December 2015 Railway Age by Railway Age

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RailwayAge

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visit us at www.railwayage.com Features A final merger round? Juniata jewel Grade crossing surfaces San Diego MTS Untangling PTC Linda J. Morgan

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News/Columns From the Editor Update Watching Washington Short Line/ Regional Perspective Financial Edge

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Departments Industry Indicators Industry Outlook Market People 100 Years Ago Meetings Products Advertising Index Classified

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On the Cover Canadian Pacific, by pursuing Norfolk Southern, may launch a final round of railroad mega-mergers. Photo: Steve Host

Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 55 Broad St., 26th Fl., New York, NY 10004. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 216, No. 2. Subscriptions: Railway Age is sent without obligation to professionals working in the railroad industry in the United States, Canada, and Mexico. However, the publisher reserves the right to limit the number copies. Subscriptions should be requested on company letterhead. Subscription pricing to others for Print and/or Digital versions: $100.00 per year/$151.00 for two years in the U.S., Canada, and Mexico; $139.00 per year/$197.00 for two years, foreign. Single Copies: $36.00 per copy in the U.S., Canada, and Mexico/$128.00 foreign All subscriptions payable in advance. COPYRIGHTÂŠ 2015 Simmons-Boardman Publishing Corporation. All rights reserved. Contents may not be reproduced without permission. For reprint information contact PARS International Corp., 102 W. 38th Street, 6th floor, New York, N.Y. 10018, Tel.: 212-221-9595; Fax: 212-221-9195. Periodicals postage paid at New York, NY, and additional mailing offices. Canada Post Cust.#7204564; Agreement #41094515. Bleuchip 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 1172, Skokie, IL 60076-8172, Or call toll free (800) 895-4389, or (402) 346-4740. Printed at Cummings Printing, Hooksett, N.H. ISSN 00338826. December 2015 Railway Age 1

From the Editor William C. Vantuono

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

Time to choose a name

aming a railroad is sort of like naming a baby. There are plenty of options, depending upon whether the railroad is a start-up, or is the result of an acquisition or merger. Some names are fairly simple to understand—“Union Pacific,” for example, one of the oldest original railroad names in the industry. Throughout numerous acquisitions, Union Pacific has always remained “Union Pacific.” When UP acquired the Missouri Pacific and, later, the Southern Pacific, the first names of each acquired railroad were conveniently dropped. Made sense—especially to UP—but you have to admit, “Union Pacific” is a grand old name, lots of heritage. Other merging railroads chose to retain parts of both names. The best one, in my opinion, is “Norfolk Southern.” A combination of “Norfolk & Western” and “Southern Railway,” it’s got a nice cadence to it, and it’s based on simple geography (Norfolk, Va., and the South), a method by which many railroads have been named. BNSF is another example. It’s a combination of “Burlington Northern” and “Santa Fe.” The actual company name is “Burlington Northern and Santa Fe,” but that’s a mouthful to pronounce, and it takes up a lot of space in print. “BNSF” is short and sweet, and easy to remember (though I still see some people referring to it as “BN,” which is 20 years out of date). Then there are the railroad names that, quite frankly, are difficult to understand, like “CSX.” I looked it up in Wikipedia: “The name came about during merger talks between Chessie System, Inc. and Seaboard System Railroad, Inc., commonly called Chessie and Seaboard. The company chairmen said it was important for the new name to include neither of those names because it was a partnership. Employees were asked for suggestions, most of which consisted of combinations of the initials. At the same time a temporary shorthand name was needed for discussions with the Interstate Commerce Commission. CSC

Railway Age

December 2015

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was chosen but belonged to a trucking company in Virginia. CSM (for ChessieSeaboard Merger) was also taken. The lawyers decided to use CSX, and the name stuck. In the public announcement, it was said that ‘CSX is singularly appropriate. C can stand for Chessie, S for Seaboard, and X actually has no meaning. But X could be used as a short term for the word Express, taking off the E, giving out Xpress, putting the X in use. T had to be added to CSX when used as a reporting mark because reporting marks that end in X mean that the car is owned by a leasing company or private car owner.’” Run that by me again? No matter. By now, CSX is a household name (at least in the East). But what would happen if Union Pacific merged with CSX? “USX”? That used to be the name of United States Steel. Too confusing, and probably legally unavailable. History tells me “Union Pacific” would be the surviving name. If BNSF were to merge with NS, it would be a simple matter to drop the “B” and the “F.” But that won’t happen, because it looks like Canadian Pacific is going to merge with Norfolk Southern (cover story, p. 20). As CP CEO Hunter Harrison has said, many times, “It’s not a matter of if, but when.” Has anyone at CP or NS given some thought to what this massive transcontinental railroad should be named? Both names are grand, with lots of history. Which name should survive? This won’t be easy. To be fair, let’s think in terms of geography: The railroad would connect the Atlantic and Pacific oceans, so how about “Atlantic & Pacific,” or “A&P”? Well, “A&P” (Great Atlantic & Pacific Tea Company, Inc.) is the name of a bankrupt Northeastern supermarket chain. Forget it! Thinking geographically, the railroad would be an east-west transcontinental. CP touches the Pacific Ocean, as far west as one can go. NS headquarters is in Norfolk, Va. “Norfolk & Western”?

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

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Industry Indicators TRAFFIC ORIGINATED CARLOADS

SHORT LINE AND REGIONAL TRAFFIC INDEX FOUR WEEKS ENDING OCT. 31, 2015

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

OCT. ’15 99,794 5,804 38,077 26,099 119,305 53,537 391,182 5,687 13,213 22,800 23,283 16,039 34,041 12,837 74,017 98,450 19,706 32,288 13,625 24,686 1,124,470

OCT. ’14 88,428 6,035 39,154 26,287 118,947 65,746 450,973 6,738 14,565 23,642 32,312 15,569 42,831 17,661 69,363 100,289 20,813 35,174 14,128 19,393 1,208,048

% CHANGE 12.9% -3.8% -2.8% -0.7% 0.3% -18.6% -13.3% -15.6% -9.3% -3.6% -27.9% 3.0% -20.5% -27.3% 6.7% -1.8% -5.3% -8.2% -3.6% 27.3% -6.9%

300,697

353,896

-15.0%

1,425,167

1,561,944

-8.8%

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 INTERMODAL

FOUR WEEKS ENDING OCT. 31, 2015

MAJOR U.S. RAILROADS by Commodity TRAILERS CONTAINERS TOTAL UNITS

OCT. ’15 113,787 975,523 1,089,310

OCT. ’14 120,804 984,275 1,105,079

% CHANGE -5.8% -0.9% -1.4%

5,283 240,972 246,255

7,094 228,131 235,225

-25.5% 5.6% 4.7%

119,070 1,216,495 1,335,565

127,898 1,212,406 1,340,304

-6.9% 0.3% %

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 3.1% -4.2% -8.5% 2.1% 3.1% 5.7% -8.2% -55.8% -26.0% -12.4% -2.9% 2.1% -5.1% -1.6% -7.3% -4.5% -2.8%

Railroad employment, Class I linehaul carriers, OCTOBER 2015 (% change from OCTOBER 2014)

CANADIAN RAILROADS TRAILERS CONTAINERS TOTAL UNITS

ORIGINATED OCT. ’14 44,287 24,479 32,363 11,384 26,505 6,025 9,913 5,609 21,373 9,100 2,891 2,034 19,544 13,662 50,345 10,148 91,944

TOTAL CARLOADS, MONTH 2015 vs. 2014

CANADIAN RAILROADS ALL Commodities

ORIGINATED OCT. ’15 45,678 23,444 29,615 11,618 27,322 6,370 9,096 2,478 15,816 7,973 2,808 2,076 18,549 13,442 46,666 9,694 89,373

BY Commodity

Transportation (train and engine) 66,262 (-6.31%)

Executives, Officials, and Staff Assistants 9,666 (-3.02%)

Professional and Administrative 14,332 0.84%

Total employees: 165,606 % change from OCT. 2014: (-2.14%) Transportation (other than train & engine) 6,701 (0.27%)

Maintenance of Equipment and Stores 30,723 1.31%

Maintenanceof-Way and Structures 37,922 1.73%

Source: Surface Transportation Board

class I employment remains flat Figures released by the STB show Class I total railroad employment dropped 2.14% in October 2015, measured against October 2014. Three out of the six categories took a hit with Transportation (train and engine) dropping the most by 6.31%, followed by Executives, Officials, and Staff Assistants, which dropped 3.02%, compared to last year. Maintenanceof-Way rose the most by 1.73%, followed by Maintenance of Equipment and Stores, which rose by 1.31%. 4

Railway Age

December 2015

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Industry Outlook

MTA sets five-year capital plan The New York Metropolitan Transportation Authority (MTA) late last month adopted a 2015-19 Capital Program worth $29 billion. The program—a revised figure roughly 10% lower than the $32 billion first proposed a year ago—still represents the largest investment ever in the subways, buses, railroads, bridges and tunnels, MTA said. It is

the result of an agreement between MTA, New York City and New York State. The program is fully funded with $11.8 billion in MTA funds, an $8.3 billion commitment from the state, $6.4 billion in federal funds and a $2.5 billion commitment from New York City. It requires approval by the New York State Capital Program Review Board. The Capital Program includes $21.6 billion in core investments in MTA subways, buses and railroads; $4.5 billion for the East Side Access,

Penn Access and Second Avenue Subway projects; and $2.9 billion for MTA Bridges and Tunnels. It will finance thousands of new subway cars, commuter/regional railcars and buses; invest $2.8 billion in subway station improvements; complete the installation of Positive Train Control on Metro-North Railroad and the Long Island Rail Road (LIRR); bring countdown clocks to the majority of subway stations; begin work on extending the Second Avenue Subway to East Harlem; build a new LIRR station in Elmhurst, Queens and construct four new Metro-North stations in underserved areas of the Bronx. “Since our first Capital Program in 1982, we have invested more than $100 billion to rescue our mass transit network from near-collapse and make it an engine of growth for the entire region,” said MTA Chairman and CEO Thomas F. Prendergast. “[T]his revised program will reduce costs and deliver projects more efficiently without cutting any projects or the benefits they will bring to our customers.” Full details on all project spending and efficiencies as well as revenue sources for the MTA’s 2015-19 Capital Program is available on the MTA website at www.mta.info/capital.

KCS to invest $6.5 million in Vicksburg Sub

Kansas City Southern’s (KCS) principal U.S. subsidiary, The Kansas City Southern Railway Company (KCSR), will invest approximately $6.5 million in 2015 on rail and bridge improvement projects on its Vicksburg Subdivision in Louisiana. These projects will help grow capacity, as well as maintain and enhance safety on KCS’ cross-border network, the railroad said. 6

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The work, which was scheduled to begin Nov. 9 and conclude by month’s end, will include the replacement of six miles of rail and improvements to several railroad bridges. Communities that KCSR will work through include Tallulah, Grambling, Simsboro and Gibsland, La. “KCS, through its U.S. and Mexican subsidiaries, continues to invest in capital projects to expand network capacity, keep maintenance in a regular and healthy cycle, and enhance the safety of our operation,” said KCS CEO David L. Starling. “These investments also help us be an economic growth partner to our customers and the communities through which we operate.” In Louisiana, KCSR owns and operates 915 miles of rail infrastructure

and serves the river ports of Baton Rouge, Lake Charles and Natchitoches and the gulf port of New Orleans. KCSR serves several transload facilities in the state. Separately, an operating ratio of 65.2% combined with diluted earnings per share of $1.20 resulted in a slightly improved third-quarter 2015 for KCS, the railroad recently reported. Revenue of $632 million was a decrease of 7% compared to third-quarter 2014. Adjusted operating income was $220 million, which when compared to last year’s $229 million, was 4% lower. The operating ratio was 65.2%, compared with 66.1% in second-quarter 2014, a 0.9-point improvement. Adjusted diluted earnings per share were $1.21, a 6% decrease.

