May 2015 Railway Age by Railway Age

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May 2015 | www.railwayage.com

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RAILROADS FREE, LEAVE US BE! Reregulation will lead to ruin

WMATA back on track M/w focus: Friction Management Freight car market outlook

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RailwayAge

may 2015

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Railroads free, leave us be! 20 Friction management

WMATA back on track

Luther Miller tribute

Fleet revitalization

News/Columns From the Editor

Update

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North American Freight Car Fleet, by Group (Counts at year end, shown in thousands) 1,481

1,482

1,499

1,513

1,553

304

300

303

315

339

371

166

160

154

149

145

142

237

231

230

232

228

195

193

191

194

193

494

458

466

479

493

Covered Hoppers Box Cars

Total=1,515

133 2009

124

121

118

114

111

2010

2011

2012

2013

2014

Tanks Hoppers Gondolas Flats

On the Cover A BNSF stack train crosses Lake Pend Orielle at Sandpoint, Idaho. Photo by Bruce Kelly

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. COPYRIGHT© 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 Int’l, PO Box 25542, London, ON N6C 6B2. Address all subscriptions, change of address forms and correspondence concerning subscriptions to Subscription Dept., Railway Age, P.O. Box 1172, Skokie, IL 60076-8172, Or call toll free (800) 895-4389, or (402) 346-4740. Printed at Cummings Printing, Hooksett, N.H. ISSN 00338826. May 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

0.5625 + ECP = 5% gain

efore I explain what the above numbers mean, some background: At press time (which around here we call our “drop dead date”) on May 1, the U.S. DOT and Transport Canada finally released what most of this industry has been waiting for (and arguing over): the final rule on tank cars carrying flammable liquids— crude oil and ethanol. The final rule, developed by PHMSA and FRA in coordination with TC, “focuses on safety improvements that are designed to prevent accidents, mitigate consequences in the event of an accident and support emergency response to an accident.” Drilling down (pun intended), the rule establishes “enhanced tank car standards and an aggressive, risk-based retrofitting schedule for older cars carrying crude oil and ethanol; requires a new braking standard that offers a superior level of safety by potentially reducing the severity of an accident or ‘pile-up effect’; designates new operational protocols for trains transporting large volumes of flammable liquids, such as routing requirements, speed restrictions and information access to local government agencies; and provides new sampling and testing requirements for unrefined petroleum-based products to improve classification.” The rule applies to “high-hazard flammable trains” (HHFTs), “a continuous block of 20 or more tank cars loaded with a flammable liquid or 35 or more tank cars loaded with a flammable liquid dispersed through a train.” New tank cars constructed after Oct. 1, 2015 are required to meet DOT Specification 117 design or performance criteria: 9/16-inch-thick tank shell, 11-gauge jacket, half-inch full-height head shields, thermal protection, and improved pressure relief valves and bottom outlet valves. Existing tank cars must be retrofitted with the same key components based on “a prescriptive, risk-based retrofit schedule that will require replacing the entire fleet of DOT-111 tank cars for Packing Group I, 2

Railway Age

May 2015

RailwayAge

which covers most crude shipped by rail, within three years, and all non-jacketed CPC-1232s in the same service within approximately five years.” The rule requires HHFTs to have in place a two-way end-of-train (EOT) device or a distributed power (DP) braking system. Trains meeting the definition of a “HHFUT” (high-hazard flammable unit train—another new acronym!), defined as “a single train with 70 or more tank cars loaded with Class 3 flammable liquids, with at least one tank car with Packing Group I materials,” must be operated with an electronically controlled pneumatic (ECP) braking system by Jan. 1, 2021. All other HHFUTs must have ECP braking systems installed after 2023. The rule restricts all HHFTs to 50 mph in all areas. HHFTs containing any tank cars not meeting the enhanced tank car standards are restricted to operating at 40 mph in high-threat urban areas. Railroads operating HHFTs must perform a routing analysis that considers, at a minimum, 27 safety and security factors, among them “track type, class, and maintenance schedule” and “track grade and curvature,” and select a route based on that analysis. Railroads must also provide state and/or regional “fusion centers” and state, local and tribal officials with a railroad point of contact for information related to the routing of hazardous materials through their jurisdictions. Finally, “offerors” (is that a new word?) must provide sampling and testing for all unrefined petroleum-based products and certify that hazardous materials are packaged in accordance with test results. Back to my headline: 0.5625 is 9/16ths, the DOT-117 tank car shell thickness. On May 1, stock prices for tank car builders Greenbrier and Trinity and ECP brake supplier Wabtec rose 5%. Need I say more? Didn’t think so.

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, 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 International Offices 46 Killigrew Street, Falmouth, Cornwall TR11 3PP, United Kingdom Telephone: 011-44-1326-313945 Fax: 011-44-1326-211576 International Editors: David Briginshaw, 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

FOUR WEEKS ENDING MARCH 28, 2015

CARLOADS

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

MAR. ’15 90,474 3,717 39,982 25,612 121,638 55,242 422,154 5,791 14,513 22,152 21,073 14,045 34,876 12,594 71,647 84,777 17,646 27,900 12,218 19,078 1,117,029

MAR. ’14 81,578 3,177 39,007 25,582 122,205 59,412 453,359 6,260 14,426 23,975 17,696 14,825 41,632 16,353 71,827 83,296 18,935 31,004 11,740 20,533 1,156,822

% CHANGE 10.9% 17.0% 2.2% 0.1% -0.5% -7.0% -6.9% -7.5% 0.6% -7.6% 19.1% -5.3% -16.2% -23.0% -0.3% 1.8% -6.8% -10.0% 4.1% -7.1% -3.4%

316,009

302,070

4.6%

1,433,038

1,458,892

-1.8%

SHORT LINE AND REGIONAL TRAFFIC INDEX 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 2015 MAJOR U.S. RAILROADS by Commodity TRAILERS CONTAINERS TOTAL UNITS

FOUR WEEKS ENDING MAR. 28, MAR. ’15 123,733 960,403 1,084,136

MAR. ’15 125,279 900,696 1,025,975

% CHANGE 6.6% -1.2% 5.7%

6,857 232,076 238,933

7,976 206,040 214,016

-14.0% 12.6% 11.6%

130,590 1,192,479 1,323,069

133,255 1,106,736 1,239,991

-2.0% 7.7% 6.7%

COMBINED U.S./CANADA RR TRAILERS CONTAINERS TOTAL COMBINED UNITS

Source: Monthly Railroad Traffic, Association of American Railroads

average weekly U.S. Rail Carloads: all commodities (not seasonally adjusted)

% CHANGE 8.5% -1.0% 3.0% 5.1% 9.5% -3.1% 8.9% -28.1% -18.7% -6.2% -0.4% -1.1% -3.4% -2.1% 56.8% -15.8% 5.7%

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

CANADIAN RAILROADS TRAILERS CONTAINERS TOTAL UNITS

ORIGINATED MAR. ’14 42,760 22,974 23,497 11,245 24,034 6,290 9,522 6,827 19,912 8,568 2,468 2,130 18,330 11,134 29,036 9,586 82,158

TOTAL CARLOADS, MARCH 2015 VS. 2014

CANADIAN RAILROADS ALL Commodities

ORIGINATED MAR. ’15 46,405 22,754 24,209 11,814 26,318 6,097 10,372 4,906 16,189 8,038 2,457 2,107 17,713 10,900 45,521 8,067 86,837

BY Commodity

Transportation (train and engine) 70,722 (+7.25%)

Executives, Officials, and Staff Assistants 9,950 (+1.10%)

Professional and Administrative 14,299 (+2.34%)

Total employees: 172,970 % change from mar. 2014: 6.14% Transportation (other than train & engine) 6,670 (-0.25%)

Maintenance of Equipment and Stores 31,234 (+5.10%)

Maintenanceof-Way and Structures 37,453 (+2.59%)

Source: Surface Transportation Board

Employment continues year-over-year gains Figures released by the Surface Transportation Board show Class I total railroad employment rose a healthy 6.14% in March 2015, measured against March 2015. The increase was powered by a 7.25% year-overyear rise in Transportation (train and engine), which again led gains in five out of six exmployee categories. Transportation (other than train & engine) was the only category, the second month in a row, to experience a decline at 0.25%. 4

Railway Age

May 2015

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Industry Outlook

Ontario to fund Hurontario LRT Canada’s Ontario Province will be covering the entire cost of a 14.2-mile, $1.6 billion light rail line connecting the Port Credit (Mississauga) and Brampton GO Transit regional/commuter rail stations, Transportation Minister Steven Del Duca confirmed on April 21, 2015. Construction is slated to start in 2018 for a planned 2022 service start-up of the “Hurontario” LRT. Though funding is now in place, “hurdles remain—the route through downtown Brampton remains contentious and will require [city] council approval,” Toronto’s Globe & Mail reported. The mayors of Mississauga and Brampton joined Del Duca in announcing the provincial government’s plan to foot the entire bill. The new LRT system “will become that north-south spine of a regionally integrated transit system,” said Mississauga Mayor Bonnie Crombie. “Today’s announcement is a real game-changer for the city of Mississauga’s promising future.” When added to a $13.5 billion GO 6

Railway Age

May 2015

Transit expansion plan announced previously, the LRT’s cost “means that almost all of the $16 billion earmarked for transit over the next decade is spoken for,” the Globe & Mail reported, adding that Del Duca “took umbrage at the suggestion Toronto’s needs were being marginalized, [as he listed] projects proposed or under way as proof of the province’s commitment to the city. ‘The people of our province want us to put progress ahead of politics,’ he said.” The paper also noted that “LRT is not the dirty word here that it has become for much of the Toronto city council.” According to Metrolinx CEO Bruce McCuaig, 33 million people will be riding the Mississauga-Brampton LRT annually by 2031—about half the total carried now on the entire GO Transit network. The GO Transit service expansion, which includes electrified Regional Express Rail (RER), is expected to double ridership when it’s completed in approximately 10 years.

The FRA and PHMSA last month issued one Emergency Order, two Safety Advisories, and several Notices to Industry “intended to further enhance the safe shipment of Class 3 flammable liquids.” FRA is recommending that “only the highest skilled inspectors conduct brake and mechanical inspections of trains transporting large quantities of flammable liquids, and that industry decrease the threshold for wayside detectors that measure wheel impacts.” PHMSA issued a Safety Advisory “reminding carriers and shippers of the specific types of information that they must make immediately available to emergency responders.” FRA and PHMSA issued a joint Safety Advisory requesting that “specific information also be made readily available to investigators.” On top of this, FRA sent a request to the AAR “asking the industry to develop a formal process by which this specific information becomes available to both emergency responders and investigators within 90 minutes of initial contact with an investigator,” and submitted to the Federal Register a notice proposing to expand the information collected on certain required accident reports “so that information specific to accidents involving trains transporting crude oil is reported.” The USDOT said that it “has determined that public safety compels issuance of an Emergency Order to require that trains transporting large amounts of Class 3 flammable liquid through certain highly populated areas adhere to a maximum authorized operating speed limit of 40 mph in High Threat Urban Areas. Under the EO, an affected train is one that contains: 1) 20 or more loaded tank cars in a continuous block, or 35 or more loaded tank cars, of Class 3 flammable liquid; and 2) at least one DOT-111 tank car (including a CPC-1232) loaded with a Class 3 flammable liquid.”

Hurontario-Main LRT Project

FRA, PHMSA pile on more paperwork

OCTOBER 4-7, 2015

MINNEAPOLIS, MN

SAVE THE DATE

REGISTER TODAY! Railway Interchange 2015 will host a USA-based Exhibition and Technical Conference at the Minneapolis Convention Center from October 4-7, 2015. Indoor and outdoor exhibits will showcase the latest technology by the members of: • Railway Supply Institute (RSI) • Railway Engineering-Maintenance Suppliers Association (REMSA) • Railway Systems Suppliers, Inc. (RSSI) Technical and Educational presentations are hosted by: • American Railway Engineering and Maintenance-of-Way Association (AREMA) • Coordinated Mechanical Associations (CMA) •Air Brake Association •International Association of Railway Operating Officers •Locomotive Maintenance Officers Association •Mechanical Association Railcar Technical Services •League of Railway Industry Women

AREMA

RSI

REMSA

RSSI

www.railwayinterchange.org

Market

More SD70ACe locomotives for Ferromex Ferrocarril Méxicano (Ferromex) has taken delivery of the first 10 of 19 Electro-Motive Diesel (EMD, a Progress Rail Services company) SD70ACe locomotives, bringing its fleet to 116 units. Ferromex “selected EMD to supply its new locomotives based on the demonstrated performance and fuel efficiency of the SD70Ace,” EMD said. The most recent locomotives will be placed into service by June 2015. Ferromex took delivery of 82 new SD70ACes in 2011 under two separate orders and 15 in 2006.

