August 2013 Railway Age Magazine by Railway Age

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RailwayAge

August 2013

visit us at www.railwayage.com Features NS: Anticipate, adapt, accomplish

Rethinking railroad safety and efficiency

Tamper with this, please

News/Columns From the editor

Update

watching washington

Short line/ Regional Perspective

Financial edge

Departments industry indicators

industry Outlook

Market

People

100 years Ago

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On the COver Norfolk Southern has $2.0 billion for capital needs in 2013. Photo: Norfolk Southern

Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 55 Broad Street, 26th floor, New York, NY 10004. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 214, No. 8. Subscriptions: Railway Age is sent without obligation to professionals working in the railroad industry in the United States, Canada, and Mexico. However, the publisher reserves the right to limit the number copies. Subscriptions should be requested on company letterhead. Subscription pricing to others for Print or Digital only 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. Foreign $239.00 (U.S. funds) per year/$397.00 for two years for Air mail delivery. When ordering Both Print and Digital: $150.00 per year/$227.00 for two years in the U.S., Canada, and Mexico; $208.00 per year/$296.00 for two years, foreign. Foreign $308.00 (U.S. funds) per year/$496.00 for two years for Air mail delivery. Single Copies: $36.00 per copy in the U.S., Canada, and Mexico/$128.00 foreign All subscriptions payable in advance. COPYRIGHTÂŠ 2013 Simmons-Boardman Publishing Corporation 2012. All rights reserved. Contents may not be reproduced without permission. For reprint information contact PARS International Corp., 102 W. 38th Street, 6th floor, New York, N.Y. 10018, Tel.: 212-221-9595; Fax: 212-221-9195. Periodicals postage paid at New York, NY, and additional mailing offices. Canada Post Cust.#7204564; Agreement #41094515. Bleuchip Intâ&#x20AC;&#x2122;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 10, Omaha, NE 68101-0010 or call toll free (800) 895-4389. In Nebraska call (402) 346-4740. Printed at Cummings Printing, Hooksett, N.H. ISSN 00338826

August 2013 RAilwAy Age 1

RailwayAge

From the Editor William C. Vantuono

Editorial and ExEcutivE officEs Simmons-Boardman Publishing Corp. 55 Broad Street, 26th Fl. New York, NY 10004 212-620-7200; Fax: 212-633-1863 Website: www.railwayage.com

“This has been a very difficult time”

he July 6 Montreal, Maine & Atlantic accident in Lac-Mégantic and the resulting loss of life is horrific— indeed, virtually unthinkable. Information, some of it conflicting, continues to be gathered about the runaway crude oil train and the resulting derailment and explosions. About the only thing that’s clear is that the disastrous wreck resulted from a confluence of events—a “perfect storm,” so to speak. As of late July, Transport Canada had issued a ban on one-person train crews. It said that trains with dangerous goods cannot be left unattended on any main line track; that hand brakes must be applied to trains left for one hour or more; and—though failure to supply sufficient hand brakes is still only suspected—railroads must ensure that no one without authorization can enter the cab of an unattended locomotive. “This has been a very difficult time, and it will go on for a long time,” Rail World (owner of MM&A) chief executive Ed Burkhardt told me a few days after the derailment. “I don’t think anyone who knows me doubts my commitment to safety. MM&A’s board has a Safety and Compliance Committee (with me as Chairman), and we dissect every incident with a fine-tooth comb. But apparently not fine enough. There was a confluence of factors that will come out in the final investigation report, and lots of questions for the industry to answer.” “The tank cars were mostly older types, and apparently the NTSB has had them in its sights for more than a few years,” he said. “Prepare for a major crackdown.” Burkhardt also said that there were no propane cars involved, as has been speculated. “The crude blew up on its own,” he said. “But we have a school of thought that fracking fluids, naptha, and diesel added to make the crude fluid, helped develop a

vapor that ignited. The safety people are concentrating on analysis of the oil, and it will be interesting to see what they find.” The AAR has weighed in on the safety questions that inevitably surfaced. Much of the unit train fleet in service today has been built to AAR standards implemented in 2011—double hulls, energy-absorbing head shields, recessed top valves, and shelftype couplers that are less prone to detaching vertically (and thus puncturing a car) in a derailment. “The events in Lac-Mégantic were tragic, and the U.S. rail industry is closely following the investigation and what it reveals about the safe movement of crude oil,” Ed Hamberger said in response to a Wall Street Journal editorial questioning the safety of moving crude by rail. “The accident notwithstanding, hazardous materials accidents and spills from freight rail are exceedingly rare, with 99.997% of all hazmat shipments reaching their destination without a release caused by a train accident.” What about the future of crude by rail? “There will be a full and frank discussion about additional safety enhancements that may be possible in new car design as well as to the existing fleet of tank cars,” said Tony Kruglinski, our Financial Editor. “It is my prediction that crude by rail will continue to grow after significant industry and regulatory introspection. But like most things after a major accident, it will be more involved and more expensive. Given the fact that the existing fleet of tank cars is practically 100% utilized, and given the long lead times for new cars, any equipment enhancements that are ultimately required may take several years to implement.”

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Industry Indicators shoRt line and Regional tRaffiC indeX

tRaffiC oRiginated

fouR WeeKs enDIng JUne 29, 2013

carLoaDS

maJoR u.s. RailRoads By Commodity grain farm Products ex. grain grain mill Products food products chemicals Petroleum & Petroleum Products coal Primary forest Products Lumber and Wood Products Pulp and Paper Products metallic ores coke Primary metal Products Iron and Steel Scrap motor Vehicles and Parts crushed Stone, Sand, and gravel nonmetallic minerals Stone, clay & glass Waste & nonferrous Scrap all other carloads total u.s. CaRloads

June ’13 65,853 3,309 35,991 25,845 118,784 55,312 445,754 5,985 13,108 24,956 31,795 15,267 41,484 15,792 68,088 86,883 22,239 32,614 14,092 16,568 1,136,719

June ’12 76,718 3,403 39,225 26,619 117,239 41,983 458,429 6,252 13,024 24,149 32,265 14,123 42,333 17,252 65,904 77,590 20,266 32,048 12,881 18,835 1,140,538

% Change -18.1% -2.8% -8.2% -2.9% 1.3% 31.7% -2.8% -4.3% 0.6% 3.3% -1.5% 8.1% -2.0% -8.5% 3.3% 12.0% 9.7% 1.8% 9.4% -12.0% -0.3%

308,054

312,133

-1.3%

1,444,773

1,452,671

-0.5%

carLoaDS

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

ComBined u.s./Canada RR

fouR WeeKs enDIng JUne 29, 2013

InTermoDaL maJoR u.s. RailRoads By Commodity TraILerS conTaInerS total units

June ’13 116,663 892,724 1,009,387

June ’12 119,828 876,166 995,994

% Change -2.6% 1.9% 6.6%

7,108 210,578 217,686

6,176 212,449 218,625

15.1% -0.9% -0.4%

123,771 1,103,302 1,227,073

126,004 1,088,615 1,214,619

-1.8% 1.3% 1.0%

ComBined u.s./Canada RR TraILerS conTaInerS total ComBined units

Source: monthly railroad Traffic, association of american railroads

aveRage WeeKly u.s. Rail CaRloads: all Commodities (not seasonally adjusted)

% Change 8.1% 7.5% 6.2% -4.3% -11.8% -9.3% 10.1% 87.7% -1.7% -8.8% 28.0% -5.9% 3.7% -0.9% 5.3% -3.6% -10.1%

June 2013 - 359,186 June 2012 - 358,502 310,000 320,000 330,000 340,000 350,000

360,000 370,000 380,000 390,000 400,000

RailRoad employment, Class i linehaul CaRRieRs, June 2013 (% change from JUne 2012)

Canadian RailRoads TraILerS conTaInerS total units

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

total CaRloads, June 2013 vs. 2012

Canadian RailRoads all Commodities

oRiginated June ’13 44,976 23,205 28,735 11,669 21,054 6,484 10,000 11,543 21,072 10,667 1,741 2,016 18,029 12,487 41,734 9,841 83,933

By Commodity

Transportation (train and engine) 66,078 (0.72%)

executives, officials, and Staff assistants 9,802 (1.46%)

Professional and administrative 14,467 (3.04%)

total employees: 164,469 % Change fRom June 2012: 0.80% Transportation (other than train & engine) 6,742 (-1.46%)

maintenance of equipment and Stores 29,938 (0.63%)

maintenanceof-Way and Structures 37,442 (0.49%)

Source: Surface Transportation Board

employment up yeaR-oveR-yeaR and fRom past month figures released by the Surface Transportation Board show class I railroads employed 164,469 people in mid-June, up 1.11% from april 2012, and up 220 people, or 0.13%, from the previous month of may. all categories save one gained year-over-year, with Transportation (other than train and engine) the only year-over-year loss for a third straight month, down 1.46%. The top gainer year-over-year, also for a third straight month: Professional and administrative, up 3.04%. 4

Railway age

august 2013

Railroad people take an unusual sense of pride in being the only transportation industry in the country with the responsibility to maintain its “highways.” The trucking industry does not have to maintain the roads. The airlines don’t have to fix the runways. Sure, we might rather have someone else do the job for us, but wouldn’tt do as good ut they probably wouldn a job as we do. If you run a railroad, you understand.

Industry Outlook Timmons stays with ASLRRA

Tank cars still driving railcar orders Figures released last month by the Railway Supply institute’s american Railcar institute Committee (aRCi) show that tank cars continued to be a driving force in railcar orders during the second quarter, according to KeyBanc Capital Markets inc. analyst Steve Barger. aRCi figures show industry-wide orders for the quarter totaled 14,850, down from 23,901 in the first quarter and also down 9.6% from 16,434 in the second quarter of 2012. RSi said 12,511 cars were delivered in the second quarter, up 4.8% from first-quarter deliveries of 11,952. The backlog as of July 1 was 73,706, up about 2.8% from 71,704 on april 1 (end of the first quarter). “Overall, the industry order number remains highly concentrated in tank car orders, which accounted for 6,944, or 47% (down from 19,267, or 81% during 1Q13) of the total orders in the quarter,” said Barger in a note to clients. “Covered hoppers orders, which were the second largest concentration in orders, came in 4,795, or 32% of the total orders. Together, these two car types accounted for 79% of the total orders in the quarter vs. 89% for the top two last quarter,” Barger said.

Metrolink project deal is reached

Fort Lauderdale streetcar tax OK’d Fort lauderdale, Fla., city commissioners approved a plan last month for a special tax assessment zone downtown to fund its proposed streetcar line, known as The wave. Downtown businesses, organizations, and residents have signaled strong support for the proposed $142.6 million, 2.7-mile starter line. 6

Railway age

august 2013

a Riverside County, Calif.-based environmental group has dropped its lawsuit against a proposed 24-mile Metrolink rail extension, the Perris Valley line, citing concessions being offered that are amenable to its concerns. The group, Friends of Riverside’s Hills, obtained concessions worth about $3 million, involving noise reduction, hiking trails, and biking facilities. a judge last spring rejected the environmental impact report (eiR) for the proposed line, ruling that the Riverside County Transportation Commission failed to address such issues as train wheel noise and pedestrian safety.

american Short line and Regional Railroad association President Richard F. Timmons—known in the industry as “The general”—has agreed to lead his small-road troops for another year. although Timmons, a former U.S. army lieutenant general, had previously announced his intention to retire at the end of this year, the aSlRRa Board of Directors requested that he extend his tenure, and he has agreed to do so. On July 17 the Board approved the extension of Timmons’ contract through Dec. 31, 2014. “The short line industry is facing some tough challenges and some real opportunities in the coming 16 months,” said aSlRRa Chairman ed McKechnie. “The short line tax credit expires at the end of 2013, and we must work to keep that provision in law. The U.S Department of Transportation is in the midst of a two-year study on truck size and weight, and the proponents of bigger trucks are already hard at work on new legislation allowing bigger trucks. we are working closely with our Class i partners to delay the unfunded PTC mandate. as an association we are undertaking a comprehensive review of rail safety issues with the goal of making the short line industry the safest in the world.” “Rich Timmons has been at the forefront of all of these issues. His knowledge of our industry and his relationships with public officials and Class i railroads are an invaluable asset to aSlRRa. at this critical juncture we have asked him to stay on as our president and he has agreed,” McKechnie added. Prior to joining aSlRRa, Timmons was employed with Norfolk Southern as the chief political liaison to the states of Pennsylvania and New york, representing the railroad’s interests in legislative and regulatory policy. in addition, he served for 32 years in the U.S. army, retiring as a lieutenant general. Timmons was named 2006 Railroader of the year by Railway age.

Market

Canadian Pacific, K+S Potash sign deal on rail logistics Canadian Pacific and K+S Potash signed an “exclusive long-term volume-based contract” last month for the transportation of potash products from K+S’ legacy Site near Moose Jaw and Regina, in Saskatchewan, to a western Canadian port of export for overseas destinations and via CP’s extensive network to domestic Canadian and U.S. markets. The contract was signed in K+S Potash Canada’s headquarters in Saskatoon, Saskatchewan, by (left to right) CP executive Vice President and Chief Marketing Officer Jane O’Hagan, K+S Potash Canada President and CeO Dr. Ulrich lamp, and luis Mendoza, CFO, K+S Potash Canada.