Market Siemens to build new locomotives for SEPTA Siemens has been awarded a $118 million contract to build 13 ACS-64 electric locomotives for the Southeastern Pennsylvania Transportation Authority (SEPTA), with an option to deliver up to an additional five. The electric locomotives, which will be built at the Siemens rail manufacturing facility in Sacramento, Calif., will be virtually identical to the ACS-64s Siemens has been supplying to Amtrak. The locomotives are set to be delivered in early 2018.

Ansaldo STS: Has been awarded a $53.2 million contract from SEPTA for the full design and build of the agency’s Media-Sharon Hill Lines Communications Based Train Control (CBTC) system. Brookville Equipment Corp.: Has agreed to terms with the City of Milwaukee for the supply of four Liberty Modern Streetcars for the city’s 2.1-route-mile starter line in a contract valued at $18.62 million. Cubic Transportation Systems (CTS): Has signed a three-year contract extension with TransLink commencing in September 2016 to continue operating and maintaining the go card smart card system in the Australian state of Queensland. GE Transportation: Has received a Letter of Award from India’s Ministry of Railways for a locomotive supply and maintenance contract worth approximately $2.6 billion over 11 years to supply Indian Railways with 1,000 diesel-electric locomotives. Siemens Mobility: Has secured orders with California, Illinois and Maryland 8

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December 2015

for a combined total of 34 Charger diesel-electric passenger locomotives, bringing the number of state departments of transportation procuring these units to six and the total number of units to 69. Wabtec Corporation: Has received an order valued at about $26 million to provide components, including electronically controlled pneumatic (ECP) braking equipment, for 1,186 freight cars to be built for the Saudi Arabia Railway by The Greenbrier Companies. Wabtec has also signed a $27 million contract with Regional Rail Partners to provide Phase I signaling and communications systems, including Positive Train Control (PTC) equipment, for the new North Metro Rail Line in Denver.

Worldwide Alstom: Has a received a letter of award from India’s Ministry of Railways to supply 800 double-unit Prima electric locomotives to Indian Railways (IR) in a deal worth Rs 230 billion ($US 4.3 billion). The Bremen Senate: Has allocated Bremen Tramways (BSAG) €210

million for the acquisition of 67 new low-floor LRVs. The Kerala State Cabinet: Has given the go-ahead for Kochi metro Phase 1B, referring the Rs 20.2 billion ($US 306 million) project to the Indian government for final approval. Opole: Has awarded Newag, Poland, a contract to supply five Impuls regional EMUs with an option for two additional trains. The 160km/h trains will be delivered between July 2016 and January 2018. Renfe: Has launched its first open tender for high-speed trains in a decade, inviting bids for a €1.1 billion-€2.6 billion framework contract to supply up to 30 new sets with a maximum speed of 320 km/h. SJ (Sweden): Has won two contracts to operate regional passenger services in central and southwest Sweden. Uzbekistan Railways (UTY): Has awarded Talgo a €38 million contract to supply two additional Talgo 250 trains, set to be delivered by 2017, supplementing two sets delivered in 2011.

Courtesy of Siemens

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Update Supply Briefs

Amtrak’s Gateway project moves ahead

Metalex, Unity partner up Metalex, a Jason Company, recently announced a new, authorized distribution partner in Unity Railway Supply to distribute Morton Rail Products, effective immediately. The new partnership “will focus on the rail repair market to drive improved service and delivery to Morton’s valued customers,” the company said. “As we continue to improve our internal lean operations at our Libertyville factories and simultaneously launch our new facility in San Louis Potosi, Mexico, it was also just as important to align ourselves with a partner who understands the railroad industry and could help us better serve our customer base,” said Jeff Fleming, Vice President of Sales and Marketing at Morton Rail Products.

Vanair expands with new office, manufacturing space Michigan City, Ind.-based Vanair Manufacturing, a global provider of vehicle-mounted air compressors, generators, welders and multidrive systems, recently announced the acquisition of an 80,000square-foot manufacturing facility from a private owner, bringing the company’s total production and office space to more than 160,000 square feet. The acquisition will accommodate increased growth and future expansion, Vanair says. The new office space, located on Highway 12 in Michigan City, Ind., will provide capacity for increased manufacturing, training, support, service and leadership functions across the company, Vanair adds. “Our team is excited about the growth we are experiencing, and this move represents our commitment to continue to build on the success our team has accomplished,” said Ralph Kokot, CEO at Vanair. 10

Railway Age December 2015

ederal and Amtrak officials and state officials from New York and New Jersey have reached an agreement on funding commitments and a governance structure that will allow the long-awaited, critically important $20 billion Gateway Tunnel Project to construct two new rail tunnels under the Hudson River to move forward. The agreement establishes a new federal commitment to fund 50% of project costs and creates the “Gateway Development Corp.” under the Port Authority of New York and New Jersey (PANYNJ) to leverage billions of dollars in federal grant and loan funding for the project. The corporation will include the states of New York and New Jersey, the U.S. Department of Transportation (USDOT) and Amtrak as members, and will be established and chaired by PANYNJ.

“The agreement marks a major milestone in the effort to build a new trans-Hudson river tunnel that is an essential portion of Amtrak’s eightstate Northeast Corridor connecting the states of New York and New Jersey and is one of the region’s most critical infrastructure projects,” said Governors Andrew M. Cuomo of New York and Chris Christie of New Jersey. The framework agreement includes a first-ever federal funding commitment that Senators Chuck Schumer (D-N.Y.) and Cory A. Booker (D-N.J.) secured from the USDOT and Amtrak to cover no less than 50% of the project costs via grants and other federal funding. The 50% federal funding commitment comes in response to Governors Cuomo and Christie’s Sept. 15, 2015 agreement in which they announced that the two

Update states would take responsibility for developing a funding plan to cover 50% of project costs if the federal government committed to provide 50%. “Building this new tunnel is absolutely critical to the long-term vitality of New York and the entire northeast region,” said Cuomo. “We have been working to break the federal logjam and get the federal funding that this massive undertaking requires, and for the first time, with this agreement, our partners in Washington are putting real dollars—not just loans—on the table. New York and New Jersey’s offer to pay 50% of the project was meant to provoke federal action, and I thank Sen. Schumer and Sen. Booker for their support in accomplishing that goal. As soon as the federal government delivers the funding we will proceed—because our shovels are ready.” In order to develop a financing plan for the Gateway Project, Gateway Development Corp. intends to identify

and maximize federal grant opportunities in conjunction with USDOT, and will pursue low-interest loans from the Railroad Rehabilitation & Improvement Financing (RRIF) and Transportation Infrastructure Finance and Innovation Act (TIFIA) “that will allow all of the project partners to access capital as inexpensively as possible. Due to the extraordinary circumstances involved in building one of the largest infrastructure projects in the nation, the senators and governors intend to work together to ensure that payment of debt service is deferred to the time when the Gateway Project is placed into service.” Schumer and Booker worked with U.S. Transportation Secretary Anthony Foxx and Amtrak Chairman Anthony R. Coscia to secure a commitment that their respective agencies would cover 50% of project costs. The federal funding share is likely to come from a combination of New Starts Grant dollars, Amtrak Northeast Corridor

operating profits, Amtrak capital funds, annual appropriations and other federal sources. In addition, the federal partners may utilize a low-interest federal loan to lower the cost of capital for their share. In addition, the federal and state partners agreed “to work together to expedite all environmental and planning approvals.” New Jersey Transit is working closely with Amtrak on planning and engineering and has taken the lead in NEPA (National Environmental Policy Act) procedures associated with Gateway. “The Gateway Program is essential to ensuring safe and reliable mobility for the region’s rail passengers. Amtrak looks forward to working with all stakeholders to establish this new entity and to preserving and expanding the vital Northeast Corridor rail link that serves as a foundation for the region’s economy,” said Amtrak President and CEO Joe Boardman.

Keeping Technology in Motion

Railway Age December 2015

BNSF testing Insitu’s ScanEagle drones in New Mexico

BNSF has tested a UAS (unmanned aerial system, better-known as a drone) supplied by Boeing Co. subsidiary Insitu Inc. in east-central New Mexico, on approximately 132 miles of main line track. Insitu’s ScanEagle UAS, which been used for U.S. military operations in Iraq and Afghanistan, was tested for a one-week period in commercial BVLOS (beyond visual line-of-sight) operation for the first time in the U.S. as part of the Federal Aviation Administration (FAA) Project Pathfinder initiative. The FAA established Project Pathfinder in May 2015

to assist in UAS integration and commercialization. The ScanEagle, in use in military applications for more than a decade and capable of flying for up to 24 hours at 92 mph, provides real-time video. BNSF selected the Insitu ScanEagle because it carries an FAA certification for commercial (non-military) applications. BNSF operates 32,500 miles of track and is reportedly interested in employing UAS technology to spot such problems as warped track, washouts, major erosion or bridge outages well before a train reaches them. The technology is capable of

providing 3D rendering as well as high-resolution video magnification. Insitu intends to improve the ScanEagle’s sensor and data analysis capabilities with features like automated reporting to quickly relay such information as vehicles or people/ animals on the tracks and missing crossties. Such data can be transmitted in real time to track inspectors. It could also be used to improve safety for field personnel working in extreme weather conditions. Insitu recently acquired 2d3 Sensing, which now serves as its mission systems division, for this purpose. BNSF would like to go to oneperson train operation where PTC is deployed. Earlier this year, the railroad proposed use of a drone controlled and monitored by a “Master Conductor” from a remote location (presumably the railroad’s Fort Worth, Tex., Network Operations Center) as a substitute for a conductor in the locomotive cab. The Master Conductor would be a new position. The union—SMART Railroad Division (formerly the UTU)—rejected the proposal. The FAA created Project Pathfinder to work with industry in newsgathering (CNN), agriculture (PrecisionHawk) and BVLOS infrastructure inspection (BNSF). In October, the FAA added CACI International Inc. as a program participant to evaluate how the company’s technology can help detect a UAS near an airport.

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Update Hakim returns to MTA as New York City Transit President

New Jersey Transit Executive Director Veronique “Ronnie” Hakim will be returning to the New York Metropolitan Transportation Authority after only 18 months leading NJT. She will become President of MTA New York City Transit

Railway Age December 2015

on Dec. 28, replacing MTA Bridges and Tunnels President James Ferrara, who has been serving as NYCT Interim President since the August 2015 retirement of Carmen Bianco. When she takes the throttle, Hakim will become NYCT’s eighth permanent president. A career transportation professional, she spent 23 years at the MTA before becoming Executive Director of the New Jersey Turnpike Authority, a post she held for four years before New Jersey Gov. Chris Christie tapped her to head NJ Transit. In her prior tenure at the MTA, Hakim served as NYCT Special Counsel and MTA Capital Construction Executive Vice President and General Counsel, providing senior management with policy and legal advice on megaprojects such as the Second Avenue Subway, Long Island Rail Road East Side Access and the No. 7 subway

extension to Hudson Yards. “Our transit network is the lifeblood of the entire region and I am glad to welcome Ronnie back to New York City Transit and to entrust her with the responsibility of ensuring safe and reliable service even as ridership grows every month,” MTA Chairman and CEO Thomas Prendergast said. “Her comprehensive transportation experience, her detailed vision for the future and her demonstrated ability to bring real improvements to customers make her the right person to tackle New York City Transit’s challenges now.” Prendergast, who at one time was NYCT President, reportedly wanted Hakim for the post. “Having spent more than two decades of my life at the MTA, I am deeply honored to have the opportunity to lead New York City Transit at a time when surging ridership is affect-

ing every element of its operations,” Hakim said. “Subway and bus customers have high expectations for the network they rely on every day, and I look forward to meeting their expectations of safety, reliability and quality at New York City Transit.” Additionally, Joe Leader, a 29-year veteran of MTA New York City Transit, resigned his post as Senior Vice President Subways on Nov. 18, 2015. Vice President and Chief Operating Officer-Service Delivery Wynton Habersham will fill Leader’s position in an acting capacity. Leader had been SVP Subways for slightly more than two years. An NYCT employee publication and a letter to employees from James Ferrara obtained by Railway Age said Leader’s resignation was voluntary, “based on the desire to spend more time with his family.” No mention was made of retirement, despite that Leader had worked at MTA 29 years.

