease transactions directly and through its Capital Markets desk. Each year, ATEL’s railwayage.com

2018 FINANCIAL DESKBOOK DIRECTORY Portfolio Management will sell rail assets from one of its Funds managing expiration.

CAI RAIL Steuart Tower, One Market Plaza, 9th Floor, San Francisco, CA 94105. Tel: 415-788-0100; Fax: 415-788-3430. James H. Magee, President, email:jmagee@capps. com; Freddy Fernandez, Vice PresidentOperations, email:ffernandez@capps.com.

CAI Rail is an operating lessor in the new and used railcar space. CAI performs full service, net, per diem and finance leases on all railcar types. We have complete maintenance, engineering, operations and field marketing staff. In addition, CAI offers a comprehensive rail car customization and refurbishing program to meet our clients’ specifications. Our parent company, CAI International (NYSE: CAI) specializes in container leasing and sales as well as domestic and international intermodal logistics.

So, let’s get moving!

CarMath, Inc. 25965 482nd Ave., Brandon, SD 57005; Walker Carmon, Vice President, Tel.: 605-582-8340; Email: wcarmon@mwrail. com; John Goodwin, Sales Manager, Tel.: 605-582-8318; Email: jgoodwin@mwrail. com; Website: www.carmathinc.com At CarMath, we believe every business should have the opportunity to lease quality railcars at a reasonable price. We have the ability to lease both large and small groups of cars with a wide variety of leasing options and will customize a leasing program to best fit your needs.

CIT RAIL 30 South Wacker Drive, Suite 2900, Chicago, IL 60606; Tel.: 312-906-5701. CIT Rail leverages deep experience and one of the youngest, most diversified railcar and locomotive fleets in the industry. We have a longstanding commitment to providing attractive railcar leasing solutions to rail shippers and carriers.

Our solutions free up capital for your growth priorities, increase efficiencies and reduce out-of-service time. Visit citrail.com, call 312-906-570 or follow @CITgroup.

C.K. INDUSTRIES, INC. P.O. Box 1029, Lake Zurich, IL 60047-1029; Tel: 847-550-1856; Fax: 847-550-1854; e-mail: rmeyers@ckrail.net; Richard E. railwayage.com

Meyers, President. C.K. INDUSTRIES, a privately held corporation, began its U.S. leasing operations in 1980, and offers its services to shippers, short line, regional and Class I railroads in North America. New investment opportunities up to $10MM of both new and used types of freight cars will be considered. Our existing lease fleet offers a wide variety of car types to meet your lease requirements. We offer mid to long terms, either on a full service or triple net basis.

THE DAVID J. JOSEPH COMPANY 300 Pike Street, Cincinnati, Ohio 45202; Tel.: 513-419-6200; Fax: 513-419-6221; Trey W. Savage, VP Rail Group; Ryan Eckert, General Manager-Rail Equipment Group; Keith Kelsey, Jeff Schmutte, Jeff Blake and Eric Hausfeld, Regional Sales Managers; Dan Dorsey, General Manager-Private Fleet; Steven R. Skeels, Chief Mechanical Officer; and Ann Edwards, Mgr. Retired Rail Assets (502-212-7365). The David J. Joseph Company’s Rail Group provides a broad range of transportation services throughout North America: single investor, leverage leases, freight cars, portfolio evalu­ation, remarketing fleet management, purchases and sales of portfolios, and private fleet management. Other services include freight car inspections and engineering services from design of new cars to complete ISL extended life, modifications and analysis; in addition to railcar dismantling for scrapping and parts reclamation.

GATX CORPORATION Thomas A. Ellman, President, Rail North America, GATX Corporation, 222 W. Adams Street, Chicago, IL 60606; Tel: 312-6216200 Fax: 312-621-6546 GATX is a leader in the rail leasing industry with more than a century of experience, preeminent expertise in specialized railcars, and a growing international presence. GATX meets shipper and railroad needs with one of the largest lease fleets of tank and freight cars and locomotives in the world. We provide our customers with a unique mix of financial (global financing, valuation, structuring, leasebacks, joint ventures, partnerships) and mechanical (regulatory, maintenance, engineering, cleaning, inspection) services in North America. Contact via www.gatx. com or 1-800-428-8161

GREENBRIER LEASING COMPANY One Centerpointe Drive, Suite 400, Lake Oswego, OR 97035; 800-343-7188; Fax: 503-968-4383; Email: Marketing.Info@ GBRX.com; Website: www.GBRX.com.

Contacts: Larry Stanley, Vice President; Tom Jackson, Vice President, Marketing.

GLC provides a full range of operating and financial leases of railroad freight cars to shippers, short line, regional, and Class I railroads. In addition to owning a fleet of nearly 10,000 railcars, we develop financial structures customized to meet a multitude of customer requirements including; full-service, net, and per diem leasing structures, with both short-term and longterm options, sale-leaseback and like-kind exchanges as well as upgrade and modification programs. Our approach allows customers to meet current needs and position their business to capitalize on future opportunities. The Greenbrier Companies [NYSE: GBX], headquartered in Lake Oswego, Ore., is the leading global integrated supplier of transportation equipment and services to the railroad and marine industries. We build new railroad freight cars in our five manufacturing facilities in the U.S., Mexico and Poland and marine barges at our Portland, Ore., deep-water site. We are the market leader in the design and production of intermodal, boxcar, gondola, tank car and covered hopper railcars. Our customers include railroads, shippers and leasing companies—partners who depend on us for innovative design, quality production and on-time delivery.

