June 2012 Railway Age Magazine by Railway Age

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June 2012

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MEXICAN railroads All commodities 14,510 13,658 U.S. total Canadian total MEXICAN TOTAL NORTH AMERICAN total

Short line and regional traffic index Carloads, by commodity

Carloads Carloads % originated originated Change April ’12 April ’11

42,268 39,084 8.1% 15,417 16,941 -9.0% 27,513 21,350 28.9% 12,192 12,628 -3.5% 22,494 28,225 -20.3% 7,220 6,968 3.6% 9,309 8,755 6.3% 7,194 5,378 33.8% 22,912 21,688 5.6% 11,659 8,318 40.2% 1,627 2,360 -31.1% 2,048 1,957 4.6% 17,683 17,807 -0.7% 12,967 11,568 12.1% 36,218 36,008 0.6% 11,031 11,568 -4.6% 87,884 80,982 8.5%

Chemicals Coal Crushed stone, sand, and gravel Food and kindred products Grain Grain mill products Lumber and wood products Metallic ores Metals and products Motor vehicles and equipment Nonmetallic minerals Petroleum products Pulp, paper, and allied products Stone, clay, and glass products Trailers/containers Waste and scrap materials All other carloads

Total carloads, April 2012 vs. 2011 6.2%

19 weeks: 5,347,394 • % change from 2011: -3.3% 19 weeks: 1,465,905 • % change from 2011: 4.7% 19 weeks: 259,044 • % change from 2011: -4.1% 19 weeks: 7,072,343 • % change from 2011: -1.8%

INTERMODAL Week 19 ending MAY 12, 2012 U.S. RAILROADS Trailers 29,486 32,824 –10.2% Containers 209,494 199,076 5.2% Total units 238,980 231,900 3.1% Canadian RAILROADS Trailers 1,601 1,505 6.4% Containers 50,855 47,421 7.2% Total units 52,456 48,926 7.2% MEXICAN RAILROADS Trailers 16 1 1,500.0% Containers 9,650 8,316 16.0% Total units 9,666 8,317 16.2% U.S. total 19 weeks: 4,353,407 • % change from 2011: 2.8% Canadian total 19 weeks: 951,318 • % change from 2011: 7.9% MEXICAN total 19 weeks: 169,103 • % change from 2011: 22.1% NORTH AMERICAN Total 19 weeks: 5,473,828 • % change from 2011: 4.2% Estimated ton-miles (billions), U.S. Class I railroads 2012 2011 % Change Week 199 31.9 33.2 — 3.9% T otal Weeks 1-19 608.6 623.8 — 2.4% Source: Weekly Railroad Traffic, Association of American Railroads

Railroad employment, Class I linehaul carriers, April 2012 (% change from April 2011)

Executives, Officials, and Staff Assistants Transportation

(train and engine)

65,124

Industry Indicators

Traffic originated CARLOADS Week 19 ending MAY 12, 2012 Major U.S. railroads By commodity 2012 2011 % Change Grain 19.838 22,401 –11.4% Farm products ex. grain 829 702 18.1% Metallic Ores 7,803 8,100 –3.7% Coal 107,666 128,467 –16.2% Crushed stone/sand/gravel 20,658 18,856 9.6% Nonmetallic minerals 4,443 5,254 –15.4% Grain mill products 10,102 10,042 0.6% Food & kindred products 6,561 6,457 1.6% Primary forest products 1,379 1,398 –1.4% Lumber & wood products 3,293 2,737 20.3% Pulp, paper & other 6,208 5,778 7.4% Chemicals 29,437 30,679 –4.0% Petroleum products 9,693 6,504 49.0% Stone, clay, and glass 7,779 7,430 4.7% Coke 3,391 3,702 –8.4% Metals & products 10,699 10,936 –2.2% Motor vehicles & equip. 16,246 11,974 35.7% Iron & Steel Scrap 4,801 4,972 –3.4% Waste & nonferrous scrap 3,316 3,346 –0.9% All other carloads 4,921 4,572 7.6% TOTAL cars loaded 279,063 294,307 — 5.2% Canadian railroads All commodities 79,063 76,466 3.4%

Professional and Administrative

9,544

(3.31%)

13,727

(1.10%)

(3.58%)