Senate puts the brakes on bigger trucks

The U.S. Senate on Nov. 10, 2015 passed a motion opposing the allowance of twin 33-foot trailers on federal highways in a 56-31 vote. The amendment, “Motion to Instruct Conferees of the Highway Bill on

Double 33-Foot Trailer Trucks,” instructs conferees to allow the U.S. Department of Transportation Secretary to issue a federal rule allowing for these longer trucks only if USDOT finds that such an increase would not have a net negative impact on public safety. Among the amendment’s supporters were Sen. Roger Wicker (R-Miss.) (pictured), Sen. Dianne Feinstein (D-Calif.) and the Railway Supply Institute. “Thirty-eight states say these longer trucks are not safe, and they tell us that they don’t want them on the highways and byways. I think we should respect their decision,” Wicker said. RSI said the amendment would not only protect the motoring public from longer and heavier trucks but would also protect the railway supply industry and railroad jobs.

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Update H.R. 3763 receives House Approval Following three days of debate, during which more than 100 amendments were considered, the U.S. House of Representatives on Nov. 5, 2015 “overwhelmingly” approved the Surface Transportation Reauthorization and Reform (STRR) Act of 2015 (H.R. 3763), “a bipartisan, multi-year surface transportation bill to reauthorize and reform federal highway, transit, and highway safety programs.” H.R. 3763 helps “improve the nation’s surface transportation infrastructure, refocuses programs on addressing national priorities, provides more flexibility and certainty for states and local governments, accelerates project delivery, maintains a strong commitment to safety, and promotes innovation to make the transportation system and programs more effective,” stated the Transportation and Infrastructure (T&I) Committee.

T&I Committee Chairman Bill Shuster (R-PA), T&I Committee Ranking Member Peter DeFazio (D-OR), Highways and Transit Subcommittee Chairman Sam Graves (R-MO), and Highways and Transit Subcommittee Ranking Member Eleanor Holmes Norton (D-DC) introduced the legislation, which the House approved by a 363-64 vote. “Today the House voted to give our infrastructure and our economy a much needed shot in the arm,” Shuster said. “Critical enhancements that will improve the transportation of goods by rail in the U.S. include new safety measures for tank cars, a review of braking solutions for trains, and additional funding for infrastructure improvements at highway rail grade crossings,” said Tom Simpson, President of the Railway Supply Institute (RSI), a a major advocate for H.R. 3763.

VIA Rail commissons CTC VIA Rail has commissioned CTC (centralized traffic control) on its entire North Mainline (Guelph Subdivision) between Georgetown and London, Ontario. In conjunction with the Genesee & Wyoming’s Goderich-Exeter Railway, which leases the right-of-way from CN for freight service, and GO Transit/Metrolinx, which recently purchased the Kitchener-Georgetown section of the line from CN, VIA Rail fully funded the C$25 million upgrade program. PNR Railworks contracted to perform the work. The CTC project includes new wayside signals; new crossing protection (conforming to Transport Canada regulations), upgrading all crossings to automatic warning devices; automatic remotely controlled switches; and switch heaters at three passing sidings.

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Watching Washington Frank n. wilner

CP-NS transcon a craps table roll

ew obstacles bedevil railroads as has the Mississippi River. Spanning it was the nation’s first rail bridge in 1856—promptly assaulted by steamboat Effie Afton. While the bridge was repaired and more constructed, the river remains a problematic divide, separating, with few exceptions, eastern railroads from those operating in the West and producing grueling interchange bottlenecks at Chicago. Whether single-line transcons encompassing U.S. railroads is a solution prompts spirited debate. For dissimilar reasons, past transcon efforts failed—Seaboard Coast Line (now part of CSX) with Southern Pacific (now part of Union Pacific); BNSF with Canadian National (CN); and Canadian Pacific (CP) with CSX. Dreamers remain, including 71year-old Hunter Harrison, CP’s CEO—a brusque presence who has so improved productivity on the three railroads he superintended (Illinois Central, CN and CP) that comparisons are made with industrial engineering legend Frederick Taylor. Whether Harrison will create a legacy rivaling 19th century titans James J. Hill, Collis Huntington and Cornelius Vanderbilt by securing regulatory approval to create the first North American transcon by hitching CP, end-to-end, with Norfolk Southern (NS), is unknown. Notwithstanding pro-competitive features, formidable obstacles include skeptical CP stockholders, NS itself, other railroads, regulators, Congress and the new Canadian prime minister. CP will pay an acquisition premium for NS stock, expecting a more than compensatory boost in NS profitability achieved by tamping down the NS operating ratio from near 70 to a target of 60. While end-to-end marriages lack easily jettisoned

redundancies, and U.S. statutory protection impedes layoffs, Harrison has a proven model for squeezing the operating ratio—substituting high hourly pay, guaranteed days off, scheduled assignments, eliminating road and yard distinctions, and fixed crew-calling windows permitting a trimming of the work force through attrition, putting productivity on steroids while train and engine workers boost annual earnings as much as $30,000. Harrison may be a Tennessee native, but among the clannish good ’ol boys running NS he is an in-your-face interloper at odds with their cherished courtly manners. Even assuming Harrison could succeed in wringing from NS consequential new productivity gains, he must travel south to do so, leaving CP investors bereft of the precise CP managerial direction deemed so valuable. Then there is Harrison’s willingness, in exchange for merger approval, to provide a pro-competitive lagniappe of track access (reciprocal switching) and bottleneck pricing at sole-served U.S. points. Shippers crave it; Canada requires it; U.S. railroads, rich with political influence, stalwartly oppose it. The Surface Transportation Board (STB), with sole authority over rail mergers, may be independent of direct political influence, but STB members seeking new terms require Senate confirmation, the STB budget requires congressional approval, and a mergeraverse Congress could amend the statute—transferring rail merger authority to the merger-cynical Department of Justice; or enacting Senate Commerce Committee Chairman John Thune’s (R-S.Dak.) bill to increase STB size by two voting members, maybe selected with a “no merger” vote in mind. In June, amidst widespread service

disruptions, STB member Deb Miller expressed “no appetite” for a merger application. Notwithstanding expected CP assurances of a seamless merger, history is littered with significant unanticipated post-merger service disruptions. Coincidentally, CP President Keith Creel visited with STB members individually Nov. 4 in Washington. Two days later, the CP-NS story broke. STB merger rules require consideration of anticipated responsive merger applications and their potential impact on competition and service—perhaps CN with BNSF, and Union Pacific with CSX creating the long-sought wholly U.S. transcon. With whom will Kansas City Southern (KCS)—operating northsouth into Mexico—join? Harrison and KCS CEO David Starling trace roots to St. Louis-San Francisco Railway (the Frisco, now part of BNSF) and later interacted as Burlington Northern operating officials. In Ottawa, the Canadian prime minister holds absolute power to nix rail mergers. As CP-NS would strengthen CP as an international logistics giant at the expense of CN, the latter might invoke, in opposition, its own formidable political muscle. CN already is pursuing a corporate espionage lawsuit against CP. An interim voting trust allows CP to consummate the financial transaction ahead of merger. NS stockholders receive their premium plus CP shares. Blocked is a bidding war for NS by UP or Berkshire Hathaway. Voting trusts need STB approval. A jiggery-pokery attempt to send Creel to NS and NS CEO Jim Squires to CP may backfire as improper common control. As Pollyanna and Cassandra wished each other, “May you live in interesting times.” December 2015 Railway Age 17

Perspective: Short Line & Regional Linda Darr

Short Lines connect America’s communities

he short line rail industry comprises more than 550 carriers across the country, companies led by entrepreneurs committed to the communities they serve and their industry. Many took on failing lines and through sweat, equity and smarts built enterprises employing thousands of Americans. They originate or deliver one in every four railcars, and ensure that small towns and industries are connected to the freight network and world economy. An ongoing challenge for a sustaining enterprise is the cost of maintenance and upgrades to accommodate new and existing businesses. Many short line railroads were in grave disrepair when acquired from downsizing Class I’s following passage of the Staggers Act 35 years ago. Maintenance costs continue to be a significant portion of operational expense, and the 45G Tax Credit has helped fund many repairs and improvements. Another source of revenue for significant projects is the Transportation Investment Generating Economic Recovery (TIGER) grant program, established in 2011 by the USDOT and the FRA to encourage competitive applications for infrastructure assistance to meet needs deemed critical by state transportation planners. The best-inclass projects combine the resources and commitment of affected communities, state and local economic councils, and rail-served business enterprises. Recently, I had the opportunity to visit one such project completed by Farmrail System, Inc. (FMRC) on its Sunbelt Line in Erick, Okla. FMRC has been a beneficiary of two TIGER grants (III and V Series), enabling 60 miles of track to be upgraded and facilitating the location of a major new employer. FMRC provides access to BNSF and Union Pacific for communities between

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December 2015

Weatherford and Erick, Okla. FMRC is an employee-owned holding company of two Class III railroad subsidiaries. Five lines radiating from a headquarters hub in Clinton provide access to four connecting carriers for freight movement throughout the country, primarily related to oilfield development, agriculture, and mineral extraction. Farmrail’s FMRC subsidiary is lessee-operator of the Sunbelt Line, owned by Oklahoma DOT. Badger Mining Corp. is a fourthgeneration firm headquartered in Wisconsin. Badger Mining’s process of identifying areas for long-term investment in under-served markets led to the Anadarko Basin Region of

Short lines are the face of freight rail across America. Oklahoma, which has a rich history of oil production and a diverse set of assets. Formations currently being targeted include Granite Wash, Tonkawa, Cottage Grove, Hogshooter, Cleveland and Marmaton. Known as the “Gateway to Oklahoma,” Erick, Okla. was incorporated in 1901 at the edge of unorganized Indian Territory. After a half-century of recognition as a popular wayside stop on Route 66, Erick was bypassed by I-40 in 1975. Prior to the completion of the TIGER V project, the last freight train service to Erick was provided by FMRC in 2001. The $1.83 million Erick to Sayre Freight Railroad Rehabilitation project, supplementing a previous TIGER III project, enabled repairs to 12 additional miles of the state-owned Sunbelt

Line to allow rail service to the Badger Mining site at its western extremity. This initiative to improve track that had been dormant for 14 years to FRA Class I standard required installation of 19,500 ties, 17 grade-crossing renewals, two bridge improvements, spreading of 16,200 tons of ballast, and related lining and surfacing. A cooperative effort among the Oklahoma Chamber of Commerce, ODOT, FRA, federal, state, county and local officials and FMRC has made possible the restoration of service to Erick. The rail rehabilitation will enable significant job growth and the potential to attract additional rail traffic, evidence of which is already materializing. These and similar stories are played out all across the country on short line railroads. The recently announced TIGER VII grants included funding for collaborative short line projects in northern Maine that will provide similar economic benefit to that region. The Maine Regional Railways Project combines rail corridor rehabilitation and interchange betterment over 384 miles of track. Led by Maine’s Department of Transportation, it is backed by a unique partnership among the state-owned but privately operated Maine Northern Railway, the privatelyowned Central Maine & Quebec Railway, the Eastern Maine Railway, and Class II carrier Pan Am Railways. Short lines are the face of freight rail across America, operating about 30% of the national rail network. Their entrepreneurial drive and partnership with local and regional government and transportation departments, along with financing provided by programs such as the infrastructure tax credits and TIGER grants, are instrumental in connecting communities to opportunities.