In Europe, we build and refurbish railroad freight wagons through our operation in Poland. In Brazil, GBX is the leading manufacturer of railcars for the Latin American market thorough our joint venture called Greenbrier-Maxion. GBX offers full repair and refurbishment services on all railcar types through our joint venture called GBW Railcar Services (GBW). GBW owns and operates the largest independent repair shop network in North America with more than 30 locations, including 12 tank car repair and maintenance facilities certified by the Association of American Railroads. GBX also sells reconditioned wheel sets and provides wheel services at 9 locations throughout the U.S. GBX manages GBSummit, a 50/50 joint venture with Sumitomo Corporation of Americas, where October 2017 // Railway Age 27

2018 FINANCIAL DESKBOOK DIRECTORY we provide finished and machined railcar axles. Finally, we perform management services for customers on approximately 270,000 railcars through our Greenbrier Management Services (GMS) group, which provides industry-leading asset management and regulatory compliance through GMS’s new Regulatory Services Group.

INFINITY TRANSPORTATION Powered by Global Atlantic. 1355 Peachtree Street, NE, Suite 750, Atlanta, GA 30309; Website: www.infinitygafg.com. Larry Smith, VP Sales & Marketing; Tel.: 678-296-9709; Email: larry.smith@gafg. com; Lee Martini, VP Sales & Marketing; Tel.: 678-904-6315; lee.martini@gafg.com; Brian Ottinger, VP Sales & Marketing; Tel.: 312-731-2763; brian.ottinger@gafg. com. Infinity Transportation is a private lessor with a fleet of more than 10,000 railcars of varying types. Lease packages are tailored to meet customer needs, including a variety of short-term operating leases and long-term leveraged leases, as well as other assignment and deployment arrangements. Infinity prides itself on exceptional customer service and flexibility with regard to leases and railcar modifications to find the transaction and equipment to best serve our customers.

MITSUI RAIL CAPITAL, LLC One South Wacker Drive, Suite 3110, Chicago IL 60606 - Phone: 312-803-8851: Dan Penovich, President; Chris Gerber, Vice President Sales and Marketing. Mitsui Rail Capital is a railcar operating lessor that offers some of the youngest railcars in our industry. From tank cars to covered hoppers to a wide variety of other car types, we deploy assets in every industry, including oil, gas, plastics, agriculture and steel.

Our proactive approach enables us to know your unique needs and railcar requirements, getting well-structured deals done, faster. MRC has been in business for 20 years and is a joint venture between Mitsui & Co. Ltd. and JA Mitsui Leasing of Tokyo.

PROGRESS RAIL, A CATERPILLAR COMPANY – EQUIPMENT LEASING 15173 North Road, Fenton, MI 48430; (810) 714-4626. Trent E. Marshall, VP Leasing.

The largest lessor of maintenance-of-way equipment in North America is a full-service 28 Railway Age // October 2017

leasing firm offering a host of programs and services specifically tailored to meet your exact financial needs. With more than 60 years of specialized experience in the railroad industry, our experts’ dedication and uncompromising focus on quality sets us apart from the competition. We develop leasing programs to cut equipment costs and provide leasing structures that are tailored to meet the rail industry’s specific and everchanging needs. Visit us on the web at www. progressrail.com/leasing.

PROGRESS RAIL SERVICES Progress Rail Services, a wholly owned subsidiary of Caterpillar Inc., is a leading supplier of a full range of locomotive, railcar and track products and services. Our service and repair facilities are strategically located around the globe – with a network of more than 130 locations across the United States, Canada, Mexico, Brazil, Italy, Germany, and the United Kingdom – and our mobile crews offer even greater service flexibility. Our extensive inventory of parts and components allows us to reduce down time and return units quickly to service. We also offer recycling and demolition services. Our diversity of products and services means more value for our customers. Through its acquisition of Electro-Motive Diesel, Progress Rail furthers its commitment our customers, providing industry-leading products and services. Founded in 1922, Electro-Motive Diesel is an original equipment manufacturer of diesel-electric locomotives. Contact Progress Rail Services, P.O. Box 1037, Albertville, AL, 35950, (800) 476-8769. www.progressrail.com.

RALCO, LLC 200 S. Wacker Drive, Suite 3100, Chicago, IL 60606 tel:312-674-4742; fax: 312-4212742. RALCO is a privately held, Illinois Limited Liability Company in the business of acquiring, managing and leasing railroad rolling stock on net or full services leases.

The Company has the intellectual and financial resources necessary to compete in the small cap lease market where its size and structure provide it with a competitive advantage. RALCO also provides consulting and advisory services to its clients. Contact: Peter Urban, Principal, Richard Johannes, Principal; Jason Urban, Principal.

RELCO LOCOMOTIVES, INC. P.O. Box 83282, Baton Rouge, LA 70884. Tel.: 815-467-3030; Website:www.relcolocomotives.com. Relco, as one of North America’s leading locomotive rebuild, remanufacturing and leasing companies, can provide a full range of locomotive leasing and maintenance services. Since 1961, RELCO has developed a reputation for providing the finest motive power and custom maintenance packages to fit any need: • Full line of both switching and road power available.

• Specifications ranging from qualified to completely custom remanufactured.

• Aftermarket systems upgrades available, including radio remote controls, microprocessor control systems, fuel-management systems, etc.

• Nationwide full-maintenance programs available.

• Net, full-service, financial and sale/leaseback programs.

SMBC RAIL SERVICES LLC 300 South Riverside Plaza, Suite 1925, Chicago, IL 60606; 1-888-4RAILCAR. Gene Henneberry, President & CEO, (312) 559-4801; Tim Johnson, Senior Vice President Leasing, (312) 559-4805; Patrick McGrath, Vice President Leasing – Southeast, (312) 559-4821; Mark DePaul, Vice President Leasing – Northeast, (312) 559-4822; Dan Mazzarini, Vice President Leasing – North Central, (412) 760-5741; Kevin Wingate, Vice President Leasing – Southwest, (312) 559-4808; Jerry Finan, Vice President Leasing – Northwest, (312) 559-4820; Bill Ratcliff, Vice President Leasing – Houston, (312) 559-4824; Jon Mudronja, Vice President Leasing – Midwest, (312) 559-4823; Glenn Tomalty, Vice President Leasing – Canada, (403) 984-8235. SMBC Rail Services is a full service operating lessor, invested in all tank and freight car types, offering a broad selection of equipment leasing and financing products for the North American rail industry. SMBC Rail can structure a solution for all of your rail equipment needs, short and long term, full service or net leases, sale/ leaseback, or portfolio acquisition. Visit us at www.smbcrail.com.