THE REGIONAL TRANSPORTATION DISTRICT OF DENVER: Recently took delivery on its first set of 66 electric multiple-unit (EMU) cars from HyundaiRotem. The railcars took their maiden voyage on April 3, 2015, between Denver Union Station and Denver International Airport on the East Rail Line—pulled along the new 22.8-mile route by a Trackmobile railcar moving at 10 mph. BROOKVILLE EQUIPMENT CORP.: Has shipped two EPA Tier-4 BL12CG CoGeneration low-emissions switchers to Central California Traction that will be used on the 55.9-mile Stockton Public Belt Railroad Network and the 14.9-mile Central Valley Branch, with service from Stockton, Calif., to Lodi and Sacramento, Calif. ALL ABOARD FLORIDA: Has selected GE Transportation Global Signaling Solutions to design and manufacture signaling, grade crossing and related 8

Railway Age

May 2015

Positive Train Control equipment for its 235-mile higher-speed passenger rail corridor, which will connect Miami with Orlando International Airport. KOPPERS INC.: Has agreed to contract extensions with each of its two largest railroad customers, BNSF and CSX. Combined revenues from BNSF and CSX accounted for approximately 40% of 2014 railroad-related sales for the company.

Worldwide BRITTANY (FRANCE): Announced on April 22, 2015, that the French region will exercise an option worth around €100 million with Bombardier for 10 additional Regio 2N EMUs, taking the region’s total fleet of the double-deck trains to 27. NETHERLANDS RAILWAYS: Has finalized a €280 million contract with Stradler for the supply of 58 160km/h Flirt EMUs. The order consists of 33

three-car and 25 four-car vehicles and will expand the NS Sprinter fleet. NIPPON SIGNAL (JAPAN): Has awarded a contract to Frauscher India to supply ACS2000 axle counters as a fall-back track vacancy detection system in case of a failure of the primary radio communication system. Nippon is installing communicationsbased train control on the new Line 8 in Delhi. PAULISTA METROPOLITAN TRAINS COMPANY (BRAZIL): Has awarded a Reais 21 million ($7 million) contract to the Brazilian subsidiaries of French engineering firms Setec and Egis to provide technical assistance and project management services for the construction of a rail link to São Paulo Guarulhos International Airport. INDIAN RAILWAYS: Announced it is preparing to launch a tender for a fleet of fixed-formation 200km/h trains and will hold a pre-bid conference for prospective suppliers.

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Update Wabtec reports record first-quarter earnings An 18% increase in sales combined with a 19% increase in earnings per diluted share compared to a year ago produced a record first-quarter 2015 for Wilmerding, Pa.-based Wabtec Corp. First-quarter 2015 sales were $819 million, compared to first-quarter 2014’s $695 million. The increase in sales stems from a growth in the company’s freight group. Operating income was a record $148 million, or 18.1% of sales, compared to $122 million, or 17.5% of sales, in the year-ago quarter. In addition, earnings per diluted share were a record $0.99, which was 19% higher than firstquarter 2014’s $0.83 cents. As of March 31, 2015, Wabtec had cash of $249 million and debt of $421 million. Based on its firstquarter 2015 results and outlook for the rest of the year, Wabtec increased its 2015 guidance for earnings per diluted share to about $4.10, with revenues expected to be up about 10%.

GE completes production test of Tier 4 engine GE Transportation has completed the first production test of its GE Evolution Series Tier 4 engine at its newly built test cell in Grove City, Penn. The engine, which meets the EPA’s Tier 4 locomotive emission standards that have been in place since Jan. 1, 2015, will be sent to one of GE’s locomotive assembly facilities to be installed into a GE Evolution Series locomotive. GE said it was able, without after-treatment, to obtain Nitrogen Oxides (NOx) and Particular Matter (PM) emissions reductions by at least 70% from Tier 3 emission standards. The new test cell, built specifically for the Tier 4 engine, is equipped with improved technology and tooling. 10

Railway Age May 2015

Class I first-quarter financials show mixed results

he first quarter of 2015 will not go down as a record-setting one for the Class I railroads. Financial results compared to the prior-year period were mixed, as a handful of flat or negative performers offset a couple of record-setting ones. Canadian Pacific posted the lowest first-quarter operating ratio in the company’s history and the highestever net income for the period. CP revenues climbed 10% to a record C$1.67 billion, compared to C$1.47 billion in 1Q 2014. Net income rose to an all-time quarterly high of C$320 million, or C$1.92 per diluted share, compared to 2014’s C$254 million, a 33% improvement. Adjusted earnings per share improved 59% to C$2.26. The operating ratio fell to a firstquarter record 63.2%, based upon operating expenses of C$1.05 billion, an 880-basis-point improvement. 1Q 2014 operating expenses were C$1.09 billion. Norfolk Southern said a 16% dip in coal revenue was the main factor contributing to a 16% drop in net income and a 17% drop in diluted EPS. Net income for the quarter was $310 million, compared to $368

million during 1Q 2014. Diluted EPS was $1.00, compared to $1.17. Coal revenues were $455 million; a weak global export market and fewer shipments of coal utilities combined to decrease volume by 7%. Railway operating revenues were $2.6 billion, 5% lower. Total volume increased by 2%, or about 40,000 units, reflecting gains in intermodal and merchandise traffic. General merchandise revenues were $1.5 billion, 2% lower than the same period last year, though volume grew by 3%. Intermodal revenues were $592 million, 1% lower, though volume grew 5%. Railway operating expenses declined 3% to $2.0 billion. Income from railway operations was $606 million, 9% lower, and the operating ratio was 76.4%, compared with 75.2% in 1Q 2014. CSX posted first-quarter 2015 net earnings of $442 million, an 11% increase from $398 million in 1Q 2014, and generated EPS of $0.45, a 13% increase from $0.40 per share. Revenue in the quarter was $3 billion, driven by growth across many markets and an improved pricing environment. Operating income increased by 14% to $843 million and the operating ratio

Bruce Kelly

Supply Briefs

Update improved 330 basis points to 72.2%. Union Pacific said core pricing gains helped it achieve 9% EPS growth in the first quarter. The 2015 capital program has been cut by $100 million, to approximately $4.2 billion, a 3% reduction. Net income of $1.2 billion and diluted EPS of $1.30 were flat, compared to 1Q 2014’s $1.1 billion and $1.19. Operating revenue of $4.6 billion was flat. Carloads declined 2% compared to 2014. And volume declines in coal, industrial products, intermodal and chemicals more than offset the growth in automotive and agricultural products. Quarterly freight revenue decreased 1% compared to 1Q 2014, as lower fuel surcharge revenue and the volume decline more than offset core pricing gains and a positive business mix, UP said. On the plus side, UP’s first-quarter 2015 operating ratio of 64.8% was 2.3 points better than 1Q 2014. Operating income totaled $2WhoWhatWhyWearAd billion, up 7%.7x4.9375 2e.pdf

Railway Age May 2015

Kansas City Southern said a 1% decrease in overall revenue combined with a 1% increase in carload volume compared to the prior-year period produced relatively flat firstquarter 2015 financial results for its combined North American operations. Overall revenues were $603.1 million, compared to first-quarter 2014’s $607.4 million. Revenues were a mixed bag, with healthy increases in three categories mostly offsetting declines in others. Excluding lease termination costs, adjusted operating income was $188 million, compared to $190 million in 2014, a 1% decrease, and operating expenses were $415 million, 1% lower than 2014. The first-quarter operating ratio was 70.5%, compared with 73.7% in 2014. Excluding lease termination costs, the first-quarter 2015 adjusted operating ratio was 68.9%. KCS net income in first-quarter 2015 totaled $101 million, 4:50 PM or4/28/15 $0.91 per diluted share, compared

with $94 million, or $0.85 per diluted share. Excluding lease termination and debt requirement costs and the impacts of foreign exchange rate fluctuations, adjusted first-quarter 2015 diluted EPS was $1.03, compared to $1.05 in 2014. CN’s 1Q 2015 net income was C$704 million, or C$0.86 per diluted share, compared with net income of C$623 million, or C$0.75 per diluted share, in first-quarter 2014 (a 28% increase over adjusted 1Q 2014 net income of C$551 million). Diluted EPS increased 30% to C$0.86 from adjusted diluted EPS of C$0.66 in 1Q 2014. Operating income increased 30% to C$1.06 billion. Revenues increased 15% to C$3.1 billion, revenue ton-miles grew by 7%, and carloadings rose by 9% to 1.4 million. The operating ratio improved by 3.9 points to 65.7%. Rail freight revenue per ton-mile increased by 8%. Operating expenses increased by 9% to C$2.04 billion.

J. Reilly McCarren, 1956-2015

J. Reilly McCarren, one of the most accomplished and respected railroaders of the past 35 years, died April 26, 2015 at his Kenilworth, Ill. home after a long battle with cancer. He was 58. Praised as one of its most successful and creative railroad operators by the American Short Line and Regional Railroad Association, McCarren was

majority owner and chairman of the Arkansas & Missouri Railroad Co. (A&M, Railway Age’s 2014 Regional Railroad of the Year), as well as the majority owner of Allied Enterprises Inc., which together with A&M provides rail, trucking, warehousing, packaging and railcar leasing services. A graduate of the Massachusetts Institute of Technology with a Bachelor of Science and a Master of Science degrees in civil engineering, McCarren began his railroad career with Conrail in 1978. In 1987, he, together with New York City and Chicago venture capital interests, founded the Gateway Western Railway as a leveraged buyout of the St. Louis-Kansas City route of the bankrupt Chicago, Missouri & Western Railroad. Gateway Western was sold to Kansas City Southern Industries in 1996, and McCarren joined the Wisconsin Central that year as president and CEO, leading

the railroad until CN acquired it in 2001. McCarren was vice chairman at ASLRRA. He served as a Central Region board member for seven years and was a member of ASLRRA’s Legislative Policy Committee. McCarren  was Chairman of the Board of Operation Lifesaver Inc. (OLI) from 2007 to 2012, and served as a director of the Western New York & Pennsylvania and Livonia, Avon & Lakeville railroads. He also served as a member, Vice Chair and Chair of the Rail Shipper Transportation Advisory Council. Conrail President and COO Ron Batory, a long-time colleague and friend of McCarren who worked with him at the Chicago, Missouri & Western, described him to Railway Age as “having an excellent balance of entrepreneurialism and a practical mindset.” McCarren is survived by his wife Caren, son Chris, and daughter Katie.

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May 2015 Railway Age 13

Update Greenbrier debuts Tank Car of the Future in Hockley, Tex.

The Greenbrier Companies last month publicly unveiled its Tank Car of the Future at a “Safer Tank Cars Now” event at a GBW Railcar Services (a joint venture of Greenbrier and Watco Companies) tank and general repair facility in Hockley, Tex. Deemed by Greenbrier to be six to eight times safer than the DOT-111, the car features a 9/16-inch-thick steel tank shell (vs. a 7/16-inch shell) that

decreases the threat of puncture and product release in the event of derailment. Other features include a minimum 11-gauge steel jacket, ceramic insulation, high-flow pressure relief valve, full-height half-inch-thick head shields on both ends of the car, and a detachable bottom outlet valve handle. The NTSB issued safety recommendations for tank cars transporting crude oil on April 3, 2015 in an effort

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to hasten issuance of a rulemaking expected by May 1 on a new DOT-117 car. The recommendations are derived from NTSB’s examination of damaged tank cars involved in five derailments earlier this year. “When we’re using the same cars to move corn oil that we’re using to move crude oil, that is not OK,” said NTSB Chairman Christopher A. Hart. “Five events this year means that ten years is too long to wait [for older cars to be upgraded]. We need a quick response from regulatory agencies; we do not know why there is the delay in the ruling but we hope the recommendations made will help make it happen.” “The lack of a standard is causing ambiguity in our industry,” said Cambridge Systematics Principal Andreas E. Aeppli. He added that by 2015, approximately 154,000 cars will be affected by the new ruling, and

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Railway Age May 2015

Amtrak’s Oregon service under threat based on a Cambridge Systematics study, the whole fleet could be retrofitted in 6.7 years. This would entail the retrofit of newer CPC-1232 cars, in addition to some, but not all, the DOT-111s. Aeppli said that although there is a strong argument for retrofitting DOT-111s first because they pose a higher risk, the focus is on retrofitting unjacketed CPC-1232s, followed by unjacketed DOT-111s because these are “more time consuming.” “A lot of these older cars might not be retrofitted until there is a demand for them,” Aeppli said. He added that 85,000 cars could be delivered this year, which would be a “record since the 1970s.” NTSB wants an “aggressive” timeline for the retrofit, and mileposts to go along with that. “Ten years is too long to wait but today shows that it doesn’t have to take that long,” Hart said.