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The final round of mergers?

uckle up and hold on tight, because 2016 and beyond promises to be a time of, in automobile enthusiast terms, “spirited driving.” Hunter Harrison, at the throttle of a fast, nimble, bright red muscle car from north of the border known as Canadian Pacific, is in hot pursuit of a sleek black stallion that hails from Norfolk, Va. His goal: an end-to-end combination with Norfolk Southern “that would result in the creation of a pro-competitive, pro-customer, coast-to-coast transportation solution.” A CP-NS pairing would create a true North American transcontinental railroad, stretching, unbroken, from the Pacific Ocean to the Atlantic Ocean—the kind of railroad that Harrison’s illustrious predecessor at CP more than a century ago, William C. Van Horne, or James J. Hill, the Great Northern’s “Empire Builder,” probably envisioned. 20

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December 2015

“We believe that combining our two great organizations will allow us to form an integrated transcontinental railroad with the scale and reach to deliver unsurpassed levels of safety and service to our customers and communities while also increasing competition and creating significant shareholder value,” Harrison said in a mid-November merger proposal letter to NS chief executive Jim Squires. “We propose a 50% cash/50% stock transaction [to create] a new company that would own CP and NS [and] would be listed on the New York Stock Exchange and Toronto Stock Exchange, and maintain a strong investment-grade credit rating. . . . In light of the substantial synergies created by the combination, we believe that the fair value of the new company would be approximately $270.68 per share at the time of transaction closure—which is assumed to occur on Dec. 31, 2017.”

Steve Schmollinger (top); Steve Host (right)

Canadian Pacific’s pursuit of Norfolk Southern could trigger a series of transcontinental combinations, surpassing the megamergers of the 1990s in scope. By WILLIAM C. VANTUONO, Editor-in-Chief

The particulars

Merging CP and NS does several things, according to CP. It “creates a transcontinental rail network connecting the major industrial production and population centers across North America, with global reach through premier ports located across the U.S. Gulf, Atlantic and Pacific North American coasts; integrated operations across at least four major rail gateways and enhanced service offering to shippers. It combines two premier railroads with exceptional safety records, [and will generate] more than US$1.8 billion in annual operating synergies achieved over the next several years.” CP has promised a “collaborative” Surface Transportation Board regulatory process and has a financing commitment of US$14.2 billion from J.P. Morgan Securities LLC. “Moreover, as our combined network creates more comprehensive end-to-end shipment solutions for our customers while reducing congestion in key corridors such as Chicago, network capacity will expand, allowing us to improve service and lower costs—which is both pro-shipper and pro-competition,” Harrison said. “A combined network will also lead to faster growth for the new entity vs. what either of us would be able to achieve on our own and, impor-

tantly, would create a larger, more diversified book of business less-dependent on volatile commodities such as crude oil or thermal coal.” CP said its proposal “has the unanimous support of our Board of Directors, is a non-binding expression of our current views, which remain [subject to] mutually satisfactory definitive agreements, approval of the definitive agreements by your and our Boards of Directors, approval of the transaction by your and our shareholders, and receipt of customary regulatory approvals.” CP “strongly believes that the combined railroad would offer unparalleled customer service and competitive rates that will support the success of the shippers and industries it serves, and satisfy the STB and Canadian regulators.” This would be accomplished through “key innovations” including “a new approach to terminal access that would change the status quo in U.S. rail transportation. In the event the new company failed to provide adequate service or competitive rates, it would allow another carrier to operate from a point of connection over the combined company’s tracks and into its terminals, providing an unprecedented alternative to the affected shipper. [We will] give shippers the choice of where they can connect with another railroad along [the combined December 2015 Railway Age 21

the final round of mergers?

CP-NS] network, bringing an end to the practice of ‘bottleneck pricing’ to a large number of shippers in the U.S. while further enhancing competition.” Essentially, these two provisions amount to open (competitive) access, which U.S. Class I railroads have bitterly opposed. The author put this question to Hunter Harrison, our 2015 Railroader of the Year, in the January issue. “The regulatory situation in Canada is a bit different than in the U.S.,” we noted. “There is some form of open access, to a very limited extent, and you don’t seem to have a problem with that. Some of the U.S. railroads are fighting that tooth and nail. What’s the difference? How does it work?” Harrison’s response: “It’s called inter-switching, which relates to some degree to the U.S.’s old reciprocal switching, pre-Staggers,” Harrison responded. “It’s one of these regs that are in place, but people don’t really take advantage of it, because there’s no need to if the individual carriers do their job. It’s kind of something that could be called a lever that you have over here, if it needed to be used. My view is, for years a lot of railroaders had been scared of the term ‘open access,’ and I don’t know why. What that says to me is, all we’re going to do is open up more competition, and with a very limited number of players in North America now, it’s important to keep that competitive balance. And if an individual carrier, CP included, provides the right type of

service for the customer, at an appropriate fair price, we have nothing to worry about. If we do not provide the service, we should not be resistant to someone [else] coming and providing that service. So I think it’s different, it’s change, and people, generally speaking, their normal reaction is to resist those initial change efforts. But I think if we would look back here in 20 years, most of these things are going to be behind us, and we’re going to be settled down with those types of issues.” Then, there’s the “Chicago problem,” one of Harrison’s favorite subjects. A CP-NS combination “would alleviate the long-standing issue of congestion in Chicago, which seized into gridlock in the winter of 2014 and hobbled economic growth,” he said. “By channeling rail traffic away from Chicago, we would create fluid routes through under-utilized hubs and free up much-needed capacity for other railroads that pass through the city, providing them with new, efficient and competitive service options for their own customers. In short, a combined CP-NS would create capacity for all shippers without creating the need for more infrastructure.” This is one of Harrison’s trademarks: what he calls “sweating the assets,” and to a great degree it has worked. CP “AH” (After Hunter) is moving far more traffic than CP “BH” (Before Hunter), with 600 fewer locomotives. Harrison is no fan of Chicago’s CREATE project, on which

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the final round of mergers?

some $4 billion has already been spent to help alleviate freight and passenger rail congestion in North America’s busiest, most complex rail hub. “I think CREATE was broke when it started, it’s been broke ever since, and it’s created zero value in my view,” he said during a first-quarter 2014 earnings call. “You know, it’s hard enough to get two railroads to agree on something, much less seven or eight.” This observation “offers insight into Hunter’s thinking as to why he is pursing control of NS and not working toward joint operating agreements,” Railway Age Contributing Editor Frank Wilner observes. “Hunter does not play well with others because he is convinced others don’t play nicely.” So what comes next? If NS management and its board and shareholders, after lots of back-and-forth, say “yes,” the merger may go relatively smoothly and pass U.S. and Canadian regulatory muster, given CP’s willingness to embrace open access. (For additional perspective, see Watching Washington, p. 17, and Financial Edge, p. 48.) A voting trust?

As this was written in late November, Harrison left open the possibility of using a voting trust to make sure NS shareholders get paid out in quick fashion, thereby transferring all of the regulatory risk to CP. “While this strategy has worked in some cases in the past, it has also failed in others. Is it worth

the risk?” asks Cowen and Company Managing Director and Railway Age Wall Street Contributing Editor Jason Seidl. “With rail traffic trending down more than 5% in the fourth quarter and 2% year-to-date, investors have not had much to cheer about in the railroad space during 2015,” says Seidl. “The slide has been led by coal, metals and petroleum, but even intermodal (the rail industry’s prodigal son) has started to lag. Indeed, the overall near-term outlook for rail traffic appears somewhat bleak as industrial demand is challenged, the dollar remains high vs. other world currencies, energy prices continue to be low, and truck capacity is ample. While this may sound somewhat depressing, investor interest remains very high in the rail sector as most are focusing on potential merger activity in the space. “While a rail merger has not happened since the split-up of Conrail, CP’s interest in an eastern railroad did not come as a surprise, given its failed pursuit of CSX a year before. Despite our belief that the initial offer of $46.72 in cash and a fixed exchange ratio of 0.348 CP shares per NS share (which at the time equated to roughly $95 per share or 19% higher than the closing price immediately preceding the news that initially led to a jump in NS shares) will likely be rejected, the overture itself sent shockwaves through the rail industry. The impact is likely to go well beyond the proposed deal, since if it does go through (CP itself has publicly stated

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the final round of mergers?

it’s open to raising its bid), other carriers will undoubtedly scramble to match the scale and product offerings of their newly formed transcontinental peer. This could eventually cut the number of North American Class I’s about in half (7 to 3 or 4), something that the regulators would seriously consider before giving their blessings on the first merger. “The proposed merger will take time to materialize, for sure. STB Chairman Dan Elliott has noted that the Board would have one month to accept an application and then 16 months to render a decision. It is worth noting that the STB is currently understaffed and the Board itself only has three members, a number that precludes them from talking with each other due to the Sunshine Act. CP has noted that it plans to offer some form of open access to appease the shipping community and gain support. As one would expect, other Class I’s, especially those in the eastern U.S., have been vehemently opposed to such a structure. Shippers with whom we have spoken are viewing the merger with a great deal of skepticism, with several realizing that this would reduce the total number of carriers in the end. “It is never easy to predict what a governmental agency is going to do, and in this case the situation is far more difficult to assess, as the merger rules that were put into place in 2001 have yet to be tested and in some cases are vague. For his part, Chairman Elliott has offered little insight as to how

he would view a proposal (as we write this there has not been a proposal placed in front of the STB) other than to say the STB always looks at what is in the best interests of the public in terms of making any decision. It is worth pointing out that the merger implementation period has historically been mixed at best, with large mergers proving to be far more difficult than advertised (Union Pacific/Southern Pacific and the divvying-up of Conrail), and smaller ones (CN/Illinois Central and CN/Wisconsin Central) coming together without major incidents.” Assuming the merger goes through, the remaining Class I’s will have little choice but to combine. How those mergers will shake out isn’t totally clear, but here’s what appears to make sense, at least to Railway Age: Union Pacific will join with CSX, and CN will merge with BNSF Railway. (The latter has already been attempted, but was shot down by the STB about 15 years ago.) That would leave Kansas City Southern and its lucrative Mexican franchise. Any of the new transcontinentals could benefit from adding KCS to its system, but consider this: CN’s U.S. operations stretch from Chicago to New Orleans, over the former Illinois Central. If CN acquires KCS, which is on a parallel alignment, CN could benefit from directional running. Hang on, and stay tuned. We are indeed living in interesting times. RA John H. Armstrong’s

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2016 Supplier Outlook: Growth and Uncertainty

his year was a busy one for the railway supply industry and its customers. The outlook for 2016 remains positive, but a bit uncertain as we look ahead to a shortened congressional schedule and national elections. Many in the industry are wondering what House Speaker Paul Ryan’s position will be on intercity passenger rail. As Chair of the House Budget Committee, both his FY2014 and FY2015 Budget proposals eliminated federal support for Amtrak and high-speed rail. He also voted to eliminate operating grants and capital and debt service grants to Amtrak during consideration of the FY16 Appropriations bill. However, he ultimately voted in favor of the Passenger Rail Reform and Investment Act of 2015 (PRRIA), despite the fact that Amtrak’s authorization was not eliminated. Because he has indicated that he will defer to committee chairs and members, Ryan’s personal philosophy on passenger rail may yield to that of the chairs and membership of the relevant committees. Lack of investment in intercity passenger rail continues to vex RSI members. Partisan bickering over the need to invest in passenger rail should be set aside and we should provide funding for intercity passenger rail that makes sense but also can make a difference. Tank car safety continues to dominate. In responding to a rulemaking proposed by USDOT, the RSI Committee on Tank Cars submitted a plan to reduce the risk of moving flammable liquids by rail that involved a new tank car design and modification of the current fleet. DOT adopted many of our recommendations in their final flammable liquids rule but missed on others. As Congress considered a transportation bill last fall, railroads, shippers and RSI asked Congress to clarify and improve portions of the DOT rule. While several petitions asking DOT to reconsider portions of the rule were denied, lawsuits filed in federal court could take a year or two, lending uncertainty to the rule’s implementation. Business has been strong for the North American freight car building industry as it enjoyed orders and backlogs of historical proportion. The Jan. 1, 2015 backlog of 142,837 freight cars was the highest in modern history. While orders tapered off in the third quarter of 2015, the third-quarter backlog plus expected new orders should keep carbuilders busy well into 2017. 2016 is an election year with a truncated Congressional schedule as both Houses plan to take most of the summer off to campaign. With only about 100 legislative days to address issues that may affect the supply industry, RSI will continue to represent the interests of our member companies. In the meantime, RSI members will be working full time doing what they do best—supplying the world’s finest freight rail network with the products and services it needs to move goods throughout North America, and continuing to support and improve upon our intercity passenger network.

