October 2015 Railway Age by Railway Age

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October 2015 | www.railwayage.com

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The Tangled Tale of PTC

Railroad Financial Desk Book 2016 Northeast HSR: Feasibility vs. Complexity Transit Focus: Ottawa

RailwayAge 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 ARTHUR J. McGINNIS, Jr., President and Chairman JONATHAN CHALON, Publisher jchalon@sbpub.com WILLIAM C. VANTUONO, Editor-in-Chief wvantuono@sbpub.com CAROLINA WORRELL, Managing Editor cworrell@sbpub.com Contributing Editors: Roy H. Blanchard, Alfred E. Fazio, Lawrence H Kaufman, Bruce E. Kelly, Ron Lindsey, Ryan McWilliams, David Nahass, Jason H. Seidl, David Thomas, John Thompson, Frank N. Wilner Creative Director: Wendy Williams Art Director: Sarah Vogwill Corporate Production Director: Mary Conyers Production Manager: Lily Man Production Director: Eduardo Castaner Marketing Director: Erica Hayes Conference Director: Michelle Zolkos Circulation Director: Maureen Cooney Western Offices 20 South Clark Street, Suite 1910, Chicago, IL 60603 312-683-0130; Fax: 312-683-0131 Engineering Editor: Mischa Wanek-Libman mischa@sbpub.com Assistant Editor: Jennifer Nunez jnunez@sbpub.com 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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From the Editor William C. Vantuono

PTC: Doomsday avoided?

enate Commerce Committee Chairman John Thune (R-S.Dak.) and Ranking Member Bill Nelson (D.-Fla); House Transportation & Infrastructure Committee Chairman Bill Shuster (R-Pa.) and Ranking Member Peter DeFazio (D-Ore.); and House Railroad Subcommittee Chairman Jeff Denham (R-Calif.) and Ranking Member Michael Capuano (D-Mass.) thankfully forced me to rewrite this column literally before the presses began to roll on this issue. “Congress is doing what it seems to do best: nothing,” I originally said, citing our federal legislators’ inaction on extending the PTC deadline, with the exception of Sen. Thune and his efforts to get something going. Visions of a doomsaday scenario began swirling around Capitol Hill: embargoed hazmat trains, no clean drinking water, no treated sewage, deadly diseases like cholera and typhoid running rampant, passenger rail service shut down, and the economy grinding to a halt. I now have at least some faith that PTC will not become an acronym for “Perpetually Tardy Congress.” If the Positive Train Control Enforcement and Implementation Act of 2015 (H.R. 3651), introduced September 30, becomes law, the industry will have at least three more years to turn on a fully operational and interoperable PTC network. H.R. 3651 gives railroads until Dec. 31, 2018 to implement PTC. The Secretary of Transportation has the discretion to extend the deadline for up to 12 months if the railroads “are able to demonstrate to the satisfaction of the Secretary that they: (1) are unable to meet the deadline due to technical, programmatic or operational challenges, such as availability of public funding, spectrum, technology and interoperability standards; (2) have taken actions to address any challenges and mitigate risks to successful implementation of PTC; and (3) have made good-faith efforts to implement their plans. If carriers still face challenges, the Secretary has the discretion to provide a

one-time additional extension of up to 12 months if a carrier is able to demonstrate to the satisfaction of the Secretary that (1) implementation of PTC was delayed due to one or more circumstances beyond the carrier’s control, such as a delay in federal approval of a plan, testing or certification; or (2) the carrier has experienced additional technical, programmatic or operational challenges; demonstrated due diligence in fully implementing PTC; and has made substantial progress in fully implementing PTC. Any such carrier must commit to the Secretary in writing that they will fully implement PTC by the end of the extension.” The legislation also requires the railroads to revise and transmit to the Secretary their PTC Implementation Plans, “which must include a detailed schedule and sequence for full implementation of PTC. Under current law, the Secretary has authority to enforce the plan.” Finally, H.R. 3651 authorizes the Secretary “to phase-in PTC deployment so the railroads do not have to wait until the end to ‘turn it on.’” T&I noted that “a phase-in is not authorized under current law or federal regulation.” So, it looks like we will have an extension, and the bill seems to contain enough flexibility to allow for even more delays—even though Shuster & Co. have said that “Congress will not accept any more delays.” However, what got the industry into this situation in the first place? What—or who—caused PTC to become so overly complicated, expensive and time consuming? Government? Government regulators? Suppliers? Consultants? The railroads themselves? All of the above? We decided it was time to shed some light on these questions. We asked a few people who have been involved with PTC or one of its prior iterations to weigh in on this highly controversial subject (p. 20). Their observations may surprise you.

October 2015 Railway Age 1

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Transit focus: Ottawa

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RailwayAge 20 RAILROAD FINANCIAL DESKBOOK 2016 dB1

What a difference a year makes By david nahass

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On the Cover PTC installation at Sandpoint, Idaho, on the Union Pacific. Photo: 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. 10. Subscriptions: Railway Age is sent without obligation to professionals working in the railroad industry in the United States, Canada, and Mexico. However, the publisher reserves the right to limit the number 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. 2

Railway Age

October 2015

Industry Indicators TRAFFIC ORIGINATED CARLOADS

SHORT LINE AND REGIONAL TRAFFIC INDEX FOUR WEEKS ENDING AUG. 29, 2015

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

AUG. ’15 77,822 3,805 37,774 24,282 120,688 56,176 428,286 6,203 13,633 25,013 24,163 16,205 38,255 14,566 71,881 104,439 18,609 34,196 13,120 26,861 1,155,957

AUG. ’14 77,312 3,538 35,452 24,713 121,671 65,254 461,910 6,301 14,986 25,160 32,109 16,419 44,708 18,148 68,421 102,393 23,012 35,560 14,003 20,991 1,212,061

% CHANGE 0.7% 7.5% 6.5% -1.7% -0.8% -13.9% -7.3% -1.6% -9.0% -0.6% -24.7% -1.3% -14.4% -19.7% 5.1% 2.0% -19.1% -3.8% -6.3% 28.0% -4.6%

296,641

328,066

-9.6%

1,452,598

1,540,127

-5.7%

CARLOADS

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

COMBINED U.S./CANADA RR INTERMODAL

FOUR WEEKS ENDING AUG. 29, 2015

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

AUG. ’15 115,255 999,115 1,114,370

AUG. ’14 117,516 958,237 1,075,753

% CHANGE -1.9% 4.3% 3.6%

5,979 246,762 252,741

7,198 238,467 245,665

-16.9% 3.5% 2.9%

121,234 1,245,877 1,367,111

124,714 1,196,704 1,321,418

-2.8% 4.1% 3.5%

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 7.8% -10.0% 6.0% 9.0% -8.0% 13.3% -4.9% -58.1% -21.0% -0.3% -33.1% -2.2% 3.7% -0.1% 30.6% 3.9% 0.6%

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

CANADIAN RAILROADS TRAILERS CONTAINERS TOTAL UNITS

ORIGINATED AUG. ’14 43,905 24,793 29,900 10,547 23,625 5,972 9,534 7,287 20,814 8,964 2,563 1,971 18,329 13,505 36,311 9,893 87,767

TOTAL CARLOADS, MONTH 2015 vs. 2014

CANADIAN RAILROADS ALL Commodities

ORIGINATED AUG. ’15 47,337 22,316 31,693 11,494 21,729 6,794 9,068 3,055 16,444 8,938 1,715 1,928 19,011 13,498 47,412 10,274 88,260

BY Commodity

Transportation (train and engine) 68,616 (-1.27%)

Executives, Officials, and Staff Assistants 9,808 (-1.93%)

Professional and Administrative 14,559 1.73%

Total employees: 168,997 % change from AUG. 2014: 0.60% Transportation (other than train & engine) 6,710 0.19%

Maintenance of Equipment and Stores 31,004 2.83%

Maintenanceof-Way and Structures 38,300 2.60%

Source: Surface Transportation Board

class I employment shows signs of moderate growth Figures released by the STB show Class I total railroad employment rose 0.60% in August 2015, measured against August 2014. All but two categories showed signs of growth with Maintenance of Equipment Stores rising 2.83% compared to last year, followed by Maintenance-ofWay and Structures, which rose 2.60%. Both Transportation (train and engine) and Executives, Officials, and Staff Assistants continued to dip slightly, down 1.27% and 1.93%, respectfully. 4

Railway Age

October 2015

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Industry Outlook CURE reinvents itself as FRCA

CP, NS complete D&H South sale Canadian Pacific Railway Ltd. has completed the sale of a 282-mile segment of its Delaware & Hudson subsidiary to Norfolk Southern Corp.—the D&H South line, which connects Schenectady, N.Y., with Sunbury, Pa. First announced Nov. 14, 2014 and approved by the U.S. Surface Transportation Board on May 15, 2015, the $214.5 million sale (subject to adjustments) includes all branch lines and industrial spurs that connect to the Sunbury-Schenectady main line, plus some equipment, vehicles and parts. NS formally began rail operations on the corridor on Sept. 19. Approximately 45,000 CP carloads and shipping containers moved across the line annually, including consumer goods, salt, grain and forest products. The acquired lines connect with the NS network at Sunbury, Pa., and Binghamton, N.Y., providing NS single-line routes from Chicago and the southeastern U.S. to Albany, N.Y., and NS intermodal terminals at Scranton, Pa., and Mechanicville, N.Y. NS also gained an enhanced connection to its joint-venture subsidiary Pan Am Southern, which serves New England markets. Additionally, NS has acquired the D&H car shop in Binghamton, along with other facilities. NS has hired about 150 former D&H employees who have experience working this corridor. NS m/w crews are scheduled to perform routine maintenance, and NS plans in 2016 to add new ties, resurface 40 miles of track and install 14 miles of new curved rail. 6

Railway Age

October 2015

Long-time advocate for freight rail shippers Consumers United for Rail Equity (CURE) announced on Sept. 10, 2015 “a new name and a new advocacy approach.” “The new Freight Rail Customer Alliance (FRCA) is a diverse and broad Washington, D.C.based alliance for freight rail customers working together across industries to improve access to reliable rail service at competitive prices,” said David Sauer, FRCA President and COO and Senior Vice President of Dakota Gasification Company (Dakota Gas), Bismarck N.D. The new alliance replaces CURE, which was founded in 1984 by associations representing coal-burning utilities “to advocate for affordable and reliable freight rail service before the U.S. Congress and the Interstate Commerce Commission (ICC).” FRCA describes itself as “an alliance of freight rail shippers impacted by continued unrestrained freight rail market dominance over rail-dependent shippers.” The announcement is the culmination of a year-long process beginning in 2014 to review CURE’s mission and structure. The review concluded that there is a continued need for congressional and executive branch education and advocacy on behalf of a broad range of freight rail shippers. As a result, CURE’s membership approved a restructuring plan “that will expand the organization’s membership to increase participation by freight rail shippers in a host of industries and commodities. FRCA will continue the campaign to obtain changes in federal law and policy that would provide all shippers with reliable rail service at competitive prices. FRCA supports legislation that will provide long-needed reforms at the STB. Such reforms and process enhancements will allow the STB to effectively oversee the freight rail industry resulting in competitive rail service and pricing. FRCA also supports removing the current freight rail exemption from the nation’s antitrust laws.”

Market

Siemens-refurbished LRVs start rolling in Sacramento On Sept. 16, 2015, the Sacramento Regional Transit District (RTD) began operating the first set of light rail vehicles newly refurbished by Siemens on the recently opened Blue Line light rail extension to Cosumnes River College. The additional LRVs will increase capacity on the Blue Line throughout the RTD LRT system. Siemens is refurbishing 21 LRVs at its manufacturing facility in Sacramento and at the RTD light rail maintenance facility.

North America San Francisco Bay Area Rapid Transit District (BART): Has awarded Cubic Transportation Systems (CTS) a $12.6 million contract to update its revenue management system. Canadian Pacific: Has completed the $214.5 million sale of a 282-mile segment of its Delaware & Hudson subsidiary to Norfolk Southern Corp.— the D&H South line, which connects Schenectady, N.Y., with Sunbury, Pa. Maryland Board of Public Works: Has approved the Maryland Department of Transportation’s contract to purchase eight new diesel locomotives for MARC Train service. Metra: Has awarded Parsons a contract to install Positive Train Control (PTC) technology on its commuter rail lines. 8

Railway Age

October 2015

Metrolinx: Has awarded Alstom Transport a contract worth $127 million (C$168.5 million) for a new computer-based integrated traffic control system for the GO Transit regional/commuter rail network. Orange County Transportation Authority: Has selected HNTB Corporation to design the OC Streetcar project. Wabtec Corp.: Has signed a 10-year agreement with RPC-UWC (Russian Research and Production CorporationUnited Wagon Company) for the supply of freight car truck castings to the U.S.

Worldwide Adif (Spain): Has awarded a €164 million contract to a consortium led by Bombardier and including Alstom and

Indra to install signaling and provide maintenance for a new high-speed line under construction in the Extremadura region. Cuban Ministry of Transport: Has signed a contract with RM Rail, Russia, for the delivery of 363 new freight cars for Cuban Railways (UFC). European Bank for Reconstruction and Development (EBRD): Has agreed to provide Kosovo with a €39.9 million loan, which will be used by Kosovo Railways (HK) infrastructure subsidiary Infrakos to fund the first phase of a project to rehabilitate the 148-km north-south corridor between the Serbian and Macedonian borders. Munich Transport (MVG): Has selected Siemens for a contract to supply 22 low-floor LRVs with options for up to 124 additional vehicles.