Total employees: 161,876 % change from April 2011: 3.25% Transportation

(other than train and engine)

Maintenance of Equipment and Stores

(2.06%)

(3.20%)

6,802

29,775

Maintenanceof-Way and Structures

36,904

(3.74%)

Source: Surface Transportation Board

Employment up again from year-over-year, past month

Figures released by the Surface Transportation Board show Class I railroads employed 161,876 people in mid-April, up 3.25% from April 2011, and up 0.84% from March 2012. All categories gained year-over-year, with Maintenance of way and structures leading the pack, up 3.74%. Two categories lost ground, albeit modestly, from the previous month: Executives, officials, and staff assistants, down 0.07%, and Professional and administrative, down 0.28%. www.railwayage.com

JUNE 2012

Railway Age

RailwayAge

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JUNE 2012

Whether the railroad client is in Shanghai or Chicago, the goal for sustainable locomotive design is simple: Identify the customer’s needs, and meet them. page 16 Cover photo courtesy of Norfolk Southern. Photo above courtesy of EMD.

News/Columns

Departments

4 From the Editor 10 Update 40 Short Line & Regional Perspective

1 Industry Indicators 6 Industry Outlook 8 Market 34 People 34 100 Years Ago 34 Meetings 35 Products 37 Advertising Index 38 Professional Directory 39 Classified

Features

Locomotives with sustaining power

The science of train handling

Wheel failure is not an option

Railway Educational Bureau: Ready for the future

For coal, a sharper focus on exports

visit us at www.railwayage.com Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 345 Hudson St., 12th Fl., New York, NY 10014. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 213, No. 6. Subscriptions: Railway Age is sent without obligation to professionals working in the railroad industry in the United States, Canada, and Mexico. However, the publisher reserves the right to limit the number copies. Subscriptions should be requested on company letterhead. Subscription pricing to others for Print or Digital only versions: $100.00 per year/$151.00 for two years in the U.S., Canada, and Mexico; $139.00 per year/$197.00 for two years, foreign. Foreign $239.00 (U.S. funds) per year/$397.00 for two years for Air mail delivery. When ordering Both Print and Digital: $150.00 per year/$227.00 for two years in the U.S., Canada, and Mexico; $208.00 per year/$296.00 for two years, foreign. Foreign $308.00 (U.S. funds) per year/$496.00 for two years for Air mail delivery. Single Copies: $36.00 per copy in the U.S., Canada, and Mexico/$128.00 foreign All subscriptions payable in advance. COPYRIGHT© 2012 Simmons-Boardman Publishing Corporation 2012. All rights reserved. Contents may not be reproduced without permission. For reprint information contact PARS International Corp., 102 W. 38th Street, 6th floor, New York, N.Y. 10018, Tel.: 212-221-9595; Fax: 212-221-9195. Periodicals postage paid at New York, NY, and additional mailing offices. Canada Post Cust.#7204564; Agreement #41094515. Bleuchip 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 10, Omaha, NE 68101-0010 or call toll free (800) 895-4389. In Nebraska call (402) 346-4740. Printed at Cummings Printing, Hooksett, N.H. ISSN 00338826

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editor from the

William C. Vantuono

Move over, Detroit. We like “retro,” too

history. That means appreciating our heritage, including the “fallen flags” that formed the backbone of today’s core system. What better way to do that than creating what the automotive industry would call a “retro” vehicle (think Camaro, Mustang, or Challenger), a modern version of a classic. We don’t redesign the sheet metal on our locomotives, though. We simply select classic paint schemes and adapt them to new equipment, like Norfolk Southern did with its Heritage Fleet to mark the 30th anniversary of the Norfolk & Western/Southern Railway merger that created the NS. There are a few examples of these handsome units throughout this issue, most notably, the Southern unit on the front cover and the N&W unit on the cover of our annual “Guide to Equipment Leasing.” I wanted to use the PRR heritage unit in my column for two reasons. First, as I already mentioned, I’ve always admired the PRR, the railroad that designed and built many of its its own locomotives.