Amtrak’s Cascades service between Portland and Eugene will end if Oregon’s state legislature enacts the budget adopted by its Joint Ways and Means Committee that proposes slashing funding for the daily state-backed service. The Oregon Department of Transportation (ODOT) estimates that it will cost $10.4 million to continue operation over its next bi-annual funding period, which runs from June 30, 2015 to June 30, 2017. This figure was negotiated down from the $20 million requested by Amtrak. Former Oregon Governor John Kitzhaber included a $10.5 million allocation in his budget request before his resignation on Feb. 18 following a misconduct charge. This was subsequently cut to $5 million in the Joint Ways and Means Committee budget in an attempt to

get ODOT to allocate funding directly rather than use general state funds. However, ODOT declared that it would not be able to maintain the existing service at that level of funding. The proposed state contribution to the service is 0.2% of the state’s transport allocation, with Oregon set to allocate $1.6 billion toward highways in its two-year budget. Officials have indicated that if ODOT cannot find the funds, alternatives will be sought and that they are optimistic that it will remain operational. However, if the Cascades service is lost, the Portland- Eugene corridor will only be served by the once-daily Seattle-Los Angeles Coast Starlight, despite Oregon investing $38.4 million from 2009 Federal stimulus funds in two 13-car Talgo 8 trains to boost capacity on the Cascades service.

May 2015 Railway Age 15

Update Ontario details GO Transit electrification plan The Minister of Transportation of the Province of Ontario last month outlined plans for the electrification of certain GO Transit regional rail lines, including an implementation schedule. Electrification is planned for most corridors by 2022-2024, commencing with portions of the Kitchener and Stouffville lines in 2022-2023, followed by the Barrie and Lakeshore lines in 2023-2024. The announcement did not mention whether the Kitchener electrification would include the Union Pearson Express (to Pearson International Airport in suburban Mississauga), which is due to open June 6, 2015, utilizing diesel multipleunit equipment. The electrification’s scope will be as follows: • Kitchener Line: Bramalea Station to Toronto Union Station. • Stouffville Line: Unionville Station to

Union Station. • Lakeshore East Line: Full corridor from Union Station to Oshawa. • Lakeshore West Line: Burlington Station to Union Station. • Barrie Line: Full corridor. The Milton and Richmond Hill lines are absent from the present electrification project. The Milton Line is excluded due to the fact that the trackage is owned by the Canadian Pacific Railway, and implementation costs would thus be significantly higher than for the other routes. In the case of the Richmond Hill Line, significant flood protection work is needed in the lower Don Valley, where the right-of-way closely parallels the Don River and is subject to periodic flooding. In addition, a grade separation is needed at Doncaster Junction, in North Toronto, where the Bala Subdivision used by GO trains

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Railway Age May 2015

crosses CN’s busy York Subdivision. The electrification limits correspond, generally, to the territory where all-day 15-minute service will be provided. This will be the heart of the new Regional Express Rail network, with less frequent, dieselhauled service running through to the less patronized non-electrified sections. The announcement did not specify whether the electric (or possibly dual-power) rolling stock would be locomotive-hauled or multiple-units, or a combination of both. On the Lakeshore East Line, there has been discussion for some time about extending rail service eastward approximately 10 miles from Oshawa. One scenario has a new GO alignment turning northeastward just beyond the Oshawa station, crossing Highway 401, and following CPR’s TorontoMontreal line to Bowmanville.

However, a firm implementation schedule for this undertaking, which would be extremely costly, has not been announced. Prior to electrification, GO plans to significantly improve service on the affected lines to essentially the all-day level. The agency will thus become, in effect, a regional rapid transit service, transforming from its original traditional role as primarily a rush hour commuter service, with off-peak service on the busiest line, the Lakeshore Line. SNC-Lavalin and Hatch Mott MacDonald are among more than two dozen companies that have expressed interest in becoming Metrolinx’s general engineering contractor for the electrification program. The overall increases to the GO Transit rail system will result in 32 additional trains by 2019-2020.

Carolina Worrell joins Railway Age as Managing Editor

Carolina Worrell has joined Railway Age as Managing Editor, based at Simmons-Boardman Publishing Corp.’s headquarters in New York City. A graduate of City University of

New York-Hunter College with a Bachelor of Arts degree in media studies/journalism, Worrell honed her skills at Dodge Data & Analytics (formerly McGraw Hill Construction), editing and writing for a variety of titles including Engineering News-Record, ENR New York, ENR New England, ENR Northwest, and the Aviation Week & Space Technology Source Book. “Carolina Worrell brings extensive experience in trade publication journalism to Railway Age and the Simmons-Boardman Rail Group,” said Railway Age Editor-in-Chief William C. Vantuono. “Her background at ENR will prove invaluable as she immerses herself in coverage of the complex technical and operational subjects for which Railway Age is well-known in the industry.”

All About Railroading by Railway Age Editor William C. Vantuono

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May 2015 Railway Age 17

Watching Washington Frank n. wilner

Give ’em an inch, they’ll take a ton-mile

eek a bank loan or corporate board approval for capital expenditures and you prepare a business plan. If the plan is deemed flawed, the funds don’t flow, pending acceptable revisions. Congress—oft earning its reputation as a parliament of whores—doesn’t operate in that fashion. So it is that a growing squad of lawmakers in both chambers and on both sides of the aisle—encouraged not by scholarly analysis, but by political contributions from trucking interests and shippers who will benefit commercially—are supporting legislation permitting big trucks to grow longer and heavier. How long? From twin 28-foot doubles to twin 33-foot doubles; and from 80,000 pounds maximum to 97,000 pounds. Congress already has credible evidence that big trucks, at their current federal length and weight limits, fail to pay the societal costs they impose. More perturbing is the matter of a study Congress itself sought to guide its policymaking. This business-plan equivalent, analyzing the economic, safety and environmental benefits and costs of liberalizing current truck length and weight limits, was so hastily prepared by a Federal Highway Administration (FHWA) contractor that it was deemed too flawed to present to Congress by its November 2014 due date. FHWA cannot say whether the study might ever be salvaged. Not to matter to members of Congress who lecture endlessly against wasteful federal spending and in favor of “common sense” legislative action. They see no evil, hear no evil and s peak no evil of what would be—absent unbiased and credible scholarly analysis to the contrary—an unjustifiable, unsafe and untoward public subsidy for truckers should length and weight restrictions be relaxed. The trucking

Railway Age

May 2015

industry demurs, but its response was a study for which it alone paid. Consider that the Congressional Budget Office (CBO), whose nonpartisan analysis continues to earn respect in and out of government, concludes big trucks underpay by 20% the damage they cause to bridges, pavement and the environment (including congestion and accident risk). This misallocation of resources, says the CBO, additionally causes some 4% of traffic that otherwise would travel by rail to be diverted to less safe highways. Railroads contend new

Many of the lawmakers who are eager to increase truck weights oppose increasing fuel taxes to pay for the damage caused by trucks. truck length and weight liberalizations could cost it $6 billion in additional lost freight revenue. If Congress earnestly sought truthful policy guidance on optimal truck lengths and weights, it would shelve attempts to liberalize existing limitations until the very study it commissioned passes minimum academic muster, and is vetted in scholarly public debate. Previous bum policy decisions have created a sufficient mess, including a $125 billion hole in the Highway Trust

Fund and the existence, nationwide, of 61,000 structurally deficient bridges. Yet many of the lawmakers eager to increase bridge and pavement damaging truck weights oppose increasing highway fuel taxes, and display greater opposition to imposing on big trucks user charges that would match the societal costs they impose. The best that might be said for the troubled Comprehensive Truck Size and Weight Limits Study, now six months overdue, is that it was performed as if those responsible were double-parked: • The FHWA conducted no open bidding to choose a lead contractor, and the one selected previously produced studies promoting truck length and weight liberalization. • A peer review committee was chosen with advice from those with a vested interest in the study’s outcome. • Rather than independently collect data, the study utilizes data collected and submitted by self-interested trucking companies. • The analysis is heavily weighted toward western states with the lowest population and traffic densities; and the local roads and bridges that connect to major highways and carry significant truck traffic at origin and destination were excluded from the study. • The longest and heaviest double configurations being operated in 21 states—configurations considered having the greatest adverse impact on bridges and pavement—were excluded from the study. • The statistical sample of 400 out of 600,000 bridges is considered too small to be statistically relevant, and the nation’s 61,000 structurally deficient bridges, many more than 50 years old, were not included for study of impacts. Whether Congress reacts as would a rational loan officer or corporate board remains to be seen.

SPECIAL ADVERTISING SECTION

SAFETY IS EVERYONE’S BUSINESS During my seven years as Chairman of the National Transportation Safety Board, I saw the devastation caused by failures in railroad tank car design. I saw citizens evacuated from their homes to flee the effects of poisonous fumes, or communities nearly destroyed by explosion and fire. In my hometown of Chattanooga, Tenn., I witnessed the city’s water supply contaminated by leaking product from a damaged tank car. The problem has not gone away. In fact, it has become more acute. It isn’t that tank car breaches happen that often. It is that when they do the consequences can be catastrophic. This was most dramatically illustrated two years ago when the Canadian town of Lac-Mégantic was devastated after a runaway crude oil train derailed, killing 47 people. Although I’ve left the NTSB, I’ve not stopped working tirelessly for transportation safety. That is why I am proud to be working with the men and women of The Greenbrier Companies to achieve our shared goal of Safer Tank Cars Now. As one of America’s leading railcar manufacturers, Greenbrier has stepped to the front to lead the tank car industry toward safer design standards. It is not surprising that Greenbrier’s assertive position can be controversial and even unpopular. But what I saw in my years at the NTSB is that those companies that do not emphasize safety are the ones more than likely to see their own safety performance suffer. With increased volumes of flammable and hazardous materials being transported by rail, the stakes are much higher than they ever were, even compared to just a decade ago. Yet, tank car designs carrying these commodities have not meaningfully improved since the past century. They go back to the 1960s and 70s.

Tank car standards are badly out of date with modern operating realities, and need to be upgraded. The governments of Canada and the United States need to do something now. Recently my former agency, the NTSB, issued urgent safety recommendations to upgrade construction standards. The Department of Transportation is currently considering several options it proposed last year. It isn’t clear what the final regulations from either country will look like. For new cars, we expect adoption of the stronger, jacketed, insulated 9/16-inch steel thickness car with full-height head shields and improved rollover protection. The good news is that this isn’t some fanciful Tank Car of the Future; Greenbrier is building such cars right now. However, phaseout dates for older cars and retrofit standards are less certain, but must occur with due haste. Greenbrier will benefit from increased tank car production and retrofit activity, but I am convinced its leadership in this area is not driven by profits. I believe Greenbrier is in this fight based on sound engineering principles, and in recognition of a changed railroad operating profile. We need to remove substandard rail tank cars from our communities, and I ask the rest of the tank car manufacturing industry, the railroad industry and government regulators to join us in ensuring we get Safer Tank Cars Now.

James E. Hall Former Chairman of the National Transportation Safety Board (1994-2001)

James E. Hall served as Chairman of the National Transportation Safety Board from 1994-2001.

May 2015 Railway Age 19

Railroads free, leave us be!

Billions in investment capital are required to keep traffic on capacitystrained railroads flowing.

Freedom from excessive regulation helped transform the freight railroads into the most cost effective of all transportation modes. By FRANK N. WILNER, Contributing Editor There’s no reason to change that.

here, of our own device.” That device is government financial and political dependency.

Our federally financed highway system is crumbling under heavy truck loads worsened by insufficient repair and reconstruction funding. Our federally financed Air Traffic Control System is dependent on obsolete vacuum-tube technology, requiring inefficient greater spacing of aircraft. New pipeline construction is a prisoner of politics. Ocean port automation is retarded by politically protected labor unions. And public-purse-reliant Amtrak operates over federally owned Northeast Corridor infrastructure dating to the 1930s. The exception is the privately owned freight railroad industry, itself once bound to a form of government dependency—harsh economic regulation—that retarded renewal, crushed creativity, kindled bankruptcy filings, alienated investors, exasperated customers and darn near made freight railroads another ward of the state as they are too essential 20 Railway Age May 2015

to fail without inflicting substantial national economic harm. No longer are freight railroads analogous to playwright Samuel Beckett’s forlorn characters Vladimir and Estragon— endlessly awaiting Godot while muttering, “nothing to be done.” Freight railroads, in contrast to highways, the Air Traffic Control System, pipelines, ocean ports and Amtrak, were largely freed from government dependency 35 years ago. Credit recognition of market-based solutions and the private sector investments they propagate. Return from the brink

The road back to financial self-sufficiency was neither easy nor immediate for railroads. The outcome forms a case study in the underlying evils of excessive economic regulation and the societal benefits of market forces. After the 1980 Staggers Rail Act provided railroads the means to break free of overly restrictive economic regulation, the steps were tentative. For many years, freight railroads were reluctant to test the limits of their long awaited economic freedom. Eventually, small steps led to larger steps. Finally, enormous strides. Indeed.