North America CINCINNATI: Signed a $71.4 million construction contract with Messer/ Prus/Delta Joint Venture to proceed with Phase 1 of the city’s $116 million, 3.6-mile streetcar line. KANSAS CITY, MO: Selected Herzog Contracting Corp., in conjunction with Stacy and witbeck, inc. as finalists for a $102 million contract to build the city’s initial 2.2-mile streetcar line. LACMTA: awarded the design-build contract for the Crenshaw/laX Transit Corridor Project to walsh/Shea Corridor Constructors, with HNTB Corp. as lead designer. The line will connect Metro’s existing green line light rail transit with the expo line and improve access to los angeles international airport. 8

Railway age

august 2013

WATERLOO REGIONAL COUNCIL (ONTARIO): Formally approved a U.S. $89.2 million agreement, in coordination with Metrolinx, to acquire 14 low-floor Flexity Freedom lRVs from Bombardier, to be delivered in mid-2016. The contract will include an option for 16 additional vehicles.

Worldwide BERGEN, NORWAY: awarded Stadler a contract worth more than $138 million to supply and maintain eight additional Variobahn low-floor light rail vehicles and maintain the existing fleet of 20 lRVs until 2026. BRATISLAVA TRANSPORT (SLOVAKIA): Signed a contract with Škoda Transportation for a fleet of 15 low-floor 30T lRVs, which will enter

service on the meter-gauge network in the Slovak capital in 2015. The contract includes options for 15 additional vehicles and maintenance of the fleet for a period of 15 years. CUENCA, ECUADOR: awarded a contract to a consortium led by alstom Transport for 14 alstom Citadis trams, along with electrification, traction power supply, and system integration. SNIF (MAURITANIA): The National industrial and Mining Co. of Mauritania signed a $21 million contract with wabtec Corp.to supply bogies for new iron ore freight cars. TURKISH STATE RAILWAYS: awarded a $375 million contract to Siemens for seven 300km/h (186 mph) trains, including maintenance, for its high speed rail network, beginning in 2016.

Update Supply BriefS Bombardier gear OK’d for Waterloo region lrT

Second-quarter earnings shine for most Class I carriers

The waterloo (Ontario) Regional Council last month formally approved an agreement in coordination with greater Toronto Area’s Metrolinx to purchase 14 light rail transit vehicles from Bombardier Transportation for roughly C$92.4 million. Production of the Flexity Freedom gear is scheduled to begin next year, with delivery beginning in the summer of 2016. The regional council also can exercise an option for 14 additional cars. The waterloo order is in some ways technically an add-on order to previous orders made by Toronto Transit Commission and Metrolinx. The waterloo region lies roughly 65 miles west of Toronto.

Wabtec to provide pTC for NCTD Coaster service wabtec Corp. has signed a $9 million contract with Herzog Technologies inc. to provide Positive Train Control (PTC) equipment and services for Oceanside, Calif.’s North County Transit District (NCTD). The contract includes an option worth an additional $5 million. Under the initial contract, wabtec will provide its interoperable electronic Train Management System (i-eTMS®), including installation, for seven locomotives and 10 cab cars on NCTD’s Coaster regional rail system, which operates on approximately 60 miles of BNSF right-of-way. wabtec will also provide back office engineering and systems integration support. The system will be fully interoperable with BNSF’s PTC system and that of other Class i railroads, all of which are using a version of wabtec’s eTMS technology for onboard applications.

ith one exception, Class I railroad shrugged off declining coal volume and registered solid,sometimes record second-quarter earnings. CSX on July 16 reported secondquarter earnings of 52 cents per share, or $533 million, on revenue of $3.1 billion, up from earnings of $512 million, or 49 cents per share, on revenue of $3.0 billion, in the second quarter of 2012. Operating income increased 2% year-over-year to $963 million, while CSX’s operating ratio was 68.6%, down by 10 basis points. “CSX continues to drive solid growth in many of its markets and is encouraged by the team’s sustained track record of delivering excellent operating performance in a wide range of market conditions,” said Chairman, President,

and CEO Michael J. Ward. “We remain sharply focused on creating strong, sustained value for customers and shareholders, as the economy appears to be slowly gaining strength.” On July 18 Union Pacific reported second-quarter earnings of $2.37 per share, or $1.1 billion, up from $2.10 a share, or $1 billion, in the second quarter of 2012. UP revenue rose 5% to $5.47 billion, slightly below expectations. Union Pacific CEO Jack Koraleski expressed cautious optimism, saying, “We’re hopeful that we’ll see some economic improvement in the months ahead.’ UP noted coal volume during the quarter was roughly equivalent to the 2012 second quarter, indicating that the steep decline in coal volume may be tapering off. Kansas City Southern on July 19 August 2013 RAilwAy Age 9

Update reported second-quarter earnings of $15.4 million, or 14 cents a share. Earnings results were down 87% from $120.4 million, or $1.09 per share, in the second quarter 2012. But excluding items such as foreign exchange rate fluctuations and debt retirement costs initiated by the company, earnings were 96 cents a share, up 9% from 88 cents per share in the second quarter of 2012. Revenue rose 6.2% to $579.3 million; carload volume increased 3%. KCS’s operating ratio of 69% for the quarter was 1.5 points better than the ratio in the comparable 2012 quarter. KCS said the severe drought in the U.S. Midwest during 2012 led to a steep decrease in grain volumes in the current quarter, as agriculture and minerals revenue declined. Said President and CEO David L. Starling, “The combination of solid revenue growth, a steady mid-single digit improvement to pricing, and continued control over operating expenses resulted in a second quarter operating ratio of 69.0%, a 1.5 point improvement over last year’s adjusted operating ratio. This performance speaks to the strength of KCS’ operations and the diversity of the franchise.” Canadian National on July 22 reported second-quarter earnings of C$717 million (US$694 million), or C$1.69 (US$1.64) per diluted share, up from net income in the comparable 2012 quarter of C$631 million, or C$1.44 per diluted share. Revenue for the quarter rose 5% to C$2.67 billion, aided by increased revenue ton-miles and carloadings. CN’s operating ratio improved 0.4 of a point to 60.9%. CN President and CEO Claude Mongeau said, “We executed strongly during the second quarter, with service and operating metrics on a steady improvement trend. This performance underscores our agenda of Operational and Service Excellence, which is key to achieve solid revenue growth at low incremental cost.” On July 23, Norfolk Southern Corp. reported second-quarter net income of $465 million, 11% lower than the $524 million notched in the second 10

RAilwAy Age August 2013

quarter of 2012. NS diluted earnings per share of $1.46 also declined, down 9% from the $1.60 per diluted share a year ago. Revenue totaling $2.8 billion was down 3% from the second quarter of 2012, though shipment volumes rose 2%. Norfolk Southern’s operating ratio was 70.2%, 4% higher than a year ago. Coal revenue fell 17% measured against he comparable quarter in 2012, while intermodal volume rose 4%. “In the second quarter, Norfolk Southern delivered solid results, supported by growth in our chemicals, intermodal, and automotive businesses, despite continuing weakness in the coal markets,” said President and CEO Wick Moorman. “We continue to focus on service efficiency and velocity, which is enabling us to control operating expenses and deliver superior performance to our customers.” Canadian Pacific on July 24 reported record second-quarter net income of C$252 million, or C$1.43 per diluted share, stressing a record operating ratio of 71.9%, up from 82.5% a year ago. Net income in last year’s second quarter was C$103 million, or 60 Canadian cents per share, meaning current income “represents a 138% year-over-year improvement in earnings per share,” CP said. CP’s second-quarter revenue was C$1.5 billion, up 9.6% from the comparable quarter in 2012 and also an “all-time quarterly record,” the railroad said. Said CP CEO E. Hunter Harrison, “The second quarter was a significant test for our employees who worked tirelessly during extensive network outages, including more than 40 washouts over a four-day period of historic flooding in Calgary and southern Alberta.” Harrison also noted that network interruptions during the quarter impacted revenue growth by approximately C$25 million or 2%. “The disciplined execution of our model allowed us to quickly recover from these challenges and restore service for our customers in a timely manner,” said Harrison. “CP is well positioned to continue to build upon its strong first half and deliver record financial and operating results for 2013.””

Bistate bridge project (with LRT included) dies

The economic future of Vancouver, Wash., is uncertain following the Washington State legislature’s failure in late June to approve state funds for the proposed $3.4 billion Columbia River Crossing (CRC), spanning the namesake river and linking Vancouver with Portland, Ore., by road, TriMet light rail transit, bike path, and walkway. The state legislature adjourned after declining to fund the project, supported by Gov. Jay Imslee (D) but opposed by many Republicans in the state Senate, including local Vancouver representatives, who cited concerns about cost and potential interference with river traffic, branding the LRT component as the particular cause for both problems. A poll commissioned by Vancouver’s The Columbian newspaper showed Clark County (Wash.) residents evenly split on any Columbia River Crossing. Lisa Nisenfeld, president of the Columbia River Economic Development Council, said the project’s demise will put an economic burden on Vancouver, as auto congestion rises and alternatives are not made available, noting prospective employers often inquired about the CRC. But Port of Vancouver (Wash.) Executive Director Todd Coleman countered, “I think this community will coalesce around economic development,” he said. “I think you will see people come up with new ideas.” CRC was to establish a new bridge route, part of Interstate 5, to be used by Portland TriMet’s MAX light rail in an effort to establish the second U.S. bistate LRT operation. Washington state was responsible for $450 million of the total cost of the bridge. Objections to LRT by Washington representatives, which played well to many constituents, ran up against the stance held by Oregon counterparts, who asserted that Oregon’s insistence on LRT, led by Gov. John Kitzhaber, was non-negotiable. “No light rail. No project. No kidding,” Tim Raphael, a spokesman for Kitzhaber, said in a statement last April. Last March, then-Transportation Secretary Ray LaHood also warned Washington state lawmakers that a lack of funding commitments from either state would jeopardize the $1.2 billion in federal funds designated for the bistate bridge project. August 2013 RAilwAy Age 11

Update Norfolk Southern completes Mon Line upgrade

Norfolk Southern has completed $22.6 million in track, bridge, and signal improvements along its 85-mile “Mon Line,” a major coal route through Pennsylvania’s Monongahela Valley. The Mon Line (a portion of the former Monongahela Railroad), extends south from Pittsburgh to serve five coal mines in Pennsylvania’s Washington, Greene, Marion, and Monongalia counties. During 2012,

nearly 36.4 million tons of coal were delivered to electric utility plants and East Coast export terminals. Norfolk Southern accomplished the Mon Line upgrade with a maintenance blitz that started with a partial shutdown of train traffic on June 24 before kicking into high gear with a full shutdown on June 29. About 400 NS m/w employees culled from all over the railroad’s 22-state system installed 26,904 ties and 75,000 tons of ballast; laid 13 miles of new rail; resurfaced another 110 miles of rail; added 961 new bridge ties; replaced 22 culverts and cleaned 110; and upgraded 40 road crossings. The crews also replaced a

2013 Rail-HalfPage-Future Rail Ad_Layout 1 1/22/13 11:57 AM Page 1

retaining wall and a 140-foot timber bridge with a ballast deck over the Pigeon Creek in Monongahela. NS crews, manning 60 work trains requiring 300 meals per day, labored through intense summer conditions, with some days seeing humidity at nearly 100%. “Jobs, both railroad and non-railroad, depend on the vitality of the Mon Line,” said NS Vice President Engineering Mike Wheeler. The Monongahela Railway was a coal-hauling short line in Pennsylvania and West Virginia. It was jointly controlled originally by the Pennsylvania Railroad, New York Central subsidiary Pittsburgh & Lake Erie Railroad, and the Baltimore and Ohio Railroad, with NYC and PRR later succeeded by Penn Central. The “Monon” was merged into Conrail on May 1, 1993, which Norfolk Southern and CSX acquired in a 58%/42% split in 1999.

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RAilwAy Age August 2013

he n! ils t t tio eta ge hibi r d for Ex g fo n’t WI i.or Do 3 R .rss 1 20 ww

w it Vis

Backers of Detroit streetcar outline implementation plans Notwithstanding the biggest U.S. urban bankruptcy to date, occurring last month after years of speculation of such an event, private-sector backers of Detroit’s M1 streetcar project are proceeding with implementation of the city’s first modern streetcar line. M1 Rail officials last week updated the Downtown Detroit Partnership at the latter organization’s summer stakeholder meeting outlining construction plans for the initial 3.3-mile segment along Woodward Avenue. Construction is set to commence in early fall. Private-sector backers of the project include the Kresge Foundation, the Penske Corp., and Quicken Loans, among others. M1 Chief Operating Officer Paul Childs and Director of Governmental and Community Affairs Sommer Woods noted construction will occur in two segments. At times, portions of Woodward Avenue will be closed to traffic and pedestrians, though detour signage will provide guidance. Construction is expected to be limited from 7:00 a.m. to 7:00 p.m. each day. Aware of utility issues embroiling other U.S. cities adding streetcars, Detroit and M1 Rail officials will limit utility service interruptions to a minimum. Any unavoidable interruptions will prompt a five-day advance notice to affected people and businesses.

is...