Update Supply Briefs Rocla to build Florida facility to serve FEC, All Aboard Florida Rocla Concrete Tie, Inc. has entered in to a long-term supply agreement with All Aboard Florida (AAF) and Florida East Coast Railway (FEC), which will require the construction of a new facility in Ft. Pierce, Fla. The new plant will supply ties to FEC and AAF, as well as other transit agencies and railroads throughout the Southeast. It will be located along the existing FEC main line in Fort Pierce. Rocla said this location was chosen because Fort Pierce is the midway point between the hubs of Orlando to the north and Miami to the south, making it the ideal point to manufacture and deliver ties to all of Florida’s growing rail operations. Construction on the new facility in Ft. Pierce will begin immediately, and the production of concrete ties will start in early 2016.

Stone Canyon Industries purchases A. Stucki Company Harris Williams & Co., a middlemarket investment bank, has announced the sale of A. Stucki Co., a supplier of new and reconditioned railcar components, to Stone Canyon Industries. Harris Williams was exclusive advisor to A. Stucki, a subsidiary of Quad-C Management. The transaction was led by Jason Bass, Joe Conner, Jeff Burkett, Jeff Kidd and Jay Beekman of Harris Williams’ Transportation & Logistics (T&L) Group. A. Stucki, headquartered near Pittsburgh, is a privately held company comprised of 17 global locations focused on engineering, reconditioning, machining and manufacturing railcar and industrial parts, including development and application of railcar dynamic control products. 10

Railway Age October 2015

Another smooth leadership transition at Norfolk Southern

ontinuing a tradition of smooth leadership transitions, Norfolk Southern Executive Chairman Charles W. “Wick” Moorman (pictured) stepped down effective Oct. 1, 2015. President and CEO James A. Squires became Chairman. There were other retirement-driven changes. Mark D. Manion, Executive Vice President and Chief Operating Officer, will retire effective Feb. 1, 2016. Manion’s replacement will be Vice President Engineering Michael J. Wheeler, who before assuming COO duties is serving as Senior Vice President Operations through Jan. 31, 2016. Assistant Vice President Maintenance of Way Philip Merilli has replaced Wheeler as VP Engineering. Additionally, effective Oct. 1, Cindy C. Earhart became Executive Vice President Administration and Chief Information Officer, reflecting her new responsibility for NS’s Information Technology department following the retirement of Deborah H. Butler. Moorman, Railway Age’s 2011 Railroader of the Year, will continue to serve as a director until retiring from the board effective Dec. 31, 2015. He is serving as Senior Advisor to CEO Squires through Dec. 31, at which time he will retire as an NS employee. Squires, 54, joined NS in 1992 and served in numerous law, finance and administration positions before being named President in 2013 and CEO in March 2015. “Jim goes forward with

the people, resources, and creativity to take Norfolk Southern to the next level in service to our shareholders, customers and communities,” said Moorman. “That mandate is clear, and I have the highest confidence that Jim and the entire NS team will succeed admirably.” “Jim’s appointment reflects Norfolk Southern’s robust succession process in support of sustainable growth, service dependability, financial success and value creation for shareholders,” said Steven F. Leer, the company’s lead independent director. “Norfolk Southern and all of those who depend on NS benefit from a seasoned, thoughtful and future-focused leader in Jim Squires. Jim, his senior management team, and the entire NS workforce enjoy the board’s full confidence and support as we work together to make the most of the opportunities ahead.” “I speak for the 30,000-strong Norfolk Southern team in expressing our gratitude for Wick’s leadership, friendship and vision over some of the most remarkable years in Norfolk Southern’s history,” said Squires. “Thanks in great part to him, Norfolk Southern and the railroad industry are far more modern in our thinking, more technologically advanced in our operations and more thoughtful in managing our footprint for our business partners and those we serve.” Manion joined NS in 1975 as a management trainee. He served in a range of operations positions, including trainmaster, superintendent, general manager, VP Mechanical, and SVP Transportation Operations. Wheeler, who has served as VP Engineering since 2012, joined NS in 1985 as a research engineer. Earhart joined NS in 1985 as a supervisor in subsidiary accounting. Merilli joined an NS predecessor line in 1981 as an assistant roadmaster. He served in a variety of engineering positions, including track supervisor, division engineer, and chief engineer line maintenance.

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NYCT No. 7 line extension finally open for business The long-awaited, long-overdue extension of MTA New York City Transit’s extension of the No. 7 subway line to Manhattan’s far west side opened to the public on Sept. 13, 2015. It is the first new NYCT line in 20 years. The City of New York funded the $2.42 billion, 1.5-mile extension of the No. 7 line from its present terminus at Times Square to a new station at 34th Street and 11th Avenue, at the under-development Hudson Yards. City funding included $2.1 billion for the station and tunnels in addition to $266 million for other non-subway related infrastructure work. Hudson Yards is a 28-acre, $20 billion commercial, retail, residential and recreational development being built on top of the Long Island Rail Road John D. Caemmerer West Side Yard. The No. 7 extension also allows connections to 18 other subway lines. WSP | Parsons Brinckerhoff—whose founder, legendary civil engineer William Barclay Parsons, was Chief Engineer of the New York Rapid Transit Commission and led the design and construction of city’s first subway line, the Interborough Rapid Transit (IRT), in 1904—was an integral part of the No. 7 project. The firm prepared an environmental impact statement and led conceptual, preliminary and final design for the extension on behalf of the MTA. Currently, it is performing structural engineering and mechanical-electrical-plumbing engineering for several buildings at or near Hudson Yards. Arup served as tunnel design engineer for S3 II Tunnel Constructors (a joint venture of JF Shea, Schiavone, and Skanska) in the construction of the station caverns and as engineer-of-record for the CCA-Halmar International Joint Venture on the ventilation systems. As engineer of record for the CCA-Halmar International Joint Venture contract at the new 34th Street Station Site L ventilation facility, Arup provided initial ground support design, construction sequence design, construction impact assessment, ventilation design and field services including the fit-out with mechanical and electrical equipment.

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October 2015 Railway Age 11

Update Portland Tri-Met launches MAX light rail Orange Line

Portland, Ore. added a fifth line to its light rail network last month with the start of public services on the MAX Orange Line from Portland State University (PSU) to SE Park Avenue in Milwaukie. The 7.3-mile line is effectively an extension of the Yellow Line serving two stations on the west side of the Williamette River and eight on the east

side and linking Portland city center with the south Waterfront, Milwaukie and northern Clackamas County. The line crosses the river on the Tilikum Crossing, which at 1,706 feet is one of the longest transit-only bridges in the United States. The Orange Line shares the bridge with the Portland Streetcar, buses, bicycles and pedestrians. Services are operated by 18 Siemens

S70 LRVs, which are equipped with Sitras SES onboard energy storage systems. Ten bus lines have been reconfigured to feed into the Orange Line, and there are 446 new bicycle parking and 719 car parking spaces, including nine with electric vehicle charging points. The total budget for the project was $1.49 billion, although Portland transit authority TriMet says it has achieved savings of $48 million during construction. Around $65 million was invested in new or improved pedestrian and bicycle infrastructure as part of the project. Average weekday ridership is forecast to reach 22,765 by 2030, when approximately 22,000 households and 85,000 jobs will be located within walking distance of the line’s stations. The completion of the Orange Line expands the MAX light rail network to nearly 62 miles and 97 stations.

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Railway Age October 2015

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CSX: Wheels up for Munoz; Gooden named President CSX President and Chief Operating Officer Oscar Munoz has left the railroad, effective immediately, to become President and CEO of United Continental Holdings, Inc., parent company of United Airlines, following the scandal-laced resignation of United head Jeff Smisek and two of his lieutenants. Munoz has served on the board of United Continental since 2010 and previously was a Continental director. CSX Chairman and CEO Michael J. Ward moved immediately to enact several senior management changes. Clarence W. Gooden has been appointed President, overseeing both Operations and Sales and Marketing from his previous position as Executive Vice President and Chief Sales and Marketing Officer. Fredrik J. Eliasson has been appointed EVP and Chief Sales and Marketing Officer from his previous position as EVP and CFO.

Cindy M. Sanborn has been appointed EVP and Chief Operating Officer of CSX Transportation, Inc., from her prior position as EVP Operations. Frank A. Lonegro has been appointed EVP and CFO from his previous position as VP Service Design. Gooden “has helped lead CSX’s growth and value pricing efforts, serving as EVP and Chief Sales and Marketing Officer since 2004,” the company said. “His career with CSX and its predecessors has provided him with more than 40 years of experience in operationsm sales and marketing.” Eliasson “has helped develop and lead strategic initiatives, particularly in efficiency and capital allocation, since his appointment as EVP and CFO in 2012,” CSX said. He previously served in key sales, marketing and Finance leadership roles, including as vice president of the chemicals and fertilizer business, vice

president of emerging markets, vice president of commercial finance, and vice president of financial planning and analysis. He joined CSX in 1995. Sanborn “has helped lead the company’s operating performance and Service Excellence initiatives in the role she took on earlier this year as EVP Operations and in leadership positions of increasing responsibility in Operations, including as Vice President and Chief Transportation Officer and Vice President Northern Region,” CSX said. She joined CSX in 1987. Lonegro “has helped shape and lead efficiency and capital strategies in positions of increasing responsibility, most recently as Vice President Service Design and before that president of CSX Technology, VP Mechanical, VP Internal Audit and Associate General Counsel,” CSX said. He joined the company in 1999.

W o r l d ’s L a r g e s t C r a n k s h a f t M a n u f a c t u r e r a n d R e - M a n u f a c t u r e r

H e r m i t a g e , PA U S A 1 6 1 4 8 Te l e p h o n e 1 - 7 2 4 - 3 4 7 - 0 2 5 0 w w w . E l l w o o d C r a n k s h a f t G r o u p . c o m October 2015 Railway Age 13

Update CRRC breaks ground for Boston contract

Massachusetts Governor Charlie Baker joined Springfield, Mass., Mayor Domenic Sarno, CRRC (China Railway Rolling Stock Corp Ltd.) Vice President Weiping Yu (pictured), CRRC USA Rail Corp. Chairman and President Chuanhe Zhou and state and local officials at the Sept. 3, 2015 groundbreaking of a $95 million, 220,000-square-foot railcar manufacturing facility where 152 new Orange Line and 132 new Red Line vehicles

will be built for the Massachusetts Bay Transportation Authority (MBTA) under a $566.6 million contract awarded earlier this year. The new facility will also support additional anticipated North American contracts for CRRC USA Rail Corp., the U.S. subsidiary of China’s largest railway rolling stock manufacturer and the first Chinese railcar builder to land a U.S. contract. More than 100 jobs will be created to restore an historic former Westinghouse plant in Springfield that will house the new facility, CRRC said. Staffing for CRRC USA Rail Corp. will draw upon the greater Springfield region, with an initial estimate of 150 employees. Construction will begin in spring 2016 with completion slated for fall 2017. Full production is expected to begin in spring 2018 with the first railcars completed in January 2019. The

new railcars will replace vehicles that have been in service since 1978. Weiping Yu told Railway Age that CRRC’s immediate goal is to ensure that the MBTA project is completed before the company moves on to other contracts, but that CRRC “is interested in providing its expertise to any and all cities in the U.S. that have the same needs [as Boston].” He added that CRRC has already been in communication with Los Angeles and Chicago. Additionally, The New York MTA has invited CRRC for talks “but nothing has come out of that yet,” Yu said. “It’s important to become a good partner—to create jobs and become a part of the local economy,” said Yu. “We have an exciting road ahead as we embrace this unique opportunity with Massachusetts on our first transportation project in the US. We look forward to the success of this project.”

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Railway Age October 2015

NS restructuring Triple Crown Service Norfolk Southern Corp. is restructuring its Triple Crown Services (TCS) subsidiary to focus on the transportation of automobile parts. The railroad said it will work with shippers and logistics partners to convert other business TCS handles into NS’s current intermodal network. Triple Crown Services specializes in the use of RoadRailer® equipment in dedicated trains. TCS will continue RoadRailer service for automobile parts between Detroit and Kansas City for the foreseeable future but will transition to containers in other NS lanes. TCS has annual revenues of approximately $350 million and currently has a workforce of about 240 employees. NS expects to downsize the workforce by about 200 employees by the end of the year. The affected employees will be eligible for severance pay, job placement assistance and opportunities to

apply for positions at NS. As a result of the restructuring, NS will recognize accelerated depreciation and other costs totaling approximately $65 million in the second half of the year, roughly equal between the third and fourth quarters. The restructuring “is expected to be modestly accretive to earnings beginning in 2016,” NS said. “This change is a natural evolution in the business,” said NS Executive Vice President and Chief Marketing Officer Alan H. Shaw. “We want to retain the best of TCS in specific markets, with efficient door-to-door logistics and award-winning customer service.” TCS President James Newton said the immediate emphasis “is on making the transition smooth for customers, employees, families and trucking partners. We are proud of the accomplishments of Triple Crown and the service we have provided to our

customers, and we are confident that TCS and Norfolk Southern will continue to provide the level of service our customers expect.” NS will continue to employ more than 2,000 people in Indiana. “NS maintains a strong transportation presence for shippers, receivers, industrial developers, and communities throughout Indiana,” Shaw said. “We are grateful for our relationships in the state and look forward to future opportunities to partner and grow business.”