Bruce Kelly

or most transportation in America, it’s too much like checking in at the Hotel California, where, as the Eagles sang, “you can check out any time you like, but you can never leave … We are all just prisoners

railroads free, leave us be!

No longer stunning Congress with bankruptcy filings and unrelenting public-purse spending requests, less shackled freight railroads effectively use market-based tools to figure out, on their own, how to meet customer demand at lower cost; attract private capital for maintenance, renewal and capacity expansion; and avoid destructive work stoppages— all the while providing a 236,000-strong work force with job security and solid middle-class wages and benefits, especially as measured against other blue-collar industries. Congressional lawmakers should read, mark, inwardly digest and take credit for this result. Were there more such points of light as is the legacy of the Staggers Rail Act, Congress’ approval rating would not register, as it does, lower than a snake’s belly in a wagon rut. One needn’t be a poet laureate to understand the harmonic cadence of the confirming data. Since partial economic deregulation of railroads in 1980, every consequential railroad productivity and safety measurement has turned northward as rail freight ton-miles (a standardized measurement across all modes) have climbed some 90%. Rail fuel efficiency more than doubled; the cost of rail freight loss and damage declined 90%; more than 13 million truck trailers and containers are taken off the highway annually to travel by rail; train accident and rail employee injury rates are down 80%; more than half a trillion dollars has been invested in improved and expanded rail plant and equipment (more than $100 billion invested in the past four years); and inflation-adjusted average rail rates are down 42%. In fact, American freight railroad rates are less than half the railroad rates charged in major European nations. Privately owned and operated freight railroads have become the most cost effective of all transportation modes, capturing 40% of freight ton-miles, but only a 10% share of total freight revenue. Where nearly a quarter of the nation’s freight railroad plant was operated in bankruptcy prior to partial deregulation, with the industry then in danger of nationalization, all major railroads today are approaching the adequate revenue mark required to attract and retain private-sector investment. Such was the intention of Congress as expressed in the National Transportation Policy rewritten as part of the Staggers Rail Act. A loud minority

Such a narrative now would be unnecessary were it not for a minority of highly vocal shippers—many international conglomerates and domestic industries considerably larger and more profitable than railroads—that seek to restore greater government involvement in railroad business decisions. This minority of shippers seeking restoration of government micro-management of railroads might, in the short term, obtain for them lower freight transport costs and feather their personal retirement nests with appreciative bonuses. History, however, well records the longer term negative impact on efficient rail service. Substituting

bureaucratic decision making for market responsive decisions serves only to spook private-sector investors. Such was the case before railroads were largely freed from government dependency; such would be the case were federal micromanagement of railroads restored. At the core of the railroad renaissance is one of the most scarce commodities—private sector investment, which has funded new technology allowing elimination of the costly to operate and dangerous caboose; implementation of remote control yard operations; and rapid development of Positive Train Control that monitors and controls train movement using computers, transponders and the Global Positioning System (GPS). Additional private sector investment has been used by railroads to purchase higher-horsepower, more fuel-efficient and technologically advanced locomotives; to fund track improvements; and permit infrastructure expansion to handle steadily increased freight demand that is further expected to grow by one-third over the next several decades.

Major railroads are approaching the adequate revenue mark required to attract and retain private-sector investment. Were investors sent conflicting signals—such that Congress is going to change the rules and revert to micromanaging railroad decision making—the substantial risk would be that these investors would again abandon railroads and pursue no shortage of alternative global investment opportunities. Where a government harness can serve quickly to retard investment, restoring investor confidence is a far more difficult and lengthy endeavor, as history has shown. The railroads’ largest customers—electric utilities at the forefront of demands that Congress restore micro-management of railroads—have a different message when it involves their own investment needs. Florida Power & Light told its own regulators, “If we can’t make an attractive investment for the shareholder, then we are going to have a very difficult time going in the marketplace and competing for [investment] dollars.” Where assets are long-lived, investors seek steady and secure returns—predictability. Consider: Since the Staggers Rail Act was passed in 1980, it has remained largely intact as written. The Railway Labor Act continues to shine as a manual for labor peace, as there has not been a national railroad shutdown in more than two decades. Moreover, a compensation package that places railroad workers in the top 6% of wage earners nationwide, and provides a generous industry-financed, defined-benefit pension with a lower retirement age than Social Security, assures a low turnover of employees; higher levels of training and skills; and impressive workforce productivity. May 2015 Railway Age 21

railroads free, leave us be!

Less intrusive economic regulation allows railroad management to develop best practices, unimpeded by bureaucratic oversight that slows decision making in an economy requiring nimble business assessments and reactions. STB as referee

Rather than micro-manage marketing and pricing decisions as regulators did for almost a century prior to the Staggers Rail Act, the STB now plays a role more akin to a football referee, calling infractions of broad regulatory principles. In today’s more efficient regulatory environment, railroad management is freer to choose actions best responsive to ever and fasterchanging market conditions. This does not leave the most vulnerable shippers without grievance redress. For shippers demonstrating few or no effective alternatives to rail transportation—such as trucks or barges—the STB has authority to lower rates, order reparations and mandate the use of an offending railroads’ tracks by another rail carrier. Over the past decade, these so-called captive shippers who have filed grievances with the STB have prevailed more often than have the defending railroads. The STB has under way efforts to simplify and make less costly the assessment and resolution of captive shipper complaints. Arbitration and mediation are being made available in lieu of formal court-like procedures before the STB that require shippers to employ accountants, attorneys, economists, professional engineers and other experts to spar almost endlessly with railroad witnesses, and then replay that exorbitantly expensive process in a federal court. Additionally, the STB has ruled that product competition (the ability of an electric utility to substitute natural gas for coal) cannot be used by a railroad to defend itself against allegations of unreasonable coal rates. As for chemicals and other shippers whose business involves multiple origins and destinations, the STB is assisting in analyzing truck rates between those myriad origin and destination points to help determine, at 22 Railway Age May 2015

less cost to the complainant, the reasonableness of rail rates. In economics, there is always a trade-off. Government involvement in private-sector decision making creates an uncertainty about the expectations of future returns on investment. Should investors perceive new uncertainty, their response will be twofold. Stockholders, who own the railroad, will demand some of their capital be returned through higher stock dividends and buybacks of stock. Lenders will demand higher interest rates. Both ways, new investment is slowed, service suffers and operating and capital costs increase. Thus, the appropriate question is whether railroads are earning a sufficient return on invested capital to satisfy investors whose horizon is long-term. In writing the Staggers Rail Act, Congress instructed regulators “to maintain and revise as necessary standards and procedures for establishing revenue levels … [that] permit the raising [of new capital] and cover the effects of inflation.” The STB now uses a test measuring rate of return on original asset cost, when the real cost to replace, say, a 75-year-old asset is considerably more. A 10% return on an asset costing $1 million in 1940 is equivalent to less than a 1% return today, as the inflation-adjusted cost to replace that asset is some $17 million in 2015 dollars. Shippers argue that accelerated depreciation of assets increased rail costs, lowered profits and allowed higher maximum rates. Shifting to replacement costs would have shippers paying for those assets a second time, as most have decades of life remaining and may never be replaced. The STB should probe the impact of shifting to replacement costs, including the difficulty of estimating them for assets having decades of life remaining, and how much higher the cost of capital and freight rates might rise were replacement costs used. Congress has enough public-purse challenges without risking actions that again send railroad investors fleeing, placing yet another burden on the general taxpayer. RA

Bruce Kelly

High-tonnage railroading will not survive with low-level investment in plant and equipment.

LET’S NOT GO DOWN THIS ROAD AGAIN. The right public policy has helped America’s railroads roll out of a shaky past by encouraging innovation and robust infrastructure investment. This remarkable transformation has seen the US freight rail industry re-emerge as the most productive in the world—an engine that powers our participation in the global economy. Let’s keep it moving forward. America’s railroads are on the move, with entrepreneurial spirit, a capable workforce and the will to invest billions in private capital to build infrastructure that delivers public benefits. America’s railroad renaissance has only just begun, and with sensible government engagement, there’s nothing we can’t accomplish.

Entrepreneurial Railroading

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Optimizing friction management Loram’s new GaugeShield gauge face lubricator can be remotely monitored.

L.B. Foster’s TOR spray application systems continue to gain acceptance as use of mobile systems expands.

Suppliers are implementing technology advancements that ensure friction management isn’t a drag. By MISCHA WANEK-LIBMAN, Engineering Editor

riction management suppliers are focusing their efforts on the continuous evolution of their equipment and services in order to provide railroads with extended equipment service life, increased equipment uptime and longer modifier impact zones. Friction and noise management

Elecsys Corp. added a new variant to its RFM family, the RFM-100S, and enhanced the capabilities of its RFM-100 remote monitoring systems that are used to monitor and control both top-of-rail (TOR) and gauge-face lubricators. The enhanced RFM-100 systems are now available with 4G-modem capability and IsatData Pro, which Elecsys calls the latest in global satellite communications. The RFM-100S, which monitors noise levels, as well as the friction management unit, is currently in pilot testing at a transit system. “These significant upgrades are important for remote monitoring products in order to extend their coverage area and enable efficient communication using the latest technologies. On cellular versions of the product family, we’ve also added a data logging and remote retrieval feature,” says Elecsys Chief Technology Officer Daniel Hughes. “The devices will now capture and store every parameter during each train event. If operators need detailed information from field units at some point in the future, they can simply download that data directly from the equipment in the field using our website without traveling to the remote sites.”

Reducing TCO

L.B. Foster Rail Technologies says its focus is on reducing total cost of ownership (TCO) of friction management projects through an increased scope of value-added aftermarket services, enhanced manufacturing capabilities and driven product improvements. According to General Manager-Rail Technologies Jim Tanner, the company has purchased additional hi-rail service vehicles to maximize customer equipment uptime and will see improved manufacturing efficiencies with the consolidation of its friction management equipment production at its Niles, Ohio, facility. General Manager-Friction Management Steve Fletcher notes that there has been a wide acceptance of proper topof-rail (TOR) and gauge face friction management, which has led the industry to focus on the cost of implementing and maintaining an effective friction management program. “Our efforts have been concentrating on enhancing our customers return on investment by not only reducing the number of applicators required to treat a section of track, but also the application rate required. Both of these are directly related to the types of friction management materials used,” says Fletcher. Regarding the company’s KELTRACK® line of TOR friction modifiers, Fletcher says, “We continue to drive additional value added for our customers by advancing the chemistry for our KELTRACK® family of products to provide extended carry down of more than four miles while May 2015 Railway Age 25

FRICTION MANAGEMENT

maintaining the performance and safety requirements of the railroads. We have also invested in the development of a TOR Oil product that can provide benefits at up to eight miles. Our customers are going to see very significant improvements in performance as a result.” L.B. Foster says product performance validation comes from field trials and collaborating with the technical community. Significant efforts have gone into verifying that its friction management materials not only offer fuel and rail savings, but also provide safe operations regarding traction, braking and impact on rolling contact fatigue. The company notes its AutoPilot™ advanced TOR spray application systems continue to gain market acceptance as use of mobile systems within the rail industry continues to expand. L.B. Foster says these systems are well suited to high-traffic commodity routes, but are also effective in closed loop utility operations and with short line railroads. Switch plate protection

Interflon Rail USA offers Interflon Lube EP for use on switch plates and fishplates (connector bars). The lubricating coating, MicPol®, uses micronized and negatively charged Teflon® to adhere to the metal surfaces it contacts, resulting in a lubricating coating. Four milliliters of material are used on each switch plate per application, and Interflon says the coating lasts four to six weeks. The company notes that considering four milliliters are applied, there is little or no runoff to contaminate the surrounding soil, and the surface of the plate remains visible. Soil samples tested in Germany surrounding a switch where Interflon Lube EP was used for two years showed that there were no traceable residues of the Interflon lubricants in the soil. The company says Interflon Lube EP and its other products for the rail industry lower user costs, help keep the environment clean, reduce friction, reduce energy supplied from the grid, last longer than existing lubricants, improve track safety, prolong the life of switch components and significantly lower switch failure occurrence. Additionally, Interflon says its philosophy of providing training on site and supplying user guides ensures that the benefits of Interflon’s new technology are easily and fully realized. Managing the gauge face