Railway Systems Suppliers, Inc. is a trade association serving the communication and signal segment of the rail transportation industry. What We Offer • Annual Exhibit: Largest exhibit in the North American communications and signal industry • Scholarship program: Multiple scholarships are awarded each year • Sponsorships: AREMA, CABT, GoRAil, NRC, RSI and ASLRRA • Legislative: We support the initiatives of RSI, GoRail, RSI, NRC and ASLRRA dealing with federal legislative issues that impact the rail industry • Active supporters of AREMA Technical Committees, IRSE, and other rail and transit associations

RSSI Objectives • Provide a world class exhibition that allows our member companies to showcase their products and services to their rail and transit customers in the most efficient manner possible • Work to maintain the stature of the communications and signal supply companies in the railroad industry and business community • Encourage and provide for the development of the next generation of America’s rail, transit and supply leaders • Provide effective communications to our members about happenings in the rail industry

DAVE DOBBS

Charlotte, N.C., marks Lynx LRT extension start The Charlotte Area Transit System (CATS) hosted a groundbreaking ceremony July 18 to mark the start of extending Lynx light rail transit 9.7 miles to the University of North Carolina-Charlotte campus. The extension add to the initial 9.6-mile CATS LRT line, also known as the CATS Blue Line, which opened in November 2007. The initial 1.5-mile, $37 million starter streetcar line, recently relabeled the CityLynx Gold Line, is under construction. Federal Transit Administrator Peter Rogoff was among those addressing the gathering. FTA funding will provide roughly half of the $1.16 billion cost of the extension.

Join the over 6500 customers, suppliers, and regulators who will be attending the 2013 Railway Interchange Conference and Exhibition at the Indianapolis Convention Center on September 29, 30 and October 1, 2013. Over 180 communication and signal companies will be exhibiting with RSSI. For more information visit the RSSI website at www.rssi.org.

Railway Systems Suppliers, Inc. 9306 New LaGrange Rd., Suite 100 • Louisville, KY 40242 Phone: (502) 327-7774 • Fax: (502) 327-0541 www.rssi.org

August 2013 RAilwAy Age 13

Update Herzog ballast dumping: No GPS? No problem!

Herzog Railroad Services Inc. (HRSI) says its GPS ballast trains “are one of the safest and most efficient advancements of railroad maintenance equipment in decades. The tasks of unloading a ballast train were labor intensive and the risks to personnel were significant. HRSI’s patented GPS technology changed the way railroads unload ballast, for the better.”

HRSI’s P.L.U.S. (Programmable Linear Unloading System) involves pre-dump surveys taken before a train spreads ballast. This is done to confirm the locations of switches, crossings, and other fixed assets. A survey file is created for each ballast spreading assignment. Using GPS coordinates, the survey defines ballast spread and no-spread areas and indicates the

desired amount of ballast to be spread. The train, made up of Herzog Automated Ballast cars, “provides the fastest, most precise and efficient means of spreading ballast,” HRSI says. But pre-dump surveys have always proved challenging in areas where GPS outages occur, “and that challenge remains when the train arrives to dump the ballast,” HRSI notes. HRSI conducted research and development on a system that could back up the GPS signal, if lost, while maintaining dumping accuracy. Various types of sensors were tested; the end result is the new P.L.U.S./Smart Train Inertial System. Says HRSI, “GPS outages will no longer be a concern when dumping ballast. The same can be said of the pre-dump survey when utilizing the Herzog ProScan LIDAR (Laser Imaging Detection and Ranging) Truck to replace the manual survey.”

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RAilwAy Age August 2013

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Watching Washington FRAnk n. wilneR

Regulatory rat holes worth watching

or institutional investors with large holdings in railroads, actions by Congress and decisions of the Surface Transportation Board (STB) are—with all due respect—rat holes worth watching. Decisions made in Washington, D.C., that adversely affect railroads’ earnings growth, operating ratio, and return on investment can shut off access to capital for infrastructure renewal and expansion more abruptly than economic downturns, adverse changes in the commodity mix, liberalization of truck sizes and weights, and labor strife. This is why Wall Street analysts and their institutional investor clients keep a close eye on pending legislation that would reregulate railroads, and on STB decisions that could produce similar results. Some 80% of railroad stock shares are owned by institutional investors such as mutual, pension, and hedge funds, and hospital, museum, religious, and university endowments, says one of Wall Street’s most respected railroad financial analysts, William Greene, who is a managing director and senior transportation analyst at Morgan Stanley Research. While BNSF no longer is publicly traded, it is 100% owned by Berkshire Hathaway, which itself is owned primarily by institutional investors. A sell-off of railroad stocks does more than reduce share prices. It may signal concerns of rail bond buyers and other suppliers of short and long-term financing about the long-term health of the rail industry. The cost and access to this financing are important for rail network reinvestment. As railroad borrowing costs rise— because some lenders cease lending and others demand higher

interest rates—capital spending on infrastructure and equipment renewal declines along with service quality. What follows is a rail network in disrepair and reduced service quality, causing shippers of time-sensitive freight to flee to other modes. “It’s not immediate, but happens over time,” Greene says, explaining that the aim of shippers using re-regulation to impose lower freight rates may be short-sighted if it threatens the long-term financial health of the industry.

The outcome of an antitrust lawsuit over fuel surcharges is nothing compared to the long-term costs of re-regulation. Institutional investors are a savvy bunch and recall too vividly the lessons from the 1960s and 1970s, when pervasive economic regulation created a wave of railroad bankruptcies and massive deferred maintenance that slowed rail transportation to an unacceptable crawl. For this reason, railroads spend heavily to educate Congress on the draconian tribulations of railroads prior to passage of the Staggers Rail Act of 1980, which partially deregulated railroads and allowed them more flexibility to react swiftly to changing market forces. Re-regulation of railroads by Congress—or de facto re-regulation by the STB using its regulatory powers— would, says Greene, choke off the flow

of capital to railroads that are among the most capital intensive of all industries, investing at five times the rate of manufacturers to operate, maintain, and improve the nation’s rail infrastructure. “While some shippers may feel rail consolidation has reduced transportation options and raised rates, shipper efforts to lower freight rates could create negative long-term results for railroads, their customers, and the nation’s economy.” Greene says the most harmful outcome of a pending antitrust lawsuit against railroads over an alleged conspiracy to set fuel surcharges— which some predict, at worst, could cost the industry tens of billions of dollars—pales in comparison to the long-term costs of re-regulation. “The risk of losing the antitrust lawsuit is a unique one-off event, but doesn’t change the fundamental economics of the rail industry as would a rollback of Staggers Rail Act freedoms,” he says. “Re-regulation calls into question the industry’s future earnings growth, operating ratio, and return on investment—three metrics most watched by institutional investors,” Greene says. “The Staggers Rail Act is a wellthought-out Congressional success story. The industry is on the cusp of revenue adequacy, has vastly upgraded service quality, and has improved productivity and safety. Rail employment is rising, and average freight rates have trailed the rate of inflation.” “Unless railroads attempt a new round of mergers to create a duopoly, Congress should leave intact the framework the Staggers Rail Act created,” Greene says. “The Staggers Rail Act is a smashing success and re-regulation is a too great a risk to a sustainable national rail network.” August 2013 RAilwAy Age 15

Perspective: Short Line & Regional PaUl M. ViCTOR

Positive Train Control status in 2013

TC continues to be a work in progress on a national scale. The impact of PTC reaches all Class I’s, all passenger carriers, and a significant number of non-Class I railroads. Railroads, suppliers, and the FRA are proceeding “full speed ahead” to comply with the imposed mandate. Despite this effort, a host of open issues exist that must be addressed. Some significant issues include: • The need for a fully functioning system of protocols that link control centers of various railroads, and that can operate in lock step with each railroad’s internal systems. • The current lack of capacity to install components. Until this resource issue is resolved, the “ETA” for PTC on a national scale is an open issue. • In certain geographic areas, bandwidth constraints may impact PTC implementation. • FRA’s capacity to certify PTC installations has institutional capacity limits. • The training component for railroads also has an institutional capacity limit. For the non-Class I’s that require PTC investment due to joint operations in passenger territory, or for other compliance requirements, the investment magnitude can jeopardize the financial well-being of many carriers if no funding mechanism is created for offsetting at least a portion of the cost. Future ongoing maintenance of the PTC network will require a permanent operating expense budget. And each turnout for any new customer to connect to the rail network will have to support the additional cost of incorporating the required PTC capability. The term “interoperability” has taken on a new meaning within the world of PTC. Typically, this term would convey the impression that the physical 16

Railway age august 2013

components fixed in the field and on locomotives would be standardized across the industry, but this is not the case. Right now at least two major noncompatible options are available. ACSES will be the standard within the Northeast Corridor and on certain adjacent lines. ETMS and other related systems will comprise the balance of the U.S. network. This non-compatible reality has already impacted PTC design and control

Two non-compatible systems will co-exist within the national network. development on line segments that incorporate a point of contact between both basic systems. At a minimum, all locomotives that will bridge both systems will have to be equipped with onboard equipment for each independent network. The term “interoperability” also refers to the requirement that a train crew’s initial on-duty location must support PTC information required for all carriers and corresponding line segments that are planned to be traversed during their journey. Called the initialization requirement, this may prove more difficult to accomplish than stopping a train that has overrun its limits. The control centers of all the carriers within the crew’s trip need to be “interlocked” in real time to support this requirement. Currently, the railroads have a platform for supporting industry wide reporting and clearing houses for data. But the data is not safety critical, nor could “real time” be used as the industry standard. The protocols presently in use have evolved

over a timespan measured in decades. The challenge, especially for non-Class I carriers, is how to effectively support this aspect of the mandate. The first PTC application, predating the 2008 collision in Chatsworth, Calif., was conducted on the Panama Canal Railway, a carrier that had no interchange or point of contact with another railroad. FRA reviewed this and deemed it a success. But what separates this application from the PTC mandate in the 48 contiguous U.S. states is the requirement for “interoperability” and the sheer scale of the undertaking. Ongoing and future system upgrades will create the need for future coordination among all carriers. This by itself could require a significant industry-wide cost and commitment. The limited systems capacity of the smaller, non-Class I carriers could be impacted more significantly than an in-house department of a major corporation. The final startup date and certain systemic matters remain open. The die has been cast that two non-compatible systems will co-exist within the national network, but “interoperability” must be up to par to support the interline and interdependent structure of the U.S. rail network. The task, daunting for Class I’s, is an order of magnitude even more difficult for smaller carriers. From an initial capex standpoint, the task has the potential to be financially grave for smaller railroads and commuter railroads without a source of external funding to underwrite the investment. Unknown to all will be the future long term maintenance cost for PTC. Will it be only marginally expensive or substantially more to sustain? Paul Victor is the president of the NewYork & Atlantic Railway.

HigH Speed BallaSt delivery

NO GPS? NO PrOblem! P.l.U.S./SmArT INerTIAl SYSTem ImPlemeNTATION We can now spread ballast through areas where GPS outages occur allowing highly accurate ballast unloading for the first time in the industry. • replaces standard GPS Antenna with GNSS INerTIAl SYSTem • Seamless ballast spread through areas of GPS outages • Ability to dump through tunnels and mountainous areas without GPS PrOSCAN lIDAr TrUCK • Scans the track surface to provide a precision placement of ballast

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GPS Only

P.l.U.S./SmArT Inertial System

Norfolk SoutherN ANticipAte, AdApt, AccompliSh

The goal of capital expenditures is to link investments to the quality of the transportation product, generating increased customer satisfaction. Perhaps no railroad does it better than Norfolk Southern. By Roy BlaNchaRd, contributing Editor 18

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he Norfolk Southern approach to capital investment is to provide the right resources at the right place so that all commodity groups—coal, intermodal, manifest— can use the same resources to add value for the customer. Here, Chief Executive Officer Wick Moorman sets the strategic view for the $2 billion 2013 Capital Plan. Chief Marketing Officer Don Seale tells how asset-sharing and “co-production” provide more bang for the capital dollar.