TEALINC, LTD. 1606 Rosebud Creek Road, Forsyth, MT railwayage.com

2018 FINANCIAL DESKBOOK DIRECTORY 59327; Tel.: 406-347-5237; Fax: 406-3475239; www.tealinc.com; Darell J. Luther, CEO, 406-347-5237 darell@tealinc.com; Julie Mink, President, 720-733-9922 julie@ tealinc.com. Tealinc, Ltd. specializes in rail transportation solutions nationally and internationally. We are a rolling stock operating lessor and broker and we also provide marketing, transportation management and consulting services for car owners, shippers and suppliers within the rail industry. Our lease fleet consists of covered hoppers, open top hoppers, mill gondolas, flatcars, gondolas, etc. We have a combined 80 years of service and experience within the rail industry and have assisted both novice and experienced rail shippers best utilize the rail network they participate in.

TRINITY INDUSTRIES LEASING CO. 2525 Stemmons Freeway, Dallas, TX 75207.

800-631-4420. www.gotilc.com. D. Stephen Menzies, Group President, steve.menzies@ trin.net; Eric Marchetto, Executive V.P. & Chief Financial Officer, eric.marchetto@ trin.net; Robert Pokorski, Sr. V.P., Fleet Maintenance; Mark VanCleave, Executive V.P., Industrial Sales & Leasing, mark. vancleave@trin.net; Jesse Crews, V.P. & Chief Investment Officer, jesse.crews@trin. net; Bob Hulick, Executive V.P. & Chief Mechanical Officer, bob.hulick@trin.net; John Guarino, V.P., Portfolio Management, john.guarino@trin.net. Trinity Industries Leasing Company, with a fleet of approximately 76,440 railcars, offers railcar leasing, comprehensive management and administrative services as well as maintenance services. Also available is access to the railcar manufacturing resources and additional railcar services provided by TrinityRail®. An overview of TrinityRail’s portfolio of rail transportation products and services is available at www.trinityrail.com.

VTG RAIL INC. 103 West Vandalia, Suite 200, Edwardsville, IL 62025. Randy Sycks, Regional Vice President Sales, 618-977-6769, Randy.Sycks@ vtg.com. Lynn Hayungs, Regional Vice President, Sales, 956-630-2723 ext. 206, Lynn.Hayungs@vtg.com. VTG is a freight and tank railcar lessor offering net and full service operating leases and customer structured solutions for all of your railcar needs. VTG also provides fleet management railwayage.com

services for its customers and for other private railcar owners and operators. VTG is a customer and service oriented leasing company that works to provide a best in class mix of service, operational and mechanical expertise and competitive rates and lease terms. VTG invests in all freight car types and ages.

WELLS FARGO RAIL Wells Fargo Rail, 9377 W. Higgins Road, Suite 600, Rosemont, IL 60018; Telephone: 844-459-9664; Fax: 847-318-7588; Web: www.wellsfargorail.com; Email: RailAccountServices@wellsfargo.com.

Wells Fargo Rail is the largest, most diverse rail equipment operating lessor in North America. Whatever you’re transporting, we’ve got you covered with more than 175,000 railcars and 1,800 locomotives. Our team of experienced rail industry professionals is ready to listen to your needs and structure creative solutions to add value to your business.

PROFESSIONAL SERVICES RAILROAD APPRAISAL ASSOCIATES Division of The Occor Company; Management Consultants providing a variety of consulting services to the railroad and urban transportation industries and the financial institutions and leasing companies that serve them: Railcar and Locomotive Appraisal & Inspection Services for New and Used Equipment, Rail Equipment Portfolio Reviews and Valuation, Market Studies, General Consulting. We have more than 20 years of market experience and data. Patrick J. Mazzanti, President; Ronda Lemons, Assistant. Headquarters: 1914 Springdale Drive, Spring Grove, IL 60081, (815) 675-3300; E-mail: pat@railroadappraisals.com.

RAILSOLUTIONS, INC. 1307 Jamestown Road, Suite 101, Williamsburg, VA 23185, 757-903-4606; Fax: 757-903-4705; Email: jhusband@railsolutionsinc.com; Website: www.railsolutionsinc.com; James D. Husband, President.

RailSolutions provides a broad variety of railroad equipment-related consulting, technical and advisory services to financial

institutions, railroads, shippers and fleet owners with a primary focus on equipment valuation and appraisal services.

RailSolutions offers two publications on a subscription basis, The Investors’ Guide to Railroad Freight Cars and Locomotives and the RailSolutions Railroad Equipment Historical Database. Our firm draws on more than 45 years of railroad industry experience in railcar and locomotive equipment valuations supported by both a sound base of market data and advanced analytical techniques.

STRATEGIC RAIL FINANCE 1700 Sansom St., Suite 500, Philadelphia, PA 19103; (215)564-3122. Michael Sussman, President and CEO. SRF has served for 23 years as trusted advisor to Class I and short line railroads, rail shippers, public sector agencies, and industrial developers. The firm has brought capital, clarity, and velocity to infrastructure development projects in 38 states and Canadian provinces. SRF integrates capital from public programs and private sources with growth marketing strategies and management consulting to position executives toward short-term objectives and long-term opportunities.