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Norfolk Southern’s GP33ECO joins a growing national fleet of fuel-sipping, By WILLIAM C. VANTUONO, Editor-in-Chief pollution-reducing yard switchers.

William C. Vantuono

orfolk Southern and Progress Rail/Electro-Motive Diesel joined local and state officials last month to dedicate a new fleet of GP33ECO environmentally friendly yard locomotives for Chicago at its 47th Street intermodal facility. NS designed and built the locomotives at its Juniata Locomotive Shops in Altoona, Pa., using components from EMD, a division of Progress Rail Services, a Caterpillar company. The prime-mover is a 3,000-hp, EPA Tier 3certified, 12-cylinder EMD 710. NS is putting 18 of these locomotives to work at its five major Chicago rail yards by the end of this year. Three of the 18 are configured as “mother-slug” units, with ballasted, traction-motor-only slugs added for extra tractive effort. The units are expected to prevent the release of 7.58 tons of particulate matter and 196 tons of nitrogen oxide pollutants annually while using less fuel compared with older switching locomotives, NS said. Based on 1980s-era GP50s, they feature NS’s “Admiral Cab,” with its inward-sloping windshields providing good visibility; EMD’s EM2000 microprocessor-based engine control system; and idle-reduction technology—plug-in (“shore power”) engine heating systems to eliminate locomotive idling, a collaborative effort with U.S. EPA Region V. The idle-reduction technology is either NS’s home-grown “Sleeper” system or Hotstart. The electrical shore power, which is based on 480-volt stationary power for passenger trains, is provided by Snyder Equipment. NS Mechanical Engineer-Locomotive Design Mark Duve is largely responsible for this system, which keeps engine fluids warm and,

routed to a cab heater system, keeps the operating cab at a comfortable temperature, a nice benefit for crews that have to deal with Chicago’s frigid winter temperatures. The locomotives are branded “ECO” for their operating efficiencies in reducing emissions and fuel consumption. More than $19 million in grant funding through the federal Congestion Mitigation and Air Quality Improvement Program (CMAQ) made the $30 million public-private partnership to replace NS’s entire Chicago yard locomotive fleet possible. The new units feature a stylistic green paint scheme with an Illinois-shaped icon and the slogan “Working Together for a Cleaner State.” “These locomotives will be rolling billboards in Chicago for years to come, as one of the finest examples of collaboration between public and private partners to think and act big on diesel emission reduction technology,” said NS Vice President Mechanical Don Graab. “The bottom line is cleaner air quality for Chicago residents. We thank the Illinois EPA, Illinois DOT, and Chicago Metropolitan Agency for Planning for their partnership in helping us achieve this goal.” “More than 1,000 engineering and manufacturing employees working for EMD in LaGrange, Ill., designed and manufactured the engines, electrical lockers and other components on this ECO locomotive,” said Progress Rail President and CEO Billy Ainsworth. “This locomotive is a tribute to our employees and their commitment to sustainable solutions that improve the world where we live.” Earlier this year, NS introduced 10 ECO locomotives at its Atlanta yard, and next year plans to add three more at its Macon and Rome yards in Georgia with CMAQ grants. RA December 2015 Railway Age 27

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On the level By MISCHA WANEK-LIBMAN, Engineering Editor

Grade crossing surfaces are being built to withstand heavy road and rail traffic, as well as lessen required maintenance.

eavier traffic, in car, truck and train form, demands that grade crossing surfaces be made of durable and easy-to-maintain materials to keep total costs down, and more important, enhance safety at any given crossing. American Concrete Products Co.

American Concrete Products Co. manufactures precast crossings for all types of ties and new concrete tie manufacturer Rail One in any panel length and any tie spacing. “The compressive strength of the concrete in our crossings exceeds the requirement as much as 30%. Two separate sealants are used on the top surface to prevent damage from de-icing agents, therefore extending the life of the crossing. Crossings are warranted for 12 years,” said Buz Hutchinson, railroad sales and service for American Concrete Products. “A broom finish on the crossing perpendicular to the roadway creates a non-slip surface. The field flangeway rubber is nearly flush with the top surface and the gauge flangeway rubber is nearer to the top. The location of these flangeway fillers enhances safety when it relates to ADA requirements.” Century Group

Century Group, Inc., grade crossing surfaces utilize a Grade 72 reinforcement in lieu of an industry standard Grade 60 to handle heavier vehicle loads.

The company says the 12,000 PSI stronger reinforcement provides a more durable panel, which achieves an HS 20-44 load rating. Jerry McCombs, Vice President of the company’s Railroad Products Division, says the company also utilizes a nine-foot-long panel for 18-inch tie centers. This allows vehicular wheel loads to be distributed over a greater number of crossties, extending crossing service life. “In reference to maintenance and initial installation, our bolt-on flangeway filler allows for a ‘one and done’ installation without having to handle a separate piece of filler that is not attached to the panels,” said McCombs. “In reference to safety, our concrete panels allow for a smooth transition from roadway approach across the track structure, allowing safe passage for vehicular traffic. It is very important that the entity responsible for the roadway approaches keep them maintained and level with the grade of the crossing structure. The service life of the grade crossing can be greatly diminished by a poor roadway approach and produce an unsafe condition for vehicular traffic.” HiRAIL Corporation

“A smooth crossing surface enhances the safety of the crossing by allowing the vehicle operator to pay attention to the warning devices and train movements at the crossing. A rough crossing surface may divert a driver’s attention from the warning devices while he tries to find a way across the December 2015 Railway Age 29

grade crossing surfaces

rough surface that will cause the least amount of damage to the vehicle,” said Walt Barry, Vice President. “HiRAIL Full Depth Rubber Grade Crossing Surfaces provide a smooth transition across the tracks and the grooved diamond surface pattern enhances traction.” Barry also explained that Full Depth Rubber grade crossing surfaces can be more forgiving than other more rigid types of crossing surfaces. “They flex with the movement of the railroad track and absorb the impact of vehicles when the road approach has rutted or deteriorated.” HiRAIL grade crossings are molded to fit snugly against the rail and have a tongue and groove interlocking between each panel. Barry notes that these features help prevent moisture and debris from entering the track structure and causing premature deterioration. LT Resources

Linda Thomas, President of LT Resources, Inc., explained that the company’s ENDURANCE®-XL PLUS Highway-Rail Grade Crossings were designed to address maintenance issues encountered with traditional crossing surface materials and will accommodate mainline rail profiles and all types of fastening systems. Thomas said that the durable crossings perform well in all traffic conditions. Lifting devices are included to speed

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installation of new crossings, as well as aid in easy removal for track maintenance. The panels were recently used with composite crossties and GEOWEB on a Union Pacific/Texas Department of Transportation double-track project. “Composite ties provide a longer tie life than traditional wood ties, extending the crossing surface life even further. GEOWEB minimizes deflection beneath the track and approaches for both rail traffic and vehicular traffic. This complete system is a good example of LT Resources’ ongoing efforts to promote the use of innovative materials to

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grade crossing surfaces

extend crossing life and reduce costly shutdowns for repairs and replacement. LT Resources’ full range of recycled and recyclable track materials provides long-term performance with minimal labor and replacement costs,” said Thomas. “LT Resources is currently working with various [departments of transportation] to introduce new surface treatments to enhance our products’ safety performance, and we look forward to implementing these designs on a widespread basis in the near future.” Omega

Mark Mottola, National Sales Manager at Omega Industries, Inc., said precast concrete provides a crossing surface to endure constant, heavy vehicle traffic. “There are two good reasons the largest railroads in North America have engineered and adopted a “Common Standard” precast concrete panel as the benchmark by which all other crossing material is judged: Reduced cost of maintenance and product longevity. When a crossing is shut down, rail and vehicle traffic comes to a halt, costing thousands of dollars,” said Mottola. “In addition to the BNSF/UP common standard design, Omega offers the addition of polyfiber reinforcement for increased panel durability. The fiber is used as a secondary concrete reinforcement along with the traditional rebar reinforcing method. Polyfiber adds increased impact resistance,

reduces plastic shrinkage cracking, and greatly increases concrete durability. All of this means a longer lasting crossing, with reduced overall maintenance costs.” Mottola also points out that heavier railcar loads mean added stress to the track structure. “Precast panels are lagged to wood or composite ties, and work independent of the adjacent panels. This system allows the panels to flex with the track structure and endure constant repetitive traffic,” said Mottola. “We offer a precast crossing surface with an ADA approved gauge flangeway opening and the option of a coarse finish. The finish is similar to 36 grit sand paper, and offers extremely good traction, even when wet. Concrete will not deteriorate with prolonged exposure to UV rays and will not become harder or softer with changes in temperature. Once again, more reasons that BNSF, UP, CP, Alaska Railroad, etc. choose concrete over all other crossing materials.” Omni

Omni Rail Products, Inc., heavy-duty concrete panels are constructed with high-strength concrete interlaced with THERMEX treated rebar for high impact toughness and then sealed with a silicone sealant to help fight off road salts. “Increased rail traffic means increased track maintenance. Omni concrete panels are designed to lift out of the track

December 2015 Railway Age 31

grade crossing surfaces

easily and be replaced quickly so any surfacing activities can be performed with a minimal amount of road closure,” said Bob Cigrang, Vice President of Sales. Omni also manufactures a full-depth lagged down rubber grade crossing composed of solid virgin rubber from top of tie to top of rail. Cigrang says that these panels are also removed and replaced easily and can be handled with any equipment without fear of damaging the panels. “As far as safety goes, Omni’s ECR panels come with a shunt break in the frame to prevent false signal activation and are available with epoxy coated rebar. Omni’s field panel on the ECR crossing has 25-pound solid block of rubber attached to each panel and goes between the metal frame and the rail,” explained Cigrang. “Omni’s IC and IC/ECR concrete crossings come with a full-depth solid rubber flangeway. A typical gauge panel will have more than 400 pounds of rubber between the concrete panel and the rail. All panels come with a skid resistant surface and are available with ADA flangeways.” Polycorp

“The evolution of Polycorp Epflex Railseal, since its inception in the mid 1980s, has been to focus on allowable deformation of the rubber at the railroad interface. Through finite element analysis, continuous in-track monitoring and implementing ideas gathered from customer feedback,

Polycorp Ltd. has been able to maintain and improve product design, quality and integrity,” said Brad Bedford, Technical Sales Coordinator at Polycorp. Epflex Railseal is made of extruded virgin rubber and absorbs destructive energy from both rail deflection and vehicular traffic in order to extend the expected crossing life. “These destructive forces along the interface would typically result in the asphalt lifting, heaving and breaking up, causing drivers to become distracted while ‘picking’ their route over the crossing to avoid vehicle damage. Far too often, these distractions result in the driver not seeing approaching vehicle and train traffic, which in turn, leads to collisions in the crossings. The large number of collisions at level crossings led to legislation to maintain surface standards through the crossings. Epflex Railseal Interface became the flagship product for asphalt crossings due to the many features, functions and benefits that have been uniquely engineered and implemented. Increased longevity and reduced crossing maintenance cycles led to Epflex evolving as a standard interface for all grade crossing mediums,” explained Bedford. Bedford said the Railseal profiles are designed to match exact contours of the rail to seal out surface water and foreign elements in order to reduce fouled and contaminated ballast, all the while maximizing the structural support of the crossing and the life cycle of the rail fastening system.