Casey Thomason

RA: At the 2013 NS Shareholders meeting, you said the businesses that prosper will be those that can “anticipate, adapt, and accomplish.” How does the 2013 capital plan support these three tasks at NS? Moorman: Our capital budget maintains the core infrastructure of the property, and supports our targets for growth and higher returns. About 75% of our 2013 capital plan keeps our infrastructure and technology current. The other 25% is for the service enhancements we need to make to provide the best transportation product that our customers need. Hockey great Wayne Gretzky once said, “I skate to where the puck is going to be, not where it has been.” In railroading, you can think of two or three places the traffic might go and position yourself to capture that business. The obvious example for us is our capex commitments over the past few years to build our intermodal components. To the extent that we can anticipate that intermodal will continue to grow, part of the 2013 budget is aimed at supporting that growth. Over the past couple years we’ve seen substantial changes in our traffic patterns. We have a systematic process in place for thinking about infrastructure. Where do we need more capacity? Where are the pinch points now, and where might they be in the future? Wrapped around that is a lot of analysis and modeling to understand where we should spend infrastructure money and how we’ll get the best return. We’re doing that in anticipation that these targeted corridors will continue to grow—be it intermodal, coal, crude oil—and which ones will require an adaptation strategy. Traffic shifts of coal to oil, for example. As we’ve seen crude oil ramp up, we’ve quickly added infrastructure and rapidly made some operating adjustments. Being nimble in the way we adapt to shifts in traffic mix—as well as preparing the railroad to handle significant changes in traffic—is a big part of the way we think about capital as well. We also think about our locomotive fleet in terms of skating ahead of the puck. We want to make sure we have enough locomotives and, at the same time, minimize the cost of maintaining that fleet. So anticipate, adapt, and accomplish run through much of our capital spend for 2013 and beyond. RA: The 2012 capex spend of $2.2 billion was 19% of the year’s $11.0 billion in revenue. Street estimates for 2013 revenues stand at $11.24 billion, making your 2013 publicly announced capex spend of $2.0 billion about 18% of sales, The black stallion is owned by an NS carman in Shire oaks, Pa. This isn’t just any black stallion. It’s the great, great, great grandson of 1973 Triple crown champion Secretariat and an award winner itself.

up from 15% of sales in 2011. Do you see this trend of higher capex spends as a percent of revenue continuing? Moorman: We do see higher capex spends as a percentage of sales. Part of that is the $229 million annual spend on PTC. But ex-PTC, we can support higher capex levels through increasing operating cash flow from improved operating income streams. We’re comfortable with the spending where it is, and it can even go up some. The big ticket items—rails, ties, ballast—will continue to be the largest line items. On the other hand, we have some areas that will diminish slightly without impacting the quality of the railroad—technology, locomotives, cars. Much of our coal hopper fleet is life-expiring right now. The coal business is depressed, moderating over the past four to five years the car replacements that six or eight years ago we thought that we were going to have to buy. Nonetheless, other pieces of our car fleet are going to require substantial investment over the next few years. We also have a very good and innovative program to rebuild road locomotives—the SD60E for example—for about $1 million each, less than half the cost of a new unit. So if we can continue to do that over the next few years, we’ll be able to compress that side of the capital budget. I’m confident we can perhaps return a little more to our shareholders in the bargain. We pay out roughly a third of net income—the highest dividend yield in the industry—and I can see that increasing over time. RA: Coal cars: You don’t have to replace them as fast, but now you can rebuild the cars you want to keep with composites, adding ECP, and increasing payloads. Moorman: We have two things going on. One is the re-body program that started last year and finishes this year. Two, most of the rest of the fleet is 40 years old, has been re-bodied once, and can’t be re-bodied again. So we’ll need to buy new cars. The good news is the new cars will last 40 years before they need to be re-bodied, and the cars have a slightly higher payload, so there is some efficiency that we gain. RA: So many of your thermal coal cars are utility-owned? Moorman: Yes, a high percentage. What makes us different

is the met trade (domestic and export comprise about 30% of NS’ coal tonnage). Met coal doesn’t really fit the leasedcar model.

RA: Doesn’t that also support your at-pier blending ability where you can make custom mixes without having to put the coal on the ground? Moorman: The blending capability has always been one of the great advantages at Lamberts Point. We’ve just reopened one of the piers after a 90-day outage to rebuild substantial components. We’ll spend a lot of capital on the piers over the next few years. As the largest coal loading facility in the Western Hemisphere, it allows us to do a lot of things that our competitors can’t. RA: AAR data through May suggests NS is running about 168,000 cars on-line vs. 180,000 in 2Q 2012. Where can you go before you get clogged up? august 2013 Railway age 19

NORFOlK SOUTHeRN “We want to make sure we have enough locomotives and, at the same time, minimize the cost of maintaining our fleet.”

Roanoke fits the same general theme. We were handling a modest amount of traffic. We had yards around it that had capacity—Linwood, N.C., for example. We took a hard look at Roanoke and concluded we could do the same job more efficiently elsewhere.

RA: You closed Buckeye Yard in Columbus, Ohio, curtailed hump operations at Roanoke, Va., and are doubling the footprint of Bellevue, Ohio. How do these actions support the “anticipate, adapt, and accomplish” theme? Moorman: Bellevue is an adaption, and the others are part of the same process. Prior to the Conrail transaction, Bellevue did not fit a lot of what we were trying to do. Post Conrail, with the acquisition of the Northern Region, we built out the infrastructure on both sides of the yard so that you can slide traffic off the ex-Conrail lines into Bellevue and back out to the NS lines and vice versa. Closing Buckeye was one result. We anticipate that merchandise carload traffic will continue to grow. At some point we could run out of switching capacity. Even though Buckeye was out of route for some of the traffic, the yard gave us sorting capacity we didn’t have anywhere else. The question became, do we rebuild Buckeye, or do we expand Bellevue? We decided to do the latter because we can now do some very interesting things at some of our different terminals—blocking for western connections and reducing the number of times we handle a car. And since one of our key metrics is car handling, lowering that number increases velocity. 20

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RA: Continuing south along the Crescent Corridor, it appears you’re putting intermodal terminals closer together, again to minimize dray and create competitive advantage. Moorman: Looking out longer term, we see an attractive traffic gathering area in eastern Tennessee. The trick in siting these terminals is not only identifying where there is enough volume in and out but also where it originates and where it wants to go. Odds are if it only wants to go 250 miles on the railroad, you’ll be much less inclined to build that terminal than if it wants to go 750 miles, where we have a better competitive position, and better margins.

Don Seale relates how NS uses its network to win new customers and encourage current customers to come back for more. RA: NS runs as an integrated network with specific corridors as the backbone. Everything NS does to make the railroad run better is done with the network and its corridors? Seale: NS is a corridor network, and what we call “co-production” is what makes it work. Intermodal is our

Norfolk Southern

Moorman: We’re running 165,000 to 170,000 cars and can certainly handle more than that. We look at where we have a lot of trains today, and where we think more are coming. We do an analysis to determine where we need another siding. On average we’ll do four to six pieces of double-track or siding extensions a year to remove bottlenecks so we can position ourselves for future growth.

RA: Another good example is what NS calls co-production.You have an intermodal facility in Greencastle.You also have an intermodal facility at Rutherford and another at Harrisburg. That gives trucks the flexibility to triangulate among the three places and creates a competitive advantage for NS. Moorman: We have a fairly dominant position in central Pennsylvania. It’s already a competitive advantage because of the enormous amount of truck traffic there. Greencastle provides one more outlet for some of the truck traffic that wants to flow into an intermodal terminal in that general area, extending into the Baltimore and D.C. markets. The Harrisburg Triangle gives shippers, the dray people, and NS far more flexibility in terms of where we can take this traffic and handle it most effectively. Greencastle is aimed almost exclusively at north-south traffic while with Rutherford and Harrisburg you can handle both east-west and north-south traffic.

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NORFOlK SOUTHeRN INvESTINg IN ThE fuTuRE

Route-MileS

hEaRTlaNd coRRIdoR

PaN am SouThERN

cREScENT coRRIdoR PhaSE 1

mERIdIaN SPEEdWay

ToTalS

789

436

2,500

320

4,045

PERcENT ShaRE

PRojected coSt ($M)

$282.4

$177.7

$717

$300.0

$1,477.8

100%

$147.4

$177.7

$422.7

$300.0

$1,047.8

70.9%

Public SouRceS

$135.0

$0.0

$295.0

$0.0

$430.0

29.1%

coNStRuctioN StARt

2007

2009

2007

2006

PRoject coMPleted

2011

2012

fastest-growing product, where speed and reliability are paramount. Steel, corn, autos, coal, frac sand, crude oil— everything in our carload network—uses the same main line tracks, locomotives, crews and support facilities. The more we can use our assets to support all lines of traffic, the better off our customers, our employees, and our shareholders are. Co-production is worth more than $100 million a year in operating savings across the network. RA: Examples of corridors and how they add value? Seale: NS has developed four primary corridors and

has been successful in creating public-private partnerships in two of them. [See table, above.] The 789-mile Heartland Corridor was the rail industry’s first multi-state PPP. Our Meridian Speedway joint venture with KCS is the shortest, fastest rail route between the West Coast and the Southeast. The Memphis-Harrisburg Crescent Corridor covers 2,500 miles across 11 states and extends to Dallas and Mexico plus Birmingham and New Orleans. We’ve added new intermodal terminals in Rossville, Tenn. (Memphis), McCalla, Ala. (Birmingham), and Greencastle, Pa. (Harrisburg). In late 2013 we’ll open a new Charlotte (N.C.) terminal. Elsewhere, we’re in the midst of a $30 million PPP with Pennsylvania to expand the Harrisburg intermodal facility between the Amtrak station and Rockville Bridge and plan to do the same at our former Reading intermodal yard at Rutherford, Pa. Having three terminals in the Harrisburg area gives draymen additional flexibility in where to drag and drop loads, decreasing over-the-road time and adding to their productivity. In Mechanicville, N.Y., the west end of our Pan Am Southern Corridor, we put an automobile terminal adjacent to the intermodal facility and we repeated the model in Ayer, Mass., to serve the Boston market. At Greencastle, we’re adding a merchandise carload industrial park adjacent to the intermodal terminal so we can serve both carload and intermodal customers from the same asset base. Co-productivity, again, and now that we have the formula, you can bet you’ll see more of the same across the NS franchise.

RA: It certainly looks like NS is betting heavily on the intermodal segment, even though it generates about 20% of 22

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today’s revenue, with coal about 25% and merchandise carload the remaining 55%. Why is this? Seale: The additional intermodal capacity we’re bringing on will open many new business lanes for NS and will be the foundation of future growth for years to come. We know roughly 80% of all intercity truckload freight is moving east of the Mississippi—right into the heart of the NS network. The number of truckloads we see as being ripe for conversion to rail is large enough that we can grow at a significant pace even if we gain a small percentage of that motor carrier volume. We know customers are buying rail networks and that’s what is behind our decisions to go into New England, the Ohio Valley, or even Mexico. That’s why we’re adding 34 new intermodal lanes, including 18 in and out of Mexico. In the process we’ve sped up the capital program a year. Our 2013 plan is $2.0 billion, $233 millionto-$200 million less than last year. We have a smaller budget this year because much of our intermodal franchise investments are nearly complete. That’s one-time money that’s in the ground now, and we can move on to other things. RA: What about the single-carload service product? Seale: The poster-child for our carload service is still

the vanilla general-service boxcar. Our goal is to standardize one car type, and we’re finding that the single-door, Plate F, 100-ton boxcar offers customers the most carrying value and for ourselves the highest use rate. However, we still see many of the older, smaller 70-ton, Plate C cars in service, mainly for paper shippers. Your typical newsprint or boxboard plant was built 50 or 60 years, ago and doors were spaced for the 50s because that’s all there were. Fast-forward to today and the trend to bigger cars moving faster made the 50-footer obsolete. But the paper plant doors don’t fit the 60-foot cars. The day may be at hand when we railroaders have to do for the papermakers what we did for the animal feed producers. We demonstrated how unit trains of feed ingredients could save them time and money and increase margins. We collaborated on the feed mill evolution from single cars to bigger and bigger unit trains. A big motivator was the economies of leaving power with a train during loading and unloading and accelerating over-the-road transit times for more uniform flows from origin to destination.

we’re committed to building infrastructure that $7.5 Billion serves america’s economy well in the present and the future. out of every dollar of revenue, goes a long way. we put a significant portion back into maintaining and improving our infrastructure. in fact, from like our trains. 2010 to 2013 we’ll reinvest $7.5 billion dollars. That should keep our trains and the economy moving.

NORFOlK SOUTHeRN

Cycle times dropped to 8 or 9 days from twice that. The economic benefit to the feed mill made the case for plant expansion to take unit trains. And NS generated increased volumes with higher per-car yields, lower fixed costs, and lower capex. RA: So Seale:

why not with boxcars? Manufacturing processes can change daily based on customer order quantities, raw material availability, manufacturing capacity—any number of variables. But farm animals must eat, the lights must stay on, and retailers must keep the shelves stocked. As a result, it will always be trucks-to-therescue when the manufacturing variables kick in, and it’s the old reliable railroad for every day. Much of the single car business will stay single car business. At NS, we’re finding that, even with the manufacturing variables, NS’ investment in equipment utilization, network velocity, and workforce productivity makes the single-car business a good business to be in. Chief Operating Officer Mark Manion and Chief Information Officer Deb Butler talk about how NS will add value to the transportation product.

RA: Earlier in the year, Wick said, “The fluid network leads to better service, lets us lower operating costs and adds

network capacity.” What’s first on your list for developing a more fluid network? Manion: First is finding the most efficient way to move cars between origin and destination while maximizing revenue tonnage per line segment. The 2013 capital plan includes $84 million for adding capacity to the line segments we’ve identified as needing greater capacity to handle the volumes we expect—skating ahead of the puck, as Wick puts it. Keep in mind that we developed our network plan—The Thoroughbred Operating Plan or “TOP”—in 2001 to include the entire system. That was before we started the corridor concept and yet, as the concept has evolved, the corridors have become an important part of the network plan. TOP gives us the operating consistency we need to identify potential choke points before they become choke points, and we can apply capital dollars to add infrastructure—longer passing sidings, double-track extensions, signals, and cross-overs. We used computer modeling to add the infrastructure changes surgically, exactly where we needed them so we were not moving the problem someplace else. Over the last 18 months the network-with-corridors concept has really paid off, giving us the best operating metrics we’ve ever seen. A big reason behind that is we’ve got the right resources, and we’ve got a crew base that absolutely supports the network plan. We’ve got the right

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number of locomotives and the right infrastructure. Put it all together, and we’re now to the point where the network can handle the volume. RA: The

2013 Capital Budget calls for $2.0 billion and has $1.1 billion in three buckets for track and structures: Roadway, Infrastructure, Facilities & Terminals. What goes where? butler: We expect to invest $831 million in Roadway projects for the normalized replacement of rail, ties, and ballast and the upgrading and replacement of bridges. Facilities & Terminals gets $203 million for property enhancement and new projects, such as the intermodal new terminal in Charlotte, N.C. And the $84 million Mark just mentioned is in the Infrastructure Fund—increasing mainline capacity and accommodating volume growth. Also in this $84 million bucket is money that’s our share of funding for public/ private partnership investments like the Crescent Corridor and CREATE in Chicago. RA: You say the Infrastructure bucket includes contingencies. How does that work? butler: You recall I said “accommodating volume growth.” That’s a contingency because we can’t say this far in advance where all the volume growth will be, and we must be

prepared. This year we’ve set aside $40-50 million for infrastructure enhancements that we know we’ll have to do but where and when are more a function of traffic patterns that have yet to develop fully—crude oil, for example. Another example is in Bellevue, Ohio, which is achieving critical mass in terms of traffic volumes. The infrastructure fund lets us be nimble in our response to new traffic patterns. Manion: Every analysis of traffic flows across the system shows nearly everything we move in the North wants to go through Bellevue. Doing so benefits our customers because we can concentrate our major class yard activities in one place and eliminate intermediate yard dwells. Blocking for the distant node lets you bypass intermediate yards, and even run manifest freights directly to and from foreign road terminals. Think Bellevue and North Platte on Union Pacific, for example. Fluidity, again. RA: That’s the third time you’ve mentioned fluidity. How does NS measure fluidity? Manion: We use a three-part Composite Service Score that measures train performance, connection performance and plan adherence. We measure operating plan compliance for every train between end points. Compliance means being on-time, and at NS on time means on-time, neither early nor late.