RAILROAD ACQUISITION SPECIALIST PROGRESS RAIL EQUIPMENT LEASING 15173 North Road, Fenton, MI 48430; (810) 714-4626. Trent E. Marshall, VP & COO Maintenance of Way. The largest lessor of maintenance of way equipment in North America is a full-service leasing firm offering a host of programs and services specifically tailored to meet your exact financial needs. With more than 50 years of specialized experience in the railroad industry, our experts’ dedication and uncompromising focus on quality sets us apart from the competition. FCM develops leasing programs to cut equipment costs and provides leasing structures that are tailored to meet the rail industry’s specific and everchanging needs. Visit us on the web at www. progressrail.com/leasing.

October 2017 // Railway Age 29

NYMTA

Renew, Enhance

expand

How New York MTA is investing $30 billion.

By STUART CHIRLS, SENIOR EDITOR 30 Railway Age // October 2017

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N

Joseph M. Calisi

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ew York’s Metropolitan Transportation Authority spells its 2015-19 Capital Program with an upper-case “C,” and with good reason.

The country’s biggest rapid transit and regional/commuter railroad operator consumes better than one-quarter of all the money invested in rail transit in the U.S., and over the next five years plans to spend $29.46 billion “renewing, enhancing and expanding” its behemoth system, which includes MTA New York City Transit, New York’s vast subway, but also Metro-North and Long Island Rail Road regional/commuter rail.

Throw in a network that includes 5,700 NYCT buses on more than 300 routes, and you have a spending program dwarfing those of many individual countries. There’s much at stake, as the MTA’s transportation system caters to tens of millions of people each day in the heart of a regional economic superpower with a gross domestic product exceeding $1.83 billion in 2015, according to the latest available data from the U.S. Department of Commerce Bureau of Economic Analysis.

Ridership across the MTA reached 8.7 million in 2014, a system-straining increase of 61% from 5.4 million in 1992.

Further analysis reveals fundamental changes in the demographic structure of the region.

Baby Boomers comprise 26% of the region’s population, and with many choosing to retire “in place,” create a new, larger sector increasingly dependent on public transit. So-called “reverse commutes” outbound from New York City have quadrupled since 1985, and the huge spike in transit use over the past 20 years has come chiefly from offpeak hours.

Even with ridership at an all-time high, the MTA is estimating that by 2035, an additional 1.6 million people will live in the region.

The MTA in a typical year provides lucrative business for hundreds of suppliers large and small, as well as consulting engineering firms. It’s a massive organization whose demands for materials and services reach deeply

NYMTA into the engineering, signaling and train control, and mechanical areas of the railway industry.

Staggering, still, is a quick review of the MTA’s near-$1 trillion rail asset base, by the numbers: A 5,000-squaremile network extending north to the Hudson Valley in New York and Connecticut, west to New Jersey and east to Long Island; more than 2,000 miles of track; 6,465 subway cars; 2,411 regional/ commuter railcars; 700 stations; and nine bridges and tunnels.

The capital spending required to keep this infrastructure functioning and reliable has taken on critical urgency after numerous derailments at New York Penn Station (used by LIRR and NJ Transit but owned and managed by Amtrak), and service issues on the subway grabbed headlines and made transit spending a top-line political issue.

In round numbers, the MTA capital program breaks down as $14.2 billion for subways; $2.8 billion for the LIRR; $2.3 billion for Metro-North; $2.9 billion for bridges and tunnels, and $2 billion for buses.

Leading the Capital Program are several projects currently under way.

Phase Two of the Second Avenue Subway will extend Q Train service northward from 96th Street to 125th Street, at a budgeted cost of $1.04 billion. When completed, the Q train will run 8.5 miles along the city’s East Side, from Harlem to Hanover Square in Lower Manhattan.

Completion of the first phase in early 2017, 63rd Street to 96th Street, marked the opening of New York City’s first new subway line in 60 years.

The other project, East Side Access, will bring the LIRR directly into Grand Central Terminal, adding a new twolevel station directly below the existing complex. MTA estimates the project will bring up to 65% more morning trains into Manhattan from Queens and Long Island, or a total of 30,500 seats.

Remaining funding for East Side Access is set at $2.57 billion, and revenue operations to GCT are planned to begin by December 2022.

A third major capital project is Penn Station Access, which would add four new stations and upgrade Amtrak’s October 2017 // Railway Age 31

NYMTA Hell Gate Line, allowing access for MetroNorth into Penn Station to serve the fastgrowing West Side of Manhattan. While Penn Station Access is currently in environmental review, the Capital Program does budget $695 million for infrastructure and completion of rolling stock specifications.

The agency will spend $250 million to complete the LIRR Double Track project, between Farmingdale and Ronkonkoma, significantly increasing capacity on its main line into New York City.

Investing in safety is a top priority. This includs $220 million through 2019 to complete the installation of PTC on MetroNorth and the LIRR. The agency also began installing communications-based train control (CBTC) on the E, F, M and R subway lines in Queens; the A, C and E lines in Manhattan; and the F line in Brooklyn.

CBTC is already in place on the Canarsie L line connecting Brooklyn and Manhattan, and under construction on the 7 line between Queens and Manhattan.

About $2.77 billion is planned for signals

and communications just for the subway, with $378 million for LIRR and $194 million for Metro-North.

Safety also encompasses security. MTA has more than 4,500 cameras in place on the rail system, and 1,500 on buses. A pilot installation will test track-intrusion detection technology that automatically alerts train crews or the agency’s Rail Control Center to objects falling on the tracks. By 2019, MTA plans to add intercom “help points” to all 469 subway stations.

The budget includes $2.78 billion for subway stations; $1.85 billion to replace 72 miles of track and 127 switches. Renewal of 20 stations on six lines checks in at $408 million, and system-wide repairs runs to $503 million, with $105 million to reconfigure Grand Central and Times Square to improve passenger circulation. A total of $419 million is to be invested in fare collection, while adding ADA-compliant elevators at 18 stations will cost $740 million.