October 2015 Railway Age 15

Watching Washington Frank n. wilner

STB: Speak to improve the silence

magine sharing with two equally qualified colleagues the decisionmaking authority affecting long-term railroad service quality, profitability and capital investment. Such is the power of the three Senate-confirmed members of the STB—Chairman Dan Elliott and Deb Miller, both Democrats; and Republican Ann Begeman. But unlike as with corporate boards, committees of Congress and our military leadership, these three STB members are prohibited from discussing, informally among themselves or individually with parties of interest, the warp and woof of matters before them for decision. Distinct from a court, which makes decisions based entirely on the law, the STB has quasi-legislative powers in addition to quasi-judicial powers, with a mandate to consider, foremost, the public interest, termed by former ICC member Rupert L. Murphy as “something fitted to the public need.” Government Sunshine law prohibits a majority (two in the case of the threemember STB) of federal regulatory agency members from consulting with each other except during formal sessions open to the public. Senate Commerce Committee Chairman John Thune (R-S.D.) likely can’t change that, but he seeks to increase STB members to five, which would allow two members at a time to confer in private. Congressional budget hawks likely will reject increased spending to enlarge the STB 20 years after a less conservative Congress downsized what previously was the ICC. More pointedly, how effective would Socratic exercises—cherished by opinion leaders and decision-makers—be if three of five STB members were excluded? A second snag is the STB’s ethics rules prohibiting so-called ex parte communications by which individual STB members meet privately with 16

Railway Age

October 2015

parties of interest. That hitch could be solved with an internal rulemaking. Miller, who distinguished herself in Kansas state government by having successive Democratic and Republican governors choose her as their transportation secretary, is no stranger to collaborative decision-making. She sees meaningful benefit in informal conversations with fellow board members, as well as parties of interest. Miller doesn’t cotton to backroom, blinds-drawn sessions with parties of interest, but informal meetings attended by an STB attorney with a written record created and made public with an attendance list. “I know that other agencies, including the FRA, permit these types of meetings and that they have generally been well-received,” Miller said. “I generally find that I can much better understand an issue after engaging in a dialogue about it for 30 minutes than I can by spending two hours reading a 50-page filing, or listening to someone’s attorney recite prepared remarks. I know from conversations with stakeholders that they sometimes feel that the STB, despite having digested a voluminous paper record, makes a decision without having fully grasped the issues and arguments.” During her short stint as acting chairman, Miller set the STB’s legal staff to work developing procedures to permit ex parte communications, but because of the legislative prohibition on STB members consulting with each other, she has “no idea where Chairman Elliott or Vice Chairman Begeman are on the issue.” Some may argue that the same result might be achieved through advance-notice, open-to-the-public formal sessions of the Board that include staff presentations. Miller, however, sees an innate stiffness

in such formality, with Board members understandably loathe to challenge one another or STB staff—or to admit to personal knowledge gaps—at public meetings. “No legal filing or prepared testimony can substitute for the value of a back and forth discussion, particularly when the issue to be determined is policy in nature, not legal,” she said. This is a Board where informal, collaborative discussions could be fruitful given the solid educational credentials, diverse transportation experience and demonstrated intellectual curiosity of these three STB members. Elliott is the lone attorney, possessing a transportation labor background. Miller’s resumé includes state transportation regulation, plus private sector transportation planning and policy consulting. Begeman advised U.S. senators on transportation issues and has previous private sector business experience. In its 1897 annual report, the ICC said, “We sit for the correction of what is unreasonable and unjust.” Now, as then, reaching agreement on what should or should not be corrected is a complex exercise encompassing familiarity with accounting, business practices, economics, finance, history, transportation law and constitutional law, plus an acute understanding of transportation networks, modal capabilities and shipper requirements. Erecting barriers preventing informal knowledge-sharing restricts the free flow of information, retards understanding of complicated subject matter and chokes off a candid sharing of ideas. The consequences of such limitations do not best assure—to paraphrase National Transportation Policy— the promotion of safe, adequate, economical and efficient service, and the fostering of sound economic conditions in transportation adequate to meet the needs of commerce.

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ailway ge R A RAILROAD FINANCIAL DESKBOOK 2016 DB1

What a difference a year makes By David Nahass

DB10

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What a difference a year makes Railcar types that were marketplace leaders as little as one year ago are today’s relative “dogs.” By DAVID NAHASS, Financial Editor

All photos: Steve Schomollinger

s the summer draws to a close, the annual Railroad Financial Desk Book becomes priority number one for the impending autumn. As preparation for the 2016 edition, a review of the 2015 Desk Book helps to set the table and foster ideas. Wow! What a difference a year makes! For those of you with short memories, this is not the year to start that Ginkgo Biloba regimen (it doesn’t work anyway). Almost one year ago, comments were being provided to the DOT regarding revisions to the tank railcar specification for cars hauling crude by rail (CBR), and the price of West Texas Intermediate (WTI) crude oil was hovering in the $90.00/barrel range. Tank railcars for hauling crude and small-cube hoppers for hauling sand were flying off production lines and into service as quickly as possible. The good times were rolling and there was no end in sight.

We’ll leave the thanks for the memories section to the late Bob Hope. Led by a reduction in the price of WTI, and an improvement in overall railroad metrics, railcar types that were market leaders one year ago are today’s relative “dogs.” Follow this with a bigger than big hiccup in the Chinese economy, a strong dollar and an American economy that is decisive and indecisive at the same time, and the strength and direction of the overall rail economy is hard to determine and harder to predict. After a summer of fun for oil producing companies and the oil producing supply chain in 2014, WTI moved from a spot price of about $107.00/barrel in August 2014 to $60.00/barrel by December 2014. During that same period, average train velocity across the U.S. increased by roughly 20%. And those market leaders? In roughly the same period, the number of tank railcars and small-cube covered hoppers (sand and cement) on line declined by October 2015 Railway Age DB1

RAILROAD FINANCIAL DESKBOOK 2016

Coal loadings, which are down a similar percentage to CBR, are under pressure from all sides.

5%-7%. And loadings? Year over year (YoY) petroleum product loadings are down more than 10%. At the end of June 2015, for the first time more oil moved out of the Bakken region in North Dakota by pipeline than tank railcars. More pipeline capacity is expected to come on line in the next 24 months. CBR loadings represent a small piece of a large pie. Coal loadings, which are down a similar percentage to CBR, are under pressure from all sides: Natural gas prices held steady in the high $3.00-low $4.00 range through November 2014, only to make a dramatic move below $3.00 /MMBtu in 2015. (All prices for oil and natural gas come from www.eia.gov.) Any number starting with $2.xx for MMBtu for natural gas has the potential to marginalize coal-based power in favor of natural gas-fired turbines. It is fascinating to watch how one commodity market surges while another suffers. It is more incredible to see a market leader whose reign spans decades seem marginalized. And the impact here is significant: A 13% decrease in coal loadings represents a loss of almost 400,000 carloads. Never one to miss an opportunity to kick someone while they are down, the U.S. government has used its political strength to further the case against coal with its recent Clean Power Plan calling for reductions of up to 60 gigawatts of coal-fired generation by 2020. Improving railroad metrics impact coal car demand, and weakness in car demand continues to torture even the most stalwart investors. It’s not all bad. As readers process these levels of less than DB2

Railway Age

October 2015

great news, chew on this: In spite of the decreases in growth markets such as CBR and in “baseload” markets (such as coal and metals), YoY combined (general freight and intermodal) U.S. traffic rail loadings are down from 2014 by less than 1% (.08% to be exact). Intermodal loadings are up more than 3% (or more than 400,000 units) YoY. Other bulk markets such as grain and forest products are relatively equal YoY. Overall, the marketplace for rail is complex and divergent and remains difficult to forecast. The state of the rail marketplace

Still, there are important issues that remain in the forefront of many investor’s minds. There is no substitute for the “on the ground” point of view of railcar lessors and industry observers that are always on top of today’s main issues. Here are three important questions on the rail economy and some of the dialogue received in answer to these questions: Do you think the current projections for new railcar deliveries for the remainder of 2015 and 2016 are realistic or overstated and why? A little background, courtesy of Eric Starks, President of FTR Associates. Eric told Railway Age that earlier in the year his firm had 2015 railcar (tank and non-tank) production projected into the low 90,000s. It has since moved down to the mid 80,000s (that’s cars delivered and projected to be delivered in 2015). 2016 currently projects into the mid-70,000s. Starks said, “Production of railcars is in line

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Bluer skies may lie ahead as manufacturing appears to be on the upswing.

with growth from other modes of transportation,” noting that “by mid-2016, railcar production output (capacity) will decline by almost half.” One lessor noted that the tank railcar backlog seems “overstated.” Another feels that “there will be a reduction in new car orders in 2015 and 2016” due to “reductions, deferrals and cancellations (making specific mention of orders being deferred by TTX into 2017).” This lessor also feels that once the final dust settles on the DOT tank car regs, orders will again tighten as companies look to grab near-term capacity that is not subject to further regulatory adjustment. Another lessor noted that “due to new regulations, lawsuits and timing, it will take time for

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DB4

Railway Age

October 2015

customers and asset owners to make the right decisions.“ Kristine Kubacki, Director, Industrials at Avondale Associates LLC, notes that 2016 projections are overstated and that current build numbers could continue to put pressure on railcar prices and lease rates. “Overstated” was a term applied by another lessor along with echoes of concerns about orders and “space reservations” being withdrawn by large customers such as BNSF that may leave a wake of up to 5,000 railcar slots at a number of railcar manufacturers. This lessor noted that the coming year would be a “real test on the firmness of orders” and feels that the mid-70,000s production number is more likely to miss the target than find the bull’s eye. This lessor is focused RailSolutions Offers: • Railroad Equipment Appraisal and Valuation Services • Portfolio Analysis and Lease Valuation Services • Equipment Remarketing • Railcar and Locomotive Inspections, and Technical Services • RailSolutions Publishes the Investors’ Guide to Railroad Freight Cars and Locomotives – A comprehensive reference manual covering market and valuation data on virtually all types of railcars and locomotives used in North American rail freight services.

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on tepid railcar loadings. Lacking loadings growth, what drives the demand for new equipment? The word on the proverbial street indicates that there are near- and medium-term delivery slots available for potential lessees or cash buyers, especially those looking to break an order into a near-term order and an order that adds to existing backlogs. What makes the concept interesting is that these anecdotal discussions on railcar capacity do not mention if near-term production capacity is available as a result of cancellation, deferral or capacity increases that represent expansion of production output. A subtle but powerful nuance is the difference between committed orders and opportunistic sales of capacity expansion. Fact is, outside the four walls of a manufacturer’s headquarters, when an offer is made to produce a car, no explanation on the source of the manufacturing capacity is required.

of 2015 to 46,375 at the end of June 2015. That’s a decline in orders, but production remained brisk in the first half of 2015 at 18,875 tank railcar assemblies. One lessor noted that general-purpose tank railcars (read tank railcars that do not haul crude) are in demand due to deferred production of non-crude tank railcars.

With tank car production having decreased, what market segments will take leadership in the new car markets? Answers to this question were remarkably consistent and a bit confounding considering the answers received to the first question and the pure volume of railcars expected to be produced in 2016. A Railway Age article from July 31 cites Economic Planning Associates, which notes that the tank railcar backlog had decreased from 57,625 at the beginning

While noting a decrease in lease rates, Kristine Kubacki asked if tank railcar production has decreased. Her skepticism aligns with Starks’ note that even as orders have seemingly decreased, railcar manufacturers increased 1Q and 2Q 2015 production to make all deliveries (of tank railcars and small-cube hoppers) that could be made. One lessor noted that covered hopper cars of all types, except small-cube hoppers, seem to be in demand right now. Another lessor echoed the same sentiment. Along with a

As car prices rise, lease rates must rise in tandem or the motivation for new investment is non-existent.

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RAILROAD FINANCIAL DESKBOOK 2016

lessor, Starks sees the grain market as “solid for the next couple of years.” Both parties noted that the grain car fleet is making a move toward rejuvenation. One lessor suggested that production would be a “mixed bag” of car types with covered hoppers (jumbo sizes for grain, DDG and plastics) leading the market with production in other car types except coal cars. Automotive was identified as a good growth story, with Starks noting that the autorack market has already peaked and should stay at current levels for the next few years, and Kubacki saying that the new market leaders are not going to be produced at the same levels of crude tank railcars and small-cube covered hoppers for sand and cement. There was similar optimism for covered hoppers for plastic pellets and intermodal cars, and an acknowledgement that TTX is building boxcars. Combining these points of view creates some interesting thoughts about 2016 production. Much of the hypothesis for production seems to be based on the replacement cycle. As car prices rise, lease rates must rise in tandem or the motivation for new investment is non-existent. A new jumbo covered hopper for grain priced at roughly $90,000 is competing with similar capacity and similar gross rail load (GRL) cars built between 1995 and 2005 for anywhere from $55,000-$75,000. There are plenty of older (pre-1985 cars) that can be replaced in the national fleet, but with scrap

prices low and new car prices high, a bit of caution regarding a backlog built on the replacement of older railcars may be prudent. What are the biggest issues facing the rail investment community right now and what issues worry you for the next 12 months? Bazinga! Open-ended and ready to go! Here’s a caveat: If the Federal Reserve decides to begin increasing interest rates later in 2015, how quickly will the end of the reign of cheap money begin to dampen activity? The ability to tolerate high railcar costs and still make money as an investor and as an operator/end user has had a great tail wind based upon loose

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DB6

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October 2015

RAILROAD FINANCIAL DESKBOOK 2016

monetary policy. A quarter-point increase might not make much difference, but as rates increase by 1% and higher, returns will need to increase.