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We’ve had to make some cultural adjustments to meet our metrics, too. In the past, intermodal trains were our hotshots, and the faster they got over the road the better. Not anymore. We run intermodal trains to make our guaranteed customer availability times at terminals. We run merchandise trains to make connections and scheduled load placements. And we score our local trains for Local Operating Plan Adherence. As a result, you might see us let a manifest train that has fallen behind plan overtake an intermodal train that was ahead of its operating plan, which leads us to connection performance. We don’t hold trains for connections because the biggest cause of late arrivals is late departures. Worse, late arrivals get “We want to make sure we power and crews out of position have enough locomotives to meet system plan compliance. and, at the same time, Finally, we measure trip plan minimize the cost of compliance for every revenue maintaining our fleet.” unit from the time we get it from a customer or another railroad to the time we either deliver it to the customer or hand it off to another carrier. Here again, the repair-and-replace and capacity-addition components of the 2013 capital plan give us the tools. RA: Let’s turn to the carload side of the house. I sense three recurring themes: asset utilization, network velocity, and workforce productivity. Let’s start with asset utilization and network velocity. How are you getting more loads out of your freight-carrying assets by making them move faster? Manion: A good example is our decision to close our Roanoke hump yard. We found that most carloads classified at Roanoke were heading for another hump yard before getting to their final destinations. By closing the Roanoke hump we forced blocking at the hump yard closest to the point of origin to the hump yard closest to the destination. We saved a day’s dwell in Roanoke between arrival in the receiving yard and actual departure and took out the odds of cars missing connections or being otherwise delayed. Car— and thus network—velocity improved. Asset utilization is increased by having yards before and beyond Roanoke do more work while we put the Roanoke assets to other uses. We can do block swaps and stage train sequences to maximize gross ton-miles per day between yards and make better use of our mainlines. We shifted hump locomotives to more productive uses and were able 26

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to give our crews regular eight-hour jobs that did not vary with traffic volumes. RA: Does this mean NS will be closing other hump yards? Manion: Not necessarily, though we were able to close

Buckeye in Columbus because Bellevue was a better location. Most of our carload traffic between the West over Chicago on the one hand, and the Northeast, Mid-Atlantic, or Southeast on the other, flowed through Bellevue. It was clear we had to remodel the classification yard network according to where cars wanted to go. So we split the work that Buckeye had been doing between Bellevue and Conway – and even Enola—depending on which is the best “distant node.” We took down the second hump at Conway sometime back, which helped drive volumes at Bellevue, and we used the space at Conway for a staging yard for ethanol and crude oil trains heading east.

RA: But isn’t crude oil riding mainly in unit trains? Manion: About a third of our crude oil is the heavier

oilsands product coming out of Alberta and heading for East Coast refineries. We put that in merchandise service as far away as Conway to keep it moving and to get better car-cycle times. Once in Conway, we build it into unit trains that go direct to destination. Our Bakken crude moves mainly in unit-train service, and we don’t see that changing.

RA: So how do you keep everything moving according to plan? butler: That’s in the $57 million technology piece of our

capex pie chart. Our “Movement Planner” is part of TOP and is the equivalent of an air traffic control system for our railroad. It’s break-through technology that lets us run more

NORFOlK SOUTHeRN

trains over a given line segment and at faster speeds. That saves money in many ways, including capital costs. If we can increase average train speed by just one mile per hour, we can run the railroad with fewer locomotives and serve more customers with fewer cars. You will recall that on the conference calls we’ve shown how NS has increased revenue units per locomotive and reduced crew-starts even as gross ton-miles increased. Then we have the Uniform Train Control System (UTCS), the dispatching system that is the backbone of Movement Planner. The combined UTCS-Movement Planner technology gives us a simulation-based model of the physical network so we can set train speeds to ensure on-time arrivals. Out on the railroad, we’ve developed a locomotive-based computer system to help crews get over the road using less fuel per gross ton-mile—and more safely. We call it LEADER, Locomotive Engineer Assist Display Event Recorder. New York Air Brake developed the system, and we use it to give our crews real-time information about the train they’re operating, recommending optimum speed given trailing tonnage, gradient and curvature, for example. This is one tool that has helped improve gross ton-miles per gallon by three percent in just one year. RA: And, speaking of technology, what about PTC? I see you

have $229 million in the 2013 capex budget. Where’s it going? PTC will cost us roughly $1.4 billion by the time

Butler:

we’re done. This year’s allocation is for locomotives, wayside devices, and back office systems. Because we’ve been upgrading our wayside signal systems continuously over the last 20 years, we don’t face many of the legacy system challenges we’ve seen on other roads. The bigger challenge is the design and construction of the hardware and software needed to communicate between and among locomotives, wayside devices, and back office systems. Right now we think we’ll want to equip 3,400-to-3,800 units, depending on the FRA rules on yard locomotives. By the end of 2013, we will have 1,700 PTC-equipped locomotives, and we’re putting LEADER on the power at the same time we do PTC. Our preference is to do it all at once, even if we have to go back and retrofit as the PTC hardware evolves. We expect to have $600 million of the entire $1.4 billion PTC commitment in place by next January. RA: Mark, how does the change in traffic mix—more intermodal, less coal—affect your capital needs? Manion: Fewer coal trains affect the coal corridors, mainly. On the Pocahontas Division there are some line segments, branch lines and secondary yards that have seen significant traffic declines whereas others, particularly the core routes, have increased tonnage volumes. We’ve repurposed the Norfolk-Roanoke-Columbus Heartland Corridor through the traditional N&W coal country. The resulting mix change gives us more room to increase intermodal and manifest carloads. RA

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August 2013 RAilwAy Age 27

passenger trains on Twentieth Annual Conference

freight railroads October 15 & 16, 2013 / Washington Marriott Hotel / Washington, D.C.

FINDING common ground

presented by

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

Joseph C. Szabo Federal Railroad Administrator

2013 Recipient W. Graham Claytor Jr. Award for Distinguished Service to Passenger Transportation

Join Railway Age at this premier event— the industry’s only conference on freight-plus-passenger railroading. SPONSORSHIPS AVAILABLE: Contact Jane Poterala at (212) 620-7209; jpoterala@sbpub.com supporting organizations

Joseph H. Boardman President & CEO, Amtrak

October 15, 2013 Keynote Address

Moderator: William C. Vantuono, Editor-in-Chief, Railway Age

oCtoBer 15

oCtoBer 16

Continental Breakfast / Sponsored by Marsh Global Rail Practice and Oliver Wyman Inc.

Continental Breakfast / Sponsorship Available

Keynote Address Joseph Boardman, President and CEO, Amtrak Freight Railroad Perspectives on the Evolving Passenger Rail Market Jay Westbrook, AVP, Passenger and Commuter Operations, CSX Transportation; Rich Wessler, Dir., Passenger Train Operations, BNSF Railway Coffee Break / Sponsorship Available Higher-Speed Rail Engineering Principles Dr. Allan M. Zarembski, Research Professor and Dir., Railroad Engineering and Safety Program, Department of Civil and Environmental Engineering, University of Delaware FRA Passenger System Safety Program Rule, 49CFR Part 270 James Michel, P.E., Senior VP, Marsh Global Rail Luncheon / Cosponsored by Association of Independent Passenger Rail Operators / Cosponsorship Available Guest Speaker: Steve Ditmeyer, Principal, Transportation Technology and Economics; and Instructor, Certificate Course in Railway Management, Michigan State University Eli Broad College of Business National University Rail Center Shared Corridors Study Dr. Christopher Barkan, Department of Civil and Environmental Engineering, University of Illinois Urbana-Champaign STB Oversight of Higher-Speed and High Speed Rail Corridors Speakers from U.S. Surface Transportation Board Passenger Operations and Office of Environmental Analysis TBA

Expanding Passenger Rail in The Tarheel State Paul Worley, Rail Division Dir., North Carolina DOT High Speed Rail in The Old Dominion State Daniel L. Plaugher, Executive Dir., Virginians for High Speed Rail; Kevin Page, COO, Virginia Department of Rail and Public Transportation Coffee Break / Sponsorship Available Higher-Speed Passenger Trains: PRIIA 305 Next Generation Equipment Committee Bill Bronte, California Division of Rail; and Executive Board Chairman, PRIIA 305 Next Generation Equipment Committee Negotiating Capitol Hill: RSI’s Reborn Passenger Rail Committee Tom Simpson, Executive Dir., Railway Supply Institute (invited) Luncheon / Sponsorship Available 20th Annual W. Graham Claytor Jr. Award for Distinguished Service to Passenger Transportation, honoring Joseph C. Szabo, Federal Railroad Administrator Complimentary Passenger Rail Services to Amtrak John Heffner, Strasburger & Price LLP; Ed Ellis, President, Iowa Pacific Holdings (invited); Joe McHugh, VP, Government Affairs, Amtrak (invited) Intercity Passenger Rail: What May the Future Hold? Stan Feinsod, Independent Passenger Rail Consultant Program subject to change

Energy Break / Sponsorship Available FRA RSAC Tier 3 Safety Standards Rulemaking for HSR Equipment Cocktail Reception / Sponsorship Available

Co n f e r e n C e r e g i s t r at i o n f o r m Please register me for the Passenger Trains on Freight Railroads conference, Oct. 15-16, 2013 in Washington, D.C. Registration fee is $925 per participant, payable in advance.

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CONFERENCE FEE AND HOTEL: The registration fee for Passenger Trains on Freight Railroads is $925, which includes admission to all conference sessions, conference documentation containing all available proceedings, and social events. The Washington Marriott Hotel, 1221 22nd Street NW, Washington, DC 20037, has set aside a block of rooms at $289 single/double for attendees. These will be held until 30 days prior to the conference; those reserving after that date will rely upon room availability. Contact the hotel directly at (202) 872-1500 for room reservations (mention group code “Railway Age”). You will receive room confirmation directly from the Washington Marriott Hotel. CANCELLATION POLICY: Confirmed registrants who cancel less than one week prior to the conference are subject to a $250 service charge. Registrants who fail to attend are liable for the entire fee unless they notify Railway Age in writing prior to the conference.