Loram Maintenance of Way Inc. calls the introduction of its GaugeShield product line, which is designed to efficiently and effectively lubricate the gauge face of the rail, a continuation of the development of innovative friction management equipment. General Manager-Friction Management Jon Behrens says, “The GaugeShield design focuses on delivering performance and reliability, while simplifying routine maintenance and operation. The ergonomically designed tank provides ample space for maintenance and inspection. The removable grease tank insert allows for easy transfer of seasonal and different manufacturers’ greases, and the cone shaped design funnels grease to the pump to decrease cavitation.” 26

Railway Age

May 2015

GaugeShield’s dual-output gear pump has fewer moving parts. The grease output is reliable and repeatable at all operating temperatures and can control two tracks with a single controller. The patent pending dispensing bar, which uniformly dispenses grease across the top of the bar, has a removable insert for inexpensive replacement. GaugeShield can be remotely monitored with Loram’s monitoring and analytics packages. TOR management

SKF/Lincoln Lubrication Systems has added several new and upgraded products to its TOR lubrication line. The company says its new contact applicator is compatible with low-viscosity friction modifiers, and features high-strength foam and adhesive that provide long service life. Suitable for a range of rail sizes, the contact applicator’s impact-zone cushion seals and minimizes splashing of lower-viscosity material. SKF upgraded its Lincoln metal contact applicator after sixplus years of field experience and testing. The applicator weighs less than 50 pounds and is compatible with higher-viscosity and “drying-type” friction modifiers. A significant improvement is its simple installation, which is accomplished with stud clamps and slotted shims. Re-installation requires only one wrench size. A new reservoir and divider valve models for drying-type water-based friction modifiers also have been introduced and can be retrofitted to existing field installations. The new reservoir automatically shuts the system down in order to avoid water-based modifiers drying up inside pumps. A non-contact level sensor reads when the level is too low and interfaces with the controller, and the pre-assembled UV divider valve withstands the abrasive properties of drying-type friction modifiers for reliable operation. Technology focus

“Our ongoing push to become more vertically integrated recently included the launch of our new TOR friction modifier, TOR Armor™,” says Whitmore Rail Director of Railroad Sales Bruce Wise. “It provides optimum friction at the wheel/rail interface and greatly reduces lateral creep. We are also about to introduce a new TOR wiping bar for heavyhaul freight and transit applications. Another key part of our product line is our high-tech AccuTrack® electric trackside lubricators. They deliver consistent output in all temperatures and come in a variety of tank sizes. A new, U.S.-made version of AccuTrack will be available later this year.” “Most of our worldwide customer base continues to see the benefits of a solid rail friction management program and looks to Whitmore Rail for the next breakthrough,” says Wise. “Because we make and offer a comprehensive friction management line of products, we project our business to grow significantly this year. Plus, our customers are always looking for new efficiencies and ways to lower maintenance costs and increase safety. We are ideally positioned to meet their specific needs because we offer the convenience of ‘one stop shopping’ to the railroads.” RA

RAILWAY AGE CONFERENCE & EXPO

JUNE 17 -18 Millennium Knickerbocker Hotel Chicago, IL

EXPLORE THE CHALLENGES, ISSUES, AND TRENDS AFFECTING THE NORTH AMERICAN RAIL MARKET REGISTER TODAY

RAILWAYAGE.COM/INSIGHTS 212-620-7205

ACCOMMODATIONS : Hotel rate of $239/night ends May 26. Reserve at the Millennium: 312-751-8100 SPONSORSHIPS AVAILABLE: Contact Jon Chalon: 212-620-7224, jchalon@sbpub.com

AGENDA HIGHLIGHTS:

An interactive dialogue among top-level executives, Railway Age’s experienced editors, and attendees

WHERE WE’RE AT; WHERE WE’RE HEADED

THE CHANGING FACE OF RAIL REGULATION

Oscar Munoz, CSX President

Deb Miller, Acting Surface Transportation Board Chair

With Railway Age Editor William C. Vantuono

With Railway Age Contributing Editor Frank Wilner

STAGGERS PROMPTED 35 GROWTH YEARS. HOW CAN GROWTH BE SUSTAINED THROUGH THE NEXT 35? Wick Moorman, Norfolk Southern Executive Chairman; Joe Boardman, Amtrak President and CEO; E. Hunter Harrison, Canadian Pacific CEO; Ed Hamberger, AAR President and CEO With Railway Age Editor William C. Vantuono

DECONGESTING CHICAGO, AMERICA’S RAILROAD HUB Linda Morgan, Nossaman LLP Partner, Amtrak Chicago Blue Ribbon Panel member, and former STB Chair With Railway Age Editor William C. Vantuono

CAPITAL INVESTMENT STRATEGIES FOR INFRASTRUCTURE Ron Batory, Conrail President and COO With Railway Age Editor William C. Vantuono

CAR & LOCOMOTIVE FINANCE AND LEASING LANDSCAPE

REGIONAL AND SHORT LINE ISSUES

Barbara Wilson, First Union Rail Managing Dir. and President

Ed Ellis, Iowa Pacific Holdings President

With Railway Age Contributing Editor David Nahass

Tom Hoback, Indiana Rail Road Founder and CEO (ret.) With Railway Age Contributing Editor Roy Blanchard

SUPPORTING ORGANIZATIONS

350+ Member Companies

Railroad Contractors Suppliers Consultants Associated Professional Service Firms

Services/Events:

Design and Engineering Construction and Maintenance New Rail, Rail Welding Grinding and Surfacing Ballast Distribution Tie Insertion and Removal Grade Crossings Signal Systems Switches Turnouts Re-Railments Bridge Maintenance more...

Class 1s Short Lines and Regionals Industrial Track U.S. Military Port Facilities And Terminals Rail Transit Agencies Operating Light Rail Systems, Street Cars, Subways, Metro Systems, and Commuter Rail Operations

—————————— Bill Dorris - Chairman - RailWorks Track Services Chris Daloisio - Vice Chairman - Railroad Construction Co. of South Jersey Mike Choat - Secretary/Treasurer - Railroad Controls Limited Kirk Bastyr - Progressive Railroading Steve Bolte - Harsco Rail Danny Brown – V&H Trucks, Inc. Joe Daloisio - Railroad Construction Co. Stephanie Freeman- Coleman Industrial Construction Clayon Gilliland - Stacy and Witbeck Scott Goehri - HDR Engineering Marc Hackett - Loram Maintenance of Way Nathan Henderson - RJ Corman Railroad Group Jim Hansen - Railworks Corporation Norm Jester - Herzog Contracting Corp. Larry Laurello - Former Chairman - Delta Railroad Construction Greg Lippard - L.B. Foster Company Dave Minor - A&K Railroad Materials Scott Norman - Herzog Contracting Corp. Jody Sims - Stacy and Witbeck Mark Snailham - Balfour Beatty Rail Daniel Stout - STX Railroad Construction Services Mischa Wanek-Libman - Railway Track & Structures (RT&S)

Executive Staff

Chuck Baker, President Keith Hartwell, Government Affairs Matt Ginsberg, Vice President of Regulatory and Legislative Affairs Ashley Bosch, Vice President of Grassroots Advocacy and Events Matt Bell, Director of Operations

National Railroad Construction and Maintenance Association, Inc. 500 New Jersey Ave NW, Suite 400, Washington, DC 20001 Phone: 202-715-1264 info@nrcma.org

www.nrcma.org

Annual Conference and Exhibition Hotel Del Coronado San Diego, CA January 6-9, 2016 Railroad Day on the Hill June 4, 2015 Roadway Worker Protection Training Program and Series of Safety Training DVDs Safety with Railroad Hand Tools Safety Around Field Welds Safety with Railroad Power Tools Safety on a Rail Gang Safety on Freight and Industrial Track Safety on a Tie Gang Safety Around Railway Maintenance Safety Around Flash Butt Welding Equipment, Parts 1 & 2 Fall Protection in the Rail Industry Safety Around Transit Track Safety Around Building Turnouts Safety While Unloading & Handling Material Safety Around Handling CWR Safety With Hot Work Safety Around Railroad Safety Around Thermal Adjusting CWR Grade Crossings, Part 1 & 2 Annual NRC Rail Construction and Maintenance Equipment Auction Government Affairs and Legislative Advocacy in Washington DC Railroad Infrastructure Investment Tax Credits Public-Private Partnerships High Speed and Intercity Passenger Rail Commuter Rail and Rail Transit Funding Reasonable Regulation of Industry Construction Friendly Policies Government Financing Programs such as RRIF and TIFIA Membership Directory — Railroad and Transit Buyer’s Guide NRC Awards Contests Safe Railroad Contractor of the Year Hall of Fame Inductees Railroad Construction Project of the Year Field Employee of the Year

Metrorail back on track

By carolina Worrell,

Managing Editor

Armed with a $1.14 billion capital plan, the Washington Metropolitan Area Transit Authority continues to expand and improve the storied Metrorail system.

hen it opened on March 27, 1976 to great fanfare, the Washington Metro was one of the most advanced, beautifully planned and designed passenger rail systems in the world. Today, approaching its 40th anniversary, the nation’s secondbusiest rapid transit system (with an average weekday ridership of close to 750,000, second only to New York City Transit), Metrorail, operated by the Washington Metropolitan Area Transit Authority (WMATA), has been undergoing a comprehensive upgrade and expansion program.

Larry Levine, Courtesy of WMATA

7000-SERIES COMING ON LINE

Among Metrorail’s most critical upgrades is its $1 billion fleet of new 7000-series rapid transit cars, supplied by Kawasaki Rail Car USA. The first trainset debuted on WMATA’s Blue Line on April 14 and is currently the only one in service. Deputy General Manager-Operations Rob Troup says a second set is scheduled for revenue service by early summer. WMATA has ordered 528 of the new railcars, enough to replace all 1000- and 4000- series cars and expand the size of its fleet by 128 cars. The 128 additional cars will support the full build-out of its $5 billion Silver Line expansion.

WMATA placed an initial $886 million order in 2010 for 428 7000-series cars, and the first pre-series train began trials on the Metrorail network in January 2014. Around 300 of these vehicles will replace the oldest cars, the original Rohr Industries-built 1000-series (which following a fatal June 2009 collision on the Red Line, the National Transportation Safety Board deemed as unable to protect passengers in a crash), while the remainder will be used on the Silver Line to Washington Dulles International Airport and Ashburn. A $184 million option for 100 additional cars was exercised in May 2013 to replace the problematic Breda 4000-series vehicles, which date back to the mid-1990s. The stainless-steel-bodied 7000-series cars feature new technologies “that are generations ahead of WMATA’s current railcars,” all of which were designed to be backward compatible with WMATA’s oldest cars, the 1000-series, WMATA says. For example, WMATA’s current railcars use analog technology for onboard public address announcements, whereas the P.A. systems on 7000-series cars will be entirely digital and feature “clear, automated announcements.” The 7000-series are different from previous models in that while still operating as married pairs, the cab in one car can be May 2015 Railway Age 31

metrorail back on track

removed, essentially turning it into a B car. The new design, WMATA says, “allows for increased passenger capacity, elimination of redundant equipment, greater energy efficiency and lower maintenance costs.” EXPANSION PROJECTS

Construction on the second phase of the Silver Line expansion project recently began. This phase picks up at the Phase 1 terminus location, Wiehle-Reston East, and then continues in the median of the Dulles Toll Road and the Dulles Access Highway with three stations. It also includes an aerial station at Dulles Airport and continues on with two stops in Loudoun County. Completion is slated for 2018. WMATA is also considering constructing the Potomac Yard Metrorail Station, which would be located along the existing Metrorail Blue and Yellow Lines between the Reagan Washington National Airport Station and the Braddock Road Metrorail Station. The project would include a new Metrorail station, associated track improvements, and pedestrian bridges. WMATA says the new station would be its second “infill” station, or a new station constructed between two existing stations, since the completion of NoMa-Gallaudet U Station in 2004. The Metro Board of Directors and Finance and Administration Committee will consider approval of a public hearing regarding the new station.