NORFOLK SOUTHERN

K, I admit it: I’ve always had an affinity for the Pennsylvania Railroad. Perhaps that’s because as a child growing up in Newark, N.J., in the 1960s, my favorite Saturday outing was taking a ride on the old City Subway PCC cars to Penn Station Newark and seeing the PRR passenger trains rumble in, pulled invariably by a GGI electric locomotive. In those days, the PRR, the “Standard Railroad of the World,” was a gasping giant, a bloated behemoth drowning in over-regulation, government-subsidized competition, antiquated work rules, rapidly dwindling passengers, and its own mismanagement. Most of us know what happened: the disastrous Penn Central merger. Bankruptcy. Government takeover and Conrail. Amtrak. Staggers and deregulation. Then, finally, rebuilding and rebirth, and a positive transformation in the Northeast that few people in this industry ever thought would happen. It did, and I think it’s safe to say that today’s railroaders have learned a lot from

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Second, as one who appreciates functional and aesthetically appealing industrial design, those Raymond Loewy-designed pinstripes and keystone emblems on the PRR’s signature Tuscan Red paint look as good today as they did when Loewy applied them to his streamlined, welded GGI carbody in the 1930s. In this issue, Managing Editor Doug Bowen writes about locomotive sustainability (p. 16). This story is followed by a report on train-handling technology (p. 24). While the word “sustainability” has taken on a new meaning having to do with preserving and protecting the environment, it could also be applied to this industry’s efforts to preserve and protect its heritage. So, if you happen to spot an NS Heritage Fleet locomotive pulling a modern intermodal train on one of the railroad’s recently cleared doublestack routes, stop and think for a moment about the struggles it took our freight rail industry to get to where it is today—the standard of the world.

CMY

, CROSST Y O H A IE CREW! Step to! Meet me hearties at the 94th Annual RTA Symposium & Technical Conference in Tampa, Florida — October 23-25. We don’t know if it’s true that legendary pirate Jose Gaspar, “The Last of the Buccaneers,” actually

Learn, network and be entertained at 2012’s best industry event: R ailway T ie a ssociaTion 94 Th a nnual c onfeRence

October 23-25, 2012

left a treasure off the Florida coast, but we do know that there will be a treasure of learning and networking at the upcoming 94th Annual RTA Symposium & Technical Conference at the Tampa This year, one of the railroad industry’s premier events takes place in Tampa, where you’ll balance

T ampa m aRRioTT w aTeRside h oTel & m aRina

business (with presentations ranging from exports and forestry to engineering and preservation) and

T ampa ,f loRida

Marriott Waterside Hotel & Marina.

pleasure (with plenty of golf, theme parks, beaches, and fishing in the area).

AgendA highlights include: • the latest track research • hardwood industry update • lively interactive discussions • legislative reports

• plus the RTA General Business Luncheon, featuring Wick Moorman, President and CEO of Norfolk Southern

Don’t miss Wednesday evening’s Annual RTA Banquet and Awards Ceremony: “The Return of Gasparilla, A Pirate Mardi Gras.” We promise the food will be better than hardtack, cackle fruit, and salmagundi.

Arrrregister at www.rta.org or call 770.460.5553 for more information, buckos.

industryoutlook STB OKs Michigan DOT rail line buy ... The Surface Transportation Board has cleared the way for Michigan’s Department of Transportation to acquire two sections of rail right-of-way from Norfolk Southern Corp., totaling about 135 miles, for eventual upgrading to 110 mph passenger rail speeds. MDOT filed an Acquisition Exemption in early April. STB said in part that MDOT “does not need Board authorization to acquire certain assets of a rail line in Wayne, Washtenaw, Jackson, Calhoun and Kalamazoo Counties, Mich. The seller, Norfolk Southern Railway Company, will retain the legal obligation to provide freight service and MDOT will not be able to interfere unreasonably with that service. Therefore, MDOT will not be considered a rail carrier under Federal law.” MDT seeks to purchase the right-of-way to improve Amtrak intercity passenger service speeds and frequency between Chicago and Detroit and also between Chicago and Port Huron, Mich.