Rethinking RailRoad safety and efficiency By Ron lindsey, Contributing editor

ver the past decade I have taught Railroad Immersion and PTC courses to railroads, traditional signaling suppliers, and suppliers who are considering the railroad market with their products and services. Interestingly, while the new folks without any history with electronic signaling readily accept two primary issues presented in the course, the railroaders and traditional suppliers argue long and hard before their acceptance. Specifically, I state that 1) signals are not installed for safety, and 2) CTC is not a traffic management system. For railroaders and traditional suppliers, these two points when introduced are seemingly heretic statements, since signaling and CTC have been a part of railroad operations since the beginning of the 20th century. Yet one-third of the freight rail 30

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trackage in the U.S. operates safely without signaling, and one-half operates with significant capacity without CTC. What gives? Railroaders and signal suppliers who have been nurtured on electronic signaling infrastructure associate the concept of railroad vitality, i.e., the integrity of train movements, with that of equipment, instead of the functionality that traffic control is used to ensure the integrity of train movements. The former perspective of equipment vitality is that of having the infrastructure responsible for generating movement authorities to be failsafe so as a false proceed is not provided when those systems fail to operate. But the true issue of any traffic control system, whether it be signaled, non-signaled, or even the antiquated token block systems stemming from the British railroads in the mid-19th

WILLIAM C. VANTUONO

An innovative project on Egyptian National Railways is an example of how small railroads can install PTC at a low cost.

century, is to provide functional vitality to ensure that overlapping authorities are not generated, whether they are working or not working properly—keeping in mind that GCOR (General Code of Operating Rules) or NORAC (Northeast Operating Rules Advisory Committee, in the Northeast) is the threshold of functional vitality when any traffic control system goes south. If this is understood, then consider non-signaled operations—dark territory—that uses an extremely simple conflict checker, whether it be a train sheet or a computerized version widely deployed in the U.S. During a course I often ask, “What is vital in dark territory?” The response is "nothing," with students thinking of the concept from only a lack of signaling infrastructure in those operations, thereby lacking equipment vitality. They don’t think of the functional perspective of preventing overlapping authorities. The functional vitality of dark territory resides in the conflict checker, and then the rulebook. For major railroads that need signaling systems to provide capacity (the actual reason for signals, albeit in a safe way), this is a moot point in that there is no choice short of moving-block (the ultimate dark territory). Many railroads don’t need the capacity of signaling systems. But most of these railroads are not being presented with pragmatic, costeffective traffic control systems that are safe, and provide sufficient capacity that minimize the financial risk for improving or initiating rail services that are critical to their profitability, and outside of the U.S. for expanding their country’s commerce. A recent study that my consultancy completed for the Egyptian National Railroads (ENR) addresses not only traffic control, but also traffic management and enforcement such as Positive Train Control (PTC). ENR is a 3,100-mile operation that consists of 82% token block, and 18% CTC. This is a railroad with 500 mechanical interlockings and 1,000 level crossings with guards to provide protection for the public. ENR has been plagued with deadly train accidents, including two in November 2012 due to errors by individuals that PTC, or any other current enforcement system, could not have prevented. For ENR we designed a Virtual CTC (VCTC) system that integrates proven traffic control and traffic management with the expanded functionality of PTC. The design of VCTC is based upon an integration of traffic control, traffic management, and safety enforcement. The approaches used by VCTC for each of these systems are well established in the U.S., but they have not been integrated and expanded in functionality in the fashion designed for ENR that uses the locomotive as a mobile node to the back office traffic control and management systems. For traffic control, VCTC uses an advanced version of TWS (Track Warrant System). By using the locomotive as a mobile node, the onboard VCTC platform continuously provides position of the train to a computerized conflict checker to dynamically update the status of track segment occupancy automatically without the involvement of the train driver and dispatcher. The method of determining the position of the train, including which track the train is on, is by means of routing logic linked with a track database and a Kalman Filter that can integrate a variety of possible inputs, including GPS,

GLONASS (Global Navigation Satellite Systems), locomotive tachometer, discrete wayside detectors, and track circuits. Additionally, once the computerized conflict checker in the dispatching office has approved the assignment of the track segment to a train based upon the dispatcher’s request to generate a movement authority, the information is automatically sent to the onboard platform via wireless data for presentation on the driver’s display. These digital authorities replace the time-consuming transmit-and-repeat approach required for the current use of voice communications to ensure the transmission integrity of the movement authority.

The true issue of any traffic control system is to provide functional vitality. As to traffic management, the lack of timely train speed and position data can limit the capacity of railroads as to track time and the key operating assets, given that the majority of railroads are truly unscheduled and therefore subject to the inefficiency of conflicts of opposing or following trains using the same track. CTC only displays the status of track blocks at some point in time, without any speed data such as the train coming to a stop, and therefore is highly inefficient in supporting even the most experienced dispatcher’s efforts to manage the movement of trains across his/her territory. VCTC expands upon the functionality of CTC by using the locomotive as a mobile node to continuously update train position and speed data. Those data are used by mathematicsbased meet/pass planners to continuously project traffic movement conflicts and make recommendations to the dispatcher to minimize the consequences of such conflicts, what I refer to as proactive traffic management. This approach, vs. the reactive, crisis-based approach of CTC, can be truly effective in increasing the capacity for scheduled as well as unscheduled operations. For safety enforcement, in designing VCTC we expanded upon the four enforcement objectives of PTC: 1) Prevent an over-speed condition. 2) Prevent the train from endangering work zones. 3) Prevent a train from exceeding its movement authority, and 4) Prevent the train from moving through a misaligned switch. Specifically, we designed VCTC to protect against errors by “vital employees” who also create authorities—mechanical interlocking operators, work gang supervisors, and level crossing guards. The reality of our analysis for ENR was soon demonstrated by two train accidents on that railroad in November 2012, resulting in 55 fatalities, due an error by a mechanical interlocking operator for one case and a level crossing guard for the other. My presentation of VCTC several weeks following those accidents to the officials of ENR and the Egyptian Ministry of Transport was well accepted, with Egypt’s prime minister directing ENR to move forward with a testing of VCTC. august 2013 Railway age 31

PTC PRogRess RePoRT

Don’t’ put up those antennas just yet! By now, it’s generally accepted that the Congressionally imposed deadline of dec. 15, 2015, for completing PTC installation across much of the U.s. railroad system is unrealistic and will not be met. The Federal Railroad administration has submitted a report to Congress, “Positive Train Control implementation status, issues, and impacts,” in which it states: “although the initial PTC implementation Plans (PTCiP) submitted by the applicable railroads to the FRa for approval stated they would complete implementation by the 2015 deadline, all of the plans were based on the assumption that there would be no technical or programmatic issues in the design, development, integration, deployment, and testing of the PTC systems they adopted. However, since FRa approved the PTCiPs, freight and passenger railroads have encountered significant technical and programmatic issues that make accomplishment of these plans questionable. given the current state of development and availability of the required hardware and software, along with deployment considerations, most railroads will likely not be able to complete full Rsia-required implementation of PTC by [the deadline]. Partial deployment of PTC can likely be achieved;

By william C. Vantuono

Freight railroads, facing "an unprecedented technological challenge," seek more time to implement PTC.

however, the extent is dependent upon successful resolution of known technical and programmatic issues and any new emergent issues.” The FRa has stated its case, and the industry—within the context of moving ahead with PTC as swiftly as possible—has mounted an effort to gain more time. The big question: is Congress listening? Maybe. earlier this year, the House Transportation and infrastructure Committee, working on renewal of surface transportation funding, recommended that the mandated deadline for PTC be extended by five years, from dec. 31, 2015, to dec. 31, 2020. Pending the expected horse-trading that accompanies

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PTC PRogRess RePoRT ◊ installing approximately 36,000 wayside interface units (wiU) that provide the mechanism for transmitting information to locomotives and the train dispatching office from signal and switch locations. ◊ installing PTC on nearly 4,800 switches in non-signaled territory and completing more than 12,300 signal replacement projects at locations where the existing signal equipment cannot accommodate PTC. ◊ developing, producing, and deploying a new radio system and new radios specifically designed for the massive data transmission requirements of PTC at 4,200 base stations, 33,700 trackside locations, and on those 22,000 locomotives. ◊ developing back office systems and upgrading dispatching software to incorporate the data and precision required for PTC. ◊ installing more than 20,000 new antenna structures nationwide to transmit PTC signals. as to the last item, according to the aaR, "while the aaR is hopeful that a solution can be found, construction of antenna structures is on hold. if our efforts with the FCC and the FRa cannot reach a workable solution to avoid antenna-by-antenna review, the timeline for ultimate deployment of PTC will be delayed.” Ra

2013

passage of most legislation, it’s more likely that the deadline will be extended to perhaps 2018. FRa identifies seven technical obstacle issues: Communications spectrum availability; Radio availability; design specification availability; Back office server and dispatch system availability; Track database Verification; installation engineering; and Reliability and availability. so far, since 2008, the railroads have spent more than $2.8 billion (of an estimated $8 billion in total costs, not including additional hundreds of millions each year to maintain the system) in private capital on PTC. despite these investments, the freight railroads have determined it will not be possible to have a fully interoperable nationwide PTC system up and running by the 2015 deadline. “PTC is an unprecedented technological challenge,” aaR President and Ceo ed Hamberger recently testified before Congress. what he called “a daunting array of tasks that railroads must perform” includes: ◊ a complete physical survey and highly precise geo-mapping of the 60,000 miles of railroad right-of-way on which PTC technology will be installed, including geo-mapping of nearly 474,000 field assets (mileposts, curves, grade crossings, switches, and signals). ◊ installing PTC on approximately 22,000 locomotives. BKATLAS2013_Layout 1 7/23/13 3:41 PM Page 1

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Railway age

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By DouglAs John Bowen, Managing editor

Tamper wiTh This, please

Suppliers continue to refine and improve the machinery needed to keep costly but critical right-of-way components in top shape.

HARSCO RAIL

nce upon a pre-Staggers time, railroad switches and turnouts seemed on the verge of becoming almost a luxury. Railroad switch maintenance, it followed, was a diminishing need, since fewer switches were needed for a diminishing customer pool. Those days are long gone. Freight railroads are again a viable shipper and consignee choice, making switch needs more acute. Regional passenger railroads, along with Amtrak, began bolstering track capacity and throughput in the 1980s, installing high-quality turnouts and upgrading switching facilities. Such growth and revival, freight and passenger, makes switch tamping equipment even more critical for today’s railroads, who’ve learned the hard way what deferred maintenance can cost in the long run.

Switches “have always needed to be maintained, and it’s the most expensive part of the railroad to maintain,” says Phil Brown, tamper sales and marketing, Nordco, Inc. “Pre-Staggers, much of the work was done ‘by hand,’ with shovels. Machinery, of course, makes such work easier and more efficient.” The man-and-machine combination is still used at times, notes Harsco Rail Associate Product Manager-Surfacing Eric Carter. “Sometimes crews will still use a track jack, digging out the ballast from underneath the switch area, and actually use the jack to raise the turnout portion of the switch, before using a tamper. We offer a number of machines that can go through a switch without the need” to use a track jack,” he says, “but some railroads opt for one method, others the other.” August 2013 RAilwAy Age 35

geneRal SubJect HeaD

The attention to such relatively small railroad real estate reflects how important—and how costly—switches and turnouts are, says Plasser-American Corp. “Switches require proper attention when being tamped,” Plasser says. “Due to their design features, switches are subjected to the heaviest wear by railway traffic and make up a significant portion of the track’s fixed assets. Therefore it is vital that switches receive careful maintenance. The optimum quality of the switch geometry has to be assured in the long term by regular maintenance. This can be achieved by using large heavy-duty, high quality machines.” “Since 1962, Plasser has developed and manufactured switch tamping machines using Plasser’s well proven tamping technology to guarantee the optimum quality in switches,” Plasser says. “Regular maintenance helps extend the service life of these valuable track components, as well as eliminate slow orders reducing operational hindrances.” Long wheel base machines, like Plasser’s Unimat series, reduce the stresses on switch components during lifting. “This is particularly true in large switches utilizing concrete ties,” a far more common occurrence on today’s railroads, Plasser says. Plasser’s “Split Head” tamping units are individually controlled, with both lateral and vertical adjustment. “Each unit is raised and lowered vertically instead of at an angle, which concentrates ballast compaction near the rail base area where it is most needed,” says Plasser. “Unnecessary tamping at or beyond tie ends or center binding is eliminated. Each individual tamping unit control allows complete switch tamping with a minimum of horizontal tamping unit adjustment, thus reducing the amount of time required to tamp a switch.” Nordco’s Brown notes that switch machine work is complex due to “how you attach the machine to the rail.” Work on tangent track involves “clamping onto the ball of the rail,” he says, but with switches and frogs and other items, “you can’t always address the ball of the rail, so you have to extend the hook out and down so you can reach the base of the rail. Then you lift and line it. But doing that slows the process. “ The goal, Brown adds, is to ensure that switch tamping achieves a “quality of overall work that is more uniform. Modern hydraulic controls and electric controls have made it easier.” Harsco Rail’s Carter adds that in some cases, “because the switch takes a bit of extra time, maybe on hour or two, the 36

Railway age

august 2013

surfacing gang has two different nordco’s Jackson 6700 will soon be joined by a new hats. One set of machines move product rollout. on; another set stays and works the switch.” The high-speed machines tend to skip the switches, he says. Not all railroad maintenance-of-way gangs proceed in such a fashion, he cautions, “but many do.” Brown notes that dedicated switch tampers preceded switch production tampers, the latter more common today. “But most designs, though automated, have been around since the 1980s.” “Europe has dedicated switch tampers,” Brown observes, but that’s not as common in the U.S. “I think the U.S. approach is a better idea,” he adds, with machinery add-ons and adaptation allowing one machine to handle switches, turnouts, or tangent main line track as the need arises. Carter largely concurs. “People will buy a machine for all phases of the work., he says. “In North America, that’s the most common thing you see out there.” machines For Future needs

Suppliers continue to seek ways to improve tamper efficiency. Plasser notes it debuted its latest version of the Unimat series at the International Exhibition on Track Technology (iaf) 2013 exposition in Münster, Germany last May: The 09-475/4S N Dynamic turnout and track maintenance machine. “For the first time functions of three machines ballasting, tamping, regulating, stabilizing, control measurement have been combined into one machine,” he asserts. “This achieves a substantial simplification of the worksite logistics with a high savings potential. In one single working pass, this machine performs the complete sequence of work for the maintenance of turnouts and tracks.” For Nordco, a rollout debut can be expected next month at the AREMA annual meeting, being held in conjunction with Railway Interchange 2013 in Indianapolis, Ind. “Nordco has some real interesting improvements appearing at the AREMA show,” Brown says, “and we invite everyone to take a look. “It will change the way they think about their (tamping) maintenance.” For Harsco Rail’s part, Carter says simply, “We are constantly working on new work head and complete tamper designs,” and to stay tuned. Doubtless railroads large and small will do just that in their own best interests. RA

NORDOO, INC.