Over-production remains a concern, and market dynamics are not looking favorable. One lessor sees the market struggling with the “cyclical peak in carbuilding coming to an end after a very frothy run-up.” This lessor continued to note that the potential end of cheap capital could leave some investors scrambling to reposition their railcar investments. (Reposition is a kind word for the potentially unplanned sale of assets that are underperforming relative to an investor’s expectations.) Another lessor raised concerns that the pressure an “oversupply of cars” has on rental rates and may be active in “forcing rental rates down.” Noting, as many industry veterans will acknowledge, “We always overbuild,” Kubacki observes, “With many new entrants into the marketplace and the decline in freight fundamentals, I’m most worried about sustaining asset prices. OEM’s are not quick to turn off the spigot, and we could/are being left with too many cars.” Still another lessor

noted the excess market liquidity that continues to scour the rail marketplace looking for homes and driving down returns in the process. As has been noted in more than one “Financial Edge” column, there’s been a blurring of the lines between the traditional operating lessor and the bank leasing company in pursuit of growth and investment opportunities. Other issues on the minds of lessors and analysts (and really who would blame them) are the ongoing discussion on tank railcar regulations and the current docket of regulatory related lawsuits. Overproduction remains a concern and the market dynamics are not looking favorable. Starks notes that “utilization of the tank fleet has decreased since the end of 2014, when it was 100%, to its current 80% level.” New production (combined with some retirements) will keep utilization around that 80% level. That’s a change from the expectations of a lot of people in this market, and manufacturers, as with small-cube covered hopper cars (for sand and cement), continue to produce every ordered railcar in this segment. Moving from the local to the global: The global economy seems to be on its heels and that is a cause for caution as well. One lessor cites concerns about the global economy on the North American rail market.Starks says that “weakness in manufacturing and in the general economy remain a concern as that feeds the rail economy. Bulk commodities remain weak globally due to weaker economies abroad, the strong dollar and uneconomic practices like dumping. That is a point to keep

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October 2015 Railway Age DB7

RAILROAD FINANCIAL DESKBOOK 2016

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October 2015

your eye on. We can see manufacturing picking up, but global concerns seem to be on the table for the next 12 months.” Kubacki sees concern there as well, noting “Secularly, we could be shifting away from emerging market commodities for some time, meaning railroad traffic in dollar-denominated commodities could be depressed for several years.” Clearly, there’s potential stress points in the market that have the potential to change the way the rail economy will look in the next 12 months. While the remainder of 2015 seems certain, 2016 holds serious questions and a number of issues to watch and observe. Here’s a prediction: Offered a bet over/ under on building 75,000 railcars in 2016? Take the under. Railcar rundown

Here’s a quick point of view on railcars and their markets. Grain: Grain car building, as noted, is anticipated to be strong, but the strong dollar has negative impacts on the export market. Watch for long-term opportunities but don’t chase. Used cars have had a run-up already and this market is banking on rental rate increases that may not come soon. Coal: Toughest market right now. Got parked coal cars? Hope for a weaker dollar, and that the U.S. government opens the for export of $2.75/MMBtu natural gas. Metals: A strong dollar, Chinese dumping and weak scrap prices are not being offset by the strong auto market. It’s a tough market for buyers, sellers and lessors. The national mill gon fleet has needed rejuvenation and that’s a ways around the corner. Boxcars: Some strength here may be offset by changing dynamics of market ownership and the price of new cars. This market favors experience, especially for the alchemy known as per-diem leasing. New to the market? Make this the last car type you add to your fleet. Small-cube covered hoppers (sand and cement): Stories of parked sand cars are widely (and accurately) reported. Check the earnings calls of any public company that produces frac sand. Sand is the core fracking component, and in a twist, drilling productivity increases with increased sand used in the drilling process. Fact is, right now there are just too many of these cars and more are coming. Long and low might be your savior here. Go short to play the market and you might end up getting played. Tank (CBR): Call Saudi Arabia and tell them you want your $90/barrel oil back. Be prepared to take a number and wait behind Libya, Venezuela, Nigeria, Russia, Iran, Algeria, etc. Until then, Google “oil tank cars in storage” and realize you’re not the only one. Tank (non crude): Changing regulations will create opportunities here, but watch the potential for tank railcars originally slated for CBR being converted and causing a short-term oversupply. Plastics: There’s real market strength here, but plastics cannot lead the market like grain and coal. Potential increases here when oil prices start to rise and mothballed ethylene facilities get reignited. Got questions? Set them free at dnahass@railfin.com. RA

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Directory 2016 FINANCE COMPANIES

CIT RAIL

30 South Wacker Drive, Suite 3000, Chicago, IL 60606; Tel.: 312-906-5700. CIT Rail leverages deep experience and one of the youngest, most diversified railcar and locomotive fleets in the industry. We have a longstanding commitment to providing attractive railcar leasing solutions to rail shippers and carriers. Our solutions free up capital for your growth priorities, increase efficiencies and reduce out-of-service time.

COMPASS CAPITAL CORPORATION

An international asset finance and management company located in San Francisco and Chicago. The company’s major emphasis is arranging and acquiring lease investments, primarily in transportation equipment. We provide customized leasing services to finance railcars and locomotives, capital and/or operating leases, portfolio acquisition services. Peter Urban, Vice President–Rail Marketing, 200 S. Wacker Drive, Suite 3100, Chicago, IL 60607. Tel.: 312-674-4742; Fax: 312-421-2742; Email: purban@compasscapitalcorp.com.

ELEMENT FINANCIAL CORPORATION – RAIL FINANCE

150 N. Wacker Driver, Suite 2450, Chicago, IL 60606; Tel.: 312-982-8700; Harry Zander, Senior Vice President, Rail Finance, Email: hzander@elementcorp.com. Website: www.elementcorp.com. Element Financial is one of North America’s leading equipment finance companies operating within four verticals of the equipment finance market – Rail Finance, Aviation Finance, Commercial & Vendor Finance, and Fleet Management. Our Rail Finance group has a longstanding track record of delivering tailored financing solutions for all types of rolling stock including tank and general freight railcars. As trusted advisors on complex transactions, we put our experience to work by adding value through our counsel as well as our capital.

PROGRESS RAIL EQUIPMENT LEASING

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

DB10

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ARRANGERS

THE DAVID J. JOSEPH COMPANY

300 Pike Street, Cincinnati, Ohio 45202; Tel.: 513-419-6200; Fax: 513-419-6221; Trey W. Savage, VP Rail Group; Ken Roseberry, Director Rail Equipment Group; Keith Kelsey, Ken Johnson, and Matt Siemer, Regional Sales Managers; Tom F. Pellington, Sr. Director Transportation Services; Steven R. Skeels, Chief Mechanical Officer; and Ann Edwards, Mgr. Retired Rail Assets (502-212-7365). The David J. Joseph Company’s Rail Equipment Group is a full-service transportation company providing a broad range of services throughout North America. Single investor, leverage leases, freight cars, portfolio evaluation, remarketing fleet management, purchase and sale of portfolios, and private fleet management. Other services include railroad car dismantling for scrapping and parts reclamation.

RAILROAD FINANCIAL CORPORATION

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

THE ANDERSONS RAIL GROUP

480 West Dussel Dr., P.O. Box 119, Maumee, OH 43537; Fax: 419-891-2749; Rasesh Shah, President Rail Group, 419-8912958; Chuck Brown, Vice President Sales, Tel.: 419-891-6386; Email: Chuck_Brown@andersonsinc.com. Formed in 1989, The Andersons Rail Group has enjoyed steady growth in the number of cars leased and managed from Maumee, Ohio. Currently, our portfolio consists of approximately 22,000+ rail cars. To better serve our customers, The Andersons Rail Group operates a large fleet of mobile units, 20 repair facilities, and a steel fabrication facility to produce custom rail components; Randy Thomure, Vice President Repair Operations, Tel.: 419-891-6687; Email: Randy_Thomure@ andersonsinc.com. We understand the importance of having extensive knowledge about taxation, government regulations and railroad requirements. As a valued customer of The Andersons Rail Group, you can expect reliable equipment, flexible lease options and superior customer service. Please visit our website at: www.andersonsrail.com.

RAILROAD FINANCIAL DESKBOOK 2016

AMERICAN RAILCAR INDUSTRIES, INC.

100 Clark Street, St. Charles, MO 63301-2075. Tel.: 636.940.6020; Fax: 636.940.6100; Email: sales@ americanrailcar.com; Website: www.americanrailcar.com. Agile, Responsive, Innovative. • Design • Manufacturing • Repair • Railcar Fleet Management • Railcar Leasing Contact us to find out how ARI can be your preferred railcar supplier.

ATEL LEASING CORPORATION

The Transamerica Pyramid, 600 Montgomery Street, San Francisco, CA 94111; Tel.: 415-616-3486; Ken Fosina, Executive Vice President, Email: kfosina@ atel.com. Since 1977, ATEL has leased rail assets to America’s largest railroads and shippers. ATEL specializes in the leasing all types of rail assets, including railcars, locomotives and maintenance-of-way equipment. ATEL targets railcars and locomotives built prior to 2005, but prefers new maintenance-of-way assets. Leases can be full service, but net leases are preferred. ATEL executes lease transactions directly and through its Capital Markets desk. Each year, ATEL’s Portfolio Management will sell rail assets from one of its Funds managing expiration.

CAI RAIL

Steuart Tower, One Market Plaza, 9th Floor, San Francisco, CA 94105, Tel: 415-788-0100; Fax: 415-788-3430. James H. Magee, Senior Vice President, email:jmagee@ capps.com; Freddy Fernandez, Vice President-Operations, email: ffernandez@ capps.com. CAI Rail is an operating lessor in the new and used railcar space. CAI performs full service, net, per diem and finance leases on all railcar types. We have complete maintenance, engineering, operations and field marketing staff. CAI also has companies in global container leasing as well as domestic and international intermodal logistics.

C.K. INDUSTRIES, INC.

P.O. Box 1029, Lake Zurich, IL 60047-1029; Tel: 847-5501856; Fax: 847-550-1854; e-mail: rmeyers@ ckrail.net; Richard E. Meyers, President. C.K. INDUSTRIES, a privately held corporation, began its U.S. leasing operations in 1980, and offers its services to shippers, short line, regional and Class I railroads in North America. New investment opportunities up to $10MM of both new and used types of freight cars will be considered. Our existing lease fleet offers a wide variety of car types to meet your lease requirements. We offer mid to long terms, either on a full service or triple net basis.

THE DAVID J. JOSEPH COMPANY

FIRST UNION RAIL

One O’Hare Center, 6250 N River Road, Suite 5000, Rosemont, IL 60018; 847-318-7575; Fax: 847-318-7588; Rich Seymour, Vice President Sales and Marketing. First Union Rail, a Wells Fargo company, is one of the largest, most diverse railcar leasing companies in North America. We have a solid industry reputation for providing superior equipment and exceptional service. First Union Rail offers a variety of customized finance and operating lease structures, as well as marketing and transportation management services. Let First Union Rail’s team of professionals help find the right equipment to solve your transportation needs.

GATX CORPORATION

Thomas A. Ellman, President, Rail North America, GATX Corporation, 222 W. Adams Street, Chicago, IL 60606; Tel: 312-621-6200 Fax: 312-621-6546 GATX is a leader in the rail leasing industry with more than a century of experience, preeminent expertise in specialized railcars, and a growing international presence. GATX meets shipper and railroad needs with one of the largest lease fleets of tank and freight cars and locomotives in the world. We provide our customers with a unique mix of financial (global financing, valuation, structuring, leasebacks, joint ventures, partnerships) and mechanical (regulatory, maintenance, engineering, cleaning, inspection) services in North America. Contact via www.gatx.com or 1-800-428-8161.

GE CAPITAL, RAIL SERVICES

161 N. Clark Street, Chicago, IL 60601; Tel.: 800-445-6126; Email:railinquiries@ge.com; Website: www.gecapitalrail. com. GE Capital, Rail Services offers specialty financing with deep rail industry experience and a highly diversified equipment portfolio. With over 100 years of experience, Rail Services offers locomotives and a variety of railcars to railroads and industrial companies which ship by rail across North America. A suite of repair and maintenance services, through the use of owned and authorized contractor shops, helps ensure quality and scheduling flexibility. Customers benefit from our deep technical and regulatory experience to make financial fleet decisions with confidence. Please visit our website at www.gecapitalrail.com or call us at 800-445-6126. October 2015 Railway Age DB11

RAILROAD FINANCIAL DESKBOOK 2016 LESSORS cont’d

GREENBRIER LEASING COMPANY

One Centerpointe Drive, Suite 400, Lake Oswego, Oregon 97035; 800-343-7188; Fax: 503-968-4383; Email: Marketing. Info@GBRX.com; Website: www.GBRX.com. Contacts: J.T Sharp, President; Larry Stanley, Vice President; Tom Jackson, Vice President, Marketing. Greenbrier Leasing Company provides a full range of operating and financial leases of railroad freight cars to shippers, short line, regional, and Class I railroads. In addition to owning a fleet of more than 10,000 cars, we develop financial structures customized to meet a multitude of customer requirements including; full-service, net, and per diem leasing structures, with both short-term and longterm options, sale-leaseback and like-kind exchanges as well as upgrade and modification programs. Our approach allows customers to meet current needs and position their business to capitalize on future opportunities. The Greenbrier Companies, Inc. manufactures a full range of freight cars designed for the carriage or intermodal containers, automotive products and vehicles, grain and agricultural products, forest and steel products, sand and cement, plastics and solid waste. We operate one of the largest repair and refurbishment networks with nearly 40 facilities strategically located facilities in North America, providing railcar repair, maintenance, refurbishment, wheel and axle services and railcar component parts. Greenbrier is also a leading provider of rail asset management services with a variety of proprietary software productivity tools and one of the most experienced teams in the industry.

INFINITY RAIL, LLC

1355 Peachtree Street, NE, Suite 750, Atlanta, GA 30309; Website: www.infinityrail.com. Larry Smith, VP-Equipment Sales; Tel.: 678-296-9709; Email: lsmith@infinityfunds.com; Lee Martini, AVP – Sales & Marketing; Tel.: 678-904-6315; Email: lmartini@infinityfunds.com. Infinity Rail, LLC, is an Operating Lessor with a fleet of over 7,000 freight cars. We offer our customers both financial and operational flexibility. We offer Full Service, Net and Per Diem Leases to Shippers and all Class I, Regional and Short Line Railroads. A broad spectrum of general use and specially modified equipment is represented in the Infinity portfolio. Our fleet is comprised of covered hoppers, boxcars, gondolas, open top hoppers, flatcars and intermodal equipment. Our in-house mechanical expertise allows us to offer you equipment maintenance and modifications that keep your leased railcars working for you.