Following closely behind safety on the capital program checklist is reliability. MTA

plans to replace mid-Eighties-vintage, Buddbuilt M-3 commuter railcars deployed on Metro-North and the LIRR with 88 new M-9 cars, for $500 million, and add 940 new R-211 subway cars to replace R46 cars, at a cost of $2.96 billion. These cars, with their open gangways, will be significantly different from the subway’s existing fleet, and provide extra capacity.

Low-vibration subway track will continue to be installed; upgrading track inspection technology to find defects and prioritize repairs as part of cyclical track programs on the commuter lines will cost $795 million for LIRR, and about $500 million for MetroNorth. At the same time, $432 million is on the books for replacement of Metro-North’s Harmon Shop, to support an expanded fleet of electric and diesel motive power.

The Capital Program also calls for investment in “invisible infrastructure”— components such as electrical substations, pumps and tunnel lighting. The MTA also plans to ensure structural integrity of its tunnels; many are 50 to 70 years old.

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Class 1FASTENERS Focus: CN Progress Rail says its E-Clip fasteners are versatile enough to be used in transit or heavy-haul applications.

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By MISCHA WANEK-LIBMAN, ENGINEERING EDITOR

ooperative relationships between supplier, customer and third-party partners are producing more-resilient fastening systems that are performing in demanding situations.

J.Lanfranco J.Lanfranco Fastening Systems Inc. has more than 40 years’ experience manufacturing all-metal locknuts for safety-critical bolted joints. It continues to find ways to innovate its product line, such as with the recent addition of the Heavy Hex Full Height nut, which can be used on diamonds and frogs and complements the company’s line of standard nuts.

The company points to the growth of its line of ERM nuts that incorporates the same dual-locking slots as other J.Lanfranco nuts, but also includes a free-spinning, Bellevilletype washer. The company says this makes for quick and safe installations and ensures good contact with the bearing surface, even when installed on foundry pieces.

The ERM style of nut and integrated disc spring washer has been installed on splice joints to eliminate loss of bolt tension.

“The largest advantage is that the nut keeps railwayage.com

Supplier/railroad collaboration is key to customized fastening systems.

the joint locked while the washer absorbs imperfections in the bearing surface along with mitigating joint expansion or contraction. The final benefit has been the ability to reapply torque at subsequent maintenance intervals without having to remove the nut/ bolt and also not requiring a power source or special bolts or tools,” says the company.

L.B. Foster Jason Bowlin, General Manager, L.B. Foster Transit Products, says the company’s ability to develop custom solutions has propelled its success in developing and commercializing fastener technology for rail transit.

“For example, we successfully incorporated a standard direct-fixation fastener, restraining rail direct-fixation fastener, special trackwork direct-fixation fastener and concrete ties on a project with a key customer, essentially allowing one-stop shopping for that project,” Bowlin says.

“Our recent design of a resilient tie system, which incorporates a concrete block, elastomeric boot and pad, insulator and clips, has been used by a West Coast passenger rail system. In addition, we were just granted a patent for a direct-fixation fastener design that dramatically reduces corrosion formed

by stray currents and can significantly extend the life of fasteners used in severe environmental conditions such as tunnels.”

While Bowlin recognizes the continued uncertainty surrounding transit funding at the federal level, he mentions the more than $170 billion in projects that were approved by voters in November 2016. “We expect that this will provide great impetus for the continued development of transit systems around the U.S.,” he says.

Lewis Bolt Lewis Bolt & Nut Company introduced the new Quick-Set® Hook Bolt System in 2015 to prevent both vertical and horizontal deck movement. The company says this system is being widely adopted and is installed from the deck surface, which is safer and saves time. Hole drilling through the ties is eliminated, as the Quick-Set is installed between the ties. Additionally, Lewis Bolt notes that inspection and future maintenance is simple, as all components are visible from the deck surface.

The company says it has continued to improve the system to provide additional versatility. Lewis Bolt points to a new longer bracket, which attaches to ties on both sides October 2017 // Railway Age 33

FASTENERS via high-strength lag screws, as an example of this. It notes that the longer bracket, preferred when tie spacing is wider, ensures the lag screws are installed closer to the center of the respective tie.

Lewis Bolt also recently successfully tested a version of the Quick-Set® that incorporates an integrated guard rail within the bracket. The company explains this eliminates the need for a timber guard, saving additional time and money.

“Lewis Bolt & Nut Company thrives on innovation,” the company points out.

“This applies not only to new products but also to current ones. The Quick-Set® Hook Bolt System is a perfect example of continuously improving a new product to save our customers time as well as money, while always keeping safety the number one focus.”

Pandrol Allen Goff, Vice President of Sales and Marketing at Pandrol North America, notes that Pandrol utilizes a three-dimensional printer and a small production line dedicated to R&D projects to reduce lead time between concept and delivering the correct solution to the customer.

This process resulted in several recent developments, including a tie pad that allows track crews to determine if rail seat epoxy is being installed properly on the FE1505 recessed rail seat assembly, for use in heavy-haul applications. Pandrol is also currently working with transit agencies to reduce noise and vibration concerns with versions of Pandrol’s Panguard assembly.

Goff says its VICTOR product line continues to grow. It utilizes a standard AREMA rolled steel tie plate with a swagedin shoulder that provides a solid flat bottom for increased bearing area. Swaging allows customers to specify the Pandrol style fastener and size of plate they prefer, as well as the hole pattern, and whether they want to utilize screw or cut spikes.

Pandrol North America also expanded through a new agreement with Arkansas Steel Associates (ASA) to sell and service rolled steel tie plates to Class II and III railroads, transits and contractors located in the U.S., Canada and Mexico. Goff explains that ASA gains an international sales force while Pandrol’s tie plate product line is expanded.