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grade crossing surfaces

“As always, Polycorp will unconditionally guarantee that Epflex Railseal Interface will effectively perform for the life of the grade crossing and will be completely reusable as an interface in a second crossing rehabilitation resulting in a lower cost per year when amortized over the life of the product,” said Bedford. Rocla

“Being that we are in the heart of coal country, dealing with heavy loads isn’t something new to us,” said Scott Craig, sales manager-special products for Rocla Concrete Tie, Inc. “At Rocla, we had to learn early on that our crossing panels would have to withstand the daily pounding of hundreds of not just heavy trucks, but ones that were overloaded. Through the years, improvements have been made to both the reinforcement and concrete designs, but the most recent change has come with the style of bearing pad. The current pad interfaces with the concrete panel and the railroad tie and has been engineered to provide optimal resilience and dampening characteristics to help with the demanding application. With regard to maintenance, the Rocla modular panel design makes it easy for the removal and re-installation of the crossing panels for those occasions where track repair or surfacing is necessary.” Craig explained that maintaining the integrity of the crossing is where safety can be enhanced. “Rocla will provide a quality product/crossing that will meet or exceed the necessary requirements. We also provide a rough concrete finish to help with traction during inclement weather, along with a concrete additive for improved water repellency and salt penetration,” said Craig. Transpo

Transpo Industries, Inc., manufactures the BODAN® Grade Crossing system (photo, p. 29), which uses a bridge design concept that transfers vehicle axle loads directly to the rails. “Panel tests show they are capable of withstanding loads in excess of 44,000 pounds, which allows the crossing to deal with heavier vehicle and rail loads. In addition, BODAN panels can be removed for easy maintenance, and it should be noted that there are BODAN crossings on 65 mph roads with heavy truck traffic that have gone six to eight years with no maintenance needed,” said Karen Dinitz, vice president and director of marketing and communications at Transpo. BODAN®’s skid resistance surface can be further enhanced by incorporating Transpo’s Color-Safe® directly onto the precast grade crossing system panels. “The FRA is testing the efficacy of colored pavement on dynamic envelopes as a safety enhancement at crossings. Transpo offers Color-Safe®, a durable pavement marking material (used by cities across the country to demarcate bus lanes and bike lanes) to create a highly visible, highly durable warning/reminder for drivers of the presence of a rail crossing. The durability of the pavement marking is particularly important at rail crossings to limit the disruption of service, as well as to create a sustainable safety feature,” said Dinitz. RA

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December 2015 Railway Age 33

Red and robust San Diego’s landmark light rail system, with its distinctive bright red LRVs, continues to expand in ridership and reach. By carolina Worrell, Managing Editor

here are two things that make San Diego, Calif., among the most pleasant places to live in the U.S. One is the climate. The other is the San Diego Metropolitan Transit System (MTS) light rail network, better known as the San Diego Trolley, considered the first of the modern LRTs in the U.S. With a record ridership of almost 97 million trips in FY 2015—breaking the previous record set in FY 2014 by nearly 2 million—and a major expansion project under way, MTS is well on its way to surpassing 100 million passengers in FY 2016.

Courtesy of San Diego MTS

Mid-Coast Trolley

Construction on San Diego MTS’ $2 billion, 11-mile Mid-Coast Trolley project is expected to begin in 2016 and will extend LRT service north from Santa Fe Depot in Downtown San Diego to the University City community, serving major activity centers such as Old Town, the University of California, San Diego (UCSD), and Westfield UTC. Completion of the Mid-Coast Trolley is slated for 2021 or 2022. The route begins just north of the Old Town Transit Center and travels in existing railroad right-of-way and alongside Interstate 5 to Gilman Drive. It crosses to the west side of I-5 just south of Nobel Drive and continues on to the UC San Diego campus, crosses back to the east side of I-5 near

Voigt Drive to serve the UC San Diego east campus and medical centers on the east side of I-5, transitions into the median of Genesee Avenue, and continues down Genesee Avenue to the Westfield UTC transit center. Nine new stations will be constructed at Tecolote Road, Clairemont Drive, Balboa Avenue, Nobel Drive, VA Medical Center, Pepper Canyon (serving UCSD west campus), Voigt Drive (serving UCSD east campus), Executive Drive, and the Terminus Station at the Westfield UTC transit center. The project will connect corridor residents with other Trolley lines serving Mission Valley, East County, and South County. As an extension of the existing Blue Line, it will offer a one-seat ride from the international border at Tijuana, Mexico and communities south of Downtown San Diego all the way to University City. This new service “will enhance direct public access to other regional activity centers and improve travel options to employment, education, medical, and retail centers for corridor residents, commuters, and visitors,” MTS says. The San Diego Association of Governments (SANDAG) will pay for half of the project with funds from the region’s TransNet half-cent sales tax for transportation. MTS is seeking the other half of the funding from the Federal Transit Administration (FTA) New Starts Program. December 2015 Railway Age 35

san diego mts Sorrento Valley Double-Track

Courtesy of SANDAG

SANDAG has been working with North County Transit District (NTCD) and MTS to add a second, 1.1-mile main line to the north from the Sorrento Valley Station. The $31.8 million project began construction in February 2014 and was completed this past November. In addition to double-track construction, the project included elevating portions of the existing track bed, placing it above the 50-year flood level; replacing two aging wooden trestle bridges; building retaining walls adjacent to the tracks near the parking lots; and installing an embankment protection system along the westerly side of the track, adjacent to Los Peñasquitos Creek. A new 81-space surface parking lot was added south of the station, across Sorrento Valley Boulevard. There are now 189 parking spaces to serve transit riders. The project improved a critical section of the 351-mile LOSSAN rail corridor, which serves as a vital link for passenger and freight movements in San Diego County. The LOSSAN corridor is the second-busiest intercity passenger rail line in the U.S. and is the only viable freight rail link between San Diego and the rest of the nation. LRV Overhaul

San Diego MTS also recently completed a $660 million Trolley Renewal project to overhaul the agency’s entire system. One

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san diego mts

of the biggest accomplishments, MTS says, was introducing low-floor light rail vehicles (LRVs) on the UC San Diego Blue Line. The Trolley Renewal project began in fall 2010. The new LRVs, which were manufactured by Siemens in Sacramento, Calif., were introduced on the Blue Line this past January and provide more than 50,000 weekday passengers with faster trips, easier boarding and more comfortable rides. Running from the U.S.-Mexico border through Downtown San Diego, the Blue Line is the busiest transit line in the San Diego region, providing more than 15 million passenger trips in FY 2014, MTS says. In fact, with 16.5 million riders in FY 2015, the Blue Line was MTS’ mostused trolley line, gaining a ridership increase of 9.5% over the previous fiscal year. The launch of low-floor service on the Blue Line is part of a $600 million effort to modernize the entire Trolley system. Trolley Renewal is funded primarily by California Proposition 1B bond funds and TransNet, the regional halfcent sales tax for transportation administered by SANDAG. In addition to low-floor cars, the Trolley Renewal project included new station platforms, next-arrival electronic signs, signaling systems, overhead catenary, larger shelters and track replacement. “In the San Diego region, we are making historic investments to keep our transit system in a state of good repair, as

well as to expand transit services,” SANDAG Chair and Santee Councilmember Jack Dale said. “Expanding transit ridership is one of our top priorities, and it’s a key strategy for our region to meet greenhouse gas emission reduction targets.” The new low-floor LRVs will improve operational efficiency by eliminating steps and mechanical lifts for people with disabilities. Trolley platforms are now nearly level with the floor of the trolley, making boarding and de-boarding much easier for all passengers. An integrated access ramp for people with mobility devices also deploys easily. This new feature eliminates the need for mechanical lifts that slowed boarding and caused delays. Other amenities include larger windows, higher ceilings, improved lighting, dedicated seating access for special-needs passengers, and more room for standing passengers. MTS now operates 76 low-floor cars throughout the entire system. Up to 28 will be dedicated to operations on the Blue Line. In September 2009, MTS placed an order for 65 low-floor Siemens S-70 Ultra Short cars and took delivery of the last car in August 2014. MTS says it anticipates getting nine additional S-70 cars to handle demand on the Blue Line in late 2018/early 2019. “We will need to replace 52 Siemens SD-100s in the early 2020s and require 36 S-70 LRVs for the Mid-Coast extension in 2021,” MTS says. Exact timing for those procurements has not been established. RA

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Untangling the tale of PTC

Norfolk Southern’s Executive Chairman responds to Railway Age’s October 2015 issue cover story on Positive Train Control.

By WICK MOORMAN

read the recent Railway Age article “The Tangled Tale of PTC” (RA, October 2015, p. 20) with a combination of astonishment, disbelief, and irritation. The essential thesis is that PTC is wildly more expensive and complex than it needs to be due to a combination of hands-off, vision-free, short-term-oriented CEOs, and railroad signal departments more focused on guarding their turf than advancing the best interests of their respective companies. According to the contributors, this combination of at-best inept railroad managers has completely missed all of the great benefits that PTC can deliver while allowing the project to be horribly mismanaged. I worked in Norfolk Southern’s transportation planning group when we studied what were then ATCS and ARES. Later, I was head of NS’s information technology and strategic planning functions, and finally the CEO from 2005 until 2015. I have a long experience looking at the concept of PTC, with all of its potential benefits and costs, and I can state with complete assurance that the arguments presented in the article are completely misguided and just plain wrong. The vast majority of people in the industry would agree. The first argument offered in the article is that the railroads lack the vision to see and capitalize on the potential business benefits of PTC. These alleged benefits, which are

termed as “strategic,” focus around the possibility of implementing moving-block systems and the availability of continuous real-time information from train operations. There is some benefit from better and more real-time operations—for example, enhanced opportunities to improve pacing in our onboard management systems—but the savings opportunities are relatively small, and we can get most of that today by merely installing GPS and wireless capabilities on our locomotives, a much cheaper option than PTC. Most of the ire in the article is directed at the supposedly lost opportunity to implement a moving-block system, thereby allowing for abandonment of the current signal systems and increased line capacity. What the article’s contributors fail to mention is that the FRA regulations governing implementation actually require that PTC systems be integrated with existing signal systems for lines with speeds greater than 49 MPH. These same regs also require broken rail protection for such lines, and the track circuit technology that underlays today’s signal systems is still the only reliable method of providing that protection. Even assuming that alternative broken rail protection becomes viable, the FRA requirements—and the added software complexity to implement a true moving-block system—would take additional years December 2015 Railway Age 39

UNTANGLING PTC

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The Tangled Tale of PTC

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to develop and implement. Even if technically possible, the arguments for moving-block are overstated. The vast majority of the U.S. rail network mileage is not at capacity, and those areas that are at capacity can