NEW LEADERSHIP

In January 2015, WMATA elected transportation veteran Mortimer L. Downey III as Chair of the Board of Directors, succeeding Thomas M. Downs. Also in January, Richard Sarles stepped down as WMATA’s General Manager/CEO, prompting the agency to launch a nationwide search for a successor. Jack Requa, Assistant General Manager for Bus Services, has been serving as interim General Manager/CEO since January. This past March, as part of its commitment to “enhance public confidence in Metro’s effectiveness, and ability to serve the region and its customers as a high performing public agency,” Chairman Downey said that the Board will open a broader dialog around what is needed in considering future candidates for the General Manager/CEO position. During the executive search, some have called for a new General Manager/CEO with a transit background; some have suggested a financial management background; others have suggested Metro needs a “turnaround” expert, Downey said. The Board also indicated that it might be ideal if a new chief executive met all these criteria. With respect to leadership transition, Downey said that the Board is “urging the compact jurisdictions to move forward quickly to fill vacancies on the Metro Board of Directors, and to make and confirm any pending Board appointments.” Downey added that the Board is directing management to

Looking for the perfect candidate or job in the rail industry? Visit the Railway Age Job boARd http://bit.ly/railjobs

To place a job posting, contact: Jeanine Acquart 212 620-7211 • jacquart@sbpub.com

Railway Age

May 2015

metrorail back on track

produce a rail fleet plan and analysis that support regional discussion of how and when new railcars will be utilized, should the Board fund the purchase of up to 220 additional cars by exercising favorable pricing options that expire this summer. Such an analysis, he said, will inform decision makers, funders, and customers about the railcar purchase options. RETURN TO ATO

Following years of signal upgrades, independent testing and the completion of key NTSB safety recommendations, WMATA returned the Red Line to automatic train operation (ATO) in April. Eight-car trains will run in automatic mode initially; six-car trains will continue to operate in manual mode. A future software upgrade on WMATA’s existing railcar fleet will allow six-car trains to return to automatic mode at a later date. The five other rail lines (Orange, Silver, Blue, Yellow and Green) are currently undergoing track-circuit module replacement projects and a return to ATO on these lines is expected in late 2017. Troup, and Deputy Chief Engineer-ATO Nick Croce, say the return to ATO involved “a very comprehensive look at WMATA’s organizational structure, plus a full safety analysis and audit of our maintenance practices.” A loss of shunt condition (which caused an occupied track circuit to appear unoccupied) was among the main contributing factors to the

2009 Red Line accident at Fort Totten, which forced the entire Metrorail operation into manual mode. Relay-based signal and train control logic is now being replaced with vital and non-vital microprocessor technology; one benefit is loss of shunt detection. Older Generation I and II track circuits are being replaced with Alstom Generation III and IV and Ansaldo AF800W audio-frequency-based equipment. Currently, WMATA has no plans to migrate to CBTC. According to Troup and Croce, the cost of CBTC “would take away from other capital priorities.” Given Metrorail’s current “very efficient” track circuits—no insulated joints except at interlockings—CBTC “would do nothing to improve turnout throw speeds and possibly force hard stops at interlockings,” which would compromise system capacity and train throughput. As well, CBTC’s lack of broken rail protection “remains a concern.” NO MORE PAPER

In July, WMATA awarded an $8 million contract to Cubic Transportation Systems to convert its paper magnetic farecard vending machines to sales and reload devices for SmartTrip, the contactless smartcard for the Washington Metro. The project is part of WMATA’s plan to eliminate paper ticketing from its fare system and convert to allcontactless media by spring 2016. RA

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May 2015 Railway Age 33

The Dean of American Transportation Journalists After nearly 60 years with Railway Age, and at the age of 88, Senior Consulting Editor Luther Sigsbee MilLer has retired from Simmons-Boardman Publishing Corp. Regarded as “the dean of American transportation journalists,” Luther came to Railway Age in February 1958 from The Institute for Railway Progress in Washington, D.C. For most of the next 57 years, his words, as well as those of numerous colleagues, served to chronicle an industry that changed and grew, and that today is flourishing. Suffice to say that Luther’s main legacy is a standard of excellence to which most journalists should aspire. Luther and I worked side by side for nearly 23 years, he and the late Robert G. Lewis having hired me as Assistant Editor of Railway Age in July 1992.When I came to the publication, I knew the railway industry, and I knew, pretty much, how to report, write and edit. But it was Luther who taught me journalism, who worked with me to develop my skills. He also taught me the value of brevity, which is why I will leave the remainder of this tribute to three of our long-time contributing editors: Frank N.Wilner, Lawrence H Kaufman, and Roy H. Blanchard. —William C. Vantuono, Editor-in-Chief

“A legacy in railroad journalism”

Had novelist Jack Kerouac taken his “On the Road” characters Sal Paradise and Dean Moriarty on yet another recollection provoking road trip, they might have logged an exploration from North Carolina’s Outer Banks to Chapel Hill and Charlotte, a flirtation with London, and wrapped it up in New York. An appropriate third surveyor would have been Luther S. Miller. Kerouac didn’t. Miller did. Start with the Outer Banks— that once desolate 200-mile-long collection of barrier islands that attracted the Wright Brothers to Kitty Hawk, and, well before that, English settlers and their first New World-born child, Virginia Dare. Of that self-reliant stock, some of whom clung to the Elizabethan English of Shakespeare, came Miller, at Avon, N.C., on Nov. 1, 1926—prophetically, now National Authors’ Day. Today’s Outer Banks summon thoughts of plentiful beer and oysters at Awful Arthur’s. Avon, well south of the Kill Devil Hills party life, remains a rural sand-blanketed outpost of still fewer than 800 souls. Paring Miller—curiously allergic to shellfish—away from sea-washed Avon, was the University of North Carolina’s world-class journalism school at Chapel Hill. Charlotte was barely of modern city status in 1948, but it afforded Miller his first post-college bylines, albeit at the cost of ear-splitting 34

Railway Age

May 2015

expletive-laced tutelage spewed by that era’s oft ne’er-dowell but talented, crusty newspaper editors. Horace Greeley recommended, “Go west, young man.” Miller, following a Korean War U.S. Army stint, went east in 1953—to the talent-crib of so many dozen English authors for a year’s study at the London School of Economics. Among lessons learned: Avoid U.S. customs duty on a frightfully expensive new Burberry trench coat—once de rigueur for metropolitan journalists—by rolling about in it in the mud prior to returning home. Erudite, urbane and ambitious—author Thomas Wolfe’s “You Can’t Go Home Again” echoing raucously—Miller took up residence in New York, prudently finding a rent-controlled flat to which he cleaved until recently. With journalism in his blood, economics in his brain and his now late-wife Mary in his heart, Miller carved a career, set a standard of excellence and established a legacy in railroad journalism that should and will reverberate, be taught, learned by a few, duplicated by fewer and celebrated by many. His personality, vocabulary and wit is such that had his New York years begun a few decades earlier, Miller would have earned a seat beside Franklin P. Adams, Heywood Broun and Dorothy Parker at their enchanted daily luncheon table at Manhattan’s Algonquin Hotel—coincidentally named for the Indian tribe that once trod the sands of Avon.

THE DEAN OF AMERICAN GeneralTRANSPORTATION SubJect HEAD JOURNALISTS

There are many fabled railroad chiefs who knew of and read Miller—Robert R. Young, Alfred E. Perlman, Edd H. Bailey, Louis W. Menk, W. Graham Claytor, L. Stanley Crane, Bill Brosnan and a score more. Many of journalism’s elite burst from North Carolina: David Brinkley, Reese Cleghorn, Charles Kuralt, Jeff MacNelly, Vermont Royster and Tom Wicker. Add Luther S. Miller. Damn old age, failing eyesight and limited mobility. Double damn any month that does not deliver, in Railway Age, the insight of Luther S. Miller. —Frank N.Wilner “A gentleman at all times”

Luther Miller is truly a renaissance man. For much of the last half-century, he was the dean of railroad writers. A courtly North Carolinian, Mr. Miller could and did tell stories that kept his small audiences enthralled. He was a gentleman at all times. As a young journalist at Business Week, I was introduced to Luther Miller by the late Brenton Welling, himself the then-dean of transportation writers, BW’s transportation editor and my mentor. Being a reporter/writer in New York in the 1960s was an exciting time, and having a drink with the likes of Luther Miller was a privilege. During much of Luther’s tenure at Railway Age magazine, the publication engaged in a competitive battle with two other publications, Modern Railroads and Progressive Railroading, that specialized in telling their readers what was happening in the railroad world. The North American railroad press is down to just two main publications now (not including Railway Track & Structures, the speciality engineering magazine published by Simmons-Boardman), and Railway Age is one of the survivors. For that lofty state of affairs, Luther Miller deserves much of the credit. Luther’s days of an after-hours drink and story telling session are winding down. I’m confident that he remembers the stories as though hearing them for the first time. I still remember being a guest at Luther’s upper Manhattan apartment for a Sunday brunch. It was like having an eighth day that week. —Lawrence H Kaufman

Joseph M. Calisi

“The writing process as an art form”

Luther Miller is the consummate gentleman with a quick wit, a keen appreciation for the well-turned phrase and a finely tuned ability to put one at ease. We came to know each other in the mid 1970s through Railway Age publisher Bob Lewis, whom I had met on one of the famous mid-1960s Reading Railroad “Iron Horse Rambles.” In the 1980s Luther started using some of my photos to illustrate Railway Age articles. Then in 1990 he invited me to write a monthly column about the newly expanding short line railroad business. He had watched as new short lines sprang up in his Native North Carolina and had spread throughout the south and elsewhere. He saw an opportunity to make Railway Age the railway magazine publishing industry’s leader in all short line matters.

Left to right: William C. Vantuono, Luther S. Miller, the late Robert G. Lewis, former Managing Editor Marybeth Luczak, Roy H. Blanchard and Mark Connolly, aboard Railway Age’s “Sesquicentennial Limited” excursion train in 2006, which commemorated the magazine’s 150th anniversary

He wanted a monthly short line column called the Marketing Advocate that touched on the challenges short lines faced in building a business and gave examples of successes. Our first effort was “The Taking of Car 12723,” and it ran in September 1991. It was a cautionary tale of what happens when too many railroads are involved in a move, each with their own priorities, and how to fix the process. The series ran for more than ten years, and Luther gets credit for keeping me on track (literally), to the point and factual. Luther sees the writing process as an art form: Tell them what you’re going to tell them, tell them, then tell them what you told them. He insists that the writer craft a bridge or “hook” between the introduction and the main event, and toward the end summarize the tale and slide seamlessly into the conclusion. He leads by example, always delighting in what he calls “wordsmanship,” and crafting some of the most eloquent railroad writing I’ve ever seen. As to wordcraft itself, Luther is a stickler for punctuation. He says a comma is where you stop for breath or to let a point sink in. He is a firm believer in the Oxford comma to tell where lists begin and end, and in using semicolons to break up long lists. And, says he, spicing up the copy through clever alliteration helps to make reading an article a pleasure, even evoking a smile on occasion. Tools of the craft, if you will. Luther maintains that the writer must always read every finished piece aloud to oneself. The reason, says he, is to make the copy flow. Not only must one set the scene for the reader, but give the reader a reason for going on, having made reading the story a pleasure, and having provided a clear take-away. We scribblers could do a lot worse than having Luther Miller parsing our every word. The business could really use more Luthers. —Roy H. Blanchard RA May 2015 Railway Age 35

Fleet revitalization The freight car fleet has been growing for four years running. By DAVID D. HUMPHREY, Ph.D., Senior Analyst, It’s also getting younger.

he revenue-earning railcar fleet is a subset of the North American railcar fleet that is largely composed of freight cars that can be used in interchange service and against which an interline waybill can be placed. It is made up of six sub-fleets: hoppers, covered hoppers, gondolas, flat cars, tank cars and boxcars. (It excludes locomotives, intermodal trailers and containers, maintenance-of-way equipment and end-oftrain devices.) Railinc’s annual review of the North American revenueearning railcar fleet shows the fleet continued its growth in 2014. The total size of the revenue-earning fleet increased for the fourth consecutive year—adding cars in the tank car and covered hopper sub-fleets, while the flat car, boxcar and hopper sub-fleets contracted. The average age of cars in the revenue-earning fleet declined for the third year in a row, suggesting more new cars are joining the fleet as older cars exit. Railinc’s analysis of the fleet is focused on highlighting trends and changes. 36 Railway Age May 2015

Railinc Corp., for Railway Age

KEY FINDINGS

The revenue-earning fleet increased in size in 2014: The growth rate increased in 2014, and the fleet surpassed its 2009 population level. The total fleet size is up 2.6 percentage points from year-end 2013 to year-end 2014, compared with a 0.9% increase the previous year. An increase in the tank car population drove growth in the revenue-earning fleet. Tank cars and covered hoppers, the two largest sub-fleets, increased in numbers in 2014, while gondolas were unchanged. Hoppers and boxcars, the two smallest sub-fleets, continued their decline. The average age of the revenue-earning fleet decreased slightly in 2014, for the third consecutive year, going from 19.9 years to 19.8 years. The decrease suggests more new cars are joining the fleet as older cars exit. The trend of 286,000-pound gross rail load (GRL 286) cars predominating among additions to the revenue-earning fleet continued in 2014. The number of GRL 286 cars added to the fleet in 2014 was about 25% more than in the previous year and the most in a decade. Larger cars enable

fleet revitalization

operational efficiencies that reduce costs and ease logistics challenges.