MITSUI RAIL CAPITAL, LLC

71 South Wacker Drive, Suite 1800, Chicago, IL, 60606 Phone 312-803-8880: John O’Bryan, President; Dan Penovich, Vice President Sales and Marketing; David Kerr, Director of Marketing; Dana Koenig, Director Sales; Dan Linklater, Director Sales; Scott Carroll, Director Sales. A highly experienced management team, a fleet of more than 10,000 modern freight cars, and high-quality service combine to give Mitsui Rail Capital customers an edge when it comes to transportation. In addition to a diverse fleet of the latest rail equipment, Mitsui Rail Capital offers fleet management and DB12

Railway Age

October 2015

maintenance services as well as On-Trax, our proprietary internet-based system for fleet tracking, maintenance, and component wear management. Mitsui Rail Capital, LLC offers both net and full service terms as well as customized, valueadded financing options. Our goal is to exceed customer needs in an increasingly dynamic and challenging environment. Mitsui Rail Capital, LLC is an affiliate of Mitsui & Co. Ltd.

PROGRESS RAIL EQUIPMENT LEASING

PROGRESS RAIL SERVICES

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

RELCO LOCOMOTIVES, INC.

P.O. Box 83282, Baton Rouge, LA 70884. Tel.: 815-467-3030; Website:www.relcolocomotives.com. Relco, as one of North America’s leading locomotive rebuild, remanufacturing and leasing companies, can provide a full range of locomotive leasing and maintenance services. Since 1961, RELCO has developed a reputation for providing the finest motive power and custom maintenance packages to fit any need: • Full line of both switching and road power available. • Specifications ranging from qualified to completely custom remanufactured. • A ftermarket systems upgrades available, including radio remote controls, microprocessor control systems, fuelmanagement systems, etc. • Nationwide full-maintenance programs available. • Net, full-service, financial and sale/leaseback programs.

RAILROAD FINANCIAL DESKBOOK 2016

SMBC RAIL SERVICES LLC

300 South Riverside Plaza, Suite 1925, Chicago, IL 60606; 1-888-4RAILCAR. Gene Henneberry, President & CEO, (312) 559-4801; Tim Johnson, Senior Vice President Leasing, (312) 559-4805; Patrick McGrath, Vice President Leasing-Southeast, (312) 559-4821; Jeffrey Griffin, Vice President Leasing -Northwest, (312) 559-4820; Jeff Wilkison, Vice President Leasing – Southwest, (312) 559-4808; Mark DePaul, Vice President Leasing – Northeast, (312) 559-4822. SMBC Rail Services is a full service operating lessor, invested in all tank and freight car types, offering a broad selection of equipment leasing and financing products for the North American rail industry. SMBC Rail can structure a solution for all of your rail equipment needs, short and long term, full service or net leases, sale/leaseback, or portfolio acquisition. Visit us at www.smbcrail.com.

TEALINC, LTD.

1606 Rosebud Creek Road, Forsyth, MT 59327; Tel.: 406347-5237; Fax: 406-347-5239; www.tealinc.com; Darell J. Luther, CEO, 406-347-5237 darell@tealinc.com; Julie Mink, President, 720-733-9922 julie@tealinc.com. Tealinc, Ltd. specializes in rail transportation solutions nationally and internationally. We are a rolling stock operating lessor and broker and we also provide marketing, transportation management and consulting services for car owners, shippers and suppliers within the rail industry. Our lease fleet consists of covered hoppers, open top hoppers, mill gondolas, flatcars, gondolas, etc. We have a combined 80 years of service and experience within the rail industry and have assisted both novice and experienced rail shippers best utilize the rail network they participate in.

TRINITY INDUSTRIES LEASING CO.

2525 Stemmons Freeway, Dallas, TX 75207. 800-631-4420. www.gotilc.com. D. Stephen Menzies, Group President, steve. menzies@trin.net; Eric Marchetto, Executive V.P. & Chief Financial Officer, eric.marchetto@trin.net; Robert Pokorski, Sr. V.P., Fleet Maintenance; Mark VanCleave, Executive V.P., Industrial Sales & Leasing, mark.vancleave@trin.net; Jesse Crews, V.P. & Chief Investment Officer, jesse.crews@trin.net; Bob Hulick, Executive V.P. & Chief Mechanical Officer, bob. hulick@trin.net; John Guarino, V.P., Portfolio Management, john.guarino@trin.net. Trinity Industries Leasing Company, with a fleet of approximately 76,440 railcars, offers railcar leasing, comprehensive management and administrative services as well as maintenance services. Also available is access to the railcar manufacturing resources and additional railcar services provided by TrinityRail®. An overview of TrinityRail’s full portfolio of rail transportation products and services is available at www.trinityrail.com.

VTG RAIL INC.

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

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

AMERICAN RAILCAR INDUSTRIES, INC.

100 Clark Street, St. Charles, MO 63301-2075. Tel.: 636.940.6020; Fax: 636.940.6100; Email: sales@ americanrailcar.com; Website: www.americanrailcar.com. Agile, Responsive, Innovative.

RAILROAD APPRAISAL ASSOCIATES

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

RAILSOLUTIONS, INC.

1307 Jamestown Road, Suite 101, Williamsburg, VA 23185, 757-903-4606; Fax: 757-903-4705; Email: jhusband@railsolutionsinc.com; Website: www.railsolutionsinc.com; James D. Husband, President. RailSolutions provides a broad variety of railroad equipment-related consulting, technical and advisory services to financial institutions, railroads, shippers and fleet owners with a primary focus on equipment valuation and appraisal services. Additional areas of expertise include railcar and locomotive inspections, equipment remarketing, equipment repair and overhaul cost analyses, and portfolio valuations. RailSolutions draws on over 40 years of railroad industry experience in railcar and locomotive equipment valuations supported by both a sound base of market data and advanced analytical techniques. RAILROAD ACQUISITION SPECIALIST

PROGRESS RAIL EQUIPMENT LEASING

The tangled tale of PTC

By WILLIAM C. VANTUONO, Editor-in-Chief

Why is PTC so expensive? So complicated? So time-consuming? Delving into its past may provide some answers.

20 Railway Age October 2015

their opinions. Our intent is not to point fingers, or to stir a pot that has been boiling with intensity for quite some time. Rather, we hope to add some useful, constructive dialogue to a highly complex technological undertaking that perhaps was underestimated some seven years ago, when the Rail Safety Improvement Act of 2008 became law. Agreeing to disagree

Just three short years ago, Railway Age Contributing Editor Ron Lindsey—one of this industry’s more controversial and outspoken individuals—had this to say in our April 2012 issue: “Regrettably, the technicians that are handling the extensive complexities of delivering an interoperable PTC solution are neither charged with, nor have they been provided with, the necessary management directives and the proper resources to address both the tactical and strategic perspectives. Specifically, the railroads’ technicians have significantly expanded the technical issues of PTC, and therefore the capital investment, beyond what is required, and they have done so without the necessary strategic perspective that could perhaps justify their activities.” It is not unusual for brilliant minds to butt heads. Over

Bruce Kelly

s this is being written, it appears the odds are more than even that Congress will be extending the Dec. 31, 2015 deadline for implementing Positive Train Control. On September 30, the House Transportation and Infrastructure Committee introduced H.R. 3651, the Positive Train Control Enforcement and Implementation Act of 2015, which extends the deadline for at least three years (p. 1). The railroad industry breathed a collective sigh of temporary relief, but the question remains: How did it come to an 11th-hour scenario in the first place? The industry has been spending a tremendous amount of hard-earned capital on a technology they believe will not deliver much more than a marginal improvement to a safety record that is already outstanding, and that has been steadily improving for many years. Some of the experts who have been involved with PTC are questioning why, in their opinion, it has morphed into an overly complicated, overly expensive and overly timeconsuming initiative whose original intent was to deliver not only improved safety, but measurable business benefits. Railway Age has asked several of these skilled and dedicated people to go on the record with their experiences as well as

carried out by organizations that have experience in this discipline, not by individuals.” Further, notes Ditmeyer, “At the June 24, 2015 Senate hearing on PTC, a CSX vice president, testifying for the AAR, talked about the complexity of the PTC implementation process without once mentioning a system integrator.” Ditmeyer also gave a presentation at the 2013 NTSB PTC Forum in which he said that BN had hired Rockwell International as designer and system integrator for ARES (Advanced Railway Electronics System), a PTC-predecessor initiative with which he was intimately involved from its inception to its shutdown in the 1990s. He notes, “Wabtec, which purchased Rockwell’s Railway Electronics business unit in the late 1990s and which now produces the on-board platform for the I-ETMS PTC system the freight railroads are implementing, told me in 2009, ‘We have a different business model than Rockwell; we are not serving as a system integrator for PTC. Railroads will have to find their own system integrators.’” “Two of the very few railroads that will have their PTC systems operational by the mandated deadline hired system integrators to help them: Metrolink hired Parsons Corp. and Caltrain hired WSP | Parsons Brinckerhoff,” Ditmeyer points out. Business benefits—or not? The Federal Communications Commission has been criticized for a PTC antenna permitting process embroiled in red tape.

the years, two of them—Lindsey and Steve Ditmeyer, whose experience with PTC encompasses his days at Burlington Northern and then the Federal Railroad Administration— have disagreed on the nuances of PTC. However: “I agree wholeheartedly with Lindsey’s assessment,” Ditmeyer told Railway Age for this article. He points out that the Class I railroads were implementing a PTC architecture designed by committee, i.e., the Interoperable Train Control (ITC) Committee, without the participation of a system integrator. Had there been one, the system would have worked when the pieces were put together, he believes. At the National Transportation Safety Board PTC forum in February 2013, NTSB Board Member Mark Rosekind asked UP’s director of PTC, representing the AAR, who the “system integrator” for PTC was. “The UP rep responded that the railroads were serving as their own system integrators,” Ditmeyer recalls. “Rosekind then asked who was making sure the systems were interoperable. Again, the UP rep responded that the railroads themselves were. After a pause and consulting with others, the UP rep said he believed the AAR had money in its 2014 budget to hire a system integrator person. Rosekind just shook his head and went speechless.” Ditmeyer doesn’t believe the AAR ever hired that “system integrator person, which in any event would have been only a token gesture,” he says. “System integration is an activity

One of the more controversial arguments involving PTC has been whether it can, on top of safety improvements, deliver business benefits. “Before the enactment of the RSIA and the PTC mandate, and even for six months after, UP was touting PTC’s business benefits,” says Ditmeyer. “During a Dec. 17, 2008 UP PTC webinar—after the Chatsworth, Calif., accident—UP said PTC can ‘improve safety, velocity and fuel conservation.’” Ditmeyer points out that the FRA’s economic analysis of PTC in its final PTC regulation only covered safety benefits. “FRA never said that there would be no business benefits, only that they were contentious and so they omitted them,” he notes. “But that does not mean that no business benefits exist for PTC. It should be intuitively obvious to the most casual observer that the continuous, real-time information that PTC produces could generate significant train operating efficiencies if PTC systems were properly implemented.” So where is the disconnect? Observes Ditmeyer: “The Class I CEOs made a big mistake when they all assigned the responsibility for PTC implementation to their signaling departments. Signal engineers were fearful that PTC would mean the demise of their signal systems. When they were given the responsibility for implementing PTC, they changed the architecture so that PTC would be tied to all intermediate wayside signals, meaning that more than 20,000 data radios would need to be installed. And then they also decided that they needed to replace all their old wayside signals with new ones to which they could connect the PTC system. These decisions more than doubled the cost of PTC from what FRA had estimated. “Tying PTC to intermediate wayside signals also had an adverse effect on business benefits. It meant that existing fixed blocks, and the relay logic that controlled the signals, October 2015 Railway Age 21

THE tangled tale of ptc

would remain in place. Thus, moving block, and the possibility of closer train spacing, would not be possible. That in turn meant that business benefits such as improved running times, improved reliability, increased track capacity and improved asset utilization would not be obtainable. Had the railroads implemented PTC in such a way as to obtain those benefits, their customers would receive better, more reliable service. “I don’t think the CEOs did this purposely. I think it happened more because they did not bother to learn about PTC technology, which even the AAR had been looking into for more than 20 years at the time. And they did not lean on their people to keep costs low and to maximize the benefits. This is a leadership mistake.

“Freight railroad leadership needs to treat PTC as a building block for the future,” says Grady Cothen. “UP’s late chairman Jim Young had the right to argue for the repeal of the PTC mandate, but by using (in a Sept. 9, 2011 Bloomberg News article) such incendiary language as calling PTC ‘a terrible waste of money’ and saying that ‘the President should junk the idea’ where his employees could read it, he compromised the principles of strategic leadership by removing all motivation from them to figure out ways to get some business benefits from PTC.” To reiterate Contributing Editor Frank Wilner’s Watching Washington column in our August 2015 issue: “Railroads once advocated an early version of PTC, known as Advanced Train Control System (ATCS); and BN, prior to its merger with the Santa Fe, was field testing ARES. Although railroads envisioned significant business benefits from ATCS and ARES—BN calculated the benefit-cost ratio of ARES as a positive 3-to-1 by including extensive business benefits— the projects were scrapped as railroads instead pursued a chain of mergers. Railroads say the cost of the more-complex PTC exceeds safety benefits by 11-fold. A changed architecture, requiring replacement of wayside signals and retention of fixed-block train spacing—rather than the less expensive moving-block technology used by ARES—eradicated business benefits for PTC. Compounding the technological hurdles fueling delay is the $14 billion price tag—an unfunded federal mandate occurring as the Surface Transportation Board, encouraged by many in Congress, entertains shipper petitions to place new caps on railroad freight rates.” “When PTC research began anew after the merger era, railroads indicated support only for its safety aspects,” Wilner points out. “Steve Ditmeyer is the one who first identified the error of turning PTC over to the signal departments, which used the mandate to spend on signals and discard the less expensive but equally efficient and safe ARES architecture that did not include wayside signals and included significant business benefits.” 22 Railway Age October 2015

“How can we get this done?”