... and clears Adirondack rail route On May 14, STB approved a request by Iowa Pacific Holdings to reopen a rail route deep in Adirondack State Park, N.Y., dismissing protests from an environmental group seeking to block reactivation. Short line Saratoga & North Creek Railway thus is cleared to commence reopening the Tahawus rail line, running between North Creek and Newcomb, N.Y., for freight service. The short line plans to haul tailings from past mining operations, as well as solicit freight service from other potential customers, including the operators of a garnet mine. Sen. Charles Schumer (D-N.Y.) said that hauling the tailings by rail will be an alternative to hauling tailings by truck, thus generating less air pollution. The federal government built the 29.7-mile stretch of rail in 1940. STB originally rejected Chicago-based Iowa Pacific Holdings’ request last year, when the environmental group Protect the Adirondacks opposed it. But in announcing its decision in Docket No. FD 35559, STB noted “subsequent filings have provided enough information to resolve the concerns ... the railroad may now file a new notice of exemption for the operating authority it seeks.”

NJ: We’ll aid Gateway Tunnel

Amtrak’s Gateway Tunnel project, designed to add rail capacity on the Northeast Corridor under the Hudson River, will get its “fair share” of fiscal support from New Jersey, Transportation Commissioner James Simpson said last month. New Jersey’s conditional support of the $14.5 billion Amtrak project contrasts with the state’s move in 2010 to terminate Access to the Region’s Core (ARC), a New Jersey Transit-sponsored six-mile commuter rail route along the NEC between Secaucus, N.J., and midtown Manhattan. Unlike ARC, Amtrak’s Gateway project is designed to be an expansion of NEC capacity, including access to Penn Station in New York. New Jersey’s payment reportedly would be some form of user fee, similar to its payment for NJT use of the existing NEC, owned by Amtrak. 6

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market In Manhattan, Moynihan Station project gets going The Port Authority of New York & New Jersey has awarded Skanska USA Civil Northeast a $147.7 million contract for the first phase of an expansion of New York’s Penn Station affecting Amtrak, NJ Transit, and Long Island Rail Road riders. The expansion will incorporate the beauxarts Farley Post Office Building, designed by McKim, Mead & White, also designers of the original Penn Station across the street on Eighth Avenue (torn down during the 1960s). The building will be known as Moynihan Station, named after the late Sen. Daniel Patrick Moynihan (D-N.Y.).

North America BART: Approved an $896 million contract with Bombardier Transportation for 410 cars to replace its aging rapid transit fleet, covering much of BART’s self-prescribed need for 775 cars, replacing its current fleet of 669. BART said its “Fleet of the Future” program would be assembled within the U.S., with at least 66% of its contents “made in America.” BNSF: Signed a new, multiyear agreement with Schneider National, under which BNSF will continue to serve as one of Schneider’s primary rail service providers. Iowa Pacific: Announced a partnership with Rail Logistics in which Rail Logistics will manage, operate, and market Iowa Pacific’s refrigerated railcar fleet. The venture began May 1. Los Angeles County MTA: Gave preliminary approval to an $890 million contract to KinkiSharyo for up to 235 light rail cars to meet system expansion. Maersk Line: Announced its new “Flagship import service direct from Asia to five key markets in North America—Chicago, Dallas-Fort Worth, Houston, Memphis, and northwest Ohio”—in conjunction with BNSF. MTA New York City Transit: Accepted the first of 28 m/w locomotives from Wabtec subsidiary MotivePower, Inc. New England Central Railroad: Tapped RailComm for remote control of one of its bridges. Norfolk Southern: Placed an order for lead-carbon (PbC) batteries with Axion Power International, Inc., for use in a battery-powered locomotive (details, p. 18).

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PATH: Awarded a $10 million contract to Skanska Koch, a division of Skanska USA Civil, to install more than 175 steel ribs along the North-South Concourse of the new World Trade Transportation Center Hub. San Joaquin Valley Railroad: Selected Progress Rail Services Corp. to supply four repowered, low-emissions PR30B locomotives to the short line, a RailAmerica property. Union Pacific: Extended an existing sales contract for an additional five years, through Jan. 31, 2017, with Koppers Inc.; Koppers provides treated railroad crossties and other railroadrelated products and services to UP.