North American Freight Car Fleet, by Group (Counts at year end, shown in thousands) Total=1,515

1,482

1,481

1,499

1,513

1,553 Tanks

304

300

303

315

339

371

166

160

154

149

145

142

237

231

230

232

228

195

193

191

194

193

494

458

466

479

493

Covered Hoppers

133

124

121

118

114

111

Box Cars

2010

2011

2012

2013

2014

2009

Hoppers Gondolas Flats

FIGURE 1: North American Freight Car Fleet by Group Type at Year-End (in thousands)

North American Freight Car Fleet Average Age at End of Year

Average Age (Years)

19.8

New Ulmer, Fall 2009 10

0 2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

FIGURE 2: North American Freight Car Fleet Average Age, at Year-End

North American Freight Car Fleet 1999

2006

50 40

1971

1983

1991

2002

2009

Source: Railinc Corp.

= approximate time of recession

1976

Thousands

1980

Number of Cars by Age (Revenue Earning Fleet)

0 1

11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49

FIGURE 3: North American Revenue-Earning Freight Car Fleet by Age

REVENUE-EARNING FLEET GROWS

The revenue-earning fleet increased by 40,000 cars in 2014, surpassing its 2009 population level. At the end of 2014, the revenue-earning freight car fleet totaled 1.553 million units of equipment, up 2.6% from the previous year (Figure 1). Tank cars again drove growth in the revenue-earning fleet, increasing by 9.4% over 2013. Covered hoppers were up 2.9%, while gondolas were unchanged. In contrast, boxcars (including refrigerated cars) were down 2.6%, hoppers by 2.1%, and flat cars by 0.5%. The average age of railcars in the revenue-earning fleet continues to decrease slightly. In 2014, the average age was down 0.1 years, to 19.8 years (Figure 2). More new cars were added as older cars left the fleet in 2014. This suggests the economy continues to head in a positive direction since historical data show that fewer new railcars join the fleet during and immediately following economic dips. More than 50,000 new cars have joined the revenue-earning fleet in each of the past three years, and the number of new cars added in each of the past four years is larger than in 2009 and 2010 combined. Historically, the average age of the fleet and the number of cars added to the fleet mirror the economic environment (Figure 3). When the economy is strong, as in the mid-1990s and mid-2000s, the fleet tends to be refurbished with the addition of new equipment. During periods of recessionâ&#x20AC;&#x201D;such as around 1991, 2002 and 2009â&#x20AC;&#x201D;the amount of new equipment added to the fleet decreases significantly. Over the past 20 years, the majority of new railcars added to the revenueearning fleet are GRL 286 cars. This trend continued in 2014 (Figure 4). The number of GRL 263 cars also increased by more than 5,000 in 2014, driven by the growth in tank cars. GRL 286 cars have predominated among new additions to the fleet since the early 1990s because they enable May 2015 Railway Age 37

fleet revitalization

North American Freight Car Fleet Number of Cars by Age and GRL (Revenue Earning Fleet)

GRL_286

GRL_268

GRL_263

GRL_220

Thousands

70 60 50 40 30 20 10 0 1

11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49

FIGURE 4: North American Revenue-Earning Freight Car Fleet, Number of Cars by Age and GRL

operational efficiencies that reduce costs and ease logistics challenges. The fleet continues to add GRL 263 and GRL 220 cars, but at a much lower rate than GRL 286 cars.

38 Railway Age May 2015

SUB-FLEET TRENDS

Several sub-fleets of similar types of equipment comprise the revenue-earning fleet. This section takes a deeper look into a few of the sub-fleets,

including covered hoppers, gondolas, tanks, open hoppers and boxcars. Railinc selected these sub-fleets because they carry commonly shipped commodities and make up the largest percentage of the revenue-earning fleet. Covered hoppers are commonly used to ship commodities such as grain and plastics. After holding steady in 2013, the covered hopper sub-fleet grew 2.9% in 2014, to 493,000 cars. Covered hoppers are the largest sub-fleet in North America, making up about 32% of the total revenue-earning fleet. Over the past four years, more than 43,000 new small covered hoppers have joined the fleetâ&#x20AC;&#x201D;more than all other sizes of covered hoppers combined. Nearly all were GRL 286 cars. Despite the growth, small covered hoppers comprise only 7% of the North American revenue-earning fleet. Gondolas are commonly used for shipping coal, iron and steel products, and scrap metal. The number of

fleet revitalization

gondolas in the revenue-earning fleet was unchanged in 2014, after decreasing by 1.7% the previous year. Tank cars carry a variety of products, including food, chemicals, petroleum, and hazardous materials. They make up about 24% of the revenue-earning fleet. The size of the tank car fleet

in the past two years. About 11,000 medium tanks—those with capacities between 22,500 and 27,500 gallons—joined the North American fleet in 2013 and 2014. Of those, about 90% were GRL 286 cars. About 45,000 large tanks with capacities greater than 27,500 gallons

Over the past 20 years, the majority of new railcars added to the revenue earning fleet are GRL 286 cars. continued its growth in 2014, increasing 9.4%, to 371,000 cars—the largest increase of any of the sub-fleets. The majority of tank cars are GRL 263 cars, although more GRL 286 cars are being added to the sub-fleet. Nearly 50,000 GRL 286 tank cars were added

were added to the fleet in 2013 and 2014—more than four times the number of medium tanks added. Large tanks make up 10% of the North American revenue-earning fleet, while medium tanks and small tanks each make up 7% of the fleet.

Open hoppers carry a number of products, including coal, aggregates and metallic ores. The number of open hoppers in the North American revenue-earning fleet decreased by 2.1% in 2014, to 142,000, continuing the sub-fleet’s steady decline. Boxcars are the smallest sub-fleet of the revenue-earning fleet. They are used to ship a wide variety of products, from consumer goods to automotive parts. The boxcar sub-fleet is older than other sub-fleets and continues to decrease in size, in part because of the addition of higher-capacity boxcars and network efficiencies that reduce the turnaround time of boxcars. The size of the boxcar sub-fleet continued its downward trend in 2014, decreasing to 111,000. It is down 16.5% since 2009. RA Railinc is a wholly owned subsidiary of the Association of American Railroads. For more information, visit: www.railinc.com.

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May 2015 Railway Age 39

People

Meetings High profile Reading, Blue Mountain & Northern (RBMN)

Railroad appointed Thomas Cook as Vice President of Transportation and Safety, the company announced on April 13, 2015. Cook joins RBMN from CSX Transportation where he retired this past January after a 30-year career in operations with CSX and in sales and operations with Conrail. He was Assistant Superintendent at Curtis Bay Piers, Md. since December 2010 where he led daily operations through a period of rapid growth. Cook In 2008, Cook was awarded CSX’s Chairman’s Award of RBMN Excellence for his success in developing a culture of safety and mentoring new managers while a Trainmaster in Indianapolis. Cook holds a Bachelor of Arts degree in Business Administration from Gettysburg College, where he graduated in 1984.

CSX—David Baggs named vice President and Treasurer, in addition to his current role as Vice PresidentCapital Markets and Investor Relations. He will formally assume his new role upon the retirement of David Boor, Vice President-Tax and Treasurer, on July 1, and continue to report to Fredrik Eliasson, Executive Vice President and CFO. Heart of Georgia Railroad Inc.— Duane Broxterman named President and Chief Operating Officer with responsibility for railroad and other affiliated operations. Broxterman joined HOG in 2000 as a partner in the business and has served as Vice President and COO. Prior to HOG, he held multiple positions with RAIL-TEX and later Rail America, most recently as General Manager of the Mid-Michigan group of railroads. NORFOLK SOUTHERN—Bruno Maestri, Vice President Government Relations and Corporate Communications, adds Corporate Sustainability Officer to his responsibilities, with offices in Washington, D.C. Robert E. Martínez, Vice President Business Development, adds Real Estate to his title, with offices in Norfolk. F. Blair Wimbush, the retiring Real Estate and Sustainability Officer, leaves after 35 years with NS and is credited “ with leading the company’s successful efforts to adopt an enterprise-wide, 40

Railway Age

May 2015

results-driven environment,” said NS CEO Wick Moorman. RED RIVER VALLEY & WESTERN RAILROAD—Nate Asplund named President and CEO, effective May 1, 2015. He will succeed Andy Thompson. Asplund most recently served as Assistant Vice President, Mexico for BNSF Railway, where he led a U.S. and Mexico-based team that provides rail and intermodal transportation to and from Mexico.

100 YEARS AGO in

(MAY 1915) premiums for freight train speed

On the Cleveland division of the Baltimore & Ohio, special credits are awarded to freight train men for making good time. The arrangement applies to both through and local trains. When a crew makes a run between divisional termini—from Chicago Junction and Cleveland to Holloway, or from Chicago Junction to New Castle—in satisfactory time, all of the members receive credit, and these credits, according to a circular issued by the superintendent, W.C. Lechlider, “will have great influence in clearing up personal records.”

June 17-18 Railway Age Rail Insights Conference Millennium Knickerbocker Hotel, Chicago, Ill. Email: conferences@ sbpub.com; Website: www. railwayage.com/railinsights

July 12-15 American Railway Development Association (ARDA) 2015 Annual Meeting Westin Denver Downtown, Denver, Colo. Email: amraildev@gmail.com; Website: www.amraildev. com/2015annualmeeting

July 13-14 Midwest Association of Rail Shippers (MARS) Summer Meeting Lake Geneva Resort, Lake Geneva, Wisc. Website: www.mwrail shippers.com

Sept. 17-18 Railway Age Crude by Rail Conference Key Bridge Marriott, Arlington, Va. Email: conferences@sbpub. com; Website: www.railwayage. com/conferences

Oct. 4-7 Railway Interchange 2015 Minneapolis Convention Center. Combined exhibits hosted by RSI, REMSA, and RSSI. Technical and educational sessions presented by AREMA and the Coordinated Mechanical Associations (CMA). www.railwayinterchange.org

Oct. 28-29 Railway Age Passenger Trains on Freight Railroads Conference Grand Hyatt, Washington, D.C. Email: conferences@sbpub.com; Website: www.railwayage.com/ conferences

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Products Dieselcraft portable fuel polishing system Diesel fuel can have water contamination issues that must be dealt with or become a costly problem if the fuel is not continually managed during storage, according to Dieselcraft Fluid Engineering, a division of The Magnum Group. The use of a stand-alone filter/polishing system is both effective and benificial, greatly reducing maintenance and guaranteeing the engine will start when it is needed. Dieselcraft’s FPS-15 low-cost, 12-volt portable filter/ polishing system, which can be used as a portable or wallmounted system, offers 99% water removal and absolute practical filtration to 10 microns with a 13 GPM 12-volt gear pump. It also includes an epoxy powder coated frame, 20 feet of hosing, and a fueling nozzle. For more information visit http://www.dieselcraft.com or contact John T. Nightingale, Dieselcraft Fluid Engineering, PO Box 7670, Auburn, CA 95604; (530) 613-2150; sales@dieselcraft.com.

Railhead Cut Resistant Gloves Railhead Corp. says its new Cut Resistant Gloves “provide a level of rail worker safety that is unparalleled in the industry.” The glove offers rubber bumpers that provide impact protection for the back of the hand and finger protection. Railhead’s design includes a nitrile coating for a durable grip, along with blade cut (Level 5), tear, puncture and abrasion (Level 4) resistance. The comfort and safety features of this glove ensure that employee hands will be protected while utilized in daily tasks such as wheel truing, handling sharp objects, metal fabrication and repair work. Railhead says a Class I railroad has tested and selected its Level 5 Cut Resistant gloves to be utilized in all of its shops. For additional information contact Railhead Corp. at 800-2351782 or visit www. railheadcorp.com.