We asked retired FRA Deputy Associate Administrator for Safety Standards and Program Development Grady Cothen, now a consultant, to weigh in. At the FRA, Cothen, like Ditmeyer at the BN, was intimately involved with PTC, albeit in a position of having to enforce a government mandate. “We all have an obligation to be forward-looking about this,” he says. “The real issue now is, how can we get this done? We may gripe and point fingers—mostly to blow off steam, like a safety valve—but at some point this has to be put in a positive frame of reference. I am concerned, as I have told others, that the justification recently given to me by a railroad vice president for finishing PTC was that ‘we have invested so much already.’ Granted, this was a governmental affairs guy, but surely he understands the concept of sunk costs. There needs to be positive reasons to do this—safety, corporate image, business benefits, and even a contribution to maintaining a balanced transportation system—that can be recognized and affirmed. This kind of leadership has been missing, except arguably on BNSF. Yet since the mandate, even Matt Rose and his people have been constrained with respect to what they could say publicly.” “I have tried to ‘out’ the smart people on the railroads who know full well (or should) that there are lots of good things that will come with PTC—even the overlay approach chosen by the ITC railroads,” says Cothen. “It’s interesting that nobody has tried to argue with me. The answer has been silence, which tells me I’m probably not too far off. The passenger railroad principals who wanted out of the mandate have departed their posts or have gotten religion following Metro-North’s Spuyten Duyvil and Amtrak’s Frankford Curve accidents. They will do PTC because they know it has to be done.” Cothen believes that freight railroad leadership “needs to change its tune, add some talent to the projects, and treat PTC as a building block for the future. Absent leadership, it’s going to be a long road to actually turning PTC on. The implementation problems will be unnecessarily disruptive, and many of the potential benefits will be squandered.” Union influence?

There are some who believe that the railroad unions wielded considerable influence when the PTC legislation was drafted. That, according to Cothen, is only partially correct: “The Senate Commerce Committee produced the final language,” he says. “The California senators were a major influence, but the committee of jurisdiction had the final say. I believe AAR influence was prominent. In my experience, union influence was not as substantial as one would expect. By 2008, the United Transportation Union knew already that BNSF wanted to use PTC to move to one-person crews—BNSF had proposed it in a Product Safety Plan filing, later withdrawn. The Brotherhood of Railway Signalmen was concerned over potential removal of signal systems.” “I have no doubt that the BRS, along with the UTU and

Union Pacific’s PTC System Vital Train Management System (VTMS) the tangled tale of PTC

GPS

Position Reference

Back Office Server (BOS)

VTMS On Board Equipment

Computer-Aided Dispatching

– Human-Machine Interface Display T Terminal i l – Onboard Computer – Location Determination System – Digital radio (voice & data)

In December 2008, Union Pacific described its version of PTC, the Vital Train Management System (VTMS), as having the ability to increase velocity, save fuel and improve safety.

Brotherhood of Locomotive Engineers and Trainmen, influenced [the late Rep. Jim] Oberstar in the drafting of the RSIA,” adds Steve Ditmeyer. “Both the RSIA and the subsequent FRA PTC regulations, however, set performance requirements, not design or configuration standards. Consequently, neither the RSIA nor the FRA’s PTC regulations required railroads to replace their old signals with new ones or to tie their PTC systems to each of the new signals with wayside interface units and data radios. Those decisions and requirements were made in the ITC Committee meetings, which were closed to union members. And all attendees were required to sign non-disclosure agreements. When a railroad submitted its PTCIP (PTC Implementation Plan, required by FRA), and said it intended to replace its old signals and to tie its PTC system to the new signals with wayside interface units and data radios, and if FRA accepted the PTCIP as meeting its safety standards, then the railroad was obliged to follow its PTCIP.” “I don’t discount BRS input, given that the UTU and the BLET had their hands on the throttle with Oberstar through the whole legislative process,” adds Frank Wilner. “Labor took no back seats during Oberstar’s reign. BRS, understandably out of self-interest, monitors these events carefully. One could argue they would have access to new technology jobs, but, in context, you saw how UTU deep-sixed the BNSF

offer for job security, higher pay and access to new jobs were UTU to accept engineer-only on PTC-equipped lines. For sure, at meetings involving planning for PTC architecture, labor relations would have played an important role in addressing perceptions and likely actions by labor re: scope agreements with BRS. Moreover, UTU and BLET have always stressed the ‘overlay’ nature of PTC to bolster the arguments for retention of two-person crews. Two engineers is BLET’s fervent, but not admitted, hope.” “I don’t assume, at all, that lobbyists understand the concept of sunk costs,” says Wilner. “Nor do I recognize anyone bold enough among rail lobbyists today who would say Job No. 1 is to change the statute and allow railroads to find and invest in the most efficient, productive and costeffective of technologies. My suspicion is that back in 2008 and before, railroads wrongly assumed that a public-private partnership would subsidize much of PTC, so they did not put up a fight against rail labor and bought into an overlay architecture. Certainly it was in the interests of the BRS to perpetuate, expand and renew wayside signals. Not to be overlooked are the short horizons of many CEOs. Decisions in 2008 that had a December 2015 deadline may have been assimilated as, ‘Well, I’ll be retired by then.’ Public choice theory is a powerful explanation of self-serving, shortsighted, path-of-least-resistance behavior.” RA October 2015 Railway Age 23

HSR in the Northeast: What next?

Part II: Feasibility vs. Complexity By Alfred E. Fazio, MSME, P.E., Contributing Editor

n Part 1 of this three-part series (RA, September, p. 60), we evaluated opportunities for VHSR (very high-speed rail) and HSR across the U.S. To summarize, installation of VHSR on a scale that really matters will require new-start railways, such in the case of California HSR. Although there is much discussion on other new-start opportunities, there is little of consequence outside of California, where speeds are targeted at greater than 135 mph. Considering the VHSR threshold at 150 mph, there is the existing (albeit limited) VHSR on the New England Division of the Northeast Corridor, although there also is some progress and additional potential for superimposing HSR at the lowest end of the speed regime (say 90 to 110 mph) on existing freight main lines. Speeds above this regime are not likely to be achieved on freight-oriented main lines. It is also noteworthy that a number of passenger railroads exist other than Amtrak (LIRR, Caltrain, Metro-North), and none of these have targeted speeds above 90 mph. This brief survey leads us to consider what can and should be done to exhibit HSR on the NEC (including the Harrisburg and Empire/Albany lines). 24 Railway Age October 2015

There are two distinct issues: What can be accomplished speaks to feasibility; what should be done is more complex and must consider competing uses of the railway fixed plant as well as budget (along with competition for increasing limited funding). These are related. Realigning a curve in four-track territory to remove or mitigate a speed restriction might be feasible if two of the tracks were removed, thereby making the entire width of alignment available for â&#x20AC;&#x153;best fitâ&#x20AC;? two-track geometry, but given the increase in frequency of all train types, such an option may not be feasible. The next upgrade of the NEC bears careful consideration: What maximum speeds are realistic (feasible) on a railroad built to nominal 12.5-foot track centers. In fact, some track centers are as low as 12 feet 2 inches, and what might be the implications of these track centers at trains passing at a relative speed of 300-plus mph? Likewise, what is the cost/benefit (practicality) of raising maximum speeds between New York and Washington to various benchmarks above the current 135 mph, where MAS above 135 mph for stretches of 10 to 15 miles have no effective impact on schedule running time?

Figure A: Simplified schematic, Pennsylvania Railroad circa 1935 (showing salient features)

Trenton Cut-Off

MORRIS

Trenton Station

41.7

MIDWAY

COUNTY

EDISON

LANE

(freight-only)

To Newark

To Enola (Harrisburg)

To Philadelphia

Waverly Yard

Edison Yard

(freight-only)

This configuration supported the original PRR CONOPS (Concept of Operations). Through freights operated on the two center tracks from Trenton Cut-Off at Morrisville, Pa., to LANE (Waverly Yard) near Newark, N.J. Freights could also access Edison Yard from the center tracks. Major stations such as Trenton were designed for passenger (Newark, North Philadelphia) overtakes (parallel moves to/from station platforms).

Figure B: Simplified schematic, Amtrak NECIP circa 1976 (showing salient features)

41.7

Trenton Station

Metropark Station

To Newark

To Philadelphia

MIDWAY

Through freight is removed; the two center tracks are re-signaled for bidirectional HSR operations. The outside tracks remain signaled for single-direction flow of intercity and commuter trains. Metropark, designated as a HSR station stop, provides an interesting view of the operation, with No. 20 crossovers to/from the platform tracks and reverse signaling in effect on the outer tracks between crossovers only. While workable when designed, train density is presently too high to permit crossover moves required for HSR to access the platform tracks.

Figure C: New Jersey High Speed Rail / Concept of Operations (CONOPS) 53

Princeton Junction

41.7

MIDWAY

ADAMS

DELCO

NJT loop and shop

COUNTY To Newark

To Philadelphia

Trenton Station

Hamilton Station

CP CLARK

This revised CONOPS offers: (1) HSR (Acela Expresses, Keystones, Northeast Regionals) operate on the center tracks but diverge to the outer tracks if obstructed. (2) High speed NJ Transit Zone Expresses operate on the outer tracks west of ADAMS and DELCO and on the center tracks east of these locations, using 80 mph crossovers. (3) MIDWAY is rebuilt with No. 20 crossovers, though not for scheduled train movements. (4) CP CLARK has control signals reducing the length of the absolute block required to move trains with cab signal failures.

New Jersey High Speed Rail as a â&#x20AC;&#x153;Beta Releaseâ&#x20AC;?

The New Jersey High Speed Rail Improvement Project (NJHSRIP) represents a tangible effort, one that is of sufficient size to test various options for NEC upgrades beyond NECIP standards. The program is based upon a $459 million grant awarded to Amtrak in September 2011 to build the prototype section of the future NEC, and to evaluate both its operational performance and maintainability. NJHSRIP involves complete rebuilds, to modern designs, of traction power and signal power distribution systems; upgrades to the capacity of the 60/25 Hz electrical conversion capability; totally new cab/no-wayside signalization; and

addition of high-speed interlockings over a 22-mile segment of NEC in New Jersey. Limited track and structural improvements (outside of interlockings) and minor realignments are also included in the scope; but since track and bridges were emphasized in previous programs, under NJHSRIP they are of secondary priority. The terms of the DOT grant require Amtrak to perform to a specific schedule and complete work to a lump sum budget. Speed enhancements specified under the grant require a new MAS of between 160 and 186 mph; MAS has since been agreed upon by Amtrak and FRA to be targeted at 160 mph based upon a safety case. The grant territory October 2015 Railway Age 25

northeast corridor high speed rail

extends from New Brunswick to Trenton (Hamilton), N.J. Within the framework of performance goals, selected (but not specified in detail) scope elements and service outcomes, Amtrak has been afforded the opportunity to develop a detailed scope, engineering standards and design. The territory affected by the grant supports all three types of Amtrak service including Acela Expresses at 135 mph, Regionals and Keystones at 125 mph and long haul at lower speeds. High-speed NJT commuter (90 mph) and local (but not through) freight also operate. The new higher MAS will apply to VHSR trainsets only, presently Acela, and then later the Tier III Acela replacements now in procurement. Raising speed to 160 mph will result in approximately 50 seconds reduction in running time over the 22-mile segment. Those unfamiliar with the stepwise evolution of engineering designs and standards or who may hold unfavorable views of investments in high-speed rail will readily observe that the apparent benefit of this grant can be calculated at about ten million dollars per second saved in scheduled running time. This superficial view does not consider the enhanced reliability as well as the increases in commuter and regional train capacity that will result upon completion of work in summer 2017. Even these factors are subordinate, however, to the recognition that the 22 miles affected by this grant serves as a “beta” site for four independent but related proofs of

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concept. The first beta factor is the engineering effort, which includes establishing new design standards and installation/ maintenance requirements for totally new signaling and catenary designs. A 9-aspect cab signal system will permit NORAC Rule 562 (bi-directional train movements on signal indication with home signals only) operation on all tracks. This is an entirely new train control system that does no harm to freight, and that actually increases commuter/ regional train capacity. The new train control is currently in service over 10 miles of the territory. Approximately 10 miles of catenary will be rebuilt as fixed, not constanttension, to a modern and more fault tolerant design where independent registration will replace the PRR original design that utilized body spans. Installation and maintenance cost libraries will be developed, as will serviceability data, with an aim toward guiding future choices regarding NEC upgrades. Second is the ability to upgrade the MAS of high-speed trains while benefiting other rail services. This was accomplished largely through development of a revised CONOPS, careful placement of interlockings, and additional investment in selected subsystem designs. Also helpful was the generous four-track right-of-way. Raising MAS will generally have a deleterious effect on capacity where the physical plant is not as generous. In fact, based upon train length, braking rates and philosophy of signal block layout, maximum track (line) capacity generally occurs at speeds between 30 and 50 mph. Third is formulation of a System Safety Program Plan (SSPP) in accordance with Mil STD 882. While all new FTA-funded transit systems must develop such a plan, this practice is relatively new to FRA, where prescriptive standards have generally been the rule. Under new FRA practices, authority to operate the improved high-speed service will only be granted where prescriptive standards are complemented by a full safety case. For the NEC, the SSPP will be developed in two parts: an initial case to permit Tier II (Acela) trainsets to operate at 160 mph on the present 150-mph territory in New England, followed by a site-specific case in New Jersey allowing 160 mph on designated segments between Hamilton and New Brunswick. The SSPP must address site-specific issues as well as more general considerations. Thus, it is possible that one segment may be approved for 160 mph operation while another that has only slight variations in the environment or usage would not be approved, despite the fact that the engineering systems are designed and installed to the same standards. Ultimately, the Tier II case becomes an ingredient in Tier III (lightweight VHSR trainsets) operation. The final element makes Amtrak effectively a DBOM contractor working to a hard schedule: All work must complete prior to June 1, 2017 and within a lump sum budget of $459 million. This has led to some challenging scenarios. Conversely, a benefit is the departure from the annual funding process that hampers Amtrak in developing a rational, multi-year capital program. In this case, Amtrak has clear funding for the 5½ year (October 2011 through June

northeast corridor high speed rail

2017) duration of the grant. The challenges have also led to creative solutions for particular issues such as a project labor agreement with BMWE allocating composite gangs. CONOPS, Program Requirements, Development of Scope