Worldwide HS2 Ltd. (London): Awarded Parsons Brinckerhoff two contracts totaling $12.8 million covering design of both high speed and conventional railway systems for Britain’s second high speed rail line, linking Birmingham and London’s Euston Station. Szybka Kolej Miejska (SKM), Poland: Signed a $30.6 million contract with a consortium comprised of Škoda Transportation subsidiary Škoda Poland and Tabor Szynowy Opole, Poland, for the modernization of 21 class EN57 electric multiple-unit trains, used on suburban services around Gdansk and Gdynia. All 21 sets will be completed by the end of next year. Chicago Freight Car Leasing Australia (CFCLA Rail): Ordered 10 standard-gauge MP33CC diesel locommotives from Wabtec subsidiary MotivePower; the locomotives will be delivered next year. The carbodies are designed and built to be in compliance with AAR standards.

passenger RailwayAge trains on Nineteenth Annual Conference

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Washington Marriott Hotel • Washington, D.C. North America’s freight rail system plays host to a growing network of regional, intercity, and light rail passenger services. Now, high- and higher-speed have been added to the mix. Passenger and freight rail interests must deal with issues of compensation, liability, operational and grade crossing safety, signaling and train control requirements, capacity constraints, and maintaining the integrity of freight service. Finding common ground can be problematic. Join Railway Age at this premier event—the industry’s only conference on freight-plus-passenger railroading. REGISTER ON THE WEB: www.railwayage.com SPONSORSHIPS AVAILABLE: Contact Jane Poterala at (212) 620-7209; jpoterala@sbpub.com CONFERENCE FEE AND HOTEL: The registration fee for Passenger Trains on Freight Railroads is $895, which includes admission to all conference sessions, conference documentation containing all available proceedings, and social events. The Washington Marriott Hotel, 1221 22nd Street NW, Washington, DC 20037, has set aside a block of rooms at $289 single/double for attendees. These will be held until 30 days prior to the conference; those reserving after that date will rely upon room availability. Contact the hotel directly at (202) 872-1500 for room reservations (mention group code “Railway Age”). You will receive room confirmation directly from the Washington Marriott Hotel. CANCELLATION POLICY: Confirmed registrants who cancel less than one week prior to the conference are subject to a $250 service charge. Registrants who fail to attend are liable for the entire fee unless they notify Railway Age in writing prior to the conference.

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Update In race for efficiency, CP switches drivers

Left to right: Former CN chief executive E. Hunter Harrison, Railway Age’s 2002 Railroader of the Year, is expected to take Canadian Pacific’s reins later this year. New CP board member Steve Tobias, who retired from Norfolk Southern as COO and was the 2008 Railroader of the Year, was named interim CEO. Tony Ingram, former CSX COO and also once a NS senior vice president, and former STB Chairman Linda Morgan, are also on CP’s newly reconstituted board. Tobias and Ingram were selected by CP because of their railroad experience.

ow that Canadian Pacific Railway is under new management, how soon can shareholders expect to reap the rewards promised hedge fund investor William Ackman during a long proxy fight? “Investors must be patient,” suggested Dahlman Rose & Co. analyst Jason H. Seidl, a Railway Age contributing editor, in an investor’s note. He went on to say: “We believe Pershing Square Capital Management will attempt to implement significant changes at Canadian Pacific to improve the operating ratio (OR), which came in at 80.1% in 1Q12 and 81.3% in 2011, a year plagued with unusually severe weather especially in CP’s network. Pershing Square Capital’s OR target is 65.0% with the activist investor’s CEO candidate Hunter Harrison admitting such a target would take years to achieve. Our OR assumptions are 77.0% and 75.9% for 2012 and 2013, respectively.” Seidl added: “Our model calls for 13% and 9% revenue growth in 2012 and 2013, respectively, with EPS growing 43% and 29% for the respective periods.” Seidl pointed out that CP shares have increased nearly 70% since Pershing Square purchased its first big stake in CP last September. Class I shares generally (including CP’s) increased less than 30% in the same period. On Oct. 29 Pershing chief William Ackman told CP Chairman John Cleghorn in a telephone conversation that he would 10