Focused attention on small area

HOCHLEISTUNG I PRĂ&#x201E;ZISION I ZUVERLĂ&#x201E;SSIGKEIT

HIGH-CAPACITY I PRECISION I RELIABILITY

Leading the Way

www.plasseramerican.com

Plasser American is known for highly productive and innovative track maintenance machines. Besides its outstanding technological achievements, Plasser American has always endeavored to find solutions specifically for the American Transit and Commuter Railroad Industry, and to be a reliable, long-term partner with our customers. Decades of experience, up-to-date know-how, excellent track quality and favorable return on investment are reflected in thousands of machines nationwide.

People

Meetings

HigH Profile Canadian Pacific said veteran railroader Tony Marquis has joined the railroad as its new Vice-President Operations eastern Region, with accountability for its eastern Canada and the Northeast U.S. operations. “Tony is a leading railroader and will add to our considerable operations bench strength. He is passionate about our business and brings a strong service focus backed by years of Class 1 experience,” said CP President and Chief Operating Officer Keith Creel. Marquis after spending 25 years with Canadian National Railway Co., Canadian Pacific Marquis became owner and President of Strategic Training Simulators inc., designing, building, and installing locomotive simulators. Most recently he successfully completed a corporate turn-around at Colombia-based coal railroad, Fenoco S.a. while serving as president and chief executive officer. Marquis will join the senior operations leadership team.

September 17-18

AMTRAK named Michael Logue Chief Safety Officer, effective July 29, 2013. He reports directly to DJ Stadtler, vice president of operations. ASSOCIATION OF AMERICAN RAILROADS’ associate advisory Board has selected Harsco Rail’s Joseph W. Palese to serve out the remainder of the term of a vacant seat on the TTCi Research advisory Board. Palese’s term of service will last until Jan. 1, 2014.

Parsons Brinckerhoff—Paula Hammond, former Secretary of Transportation for the state of washington, has been named Senior Vice President and National Transportation Market leader. SYSTRA—Anthony Lee, AICP, has joined the company as Planning and environmental Manager. wes Coates has joined the company as Vice President, Sector Manager, Planning & Operations analysis.

DART named Amanda Moreno Cross to its Board of Directors. MASSACHUSETTS BAY COMMUTER RAILROAD CO. named Bonnie Murphy its general Manager, succeeding Hugh J. Kiley, Jr. VALLEY METRO (PHOeNiX) elected to its Board of Directors Scott Somers as Chair, Trinity Donovan as Vice Chair, and Jim McDonald as Treasurer.

SUPPLIERS Columbus Castings—Jack Thomas elected to the Board of Directors; David Rodems named Chief Financial Officer. FreightCar America—Mark B. Poepping named Vice President of Sales, based in evergreen, Colo. Hanson Professional Services Inc.— Hired railroad designer Christopher Rapp, to be based in the company’s Seattle regional office. 38

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100 YEARS AGO in

(AUGUST 1913) AN UNUSUAL SIGNAL ARRANGEMENT The celebration at Gettysburg battlefield July 1, 2, and 3 was the occasion of an enterprise in signaling never before heard of—the installation of automatic block signals for 25 miles, and the removal of the signals after the celebration was over; a costly temporary arrangement, but one which was warranted by the magnitude of the traffic. The Federal Signal Company, which funished the signals, noted that of the 100,000 visitors, “about 70%, or 70,000, were transported over the Gettysburg & Harrisburg Railroad of the Philadelphia and Reading system, a single-track line 25 miles long.”

ASLRRA Track Safety Standards Training Seminar Silver legacy Hotel, Reno, Nev. Tom Streicher, Tel.: 202-6284500; email: tstreicher@aslrra. org; website: www.aslrra.org.

September 29-October 2 Railway Interchange 2013 indianapolis, ind. Carol Steckbeck, Tel.: 919-303-5140; email:csteckbeck50@gmail.com; website: www.railwayinterchange. org/registration.html.

September 29-October 2 APTA Annual Meeting Hilton Chicago, Chicago, ill. yvette Conley, Tel.: 202-496-4868;

email: yconley@apta.com; website: www.apta.com. October 2-3 Southwest Association of Rail Shippers Conference Hyatt Regency Phoenix, Phoenix, ariz. Jack Dail, Tel.: 425-818-8240; email: jdailconsulting@ comcast.net; website: www.railshippers.com.

October 9-11 95th Annual Railway Tie Association Symposium and Technical Conference Hyatt Regency lake Tahoe, incline Village, Nev. Tel.: 770-460-5553; website: www.rta.com.

October 15-16 Railway Age Passenger Trains on Freight Railroads

washington Marriott, washington, D.C.

Jane Poterala, Tel.: 212-620-7209; email: jpoterala@sbpub.com; website: www.railwayage.com.

Products Lightweight lithium locomotive battery from StartPac StartPac offers a lightweight lithium locomotive battery that weighs much less than traditional locomotive batteries. The li64RR can replace two 32 volt lead acid batteries, which weigh approximately one ton each,with a singular 320 pound lithium 64 volt battery. Unlike lead acid train batteries that require regular watering, the li64RR requires virtually no maintenance, and has a battery cycle life two to three times that of a lead acid battery, the company says. it has a built in battery management system that prevents it from running to zero capacity, and it can be plugged into any AC source if it needs charging. Recent renewed appreciation of the locomotive industryâ&#x20AC;&#x2122;s smaller carbon footprint and existing infrastructure in recent years inspired the company to apply some of its patent pending technology, from aviation to locomotives. Says StartPac engineer Mark Marar, â&#x20AC;&#x153;The li64RR is based on the newest technology, and is extremely

safe, lightweight, and durable. it ushers in a new era for locomotive batteries, with the cumbersome and bulky lead acid batteries becoming a thing of the past. Train owners and operators will benefit enormously from using a battery that needs minimal maintenance and can be maneuvered more safely and easily.â&#x20AC;? website: http://startpac.com/ products/locomotive/li64rr/.

Behlman Electronics frequency converters

Behlman Frequency Converters enable railroad signal systems to provide automatic cab signaling that directs the engineer to adjust speed; opens and closes signal light circuits, and activates crossing gates. The Model RR1200 Railroad Signal Power Source is able to withstand the rigors of remote, sometimes isolated, installation. The RR1200 delivers 1200 VA of AC power in a compact, 3.5-inch high, benchtop unit that easily converts to rack mount. it supplies a clean, low-distortion, 120 VAC sine wave at any fixed frequency from 50 Hz to 250 Hz, with excellent line and load regulation, high efficiency, and low harmonic distortion. its overload protection system folds back voltage to maintain rated output current without waveform distortion. in the event of a short circuit, the unit will automatically reset upon overload removal. it also has a mechanical guard for the On/Off circuit breaker, plus AAR terminals on the rear for inputs and outputs. website: www.behlman.com/railroad.htm#a. August 2013 RAilwAy Age 39

RAWrkSiteTrn1_2pg2013Loco_Layout 1 7/18/13 4:06 PM Page 1

Products My Employees don’t have time for training.

Flexible Scheduling. Anytime. Anywhere.

oday’s railroads need cost-effective and flexible training choices. That’s exactly what The Railway Educational Bureau provides through Work Site Training. Work site training allows you to: • Maximize your training investment • Reduce employee time away from the job • Reduce travel costs by having the instructor come to your location • Increase the skill level of your employees • Improve productivity • Achieve your training objectives • Utilize your in-house expertise, equipment, and facilities

Some examples of training subjects include: Locomotive Periodic Inspection and FRA Rules Compliance • Review and correct/update periodic inspection instructions and forms. • Assure that inspection forms and instructions comply with current FRA rules. • Provide instruction and hands-on training to employees that perform periodic inspection of locomotives. Locomotive Electrical Maintenance and Troubleshooting • Locomotive electrical system overview, circuit analysis, component maintenance of EMD and GE locomotives 1960 to present. • Locomotive electrical system hands-on troubleshooting of EMD and GE locomotives 1960 to present. • Traction motor, DC main generator, Traction Alternator hands-on maintenance training. Locomotive Air Brake Maintenance and Troubleshooting Distributed Power Maintenance and Troubleshooting Distributed Power Operations, Training, and Operating Rules CORRESPONDENCE TRAINING • WORK SITE TRAINING • CONSULTING

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

Railway age

august 2013

Roxtec sealants meet Dulles Metrorail needs Roxtec sealing products have been selected for use in the Dulles Corridor Metrorail Project in washington, D.C., to secure power supply, prevent water from damaging equipment, and minimize danger in case of fire. The Dulles project team looked for an alternative sealing solution to one that required exact knowledge about the size of all cables and conduits. it also did not want to use two different seals for the cables and the conduits, or a compound containing lead. Roxtec was specified for sealing of conduits and cables in conduits for the Dulles project. Five reasons for the move were offered: 1. Flexibility: The seals are used for fiberglass conduits, power cables, and shielded cables, as well as for handling at least 10 different cable sizes and four sizes of conduit. 2. applications: Cables entering the substations and gap breaker stations via conduits are sealed from water by Roxtec. in certain areas, such as roof applications, Roxtec covers the special requirement for both water tightness and a three-hour fire rating. Roxtec is also used in the duct banks leading power cables to the contact rail. all seals on the wayside are there to keep water out of the conduits. 3. Power to the train: in the concrete structures supporting many miles of elevated track, some Roxtec seals hold the large power cables in place, while others secure water-tightness and the power supply. 4. expediting work: where the new line meets the existing one, the work had to be done quickly without any digging. The solution was to let cables come up through a cast surface trench and seal them with Roxtec. 5. Facilitating changes: if a cable is damaged and shrink tubing has been used, it can be difficult and timeconsuming to remove. Roxtec eliminates shrink tubing; loosening a few bolts and taking it apart securely is an easy task. Roxtec seals also offer built-in spare capacity in order to simplify adding and removing cables in the future. For more information, contact Roxtec, email: marketing@us.roxtec.com; website:ww.roxtec.com.

Snake Tray sports airflow manager Snake Tray®’s new Snake air™ is an airflow manager for computer access floors designed to allow MC Cable and copper/fiber cables to pass through the floor without disrupting proper air flow in a datacenter or at workstations. Snake air™ is design to segregate the two types of cables to prevent damage to the cables. Snake air™ airflow manager installs flush mount to the floor and comes in a variety of sizes and colors to meet a customer’s specifications. For further information on the new Snake air™ system, contact Snake Tray, Tel.: 800-308-6788; email: info@snaketray.com; website: www.snaketray.com.

Ad Index Company

Phone #

Fax

Email address

Page #

AReMA

301-459-3200

301-459-8077

marketing@arema.org

Boatright enterprises, inc.

800-873-2020

205-298-9483

info@boatrightcompanies.com

Chromium Corp.

216-271-4910

216-271-4195

ccinfo@chromcorp.com

Danella Rental Systems, inc.

610-828-6200

610-828-2260

pbarents@danella.com

ellwood Crankshaft & Machine

724-347-0250

724-347-0254

ecgsales@elwd.com

Helm Financial Corp.

415-398-4510 ext 1610

415-398-4816

bwind@hlmx.com

Herzog Railroad Services, inc.

816-233-9002

816-233-7757

tfrancis@hrsi.com

17, 32

Herzog Services, inc.

816-901-4035

816-233-7757

rebersold@herzogcompanies.com

Holland Co.

708-672-2300 ext.382

708-672-0119

gpodgorski@hollandco.com

Knoxville locomotive works

865-525-9400

865-546-3717

goklw.com/contact us

MTU

+1 248 560 8484

+1 248 560 8485

bryan.mangum@tognum.com

Norfolk Southern Corp.

757-629-2706

757-629-2822

rsbroom@nscorp.com

Okonite Co.

201-825-0300

201-825-3524

info@okonite.com

ORX

814-684-8484

Plasser American Corp.

757-543-3526

Railquip, inc.

34 5

23 3

glenn@orxrail.com

757-494-7186

plasseramerican@plausa.com

770-458-4157

770-458-5365

sales@railquip.com

Rails Co.

973-763-4320

973-763-2585

rails@railsco.com

Railworks

866-905-7245

952-469-1926

jrhansen@railworks.com

Railway educational Bureau, The

402-346-4300

402-346-1783

bbrundige@sb-reb.com

RSSi

502-327-7774

502-327-0541

rssi@rssi.org

Sealeze Unit Of Jason

804-275-1675 ext.235

smaclaughlin@sealeze.com

Stage 8 locking Fastners, inc.