34 Railway Age // October 2017

Progress Rail Progress Rail’s Fastening Division offers a wide range of products: GageLok screw spikes for fastening rail and plates to timber ties, ballast mats and under-tie pads; embedded block systems; Loadmaster direct-fixation fasteners; rail anchors; E-Clips; ME Series and Safelok concrete tie systems; MACRO Armor for rail seat abrasion protection; and repair and system-wide bonded direct-fixation fasteners.

Progress Rail has partnered with Edilon Sedra B.V., Netherlands, to bring its Under Tie Pad (UTP) to the North American market. The UTP is made of elastomer material and is available in either attrition or attenuation performance categories.

Additionally, Progress Rail is marketing Edilon Sedra’s Embedded Block System (EBS), which is sealed, preventing water and foreign material intrusion.

Progress Rail also offers the Loadmaster fastener to freight railroads for use on slab, steel deck and timber deck bridges to reduce the track modulus of the bridge and more closely match the track on the approaches to prevent low bridge ends and reduce maintenance. The Loadmaster DF has been in on the Northeast Corridor for 30 years. Osler says its rugged design allows it to cushion various axle load forces while reducing vertical and lateral rail head movement.

Vossloh Vossloh North America fastening systems and Rocla Concrete Tie, Inc., concrete

blocks were part of a Low Vibration Track (LVT) installation on two new slab track lines for the Chicago Transit Authority (CTA) Wilson Station in July 2017.

The LVT consists of a concrete block set on top of a resilient pad and encased in a rubber boot. Construction Polymers Technologies, Inc. (CPT), a U.S. Licensee of Sonneville AG, supplied the LVT system with Vossloh providing the fasteners, which include tension clamps, guide plates, rail pads, screws and dowels, all pre-assembled.

The companies say LVT is ideal where vibration attenuation is important. CPT notes ease of installation: Once the LVT ties are set using the top-down construction method, non-reinforced embedment concrete is poured and the slab track is finished.

The CTA project marks the first time that the Vossloh SKL system has been used in a slab track application in the U.S. This system, which utilizes the SKL 42 tension clamp, is virtually maintenance-free and can be easily and safely adjusted in the field (gauge adjustment, height adjustment, rail de-stressing) without losing toe load force when reinstalled. Benefits include as rail rollover prevention. The SKL system was rapidly approved by U.S. transit agencies.

Rocla provided the concrete blocks, which the company says are manufactured within tight tolerances. Sonneville AG designed the blocks for the Vossloh W system guide plates. The W system “provides stability and contributes to precise track geometry.”

Low Vibration Track (LVT) system on the CTA by Construction Polymers Technologies, with Vossloh and Rocla Concrete Tie components.

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People / 100 years / Meetings NOV. 2, 2017

MARC BUNCHER Siemens

Siemens has named Marc Buncher President of Siemens Mobil-

ity Division in the U.S. and Canada. A veteran of 25 years in the rail industry, he most recently served as Senior Vice President of the Rail Division at Caterpillar. Buncher will continue to build on Siemens’ efforts in providing advanced, intelligent, and efficient technologies across freight, commuter and passenger rail and road transportation. “Marc’s extensive understanding and knowledge of the transportation market will play an essential role in the continued growth and strengthening of our mobility footprint in the U.S.,” said Judy Marks, CEO of Siemens USA. “Under his leadership, Siemens will be able to continue engineering, manufacturing, and delivering the latest technologies and services to the transportation systems that contribute to our customer’s and country’s economic success.” Prior to Caterpillar, Buncher worked at General Electric across roles in Business Operations, Sales, Marketing and Finance.

H

NTB Corp. named Thomas J. Spearing III National Transit Program Management/Construction Management Practice Leader, Philadelphia. Spearing joined HNTB in 2016 as New York Office Leader and Senior Vice president. Prior to HNTB, he held executive positions at Hill International and STV. Patrick Allen, P.E., has joined HNTB’s National Rail Systems Group as Manager of Vehicle and Rolling Stock Products, which includes locomotives and passenger cars and associated components, among them PTC equipment. He is based in Boston.

K. Jane Williams, a veteran of two GOP administrations, has been appointed Deputy Administrator of the Federal Transit Administration. Prior to joining FTA, Williams was the Director of the Washington Area Transit Office in the Maryland DOT. She worked closely with the Maryland

Chicago, Ill. https://www.narprail.org/events/ rail-nation-chicago/http://www.rail. mtu.edu/ Contact: National Association of Railroad Passengers 202-408-8362

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Transit Administration and WMATA. Williams previously served in the Department of Energy and Department of Labor during the Reagan administration, and the Department of Interior under President George H.W. Bush. She also served as a senior legislative advisor for Rep. Andy Harris (R-Md.).

WSP USA named Ken Zatarain to lead station access planning for the California High-Speed Rail program.

In his new position, Zatarain will work with state and local jurisdictions to develop plans, policies and implementation strategies for stations of the California HighSpeed Rail system. Zatarain, based in WSP’s Portland, Ore., office, is a 30-year veteran of transit agency TriMet in Portland, and most recently served as director of service delivery, responsible for transportation management, planning, scheduling, workforce development and service reliability.

100 years ago in railway age gazette OCTOBER 1917

Northern Pacific Women “Rendering Satisfactory Service” James Simpson, master mechanic of the Northern Pacific at Livingston, Mont., advises that 39 women are now employed at the roundhouse at Laurel, Livingston, Bozeman, Whitehall and Butte, in the capacities of roundhouse foremen’s clerks, coach cleaners, wipers, sweepers and turntable operators. The majority of the women so employed are rendering very satisfactory service.