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be seeking major changes in the company’s management. Contentious talks about a reconstituted board led to the appointment of two CP-chosen new members with railroad experience and the offer of a seat to Ackman provided he entered into “confidentiality and standstill” agreement, an offer Perishing rejected. On Dec. 30, Pershing formally let it be known that it wanted former CN CEO Hunter Harrison to replace Fred Green as CEO. Ackman said he expected Harrison to stay on the job “two or three years,” enough time to get a head start on driving CP’s operating ratio from 80% to a a targeted 65%. Sniping by both sides continued. On Jan. 4, Ackman asserted, in an email to Cleghorn, that failure to meet Pershing’s requests for two seats on the board and a new CEO would would turn a “border skirmish” into “nuclear warfare.” CP responded by beginning a spirited public relations campaign, which was to last for four months, describing CP’s steady progress in executing a planned turnaround. CP announced Jan. 23 that it had scheduled its annual meeting for May 17. Within 24 hours, Pershing announced the start of a proxy fight. At a Feb. 3 Pershing-spnsored town meting in Toronto, Harrison announced his readiness to come out of retirement. His former employer, CN, threatened to cancel his pension and

other considerations worth a reported $40 million. Harrison denied having violated any retirement agreement. In any case, Pershing pledged to make up any losses. CP fought on and was able to announce a record first-quarter profit, but its operating ratio remained the highest in the industry. Financial industry polls showed an overwhelming swing of shareholder sentiment in favor of New York-based Pershing Square Capital Management. Hours before the annual meeting, CEO Fred Green abruptly ended the proxy fight by resigning. At the board meeting, directors named Steve Tobias as interim CEO, noting that he was a Railway Age Railroader of the Year while working at Norfolk Southern. Hunter Harrison also won the Railway Age Railroader of the Year Award. In the magazine’s January 2002 article announcing the honor, Harrison expounded on one of his favorite subjects—the operating ratio, the measure by which a railroad’s efficiency is judged. Harrison has long sdtressed that improving service and revenue—not just

cutting costs, the other determinant of an operating ratio—is the way to go. “I would rather be a $2 billion company with a 70% operating ratio than a $700 million company with a 50% operating ratio,” he told Railway Age in a story published in June 1996 (p. 51). He revisited the subject in his Railroader of the Year interview with Railway Age Age Editor William C. Vantuono. As for his reported “obsession” with a low OR, Harrison observed: “People get the wrong message. They think that when you have a low operating ratio, you’re driven by cost and are not service sensitive. But the one difference with scheduled railroading is that passion for service. What we’re trying to do is grow business through controlled, sustainable, profitable growth. If we do that, we will be rewarded with market share and quality of revenue. If we can control costs while we are doing it, the result will come with a good operating ratio.” As Railway Age commented at the time, “That says it all.”

“People get the wrong message. They think that when you have a low operating ratio, you’re driven by cost and are not service sensitive.” —E. Hunter Harrison, as told to Railway Age in 2002

—Luther S Miller, Senior Consulting Editor

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Railway Age

Update Kalmus joins Rail Group sales team

Emily Kalmus Midwestern Regional Sales Manager

Emily Kalmus has joined the staff of the Simmons-Boardman Rail Group as Midwestern Regional Sales Manager. Kalmus will be assuming sales responsibilities for all three of Simmons-Boardman’s rail publications— Railway Age, Railway Track & Structures, and International Railway Journal. Kalmus has extensive sales experience developing integrated packages that include print, online and event sponsorships. Kalmus comes to us from Penton Media, where she was the National Sales Manager for Broadcast Engineering magazine and BroadcastEngineering.com. Her experience includes selling integrated marketing programs for Crain’s Chicago Business. Kalmus can be reached at 312-683-5021, or by email at ekalmus@ sbpub.com. George Sokulski will continue in his role as Rail Group Associate Publisher Emeritus, serving on the board of directors of REMSA, NRC, Western Railway Club, and the MARTS-Coordinated Mechanical Group. Sokulski will also be in attendance at all major rail industry conferences and exhibitions and will be working on special projects for the Rail Group.