The award of the $459 million dollar defined “period of performance” contract to Amtrak was primarily based upon performance outcomes, as differentiated from an engineering-based prescriptive definition (drawings and specifications) of work to be performed. For example, interlocking improvements required to support HSR were called out, but the location, configuration and diverging speeds were left to Amtrak and FRA to develop, with the cooperation of the other users (NJT, Conrail). A similar requirement applied to the resignalization, where the contract required higher speeds (160 to 186 mph), higher reliability and greater capacity, but did not specify the signal design or block layout. Because the grant allowed latitude to develop scope according to the desired performance of the rebuilt railroad, the first priority in scope development was, along with the SSPP, Amtrak’s formulation of the CONOPS and obtaining the concurrence of FRA, NJ Transit, Conrail, NS and CSX. Figures A, B and C show the successive CONOPS developed for this railroad, beginning with the PRR’s mid-1930s concept around which the original AC electrification was installed. The

PRR’s operating concept underwent a dramatic change with NECIP. Figure B represents the circa 1976 CONOPS of an express (HSR) and local configuration, mimicking a four-track rapid transit line, with HSR diversions planned to be made to the opposite high-speed track. This CONOPS led to an early NECIP design criteria: that high-speed funds could only be expended on either of two designated high-speed tracks between New York and Washington. Figure C represents the CONOPS that was developed for NJHSRIP, still with HSR on the center tracks (2 and 3) but with two major variations on the NECIP concept. First, high-speed (100-mph) NJ Transit trains are also on the inner tracks operating as “Zone Expresses” until they make a highspeed diverge to the outer tracks. Second, due to high train density on Tracks 2 and 3, the plan calls for high-speed trains to diverge around an obstruction (failed train, track obstruction or planned m/w work) using the outer (1 and 4) tracks. This CONOPS leads to requirements that are incorporated in the NJHSRIP PRD (Program Requirements Document). • Single-direction 80-mph crossovers installed at the outer end of NJT’s Middle Zone, roughly MP 33. While originally symmetrical, the eastward crossover was relocated three miles west, thereby creating an additional interlocking to accommodate NJT’s CONOPS for a proposed mid-line turnback loop and servicing facility. The incremental cost of this

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additional interlocking was absorbed by a grant contingency. â&#x20AC;˘ Maximum cab speed on the outer tracks would be raised from 100 mph to 125 mph to accommodate high-speed trains that may be required to diverge onto them. Only Amtrak trains receive the 125 mph or higher cab codes; NJT commuter trains will get a maximum speed code of 100 mph. MIDWAY Interlocking (MP 41.7), which had remained untouched through NECIP and is essentially in its 1935 configuration, would be totally reconstructed. There would be no scheduled train movements, so it would be rebuilt with wider (15-foot vs. 12-foot, 4-inch) track centers with concrete-tie turnouts, but all four tracks would utilize No. 20 (45-mph diverge) turnouts. NJT desired use of No. 20 turnouts rather than 80-mph crossovers at this location on account of lower maintenance costs. Under the older NECIP CONOPS, the two center crossovers would have been configured for 80-mph diverging movements. To accommodate the requirement for raising capacity as well as achieving an MAS of 125 mph on Tracks 1 and 4, signal block length was shortened to 3,000 feet while the average block length on Tracks 2 and 3 is approximately 4,500 feet. Thus, there are approximately 12 more signal locations on the outside tracks than on the inside tracks. In order to accommodate freight operation (braking distances and local switching) a cab no-wayside design was

employed. All four tracks will be signaled for Rule 562. To accommodate commission-hour capacity in case of a train with a cab signal failure and with two major stations between Trenton and MIDWAY Interlocking, controllable (block limit) wayside signals are installed at Princeton Junction, but there will be no crossovers at this location. The scope of each rail system (traction power, signal power, supervisory control, right-of-way) was, in a similar fashion, based on a formal PRD. This was followed by a strong system integration/scope integration effort to insure that the required outcomes would be achieved, and that the maintenance requirements would be understood. This all occurred with participation by FRA and the other NEC users. The required deployment plan and associated transportation impacts were defined. Interim equipment (for example, roll-in/roll-out temporary high-level station platforms that would cover the full length of a 12-car train) were developed. The safety of interim conditions and work methods was also documented in a formal Safety Management Plan (SMP), which is a support document to the SSPP that insures safety of operations, passengers and work force while on the path to the final configuration. The SMP augments and supplements Amtrakâ&#x20AC;&#x2122;s safety and operating rules. RA (Part III of this series will be published in the November issue.)

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Trillium blossoming

By John D. Thompson, Canadian Contributing Editor

Ottawa’s O-Train has grown from an experiment into an expanding system, with state-of-the-art equipment.

Raymond Farrand

he Trillium commuter rail line in Ottawa, Ontario, Canada’s national capital, has recently been upgraded with new rolling stock, as well as track and station improvements. The five-mile line, named for Ontario’s provincial flower, is located within the Ottawa city limits and uses six German-built Alstom Coradia Lint diesel multiple-unit trainsets. This equipment features high efficiency engines that emit lower greenhouse gases, as well as offer lower operating costs. The two-unit trainsets are fully accessible and accommodate 260 passengers. The original equipment used on the line, which opened Oct. 15, 2001, comprised three DMU trainsets. They were Bombardier’s Talent BR643 units, built as part of a larger order for Germany’s Deutsche Bahn regional network. Access to the overhead luggage racks was blocked, and the washrooms were decommissioned as an economy move. Under the initial agreement, the vehicles could be sold back to Bombardier if they were replaced or retired. However, this agreement has expired, and the equipment has been placed in storage. Upgrading began in April 2013. It required a service shutdown for construction of two passing sidings, a stateof-the-art signal system, and station upgrades.

One of the shortcomings of the original Bombardier trainsets was that they were built to the German loading gauge, which is generally narrower than the North American one. Thus, four of the on-line station platforms required retractable extenders to allow for off-hours freight train operation (which has since ceased). The demise of the freight trains permitted widening of the station platforms to standard width. The trainsets are stored and maintained at Walkely Yard, situated northeast of the Greenboro terminus station. This yard, on which construction began in the late 1950s, was a joint Canadian National-Canadian Pacific project to replace inner city yards that were being taken over for urban renewal. The total cost of the rehabilitation project was C$60.3 million, with C$34 million going toward the trainset purchase. Initially, a test program

The Trillium Line had its beginnings in August 1998, when the Regional Municipality of Ottawa-Carleton launched a year-long study to assess the feasibility of an LRT line. The Trillium Line was regarded as a pilot project to test public response to rail transit, which had been absent from Ottawa since streetcar service ended in 1959. For this reason, costs were kept to a minimum by using diesel rather than electric October 2015 Railway Age 29

ottawa transit

propulsion; they totaled approximately C$21 million. Service was implemented on an existing CPR singletrack freight-only line that was purchased from the railway in 2005 after a lease period. OC Transpo paid for track upgrades, station construction and other requirements. One passing siding, at the Carleton station, was built. The line had originally extended southward from Ottawa to Prescott, on the north shore of Lake Ontario. CPR operated a railcar barge ferry service, since discontinued, across the lake to Ogdensburg, N.Y., for many years. The subdivision was gradually cut back to the vicinity of Ottawa’s southerly limits. The subdivision also continued northward from Ottawa, crossing the Ottawa River on its own bridge to link up with several of the railway’s lines in the Province of Quebec. This connection was removed several years ago, although the bridge remains intact. The Trillium Line begins a short distance south of the bridge. There has been periodic discussion about extending service over to Quebec. However, funding from that province’s government has not been forthcoming. A southerly extension of several miles to the Ottawa municipal airport seems more likely. The right-of-way is still intact and in government ownership; a short section of new line into the airport would be needed. The Trillium Line is entirely grade separated, and even features a short tunnel beneath a small lake. Its major traffic generator is Carleton University, located midway on the route. The five stations, proceeding southward, are Bayview, Carling, Carleton, Confederation and Greenboro, where a major parking lot is located. At Bayview, trains connect with the east-west bus-operated Transitway, part of which is currently being converted to LRT (the Confederation Line). However, for the time being there is unlikely to be a track connection between the two operations; this would only be required if the Trillium were to become full LRT in the future. The LRT, opening in 2018, will pass over the Trillium, with a common, rebuilt Bayview station. Consideration was given in 2006 to converting the Trillium to a full, electrified LRT operation, with an eastward extension through downtown to the University of Ottawa, and another southwestward to the suburb of Barrhaven. However, a subsequent change in the municipal government ended this proposal. The new LRT will serve the stillborn east-west extension, however. During 2013, the Trillium route carried 2.4 million passengers, with a daily ridership of 10,300. A total of 678 parking spaces are provided, mainly at the southern terminus. The trains run on 12-minute headways on weekdays, requiring 16 minutes to travel the route. It is planned to increase frequency to 8 to 10 minutes, as the new trainsets and signals are brought up to speed. They are limited to an operating speed of 70 kph per hour, or about 45 mph. Tickets are sold from on-platform vending machines; a proof of payment system is in force on the trains. RA 30

Railway Age

October 2015

Raymond Farrand

Expansion continues

People

Meetings

High profile GE has appointed Jamie Miller as President and CEO of GE Transportation, the company announced Sept. 14. Miller succeeds Russell Stokes, who will lead GE’s Energy Management business, effective Oct. 1. Miller and Stokes will transition into their new positions at a time when GE itself is undergoing some major structural changes. The company will be acquiring the power generation business of Alstom, which will become a pure transportation company. As part of the Miller same deal, Alstom will acquire GE’s Global Signaling business, GE Transportation which over the years has absorbed such railway signaling and communications companies as Harmon and Harris Electronics. Alstom’s C&S business in North America includes the former General Railway Signal, which it acquired from Sasib several years ago.

Nov. 3

CUBIC TRANSPORTATION SYSTEMS—Matt Cole, EVP and Deputy of Strategy and Business Development for CTS, has been appointed President of CTS and Senior Vice President of Cubic Corporation, effective Oct. 1, 2015. Steve Shewmaker, who plans to retire in 2016, has been appointed Chairman of CTS. DANELLA RENTAL SYSTEMS, INC.— Steve Bolte, a veteran of the railroad industry, with experience in signal and communications, railroad industry media publishing and maintenance-ofway segments, has been named Vice President of Business Development, North America. HNTB—Laura Mohr has been named as a Vice President and Rail Transit Group Director with responsibility for Southern California projects. STANTEC—Gary Smith has been named rail sector lead for Stantec’s freight rail team, accountable for growing the company’s freight and commuter rail services throughout Alberta, British Columbia, Saskatchewan and Manitoba. TNW CORPORATION—Cene Cooley, a railroad veteran with more than 28 years of experience, has been appointed as chief engineer. Cooley will report to Jason Gill, Vice President of Operations of TNW Corporation. In addition, Clayton Kendall has been appointed to Manager, Corporate

Development and Property, and Jason Love has been hired as Director of Business Development. Kendall will report directly to Paul Treangen, CEO of TNW Corporation, and Love will report to Wade Hoffman, Vice President of Marketing and Sales. WSP | PARSONS BRINCKERHOFF— James Wensley has been named a senior planner in the Boston office. He will manage transportation and urban planning projects in the Boston area, throughout the Northeast, and nationally.

100 YEARS AGO in

97th Annual Railway Tie Association Symposium and Technical Conference Marriott Starr Pass Resort, Tucson, Ariz. Website: rta.org

Nov. 9 American Association of Railroad Superintendents Annual Derailment Investigation Seminar Sheraton Philadelphia University City Hotel Website: railsuperintendent.org

Nov. 10 Highway-Rail Grade Crossing Safety University of Wisconsin-Madison, The Pyle Center Madison, Wis. Website: www.edp/engr.wisc.ed/ webR315

Dec. 9 “Big Data” in Railroad Maintenance Planning 2015 University of Delaware, Newark, Del. Website: engr.udel.edu

Jan. 6–9, 2016

(OCTOBER 1915) TRANSCONTINENTAL ROADS PROPOSE FURTHER REDUCTIONS IN RATES TO MEET CANAL COMPETITION Increasing competition of the water lines using the Panama Canal, which has impelled the transcontinental lines to make reductions on a large number of additional commodities to the Pacific coast, was described by witnesses for the railroads and for the shippers at a hearing before Examiner Thurtell, of the Interstate Commerce Commission in Chicago, which was begun on September 23, in support of the petition of the railroads for authority to establish reduced rates from eastern to Pacific coast terminal points.