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RAILNATION CHICAGO – THE 50TH ANNIVERSARY OF THE NATIONAL ASSOCIATION OF RAILROAD PASSENGERS

Nov. 7, 2017

CARS (CANADIAN ASSOCIATION OF RAILWAY SUPPLIERS) NATIONAL RAILWAY DAY CONFERENCE 2017 The Westin Ottawa Hotel, Ottawa, Canada Contact: Taisha Poulin 613-237-3888

Dec. 14-15, 2017

BIG DATA IN RAILROAD ENGINEERING 2017 CONFERENCE University of Delaware, Newark, Del. Contact : Katherine Lakofsky, klakofsk@udel.edu http://outreach.engr.udel.edu/ conferences/big-data-2017

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2018 MARS WINTER CONFERENCE The Westin Lombard Yorktown Center Lombard, ILL. http://www.linkedin.com/ groups?gid=4089306&trk=myg_ ugrp_ovr

October 2017 // Railway Age 35

Products Rails Co. switch heater with wireless control

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State-of-the-Art EOT Norfolk Southern has reached a preliminary agreement with Progress Rail, a wholly owned subsidiary of Caterpillar Inc., for Guardian End-of-Train (EOT) devices.

Progress Rail, which announced the agreement at Railway Interchange 2017, will deliver the devices, described “state-of-theart,” to NS for use on a portion of its fleet by the end of this year. Terms of the contract were not disclosed. Progress Rail will assemble the new Guardian EOT units at its Arab, Ala., facility.

Earlier this year, Progress Rail purchased the IP (intellectual property) of Wise Electronics of Silver Springs, Md., for advanced technologies, including Locomotive Cab Units (LCUs, also known as Head-of-Train devices) and EOT devices.

The EOT devices transmit real-time vital information from the end of the train to the LCU at the head end.

Unlike many other EOT devices, the Guardian is powered by a small electric motor that spins with a turbine fed by train line air pressure. The motor also charges internal back-up batteries. The unit, at roughly 17 pounds, is lightweight, compared to traditional EOT devices with heavy batteries.

36 Railway Age // October 2017

“Acquiring IP from Wise Electronics expands Progress Rail’s advanced technology offerings to railroad customers in North America and worldwide,” the company said.

“The new technologies will become part of our rolling stock product portfolio. They not only enhance Progress Rail’s innovative product line for the rail industry, they also contribute to improved operational safety, accident investigation, security and vandalism prevention.”

“Progress Rail has provided quality products and services to Norfolk Southern for many years, and we’re extremely pleased to see them take the first order of our latest rail technologies to aid in the operational safety of their fleet,” stated Progress Rail Senior Vice President Marketing and Analytics Paul Denton. “Compared to other similar technologies, our Guardian EOT features a more modern design with improved reliability, ergonomics, lighter weight and advanced power management. Its end-oftrain coupler mount makes the Guardian EOT faster and safer to apply—a characteristic that train operators can appreciate.”

Information: http://www.progressrail. com/en/innovation/endoftrain.html.

ails Co.’s new wireless 900 MHz radio control system provides a wireless communication network that allows wireless control and monitoring of Rails HAB Hot Air Blower Switch Heaters, Tubular Electric Switch Heaters and Snow Detectors, as well as railway switch heating devices manufactured by other suppliers.

“The wireless control system eliminates the need for control wires buried in the ground for existing or new installations,” the company says. “Customers can start and stop switch heaters and monitor system running status from a local bungalow, a local control room or remote locations. When our HAB Hot Air Blower Switch Heater system is initiated, it performs a check to assure that the system is working properly. When our Tubular Electric Switch Heaters are turned on, the system monitors the heat indication circuit to assure that all heaters are turned on.”

For remote control and monitoring, this system can be integrated with a Controller and VPN secure router to provide secure remote control and monitoring via the Internet. The secure network can be connected and accessed with a personal computer, cellular phone or tablet device.

Information: 1-800-21RAILS; gburwell@railsco.com; www.railsco.com.

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

Advertising Sales MAIN OFFICE Jonathan Chalon Publisher 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com AL, KY, Jon Chalon 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, OH, PA, RI, SC, VT, VA, WV, Canada – Quebec and East, Ontario Jerome Marullo 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7260 Fax: (212) 633-1863 jmarullo@sbpub.com

38 Railway Age // October 2017

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

Scandinavia, Spain, Southern Germany, Austria, Korea, China, India, Australia, New Zealand, South Africa, Russia, Eastern Europe Baltic States, Recruitment Advertising Michael Boyle International Area Sales Manager Nils Michael Boyle Dorfstrasse 70, 6393 St. Ulrich, Austria. +011436767089872 mboyle@railjournal.com 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

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Perspective: Short Line & Regional

Bigger Trucks: Robbing Peter to Pay Paul

J

ust when you thought it safe to go back in the water, the big truck advocates are at it again.

Late in 2015, both Houses of Congress soundly defeated attempts to increase truck size and weight limits in a bipartisan manner. In 2016, Congress received the U.S. Department of Transportation’s “Comprehensive Truck Size and Weight Study” initiated in the 2012 MAP-21 legislation. The key agency recommendation was that there should be no changes to federal truck size and weight laws.

Yet again this year, those supporting bigger trucks asked the House and Senate Appropriations Committees to ignore these past Congressional decisions and agency recommendations by approving 91,000pound trucks and increasing the length of twin-trailer combinations to 33 feet each (Twin 33s). Fortunately, both efforts were defeated. Regretfully, both bills include a state-specific provision for North Dakota to put 129,000-pound trucks on their interstate highways.

Since big truck advocates won’t take no for an answer, it is worth repeating why the answer is no. Bigger trucks mean more expensive damage to our highways and bridges, more highway congestion, more danger for the motoring public, and more diversion from rail to truck.