800-843-7836

415-532-2923

robert@stage8.com

Transcore

214-461-6443

800-923-4824

www.transcore.com

TTX Company

312-606-1450

felix.castillo@ttx.com

western-Cullen Hayes

773-254-9600

co@wch.com

773-254-1110

34, 40, C3

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

Advertising Sales MAIN OFFICE Jonathan Chalon, Publisher 55 Broad St., 26th Floor New york, Ny 10004 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com AL, AR, IN, KY, LA, MI, MS, OH, OK, TN, TX emily guill 20 South Clark Street, Suite 1910 Chicago, il 60603 (312) 683-5021 eguill@sbpub.com CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, PA, RI, SC, VT, VA, WV, CANADA – QuEbEC AND EAST, ONTARIO Mark Connolly 55 Broad St., 26th Floor New york, Ny 10004 (212) 620-7260 Fax: (212) 633-1863 mconnolly@sbpub.com

AK, AZ, CA, CO, IA, ID, IL, KS, MN, MO, MT, NE, NM, ND, NV, OR, SD, uT, WA, WI, WY, CANADA – Ab, bC, Mb, SK Heather Disabato 20 South Clark Street, Suite 1910 Chicago, il 60603 (312) 683-5026 Fax: (312) 683-0131 hdisabato@sbpub.com bELGIuM, PORTuGAL, SWITZERLAND, GERMANY, EASTERN EuROPE, bALTIC STATES, MIDDLE EAST, SOuTH AMERICA, AFRICA (EXCEPT SOuTH AFRICA), FAR EAST (EXCEPT KOREA, CHINA, HONG KONG, INDIA), ALL OTHERS, TENDERS louise Cooper international Area Sales Manager The Priory, Syresham gardens Haywards Heath, RH16 3lB United Kingdom +44-1444-416917 Fax: +44-(0)-1444-458185 lc@railjournal.co.uk

SCANDINAVIA, THE NETHERLANDS, SPAIN, GERMANY, AuSTRIA, KOREA, HONG KONG, CHINA, AuSTRALIA, NEW ZEALAND, SOuTH AFRICA, RuSSIA, RECRuITMENT ADVERTISING Steve Barnes international Area Sales Manager The Priory, Syresham gardens Haywards Heath, RH16 3lB United Kingdom +44-1444-416375 Fax: +44-(0)-1444-458185 sb@railjournal.co.uk ITALY, ITALIAN-SPEAKING SWITZERLAND Dr. Fabio Potesta Media Point & Communications SRl Corte lambruschini Corso Buenos Aires 8 V Piano, genoa, italy 16129 +39-10-570-4948 Fax: +39-10-553-0088 info@mediapointsrl.it

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

August 2013 RAilwAy Age 41

products & services

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

recruitment

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

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

proFessionAl directory Reidler can help you comply with the FRA ruling by offering prismatic reflective yellow delineators that meet their specifications. • 4" x 150 fl Rolls (kiss-cut available) • 400 candlepower retroreflection • Application instructions provided

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

employment

Kansas City (913) 661-2424

www.rrtemps.com

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

Business opportunites

Retirement Time (Still) Director of Mechanical Operations The Director of Mechanical Operations will work directly under the Vice President of Operations and assist in the oversight of all aspects of the 25 location multi-state railcar and locomotive repair company. Will assist the Vice President in oversight of staff of 400. Responsible for overseeing all repairs, staffing and motivating all employee types, controlling inventory, enforcing safety, frequent travel, opening new locations, and training. For full job description and job requirements please see visit our website: www.harborservices.com Submit resumes to: hr@harborservices.com

Rail Track Superintendent, Brea California VTMI SEE THE FULL JOB POSTING AT RAILWAYAGE.COM JOB BOARD

Assistant Chief Electrical Engineer Based in our Jersey City, NJ location

URS Corporation

SEE THE FULL JOB POSTING AT RAILWAYAGE.COM JOB BOARD 42

Railway age

august 2013

For Sale: Busy railcar repair business. 60,000 sq. ft. main shop, 16,000 sq. ft. separate shot blast and fabrication shop. Located in NW PA. Contact: (814)723-2500, wrsx@westpa.net

The new

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ELK POINT TRANSPORTATION CO. Want to purchase (on or off lease): Up to 25 PD cars – 3,230 cubic feet, 286 GRL Up to 30 PD cars – food grade, 5,000 cubic feet or greater, 286 GRL Up to 30 Covered Hoppers – 3,230 cubic feet, 286 GRL

Art Graf (800) 749-0530 railcars@ryanadair.com trAining

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

Trainers and Training Developers GLOBAL RAIL TENDERS

The Railway Educational Bureau is in the process of creating a training and development database to be used as a resource for the railroad industry. If you have experience training in an instructor-led environment and/or developing training materials for the rail industry, and are interested in becoming a part of our group, please send your resume to:

Brian Brundige The Railway Educational Bureau 1809 Capitol Avenue Omaha, NE 68102

railway Age classified section

Turning Opportunities into New Business Get up-to-the-minute business intelligence by subscribing to GlobalRailTenders.com Powered by

Jeanine Acquart 212-620-7211 jacquart@sbpub.com s r

august 2013 Railway age 43

Financial edge anthony KRuglinsKi

Meet First Union Rail’s Barbara Wilson

ttendees at my Rail Equipment Finance Conferences will instantly remember First Union Rail’s founding president, Jack Thomas. Jack, who was a storied presenter at REF, started his career at the Milwaukee Road and worked at TTX and Chrysler Rail prior to organizing and running First Union Rail. He retired earlier this year. His unique blend of railroad/operating lessor experience (Jack is also an attorney) always seemed to give First Union Rail an edge. Said another way, there was not much, if anything at all, that Jack did not “get” on first reading. So the big question became, “How do you replace Jack Thomas?” Some obvious talented candidates were in the operating leasing galaxy, but Wells Fargo, First Union’s owner, reached somewhat off the beaten path to choose Barbara Wilson, most recently CFO at Helm Financial. While Barbara had been handling the equipment financing for Helm for years (and successfully managing that leveraged company’s bank group though more than one refinancing), she had not been materially involved in the operations end of that business. Why, then, choose her to replace Jack Thomas? First, let me say that I interviewed no one in management at Wells Fargo in composing this article. Instead, I am going to rely on the fact that I have done business with Barbara at numerous times on various business platforms during the past 25 years and count her as a friend and confidant. More important, we have made money for our employers together. I also have a banking background and served as inside counsel to a Wall Street bank before shifting over to railroad lending, so I know bank management from the inside. 44

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Here is my take on Barbara, Wells Fargo, and First Union Rail: Barbara started as a transportation lender for the First National Bank of Boston. In this capacity, I collaborated with her and her colleagues at BOB on the nation’s largest regional railroad financing. It was a success in all aspects. In 1989, I left (the recently merged) bank at which I was working to set up Railroad Financial Corp. With the financial representation of regional railroads and short lines as our principal target market, we needed “a few good banks” to get our work done. Barbara and BOB helped fill that bill.

She is an excellent ‘people’ person. Expect the best with the changeover. During the early 1990s we did a number of deals with BOB and I will be the first to admit that a few of them were a little, well, odd. We liked working with Barbara, because if we got her interested in participating in the transaction it meant that the deal was as good as done. As I said often at the time, “Barbara could ‘deliver’ the bank” because her credit committee had developed complete faith in her judgment over the years. The results? More successes. Eventually, Barbara moved on to Helm. While we did not do the level of business we had done together when she was at BOB, we kept in touch with each other and she stayed in touch with the industry, attending REF most years, keeping her industry knowledge levels high and her contacts fresh.

Back to banks and bankers. One thing I learned “counseling” the senior management of my bank was that, often, big banking organizations make important decisions by committees (spreading the risk) and are glacial in making those decisions. Fortunately for Wells Fargo, First Union Rail, and all of us who will now have a chance to interact with Barbara Wilson as First Union’s new chief, Wells’ management made a brilliant choice—not an obvious choice, but the very best one. What should we all look forward to in the new “Post-Jack Thomas” reign of Barbara Wilson at First Union Rail? She is an excellent “people” person, so I will expect that she will use her early days to get to know First Union Rail, its professionals and, most important, its customers. (Remember, she was a marketing officer for years at BOB.) She will want to learn how First Union does its business, intimately. If you are a First Union employee and are reading this without any prior knowledge of the lady in question, expect the best with the changeover from Jack. Said another way, you will find that many of the best human qualities that Jack exemplified, Barbara has in abundance also. Look also for her to be a fine advocate of First Union’s interests with its owner Wells Fargo. I think the marketplace can look forward to Barbara’s bringing to bear much of what she knows about financial engineering as she conducts First Union Rail’s business. Expect new ideas to be proposed and tried. Strategic partnerships? And what of Wells’ management? As the old knight said at the end of an Indiana Jones movie, “You have chosen wisely.”

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

Reb Says...

Use this handy index to verify that you have the most up-to-date version of the FRA regulations. The left-hand column lists the FRA Part number and the right-hand column list the latest revision date. Items highlighted in red denotes recent changes. (IFR = Interim Final Rule) FRA Part #

Last Update Effective:

FRA Part #

Last Update Effective:

40 . . . . . . . . .10-3-12 209 . . . . . . . .2-12-13 210 . . . . . . . .8-14-89 211 . . . . . . . .7-20-09 213 A-F . . . . .7-11-13 213 G . . . . . .7-11-13 214 . . . . . . . .6-25-12 215 . . . . . . . .6-25-12 216 . . . . . . . .6-25-12 217 . . . . . . . .6-25-12 218 . . . . . . . .6-25-12

219 220 221 222 223 224 225 228 229 230 231

. . . . . . . . .5-6-13 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . . .1-1-13 . . . . . . . .6-25-12 . . . . . . .12-19-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12

FRA Part #

232 233 234 235 236 237 238 239 240 242

Last Update Effective:

. . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .5-14-13 . . . . . . . .6-25-12 . . . . . . . .7-13-12 . . . . . . . .6-25-12 . . . . . . . .7-11-13 . . . . . . . .6-25-12 . . . . . . . .6-25-12 . . . . . . . .6-25-12

The following is a list of booklets reprinted from the Department of Transportation Code of Federal Regulations 49 CFR Parts 200 to 399 that apply to the rail industry. They are printed in a convenient format and are kept current with updates from the Federal Register which may be supplied in supplement form. Item Code

FRA Part #

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

Railroad Safety Enforcement Procedures & Rules of Practice Track Safety Standards (Subpart A-F) Track Safety Standards (Subpart G) Railroad Workplace Safety Railroad Freight Car Safety Standards Railroad Operating Rules and Practices Railroad Communications Rear End Marking Device, Passenger, Commuter & Freight Trains BKHORN 222 Use of Locomotive Horns BKRFRS 224 Reflectorization of Rail Freight Rolling Stock BKHS 228 Hours of Service BKLSS 229 Locomotive Safety Standards BKSLI 230 Steam Locomotive Inspection BKSAS 231 Railroad Safety Appliance Standards BKBRIDGE 237 Bridge Safety Standards BKLER 240 Qualification and Certification of Locomotive BKCONDC 242 Conductor Certification BKBSS

232

Brake System Safety Standards

Each

27.50

50 or more

9.95 8.55 9.50 7.25 9.50

8.95 7.85 8.55 6.55 8.55

5.50 5.00

4.95 4.50

13.25

11.95

6.25 10.50 11.00 22.95 9.35 6.25 12.75

5.60

8.50 5.60 11.50

11.00

9.90

Each

14.75

BKPSS

Passenger Safety Standards 22.80 Part 238, 239 - Order 25 or more and pay only $20.50 each

BKSTC

Signal and Train Control Systems Includes Part 233, 234, 235, 236 Order 25 or more and pay only $17.55 each

19.50

Drug and Alcohol Regulations in the Workplace Part 40 & 219

36.00

Ph: (402)346-4300 • Fax: (402)346-1783 Email: orders@transalert.com

BKMFR

Mech. Dept. Regs. Order 25 or more and pay only $25.00 each

46.00

$27.95

Part 215: Freight Car Safety Standards

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

BKFSS

13.50

Technical Manual for Signal and Train Control Rules. Includes Part 233, 234, 235, 236 - Spiral Bound Order 25 or more and pay only $39.10 each

1809 Capitol Ave, Omaha, NE 68102

A combined reprint of the Federal Regulations that apply specifically to the Mechanical Department. Spiral bound. Part Title 210 Railroad Noise Emission Compliance Regulations 215 Freight Car Safety Standards 216 Emergency Order Procedures: Railroad Track, Locomotive and Equipment 217 Railroad Operating Rules 218 Railroad Operating Practices - Blue Flag Rule 221 Rear End Marking Device-passenger, commuter/freight trains 223 Safety Glazing Standards 225 Railroad Accidents/Incidents 229 Locomotive Safety Standards 231 Safety Appliance Standards 232 Brake System Safety Standards

Freight Car Safety Standards Order 50 or more and pay only $6.55 each

25 or more

BKTM

The Railway Educational Bureau

Mechanical Department Regulations

9.90

Each

BKCAD

Part 233: Signal System Reporting Requirements, Proposed Rule: As part of a paperwork reduction initiative, FRA is proposing to eliminate the regulatory requirement that each carrier must file with FRA a signal system status report every five years. FRA believes the report is no longer necessary because advances in technology have made it possible for more updated information regarding railroad signal systems to be available to FRA through alternative sources. Separately, FRA is proposing to amend the criminal penalty provisionin the Signal System Reporting Requirements by updating an outdated statutory citation. Written comments must be received by August 19, 2013.

$7.25

Part 232: Brake System Safety Standards

49 CFR 232. Regulations and general requirements for all train brake systems, inspection and testing, periodic maintenance and training requirements, and end-of-train devices for Class I, II, and III railroads. Plus the introduction of new brake system technology. Softcover. 155 pages, 4.0” x 6.75”. Softcover.

BKBSS

Brake System Safety Standards Order 25 or more and pay only $13.50 each

Order Now!

800-228-9670 8 a.m. to 5 p.m. C.S.T., Monday/Friday

www.transalert.com

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

$14.75

Add $4.10 Add 7.20

25.01 - 50.00 50.01 - 75.00

Add 9.80 Add 10.90

Orders over $75, call for shipping

*Prices subject to change. Revision dates subject to change in accordance with laws published by the FRA. 8/13

07.10.1979