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Railway Age

May 2015

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Midland low-profile pressure relief valve Midland Manufacturing, part of OPW, offers a new pressure relief valve (PRV), the A-1076, to help reduce the likelihood of valve shear-off during a rail tank car rollover. Built specifically for the rail transport of ethylene oxide (EO), a toxic inhalation hazard, Midland’s innovative A-1076 is the result of customer feedback and industry demand for a product that can survive a tank car rollover. With the handling characteristics of EO in mind, the design of the A-1076 PRV, which is a direct replacement for the A-14286 External PRV, retains traditional dual stem guide points, while reducing the PRV’s profile to less than 3 inches. When combined with an FRA-approved top-fitting protection system and the proper angle/check valves, the A-1076 PRV provides maximum protection against valve shear-off and can help avoid dangerous accidental and nonaccidental EO releases. Additionally, the A-1076 PRV has a guided stem at the top and bottom, enabling the device to achieve repeatable set-to-discharge, positive sealing and vapor-tight performance. For more on Midland Manufacturing and its products, see www.midlandmfg.com.

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Pneumat Systems bulk material cleanout The HopperPopper from Pneumat Systems assists in the unloading of DDGs (distiller’s dried grains) and meal products from railcars or trucks by combining the power of compressed-air blast technology with precise hydraulic controls. Through patent pending technology, the wirelessly controlled HopperPopper allows operators to position a hydraulically driven blast probe in the hopper compartment, blasting out bulk material bridges and hang-ups. The HopperPopper eliminates problems that come from banging, pounding and poking railcars or trucks, while decreasing unload times, reducing labor costs and minimizing worker compensation risks. Pneumat’s equipment solutions, which are designed for use with various materials including DDGs, powdered cement, coal and fertilizer, keep bulk materials in the ethanol, grain, cement, feed and coal industries moving. Visit: 1-800-458-9446; (507) 345-4553; info@pneumat. com; www.pneumat.com.

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Ad Index Company

Phone #

Fax URL/Email address

Page #

AREMA

301-459-3200

301-459-8077 marketing@arema.org

Danella Rental Systems, Inc.

610-828-6200

610-828-2260

pbarents@danella.com

Ellwood Crankshaft & Machine

724-347-0250

724-347-0254

ecgsales@elwd.com

Georgetown Rail Equipment Co

512-869-1542 ext. 228

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Graham-White Manufacturing Co. 904-230-4525

904-230-4526

jkuhns@grahamwhite.com 9

Greenbrier Companies The

800-343-7188

503-684-7553

gbrx.info@gbrx.com

HKX, Inc.

360-805-8600

360-805-0718

sales@hkx.com

Hotstart

509-536-8667

509-534-4216 mfloyd@kimhotstart.com

Indiana Railroad Company The

317-822-7716

317-844-5558

bob.babcock@inrd.com

Interstate Diesel Service, Inc.

800-321-4234

216-706-5010

proach@interstate-mcbee.com

L B Foster Company

412-928-3506

412-928-3512

glippard@lbfoster.com

LTK Engineering Services

215-641-8826

215-542-7676

tfurmaniak@ltk.com

MAC Products

973-344-0700

973-344-5891

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National Steel Car

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New York Air Brake

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Norfolk Southern Corp.

757-629-2706

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NRC

202-715-2920

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Okonite Co.

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201-825-3524

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Railquip Inc

770-458-4157

770-458-5365

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Salco Products, Inc.

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Star Headlight & Lantern

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Therm-Omega-Tech

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msorrentino@slicecommunications.com 39

Western-Cullen Hayes

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Whitmore Rail

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972-772-4561

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30 3 33 17, 41, 43, C3

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

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

AK, AZ, CA, CO, IA, ID, IL, KS, MN, MO, MT, NE, NM, ND, NV, OR, SD, UT, WA, WI, WY, Canada – AB, BC, MB, SK Heather Disabato 20 South Clark Street, Suite 1910 Chicago, IL 60603 (312) 683-5026 Fax: (312) 683-0131 hdisabato@sbpub.com 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

May 2015 Railway Age 45

equipment Sale/Leasing

products & services

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Railway Age

May 2015

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equipment Sale/Leasing

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Available For Lease ◆ 3,600 cu. ft. Open Top Hoppers. 45 degree slopes for aggregate, coke, coal, etc. ◆ Box Cars – 286K Gross Rail Load, 60’ 9” inside length, 12’ plug doors. ◆ Covered Hopper Cars – 4,650 & 4,750 cu. ft. cars with trough hatches & gravity gates. 268K Gross Rail Load. ◆ Covered Hopper Car – 3,000 cu. ft. cars with circular hatches & gravity gates. For additional information and pricing, please contact John Goodwin phone (605) 582-8318 e-mail jgoodwin@mwrail.com www.carmathinc.com

Wed., May 20 at 9AM Held at Metro Industries (MEI) 3800 Missouri Ave. Alorton, IL

63+ retired locomotives available at public auction. Along with these locomotives will be some locomotive parts & materials. Visit our website for list of locomotives and pictures. Can’t Make It To The Auction? Bid Live Online at

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May 2015 Railway Age 47

Financial edge DAVID NAHASS

Freight car market reflects mix of confidence, trepidation and frustration

resenters at the 29th Rail Equipment Finance Conference (REF) displayed confidence, trepidation and frustration. One impression from REF is that the rail market is seeing commodity-based compartmentalization of demand more acutely than in the past. Chicago Freight Car’s Todd Kahn discussed small-cube covered hoppers for sand and cement. He raised concerns about sustainability of growth in sand car demand and was bullish on grain cars, PD (pressure differential) covered hoppers and cars for carrying ethanol byproduct DDG (distiller’s dried grains). National Steel Car’s Bob Pickel discussed optimism for growth in the covered hopper market for plastic pellets, provided a manufacturing review and discussed car pricing and the divergence in opinions for the 2015 forecast build. He settled on a middle of the road 75,000 cars. Georgia Pacific’s Glenn Courtwright, Norfolk Southern’s Paddy O’Neil and CSX’s Mark McGee debated on boxcar availability and railroad service issues. All confirm that boxcar demand remains relatively robust and new builds continue to replace a fleet that transitions from Plate C to Plate F. Availability of cars? Open to interpretation. Railway Supply Institute President Tom Simpson gave a state of affairs on the DOT approval process for new tank cars, noting the importance of harmony proposal between the regulations in Canada and the US, and the disconnect between the potential DOT implementation time frame and the industry’s ability to make these changes. These disconnects may drive traffic off the rails—a huge concern. On coal, FreightCar America Inc.’s Mike McMahon noted that coal

Railway Age

May 2015

continues to move large volumes on rail and will continue to do so. McMahon also noted that low-priced natural gas and improving velocity may impact coal car rents. Intermodal continues to be a bright spot. RSE Consulting’s Ron Sucik, indicated that as gas and oil have garnered the attention, intermodal drives longterm growth. Headwinds for 2015 are the strong dollar and potential global economic slowdowns. Long term, intermodal will continue to grow and take market share away from trucking.

Flexibility remains an important part of navigating a market that has no clear direction. Greenbriar Equity Group’s Michael Weiss talked about the impact of oil pricing on headlines and investors, noting that today’s M&A market is filled with high prices and high leverage and remains a difficult place to find quality investment opportunities. The three horsemen of equipment valuation, Ed Biggs of Biggs Appraisal Associates, Robert Blankemeyer of First Union Rail and Patrick Mazzanti of Railroad Appraisal Associates, discussed equipment values today vs. last year. In all cases, current FMV numbers for equipment were higher this year than last year. Other than the DOT-111A, prices are not expected to drop in the near term. Oliver Wyman’s Rod Case discussed the need for improved network

performance for the railroads to carry growth and efficiency into the next traffic growth spurt. Concerns about service issues were addressed throughout the program. In the steel markets, The David J. Joseph Company’s Trey Savage discussed how low scrap pricing plagues this market even as fundamentals do not suggest a downturn. FreightCar America’s Ted Baun noted that the steel market fleet remains in need of renewal. A mix of a small order book and global economic concerns do not hint at larger production or higher lease rates. CSX’s Brenda Wheeler said there is tempered optimism for 2015 but that the construction market needs to return for steel to improve to prerecession levels. On tank cars, Union Tank Car’s David Murawski discussed the state of non-DOT tank cars, giving his thoughts on the DOT changes. He underscored the long tail of oil pricing and its impact on the 18-month tank car backlog; he anticipates retrofits on existing cars where possible and a car demand that fluctuates with oil pricing. The Andersons’ Chuck Brown discussed strength in covered hoppers and raised a hand for caution on the tank car market. First Union Rail’s Barbara Wilson said that the large lessors continue to compete for growth opportunities in a tight market where fleet utilization is high. GATX Corp.’s Thomas Ellman discussed how flexibility remains an important part of navigating a market that has no clear direction. Managing uncertainty is clearly a skill he is focusing on for 2015. It is a crowded room for the large lessors, with the eight largest owning 51% of the national rail fleet. Part Three—Power—next month. Got questions? Set them free at dnahass@railfin.com.

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Mechanical Department Regulations A combined reprint of the Federal Regulations that apply specifically to the Mechanical Department. Spiral bound. Part Title 210 Railroad Noise Emission Compliance Regulations 215 Freight Car Safety Standards 216 Emergency Order Procedures: Railroad Track, Locomotive and Equipment 217 Railroad Operating Rules 218 Railroad Operating Practices - Blue Flag Rule 221 Rear End Marking Device-passenger, commuter/freight trains 223 Safety Glazing Standards 225 Railroad Accidents/Incidents Update 1-1-15 229 Locomotive Safety Standards 231 Safety Appliance Standards 232 Brake System Safety Standards Update 1-6-15

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BKHORN 222 6-25-12 BKRFRS 224 6-25-12 BKHS BKLSS BKSLI BKSAS BKBRIDGE BKLER

228 229 230 231 237 240

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BKCONDC 242 6-25-12

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Compliance Manuals BKINFRA BKTM

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

Railworthiness Directive for Railroad Tank Cars Equipped With Certain McKenzie Valve & Machining LLC Valvesâ&#x20AC;&#x201D;Recent FRA investigations identified several railroad tank cars transporting hazardous materials and leaking small quantities of product from the cars' liquid lines. FRA's investigation revealed that the liquid lines of the leaking tank cars were equipped with a certain type of 3 ball valve marketed and sold by McKenzie Valve and Machining (McKenzie) (formerly McKenzie Valve & Machining Company), an affiliate company of Union Tank Car Company (UTLX). FRA further found certain closure plugs installed on the 3 valves cause mechanical damage to the valves, which leads to the destruction of the valves' seal integrity and that the 3 valves, as well as similarly-designed 1 and 2 valves provided by this manufacturer are not approved for use on tank cars. FRA is issuing this Railworthiness Directive (Directive) to all owners of tank cars used to transport hazardous materials within the United States to ensure they identify and appropriately remove and replace these valves with approved valves consistent with Federal regulations.

33.00 46.00

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

30.00 39.10

Part 213: Track Safety Standards

49 Part 213, Subparts A-F. Classes of Track 1 through 5: Applies to track required to support passenger and freight equipment at lower speed ranges. Includes Defect Codes and Appendices A, B, and C to Part 213. Softcover. Spiral bound. Updated 3-25-14.

BKTSSAF

Track Safety Standards Order 50 or more and pay only $8.95 each

$9.95

Bridge Safety Standards FRA Part 237 establishes Federal safety requirements for railroad bridges. This rule requires track owners to implement bridge management programs, which include annual inspections of railroad bridges, and to audit the programs. Bridge Safety Standards Part 237 also requires track owners to know the safe load capacity of bridges and to conduct special inspections if the weather or other conditions warrant such inspections. Softcover. Spiral bound.

BKBRIDGE

Bridge Safety Standards Order 50 or more and pay only $5.60 each

$6.25

Part 214: Railroad Workplace Safety

The FRA's Railroad Workplace Safety standards address roadway workers and their work environments. Subparts A-General, B-Bridge Worker Safety Standards, C-Roadway Worker Protection, D-On-Track Roadway Maintenance, and Defect Codes for Part 214. Spiral bound. 74 pages. Updated 7-1-14.

BKWRK

Railroad Workplace Safety Order 50 or more and pay only $8.55 each

$9.50

800-228-9670 www.transalert.com

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

Add Shipping & Handling if your merchandise subtotal is: U.S.A. CAN U.S.A. CAN Orders over UP TO $10.00 $4.10 $8.55 25.01 - 50.00 9.80 15.70 $75, call for shipping 10.01 - 25.00 7.20 11.80 50.01 - 75.00 10.90 19.80 *Prices subject to change. Revision dates subject to change in accordance with laws published by the FRA.5/15

BEHIND EVERY TRAIN IS A VISION OF SUSTAINABILITY. We believe in a sustainable energy future. Our freight trains save millions of gallons of fuel every year, but we found a way to do more. From investing in fuel reduction technologies to planting millions of trees, we’re helping communities along the line manage their air quality standards. This continuous improvement and commitment to doing things better today makes it possible to achieve what’s right for tomorrow.