Our nation’s roads and bridges continue to deteriorate, having received a grade of “D” from the American Society of Civil Engineers (ASCE). The 2017 ASCE report

77%

of the public

opposes bigger trucks.

40 Railway Age // October 2017

found that one of every five miles of highway pavement is in poor condition, and that one in eleven of the nation’s 615,000 bridges are structurally deficient. In Washington, there is significant bipartisan agreement that Congress needs to pass an infrastructure package. The problem is, as always, how to pay for it. Allowing longer, heavier trucks significantly increases highway damage and thus the cost. It’s a classic case of robbing Peter to pay Paul.

The 2016 U.S. DOT study found that Twin 33s take 22 additional feet to stop compared to twin-trailer trucks on the road today. The study also found that twin-trailer trucks have 58% higher outof-service violation rates than singletrailer trucks—a key finding, considering a 2016 study by the Insurance Institute for Highway Safety found that a truck with any out-of-service violation was 362% more likely to be involved in a crash.

A 2010 study conducted by MIT’s Carl Martland concluded that an increase in truck weight from the current 80,000 pounds to the 97,000 pounds previously advocated by big truck supporters would reduce overall rail traffic by 19%. The study found that diversion would result in eight million more trucks on our roads and bridges. Diversion from short lines would be even greater, as much of their traffic is intensely truck-competitive.

For short lines, that level of diversion would cause a significant financial disruption that would jeopardize their ability to serve thousands of customers and communities that depend on them to keep connected to the national railroad network.

While preserving short line traffic is clearly in our self-interest, we are joined by many of the premier national truckload freight companies. In a 2015 letter to Congress, 16 of these trucking companies stated: “Twin 33-foot trailers would have a negative impact on highway safety, accelerate wear and tear on the nation’s highway system, and make it very difficult for small trucking companies, which are the heart of our industry, to compete.”

While big truck advocates are plowing old

Truckers want a one-ton weight increase for electric vehicles.” ground, this time around a new segment of the industry has added a new twist, asking for a 2,000-pound weight increase to trucks powered by electric batteries. Railroads are no strangers to energy efficiency. With the ability to haul three truckloads in one freight car, railroads are the most energy efficient and environmentally friendly mode of surface transportation. Estimates show that if just 10% of freight that moves by truck moved by rail instead, fuel savings would exceed 800 million gallons per year, and annual greenhouse gas emissions would fall by more than nine million tons.

New technologies will inevitably shape the debate on transportation issues, but they should not be used as a backdoor approach to allowing heavier trucks on the nation’s highways.

The subject of bigger trucks is one where both Washington and the public at larger are in agreement. According to independent public opinion polling, 77% of the public opposes bigger trucks.

Congress has spoken, the U.S. DOT has spoken, and the public has spoken. All in all, isn’t it time to take no for an answer?

LINDA DARR President ASLRRA

railwayage.com

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

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

Part Title 210 Railroad Noise Emission Compliance Regulations 215 Freight Car Safety Standards Updated 4-3-17.

216 Emergency Order Procedures: Railroad Track, Locomotive and Equipment Updated 4-3-17.

217 Railroad Operating Rules Updated 4-3-17.

218 Railroad Operating Practices - Blue Flag Rule Updated 4-3-17.

221 Rear End Marking Device-passenger, commuter/freight trains

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.

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

Softcover. Spiral bound. 45 pages. Updated 4-3-17.

Updated 4-3-17.

Safety Glazing Standards Updated 4-3-17.

Railroad Accidents/Incidents Updated 4-3-17.

Locomotive Safety Standards Updated 4-3-17.

Safety Appliance Standards Updated 4-3-17.

Brake System Safety Standards Updated 4-3-17.

223 225 229 231 232

Mech. Dept. Regs.

BKMFR

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Part 228: Hours of Service of Railroad Employees

Current FRA Regulations Item Code

FRA Part #

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

Update effective

4-3-17 7-20-09 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17

BKHORN 222 4-3-17 BKRFRS 224 4-3-17 BKHS BKLSS BKSLI BKSAS BKBRIDGE BKLER

228 229 230 231 237 240

4-3-17 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17

BKCONDC 242 4-3-17

BKBSS

BKCAD BKSTC

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232 4-3-17 FRA Part #

40 219

233 234 235 236 238 239

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

28.50 10.50 9.50 9.95 7.65 9.95

9.45 8.55 8.95 6.90 8.95

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

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5.35 4.95

13.75

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6.95 11.00 11.50 23.95 9.95 6.95 13.25

6.25

8.95 6.25 11.90

11.50

10.35

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15.25

13.70

Each

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Brake System Safety Standards

BKHS

37.00

4-3-17 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17

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Bridge Safety Standards FRA Part 237 establishes FRA safety requirements for railroad bridges.

This rule requires track owners to implement bridge management programs, which include annual inspections of railroad bridges, and to audit the programs. Part 237 also requires track owners to know the safe load capacity of bridges and to conduct special inspections if the weather or other conditions warrant such inspections. Softcover. Spiral bound. Updated 4-3-17.

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Part 242: Conductor Certification The Conductor Certification rule (49 CFR 242) outlines details for implementing a Conductor Certification Program. The FRA implemented this rule in an effort to ensure that only those persons who meet minimum Federal safety standards serve as conductors, to reduce the rate and number of accidents and incidents, and to improve railroad safety. Softcover. Spiral bound. 124 pages.Updated 4-3-17.

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

Compliance Manuals BKTRACKCOMP

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Hours of Service of RR Employees

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8-8-16 Drug and Alcohol Regulations in 6-12-17 the Workplace Signal and Train Control Systems

49 CFR 228 for records and reporting of hours of duty of a railroad employee. Also covers the construction of employee sleeping quarters and health requirements for camp cars. 40 pages. Spiral bound. Updated 4-3-17.

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Combined FRA Regulations

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

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30.00

47.00

42.30

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

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