“The bottom-line issue is the complexity of PTC. Much of the essential technology didn’t exist when PTC was conceptualized.” be addressed effectively through other means at far less cost. This was a conclusion we reached at NS more than 20 years ago, and the math still works today. The second recurring theme in the article is that the CEO’s did not “bother” to familiarize themselves with the capabilities of PTC and thereby see all its possibilities—a so-called “leadership mistake.” Because of that, they turned the project over to “technicians” with no charge to execute the project as efficiently as possible. The clear inference is that the Class I CEOs did not take the time to understand the implications of the single-biggest capital project in our

careers and that we handed the project off to others with no oversight or accountability. Not true by a long shot. Using Jim Young as an example of someone who “compromised the principles of strategic leadership” was particularly offensive. Jim was a terrific person and a great CEO, and I know from many conversations with him that he fully understood what PTC could and would do on the Union Pacific. At Norfolk Southern, the PTC oversight committee was as high-level as possible. It included myself, Mark Manion, our COO, and Deb Butler, our CIO and EVP Strategic Planning. We held monthly meetings with the project team, reviewing technical

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UNTANGLING PTC

issues, coordination issues with the other carriers, and all-too-often the issues dealing with the FRA, which have presented and continue to represent additional costs and delays for all of the carriers. The NS team was keenly aware of the need to control costs and realize any benefits possible, and I have no doubt that was the case for all railroads. Another idea presented is that the railroads have made a major mistake in not having a systems integrator. But this ignores the remarkable achievements of the seven U.S. major carriers to come together and develop solutions for what is a remarkably complex system of systems. Working together, our teams have acquired the necessary bandwidth for our communications requirements, fostered the development of new radio technology that is essential for the system to function effectively, and developed common standards for interoperability. The bottom-line issue is the complexity of PTC. Much of the essential technology, particular in communications infrastructure such as Wi-Fi and cellular networks, along with adequate processing capability at a reasonable cost, didn’t even exist when PTC was first conceptualized. And we’re still developing some of that technology today. It is this sheer technological complexity that is possibly the singlebiggest concern in terms of the potential impact on reliability, quite separate from and far more fundamental than a “lack” of a systems integrator. With PTC we are assembling a system of systems, all of which have to function with close to six-sigma reliability for the entire system to operate at the current railroads’ levels. Not only are these systems highly complex, many of them are going to be operating in one of the most hostile industrial environments—a moving diesel-electric locomotive. While we are all working feverishly to build reliability into every system and will rigorously test PTC, the possibility of disruptions as PTC is implemented is a very real one. PTC was an unfunded mandate

wouldn’t be that hard to install. forced upon the industry in 2008 Now, seven years and billions of following a tragic accident caused by dollars into the project with billions human failure, and is the best example more to go, we have clearly seen just you will ever find of a well-intentioned how wrong these “experts” were. RA terrible piece of legislation. It was an idea promoted by a handful of “experts” Moorman is the former Chairman, President based on three flawed premises: That and Chief Executive Officer of Norfolk it wouldn’t be that expensive; that DEC RR Age_ARI Image Ad 10/22/15 11:12 AM Page 1 Southern Corp. theARI-35515 technology was mature; and that it

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December 2015 Railway Age 41

A Commanding Aura Death will not quell Linda Morgan’s legacy, which will long function as a flashpoint for debate. By FRANK N. WILNER, Contributing Editor

inda J. Morgan, an often polarizing presence as the nation’s cardinal rail regulator during a tumultuous period when four Class I railroad mergers were approved, died Nov. 4 at 63 following a battle with cancer. For most of her nine years (April 1994 to April 2003) as a Senateconfirmed member of the Interstate Commerce Commission (ICC) and its successor Surface Transportation Board (STB), she served as chairman. Energized by controversy, Morgan assertively presided over one of the 20th century’s more contentious mergers (Union Pacific-Southern Pacific); employed her bully pulpit to persuade CSX and Norfolk Southern to collaborate on a roughly equal partition of Conrail after their bidding war sent Conrail stock levitating; and then challenged statutory boundaries by imposing a 15-month merger moratorium, subsequently upheld by a federal appellate court, so the STB could write new pro-competitive merger rules. Of the moratorium, it derailed a fifth major railroad marriage attempt— BNSF with CN. On matters of first impression, where bright lines of law and regulatory precedent blur, Morgan so convincingly pressed her conclusions on fellow regulators that they rarely dissented. Not since Franklin D. Roosevelt confidant Joseph B. Eastman, an ICC member for a quarter-century until World War II’s waning months, has there been a rail regulator with so 42

Railway Age

December 2015

commanding an aura as Morgan. Death will not quell her legacy, which will long function as a flashpoint for debate. Morgan’s playbook was libertarian tinged. At a Senate confirmation hearing, she said, “Private-sector initiative can provide for better solutions … tailored to the needs of the involved parties.” Said a transportation attorney, “Linda wasn’t afraid to make difficult calls. When she ruled against you, she gave a coherent explanation.” Morgan’s pluck derived from achieving entry to elite private schools —Washington’s Sidwell Friends, Vassar College (pictured), Georgetown Law— and an endgame-focused father, Edward Pierpont Morgan, whose middle and last names summon recollections of railroad baron John Pierpont Morgan. While not directly related to the Wall Street banker, Edward’s career was equally strenuous, combative and controversial—FBI official and Senate staff investigator of the Pearl Harbor attack and of communist influence within the State Department. Linda Morgan effectively employed journalists to deliver messages otherwise restricted by STB prohibitions on ex parte communications. During a Senate hearing into “Conrail merger implications,” Sen. Arlen Specter (R-Pa.) quizzed Morgan over an interview she gave Washington Post reporter Don Phillips in which he inferred the STB “is prepared to impose a plan that would split control of the East equally between [CSX and Norfolk Southern].” Responded Morgan: “I cannot speak to the inferences that have been drawn.” Her professional relationship with trade-press reporter David Cawthorne was so embracing that Morgan delivered a seven-minute eulogy at Cawthorne’s funeral, making it

available for publication in the Congressional Record. Linda Joan Morgan, born in Chester County, Pa., May 19, 1952, worked in her father’s post-government-service law firm, Welch & Morgan, upon her 1976 graduation from Georgetown Law. She entered government service in 1978 as Democratic counsel to the Senate Commerce Committee, and in 1987 was named its first female general counsel. President Clinton nominated her to the ICC in 1994, naming her chairman in 1995 to superintend transformation of the ICC into a more compact STB. She remained Clinton’s choice as chairman following confirmation to a second term, and remained chairman under Republican George W. Bush until November 2002, when Roger Nober was named chairman. She resigned her seat in April 2003, eight months shy of term expiration. Morgan subsequently became Union Pacific’s Washington counsel at the law firm Covington & Burling, adding Canadian Pacific board member to her duties in 2005—the two railroads coincidentally were primary beneficiaries of her decision to impose the merger moratorium derailing the BNSF-CN marriage attempt. In 2011, Morgan joined the Washington law firm Nossaman, with railroad clients including Amtrak, which appointed her to the Chicago Gateway Blue Ribbon Panel that in October recommended operating and infrastructure improvements to relieve Windy City rail congestion and improve service. She is survived by husband Michael E. Karam, a Justice Department tax attorney, and a daughter who teaches private school pre-kindergarten. RA

People

Meetings

High profile Washington Metropolitan Area Transit Authority (WMATA) has named Paul Wiedefeld asits new General Manager and Chief Executive Officer. Wiedefeld was formally appointed at WMATA’s Nov. 19 board of directors meeting. He brings 30 years of public and private sector transportation management experience in the rail and airline industries. Wiedefeld previously was CEO of Baltimore/ Washington Thurgood Marshall International Airport (BWI), Wiedefeld where he managed an operation that served a record 22.7 WMATA million passengers in 2012. At BWI, he oversaw the largest expansion in the airport’s history including design and construction of a 26-gate terminal for Southwest Airlines. He is also credited with leading BWI’s growth to become the busiest passenger airport in the Washington metropolitan region. Prior to leading BWI, Wiedefeld’s career included service as Administrator of the Maryland Transit Administration, where he managed regional/ commuter rail, subway, light rail, buses and paratransit day-to-day operations. He also spent a decade in the private sector in engineering project management with WSP | Parsons Brinckerhoff’s aviation practice.

Jan. 6-9, 2016

Chicago Freight Car Leasing— Stephen Collins named Director of Fleet Engineering. Motive Power Resources Inc.— Terry Monaghan named Vice President of Sales. MTA New York City Transit — Joe Leader, a 29-year veteran, has resigned his post as Senior Vice President Subways. Vice President and Chief Operating Officer-Service Delivery Wynton Habersham will fill Leader’s position in an acting capacity. National Railroad Hall of Fame— Edward Gowen Budd, founder of the Edward G. Budd Manufacturing Co. in Philadelphia, has been inducted. Ontario, Canada, Ministry of Operation—David Collenette, former Canadian Transport Minister, has been appointed as special advisor to help develop high-speed rail options on the Toronto-London-Windsor corridor. RailComm—Troy Haworth named Vice President of Sales. Siemens Mobility Division—Sabrina Soussan, Executive, named CEO of the division’s High Speed and Commuter Rail and Locomotive Business units,

reporting to Siemens Mobility Division CEO Jochen Eickholt. WSP | Parsons Brinckherhoff— Michael Unger appointed area manager for Colorado and Wyoming. He will be responsible for overseeing the operations of the transportation infrastructure division’s projects in both states.

100 YEARS AGO in

December 1915 Another investigation of the new haven The investigation of the affairs of the New York, New Haven & Hartford, by the Public Service Commission, by order of the legislature of Massachusetts, was begun at Boston on Tuesday of this week, as had been announced. The action of the legislature, last spring, in empowering the railroad company to proceed with its plans for reorganization appears to have been conditioned on the approval of numerous past acts by the Public Service Commission, or on approval by the legislature of a report to be made by the commission after making an investigation.

2016 NRC Conference and REMSA Exhibition Hotel del Coronado, San Diego, Calif.; Website: nrcma.org/2016 nrcconference

Jan. 11, 2016 Chicago Railroad Mechanical Association, Railway & Industrial Services, Inc. 2016 AAR Rule Changes Odyssey Golf Course and Banquets, Tinley Park, Ill. Contact: Ken Derby, thecrma1988@gmail.com Website: thecrma.org

Jan. 12, 2016 Western Railway Club Dinner Union League Club of Chicago Contact: wrclub13@comcast.com

Jan. 21, 2016 Southwestern Rail Conference Dallas, Tex. Contact: peter@ texasrailadvocates.org

Feb. 8, 2016 Chicago Railroad Mechanical Association, Wheelworx What Goes On at a Wheel Shop Odyssey Golf Course and Banquets, Tinley Park, Ill. Contact: Ken Derby, thecrma1988@gmail.com; Website: thecrma.org

March 3, 2016 Railroad Day on Capitol Hill Renaissance Washington, Washington, D.C. Website: member. aslrra.org/ aslrra/RRDay2015 Contact: Kathy Cassidy, kcassidy@aslrra.org

March 8, 2016 Western Railway Club— Railway Age Railroader of the Year Dinner Union Club League of Chicago Contact: wrcclub13 @comcast.com December 2015 Railway Age 43

Products Axle tester offers improved inspection quality, performance

GE Measurement & Control has introduced the Compact Hollow Axle Tester (CHAT), combining hollow-axle inspection mechanics and ultrasonic angle-beam probes with GE’s highquality ultrasonic instrumentation. For organizations with hollow axle

inspection requirements, CHAT significantly increases productivity and drives improvements in quality and traceability, the company said. Trains traveling at speeds greater than 124 mph (200 kph), as well as urban commuter and/or metro trains subject their hollow axles to increased strain, which puts their structural integrity and reliability at risk. As a result, hollow axles must be inspected regularly for early detection of flaws to assure the cracks do not propagate quickly. GE’s CHAT allows inspectors to perform regular evaluations and create dynamic inspection plans through fast data acquisition and image display with an intuitive interface and advanced software. “This product brings a new level of inspection quality and flexibility to the rail industry, at a significantly lower price than existing automated systems in the market,” says Dr. Pierre Marty, Senior Product Manager at GE. Benefits of GE’s CHAT solution include:

• Light and compact design enabling a single person to move the trolley around and operate it alone. • Ability to transport it in a small van without lifting tools. • Composite frame for electrical protection to operate where electrified rails are present. • Quick installation on site for immediate inspection. • Multi-Channel UT instrument USIP 40 in 2, 5 or 10 channels configuration. • Closed loop and seals for oil coupling to minimize oil spillage during inspection. • Quick inspection time: 8 minutes for the signal acquisition, and less than 15 minutes including installation and recording of results. • Large variety of probe holders for various bore diameters and number of probes for various specifications. • Compliance with all specifications for conventional UT inspection of hollow axles. GE supports CHAT globally, with comprehensive after-sales services and training programs.