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

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

March 8, 2016 Western Railway ClubRailway Age Railroader of the Year Dinner Union Club League of Chicago Website: westernrailwayclub.com Contact: wrcclub13@ comcast.com October 2015 Railway Age 31

Products NMRR expands its LDVR platform

Railhead Corporation has announced that New Mexico Railrunner will be enhancing its current Locomotive Digital Video Recorder (LDVR) systems. NMRR is expanding its current LDVR platform from 4 to 8 channels and adding Railhead’s proprietary twin view camera. The 8 channel LDVR will enable NMRR to add cameras as needed to

coincide with the upcoming inward facing camera mandate while the twin view camera will provide two fields of view (narrow and wide) to assist in incident investigations. NMRR found the twin camera (TC690) more accurately replicates the engineer’s point of view (POV), than a single fixed lens camera. The narrow view provides a more focal POV, great for signal capturing, while the wide view is great for capturing last second crossing incidents or track side views. Designed and manufactured for the heavy rail industry, these enhancements provide NMRR with the latest in video technology while delivering access to crucial information, enabling management to respond to situations and incidents quickly, while maintaining the highest level of safety and service. For more information visit www.railheadcorp.com.

Portable AEI RFID tag reader Janam Technologies LLC, a leading provider of rugged mobile computers that scan barcodes and communicate wirelessly, has announced the launch of its XM2-RFID for Rail mobile computer. A fully rugged, highly capable, handheld RFID reader, the XM2-RFID for Rail offers best-in-class read range and battery life and is the first fully integrated handheld computer to deliver the ability to read Automatic Equipment Identification (AEI) RFID tags to the palm of the hand. The XM2-RFID for Rail provides the power and performance required by mobile workers in freight and rail operations. With unmatched versatility and a lightweight ergonomic form factor, it is specially designed to read the AEI RFID tags required on all railcars in North America and widely used globally, allowing rail and intermodal companies to track and monitor equipment effectively. Lighter 32

Railway Age

October 2015

and more affordable than competitive solutions, the 13-ounce XM2-RFID for Rail mobile computer reads AEI tags from at least one meter (3.3 feet) away. After five hours of continuous use and more than 40,000 tag reads, a customer’s unit still had 20% capacity remaining in its battery. “With more than 1.3 million railroad cars in North America equipped with AEI RFID tags, the rail industry has been eagerly awaiting a device like the Janam XM2-RFID for Rail,” said Harry B Lerner, CEO of Janam. Offering a range of features to address the demands of the rail industry, the XM2-RFID for Rail is equipped with a user-addressable compass for use with transportation applications, brilliant 3.2-inch color display, Motorola SE4500 2D imager for robust decoding of the hardestto-read barcodes and support for Microsoft’s Windows Embedded Handheld 6.5 operating system. The XM2-RFID for Rail is sealed to IP64 standards and can withstand multiple four-foot drops to concrete. For more information visit janam.com.

New APEX pump reduces maintenance requirements A new APEX35 hose pump from Watson-Marlow Fluid Technology Group is proving that it can deliver significantly reduced maintenance requirements at the world’s largest manufacturer of freight car truck components, Amsted Rail. Put to the test in a process-critical abrasive slurry transfer operation, the trial has demonstrated that in comparison with existing air operated diaphragm (AOD) pumps, the Bredel APEX35 can extend the time between scheduled maintenance intervals dramatically. When handling abrasive substances such as the core wash slurry, a major advantage of APEX hose pumps is that they have no costly wearing components like seals, valves, membranes, stators, rotors or glands to maintain. The pumps are also selfpriming and dry running. The Bredel APEX35 hose pump replaced an AOD pump on one of the dip tanks, running with flooded suction and virtually no pressure. While the AOD pumps need to be maintained every two weeks, the APEX35 hose pump ran continuously for ten weeks before any maintenance was carried out. In addition to the significantly longer uptime periods, when maintenance of the APEX pump is required, additional savings are apparent as it takes less than 50% of the time needed to reinstate the AOD pump to operating condition, with only a single replacement part required — the precision machined hose element. For more information visit wmftg.com.

Ad Index Company

Phone #

Fax

URL/Email address

Page #

Aldon Company

847-623-8800

847-623-6139

e-rail@aldonco.com

CIT

212-461-5713 212-461-5694 abby.cohn@cit.com

Danella Rental Systems, Inc.

610-828-6200

610-828-2260

pbarents@danella.com

David J. Joseph Co., The

513-419-6200

513-419-6221

txs@djj.com

Element Financial Corporation

416-386-1067 x2222

lcarroll@elementcorp.com

Ellwood Crankshaft & Machine

724-347-0250

724-347-0254

ecgsales@elwd.com

First Union Leasing Corp

847-384-5392

847-318-7588

richard.seymour@firstunionrail.com

DB7

Infinity Rail

678-904-6300

678-904-6310

info@infinityrail.com

DB5

Messe Berlin GMBH

+49 30 30381852

+49 30 3038 2278

just@messe-berlin.de

Metra Marketing

312-542-8357

312-322-6619

NRC

202-715-2920 202-318-0867 info@nrcma.org

NRE

618-241-9270 618-242-8519 sales@nre.com

Power Drives, Inc.

716-822-3600

716-824-4817

r.panzica@powerdrives.com

Progress Rail Services - EMD

256-505-6402

256-505-6051

info@progressrail.com

Progress Rail Equipment Leasing

810-714-4626

R&W Machine Division

708-458-4200

708-458-3299

jwarner@rwmachine.com

Railquip Inc

770-458-4157

770-458-5365

sales@railquip.com

Rails Co.

973-763-4320

973-763-2585

rails@railsco.com

RailSolutions, Inc.

757-903-4606

757-903-4705

jhusband@railsolutionsinc.com

Railway Educational Bureau, The

402-346-4300

402-346-1783

bbrundige@sb-reb.com

Rio Grande Chemical, Ltd.

956-686-2221

956-686-8290

david.bertram@rgcx.com

Roxtec

800-520-4769 918-254-2544 railway@roxtec.com

Samyoung Machinery

82 41 840 3000

82 41 853 4855

sales@sym.co.kr

SMBC Rail Services LLC

312-559-4800

888-4RAILCAR

sales@smbcrail.com

DB6

Soft Rail

888-872-4612

sales@signalcc.com

810-714-4680

DB8 C2 DBC4 5 13

11 26

3 C4

ddaugherty@progressrail.com

DBC2

DB4 DB3, DB9, C3

Zhuzhou CSR Times Electric Co.

DB5

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 20 South Clark Street, Suite 1910 Chicago, IL 60603 312-683-0130 CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, PA, RI, SC, VT, VA, WV, Canada – Quebec and East, Ontario Jerome Marullo 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7260 Fax: (212) 633-1863 jmarullo@sbpub.com

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

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

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

October 2015 Railway Age 33

equipment Sale/Leasing

Available For Lease

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

Available for Lease 4650 cu ft Covered Hopper Cars 3600 cu ft Open Top Hopper Cars 100 ton Automated/Manual Ballast Cars 4480 cu ft Aluminum Rotary Open Top Gons 50’, 70 ton mechanical refrigerated boxcars 65 ft, 100-ton log spine cars equipped with six (6) log bunks Contact: Tom Monroe: 415-616-3472 Email: tmonroe@atel.com

products & services

LOCOMOTIVE BATTERY “AMERICAN INGENUITY FOR A MODERN WORLD”

OR TOLL FREE 888.901.9987

MARKETPLACE SALES Contact: Jeanine Acquart Ph: 212/620-7211 Fax: 212/633-1165 Email: jacquart@sbpub.com

AM ER IC AN

WWW.STARTPAC.COM

M AD E

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RailwayAge.com

AGM64RR (3.375in x 5in).indd 1

22/09/2014 10:03

The News Destination for the Rail Industry 34

Railway Age

October 2015

ALL MAJOR CREDIT CARDS ACCEPTED

TRAINING

PROFESSIONAL DIRECTORY

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

strAteGic PLANNiNG: • Commuter rail tranSitionS • fra ComplianCe programS • operationS auditing

Kansas City Office (913) 661-2424 oPerAtioNs trAiNiNG & coNsULtiNG: www.tcsrailservices.com • engineer training & CertifiCation other services: • exCellent HiStory witH fra, ntSB • Staffing • meCHaniCal & part 238(Qmp) • interim management

RECRUITMENT

EDNA A. RICE, EXECUTIVE RECRUITER, INC

Get the inside scoop on and off the track

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

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

LEGAL NOTICE

Legal Notice

RAIL BRIEF: The Weekly RT&S Email Newsletter SUBSCRIBE AT: www.rtands.com/RailBrief

The Connecticut Department of Transportation anticipates the need for professional consultant services for the 2016 calendar year. Consultant firms must be prequalified by the Department in order to provide services. Additional information can be obtained by visiting: www.ct.gov/dot/business/consultant/selection and following the Annual Consultant Prequalification link or by contacting the Consultant Selection Office at (860) 594-3017. Submittals must be hand delivered by 3:00 pm on Friday, November 13, 2015 or postmarked by November 15, 2015 and received within 7 days. No submittals will be accepted after the due date. Connecticut Department of Transportation An EO/AA/ADA Employer

THE NEW RAILWAYAGE APP FOR IPHONE AND IPAD

October 2015 Railway Age 35

Perspective: Short Line & Regional Linda Darr

Determining our future, one carload at a time

fter three decades in which the Class I carriers relied upon short-line entrepreneurs to relieve them of marginal properties and become responsible stand-ins for unwanted scraps of lower priority single-car (carload) business, carload business is, once again, gaining increased attention. Estimates put carload business at nearly 35% of total rail volume. Whereas unit trains, the traditional mainstay of Class I business, run pointto-point requiring only mainlines and minimal relay stations, carload business requires gathering networks, specialized equipment, humpyards and destination terminals. Constrained for capital, Class I railroads have gradually relegated this capital and labor intensive work to short lines. Hence, short lines make their living by serving paper mills, converting plants, feed mills and the like. They move lumber, grain, scrap steel, sand, aggregates, aluminum, plastic resins and all the myriad commodities in freight cars one or several at a time. Thus, the future of short lines is determined one carload at a time even as we face pressure when the system is capacity constrained with unit trains and intermodal business. Yet, if the rail industry is to remain competitive with its trucking rivals, they must always find a way to nurture those carload opportunities despite the challenges it presents. Otherwise, the rail network loses disgruntled customers to trucking. And that’s bad for communities, for customers, for policymakers seeking alternate transportation solutions and, of course, is disastrous for the railroad enterprise. “The supply chain adjusts every day. One turn per month for a boxcar is not a long-term success story. What that means is that everyone has to work

Railway Age

October 2015

together to solve this problem,” said Ed McKechnie, ASLRRA Board Chairman. “It is incumbent upon all of us—our Class I partners, customers and ourselves—to push through perceived or actual barriers to make this business more competitive.” We simply cannot afford to lose out, particularly at a time when the trucking industry’s push for increasing truck size and weight is picking up speed. Short lines are well positioned to serve tradi-

Our Class I partners have stepped up to the plate. tional trucking customers. As front line service managers, short lines have strong day-to-day relationships with the customers they serve with customized and personalized service. At a time when rail freight traffic is in decline, short lines are positioned to identify new customers and to seek new opportunities with current customers. As Rob Robinson of Norfolk Southern recently noted with regard to NS short line partners, “Collectively, we need to be turning over more stones, seeking new opportunities with eyes wide open. With an intimate understanding of our customers’ businesses, we can mine new freight opportunities that aren’t moving by rail today. We like to call that creating the wave, not riding it.” Encouragingly, in many instances our Class I partners have stepped up to the plate to provide renewed focus on the single-car business. Some examples of best practices that are leading to growth in revenue and profit on both

sides of the table are: • Dedicated sales and marketing teams focused on short line business. • Annual and/or quarterly meetings with short lines where industry issues are addressed, sales and safety training is offered, and opportunities uncovered. • Advisory and working groups comprised of Short Line representatives to ensure that specific needs and challenges are incorporated into short and long term plans. • Access to Class I industrial development and planning resources. • Defined channels for quick escalation of issues in order to capitalize on new business opportunities, or to ensure retention of current business. • Joint sales calls to ensure a seamless point-to-point delivery of goods for customers. “The new environment demands change in marketing, operational and financial mind sets that in the past have been attuned to the easier unit-train pickings,” said George Betke, CEO of Farmrail System, Inc. “Connecting short lines are willing and able contributors to a redesigned system that needs better traffic balance to stabilize the kinds of demand swings now being experienced.” Seamless, high-quality service is critical for all customers who rely upon the freight rail system. Without a continuing, long-term focus on single-unit business that can provide a profitable revenue stream, the entire system is at risk. Single-unit volume protects against declines in a commodity class, and contributes to the lifeblood of the short line businesses that are especially adept at providing first-and-last mile high quality, high touch service. Single-car business is good for the railroad enterprise, good for the customer, and good for the local and national economy.

Take the

mystery out of

light rail planning Gain comprehensive insight into specialized technical and operating issues associated with light and interurban railways with Al Fazio’s invaluable new book. It closely examines the relationship between transportation and the economics of transit-oriented development (TOD) in a modern urban environment. This must-have book will appeal to transportation professionals in planning, operations, civil engineering, signaling, and vehicle engineering as well as undergraduate and graduate students looking to enter these fields. Light rail transit employs a full range of technologies where “out of the box” solutions simply don’t work like they do for rapid transit. Significant differences in railcar configuration and capabilities exist. Operating practices are spread over a wide continuum. Allow Fazio to lead you through the thoughtful, expert service planning and applications engineering required. Simply put, you’ll benefit immensely from exploring New Jersey’s decades of light rail experience. 2015. 136 pages. Softbound. “Al Fazio is a skilled writer and provides an excellent narrative. It is an atypical blend mixing technical data, operations material and a detailed (but not pedantic) history lesson that appeals to anyone with an interest in rail—supplier, historian, urban planner, engineer, editor, advocate. It’s a balance, a metaphor itself for the blend of transport modes the author himself deems necessary. Al ties up the message by stating why it matters.”

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

(800) 228-9670 www.transalert.com

From the Foreword by Douglas John Bowen

BKEPEO 2015. 136 pages. Softbound.

Price: $59.95 S&H $11.45

The SD70ACe –T4 Locomotive Featuring… • EMD 12-Cylinder 1010 Engine

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