Custom-designed connector for regenerative power In June, France’s Alstom, a world leader in the field of integrated tramway systems, delivered the first of its 32 Citadis trams to Rio de Janeiro. The new catenary-free urban light rail system is being specially constructed for the 2016 Summer Olympics in Brazil, and has been designed to consume less energy than traditional, catenary-based systems—a major savings that the city believes will make a big difference on the carbon footprint of the games. The Alstom technology that makes this possible is called Ecopack—a regenerative power system that collects energy during braking and stores it in supercapacitors. But getting Ecopack to work within strict size, weight and power specifications required revisiting the way energy is collected, transmitted and stored, which in turn meant a new 44

Railway Age

December 2015

kind of interconnect was needed. The Veam Power Plate connector, made by ITT Interconnect Solutions, is the component that solves this problem. A multi-pole power interconnection system suited for high-power applications in high-stress environments, Power Plate was customized for Alstom’s specific Ecopack requirements. The connector links the power equipment, which collects energy during braking, with supercapacitors on the roof of the vehicle that stores the energy for later use. “We needed a prototype designed from scratch, and we needed it quickly,” said Massimo Rigoselli, Technical Manager of trams at Alstom Transport in Sesto San Giovanni, Italy, where the trains were designed. “ITT Veam delivered—they provided a model beyond our specifications, and met our deadline.”

Power Plate has been customized for Alstom’s specific Ecopack requirements.

With the delivery of the first Citadis tram to Rio de Janeiro this summer, Alstom announced that Ecopack, along with Power Plate, would become standard equipment on all Alstom catenary-free trains in the near future. The 28-km-long Citadis line , which will partially open in early 2016, is expected to be environmentally sound.

Ad Index Company

Phone #

Fax

URL/Email address

Page #

American Railcar Industries

636-940-6020

636-940-6100

sales@americanrailcar.com

Amsted Rail Group

312-922-4516

312-922-4597

kskibinski@amstedrail.com

CIT

212-461-5713

212-461-5694 abby.cohn@cit.com

Custom Truck & Equipment

816-241-4888

816-241-3710

bboehm@cte-equipment.com

DALKO Resources

866-707-4286

724-962-3658

cboughner@driworldwide.com

Danella Rental Systems, Inc.

610-828-6200

610-828-2260

pbarents@danella.com

Dixie Precast

770-944-1930

770-944-9136

fbrown142@aol.com

Ellwood Crankshaft & Machine

724-347-0250

724-347-0254

ecgsales@elwd.com

FreightCar America

312-928-0850

312-928-0890

tbaun@freightcar.net

Greenbrier Companies The

800-343-7188

503-684-7553

gbrx.info@gbrx.com

Hi-Rail Corporation

800-274-7245

319-455-2914

info@hirail.com

MAC Products

973-344-0700

973-344-5891

edward.gollob@macproducts.net

Metra Marketing

312-542-8357

312-322-6619

NRC

202-715-2920

202-318-0867 info@nrcma.org

NRE

618-241-9270

618-242-8519 sales@nre.com

OMNI Products, Inc.

815-344-3100

815-344-5086

ORX

814-684-8484

glenn@orxrail.com

Plasser American Corp.

757-543-3526

757-494-7186

plasseramerican@plausa.com

Power Drives, Inc.

716-822-3600

716-824-4817

r.panzica@powerdrives.com

Progress Rail Services

256-505-6402

256-505-6051

info@progressrail.com

Railquip Inc

770-458-4157

770-458-5365

sales@railquip.com

Railway Educational Bureau, The

402-346-4300

402-346-1783

bbrundige@sb-reb.com sales@rwy.com

bcigrang@omnirail.com

31 C4 5

32 24, C3

Railway Equipment Co.

763-972-2200

763-972-2900

RailWorks

866-905-7245

952-469-1926 jrhansen@railworks.com

Rio Grande Chemical, Ltd.

956-686-2221

956-686-8290

Roxtec

800-520-4769

918-254-2544 railway@roxtec.com

SMBC Rail Services LLC

312-559-4800

888-4RAILCAR

sales@smbcrail.com

TTX Company

312-606-1450

felix.castillo@ttx.com

Unitrac Railroad Materials, Inc.

412-298-0915

865-693-9162

ppietrandrea@unitracrail.com

VTG Rail

618-343-0600

618-659-9532

sales.northamerica@vtg.com

david.bertram@rgcx.com

Zhuzhou CSR Times Electric Co.

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

Advertising Sales MAIN OFFICE Jonathan Chalon, Publisher 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com AL, AR, IN, KY, LA, MI, MS, OH, OK, TN, TX Marc Condon 20 South Clark Street, Suite 1910 Chicago, IL 60603 (312) 683-5021 mcondon@sbpub.com CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, PA, RI, SC, VT, VA, WV, Canada – Quebec and East, Ontario Jerome Marullo 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7260 Fax: (212) 633-1863 jmarullo@sbpub.com

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

Scandinavia, Spain, Southern Germany, Austria, Korea, China, India, Australia, New Zealand, South Africa, Russia, Eastern Europe Baltic States, Recruitment Advertising Julie Richardson International Area Sales Manager The Priory, Syresham Gardens Haywards Heath, RH16 3LB United Kingdom +44-1444-416368 Fax: +44-(0)-1444-458185 jr@railjournal.co.uk Italy, Italian-speaking Switzerland Dr. Fabio Potesta Media Point & Communications SRL Corte Lambruschini Corso Buenos Aires 8 V Piano, Genoa, Italy 16129 +39-10-570-4948 Fax: +39-10-553-0088 info@mediapointsrl.it

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

December 2015 Railway Age 45

equipment Sale/Leasing

Available For Lease

◆ 3,600 cu. ft. Open Top Hoppers. 45 degree slopes for aggregate, coke, coal, etc. ◆ Covered Hopper Cars – 4,650 & 4,750 cu. ft. cars with trough hatches & gravity gates. 268K Gross Rail Load. ◆ Covered Hopper Cars – 3,000 cu. ft. cars with circular hatches & gravity gates. ◆ Flat Bottom Gondolas – 4,000 cu. ft. cars, 268K Gross Rail Load and no interior bracing. ◆ Mill Gondolas – 65’ 6” inside length with 5’ sides and 52’ 6” inside length with 4’ 6” sides. For additional information and pricing, please contact John Goodwin phone (605) 582-8318 e-mail jgoodwin@mwrail.com www.carmathinc.com

Available for Lease 4650 cu ft Covered Hopper Cars 3600 cu ft Open Top Hopper Cars 100 ton Automated/Manual Ballast Cars 4480 cu ft Aluminum Rotary Open Top Gons 65 ft, 100-ton log spine cars equipped with six (6) log bunks Contact: Tom Monroe: 415-616-3472 Email: tmonroe@atel.com

products & services

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Railway Age

December 2015

(713) 667-0406 FAX (713) 667-1651 Web address: www.ednarice.com Email: resume@ednarice.com

6750 West Loop South Suite 735 Bellaire, Texas 77401-4111

Rail news on the go?

There’s an app for that. Introducing the new Railway Age app •Up-to-the minute daily rail news •Full access to all previous/archived editions of monthly magazine •Automatically receive new issues on IOS5 or higher •Download and save individual pages to enjoy offline or on the go •Social media integration to easily share news

Financial edge DAVID NAHASS

Festivus, railroad style

he rail industry and its many observers have been absorbed by the Canadian Pacific Railway’s pursuit of Norfolk Southern. Without recounting the entire story, the whole scenario (minus the regulatory stew that would be an integral part of any Class I merger) is a classic “boy meets girl” scenario with a twist. Succinctly, CP’s President and CEO, E. Hunter Harrison, made an offer for NS. NS rebuffed the CP offer. Here’s the twist: After the initial NS rebuff, CP has since taken to the court of public opinion to try to sway the mélange of interested parties (shippers, investors, regulators) that a transcontinental railroad would be in everyone’s best interest. The strategy of pursuing the investors rather than NS’s management is akin to the “boy” going to the parents of the “girl” to explain why he really is the best person for their daughter. The merger plan seems to have merit. Certainly, anything that would lay claim to decreasing congestion in and around Chicago and for keeping freight on the rails for longer periods of time (over trucks) has merit, but it also has real-life hurdles that would need to be dealt with prior to acceptance by the stakeholders involved in the rail economy. However, what is striking is how quickly this process has gone from a private matter between NS and CP to an open airing of grievances, and in the Festivus tradition of what seems like boardroom-style feats of strength. (If you don’t recognize the term, try Wikipedia or Google Seinfeld, Season Nine Episode Ten, “The Strike.”) Hunter Harrison is a tremendous executive and leader in the railroad industry. Many industry observers describe these events as “Hunter being Hunter” a la Manny Ramirez, whose “Manny being Manny” antics 48

Railway Age

December 2015

entertained a generation of baseball fans. Part of the shrewdness of this series of events is the use of the bully pulpit to change how the circumstances are being perceived and create focal points that might distract away from the negatives associated with the terms of the deal being presented, such as the offering of a low premium to current share value or how the merger of a U.S. and Canadian company might create some anxiety about the selection of a corporate headquarters and the potential loss of Canadian or U.S. jobs.

Hunter Harrison is not worried about the next deal, preferring instead to let a Class I merger be the coup de grace of a great career. It is striking that the rules governing public companies encourage this strategy. Outside of the view of the public eye, the world often operates in more pragmatic fashion. In the multi-billiondollar world of equipment finance transactions, the buying and selling of assets and leases relies as much on price and terms and conditions of sale as upon the reputations of the professionals involved and the discretion they exercise in closing deals. While the price is the price, like with the CP and the NS, it’s the details that matter. Investors that can’t close on time or that cannot stand behind their

offers on equipment are identified as such. Those reputations stick with those investors for a long time. Instead of a chuckle and a good ’ol “Manny being Manny” off-hand comment, unsportsmanlike conduct in the buying, selling and leasing of assets may keep companies from doing business for years. An investor or transactional professional that adopts a combative approach and writes letters to corporate presidents and boards of directors may find themselves wondering where all the deals have gone and why their bids are falling short in the hunt for new business. Hunter Harrison is prepared to live with the consequences, positive or negative. His “go big or go home” approach has led to an illustrious career and his bonus pool is probably at max capacity—win or lose. The same is true for the primary NS stakeholders rejecting the CP proposal. On the equipment finance transaction side, closings generate bonuses and increase personal earnings. No one wants to be on the receiving end of a busted deal that someone is counting on to hit a sales target or a corporate budget goal. That may quickly convert an opportunity from one that is about business to one that is personal. The most successful people in finance are those who deliver on their promises on price, on terms and conditions and on end results. Those are the people that get “the call” when someone needs a deal to close quickly and, most important, fairly. Repeat business pays career long dividends. Maybe at the age of 71, Hunter Harrison is not worried about the next deal, preferring instead to let this Class I merger be the coup de grace of a great career. Great prime time viewing in either case, this is truly a Festivus for the rest of us. Got questions? Set them free at dnahass@railfin.com.

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