George Sokulski Associate Publisher Emeritus

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JUNE 2012

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Charlotte, NS reach accord on more LRT

DAVE DOBBS

Charlotte, N.C.’s LYNX Blue Line Extension (BLE) light rail project along the North Carolina Railroad corridor moved a big step forward May 17 with the announcement that the North Carolina Railroad Co. (NCRR), the Charlotte Area Transit System (CATS), and Norfolk Southern Corp. had signed lease, construction, and operating agreements for the 2.7-mile addition to the light rail line. “The North Carolina Railroad Co. is pleased to partner with the Charlotte Area Transit System to improve mobility in this growing region,” said NCRR President Scott Saylor. “This is an unprecedented agreement that extends light rail in our state’s largest city, and we are fortunate to have enough right-of-way within our corridor to enable CATS to install light rail trackage.” “This signed agreement represents a significant investment in the future of public transit in Charlotte,” said Carolyn Flowers, CATS CEO. “CATS can now complete the Final Design for the BLE and move closer to securing a full funding grant agreement from the Federal Transit Administration later this year.” LYNX currently stretches 9.6 miles from I-485/ South Boulevard to 7th Street in downtwon Charlotte. LYNX commenced service on Nov. 24, 2007.

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Supply Briefs INVENSYS RAIL

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Invensys Rail Corp. has acquired privately held PHW, Inc. from the current owner/managers for up to $24 million. The acquisition was completed May 10. Pittsburgh-based PHW, Inc. will operate as a wholly owned subsidiary of Invensys Rail Corp. PHW is a manufacturer of cab signaling systems and other failsafe electronic train control systems for the North American railroad and mass transit industries. PHW’s onboard system is used by Amtrak and by other rail operators on Amtrak’s Northeast Corridor (NEC), as part of Amtrak’s ACSES PTC system. The PHW PTC products will be a major expansion of Invensys Rail’s North American PTC product line, Invensys says. Invensys Rail Corp., the North American unit of Invensys Rail, manufactures signal and control systems and rail-highway grade crossing warning equipment for the North American rail industry. Invensys Rail, based in Louisville, Ky., is a division of Invensys, plc, London, an international supplier of advanced signaling and control systems for mainline, high speed rail, and mass transit systems. alstom transport In Sorel-Tracy, Quebec, the Société des parcs industriels Sorel-Tracy (SPIST) last month launched construction of a new Alstom manufacturing facility. Sorel-Tracy Mayor Réjean Dauplaise and other dignitaries were in attendance to herald the new plant, which is slated for completion next fall. The new facility will help Alstom Transport’s ability to meet its portion of a C$1.2 billion contract obligation between a Bombardier-Alstom consortium and the Société de Transport de Montréal (STM) for the production of 468 rapid transit cars, Alstom said. In accordance with STM requirements, each train must be made using 60% Canadian content. Alstom’s work at the new Sorel-Tracy site will be dedicated to assembling and integrating the trucks for the new cars. Alstom’s local activities will create approximately 60 direct jobs and involve many area suppliers, the company said. L.B. foster L.B. Foster Co., will sell its railway securement business in a transaction scheduled for completion at mid-year. The company noted that it acquired the shipping systems division as part of its acquisition of Portec Rail Products, Inc. in December 2010. It’s selling the unit because “other industry participants would be a better strategic fit.”

Railway Age

JUNE 2012

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R.J. CORMAN RAILPOWER LOCOMOTIVES

Locomotive design

Railroads have always been fuel efficient. Locomotive manufacturers find themselves well-positioned to improve that efficiency still more, matching or exceeding expectations of governments worldwide.

Locomotives with sustaining power

By douglas john bowen, managing editor

Railway Age

JUNE 2012

www.railwayage.com

se less fuel. Emit fewer pollutants. Deliver more power. One, two, three: Easy laundry list for a locomotive, right? Unfazed by such a complex demand, North American locomotive manufacturers have risen to the challenge, making near-leaps in technology even as the environmental hurdles become ever higher. Indeed, U.S. EPA Tier 3 and Tier 4 standards in some ways are “more challenging” than European counterparts, though similar in many respects, according to GE Ecomagination Leader for Transportation Peter Lawson—perhaps giving U.S. manufacturers a slight edge in global competitive development. EPA seeks compliance “over the useful life of the product and compliance is required over a much wider environmental window of temperature and altitude,” Lawson notes. Whether the railroad client is in Shanghai or Chicago, however, the goal for sustainable locomotive designs is simple: Identify the customer’s needs, and meet them.

GE Transportation

R.J. Corman Railpower

For Erie, Pa.-based R.J. Corman Railpower Locomotives, a subsidiary of the namesake Railroad Group, the customer is king, even if the customer is a small industry player. The company stresses its work beginning in 2000 to develop “a family of clean and efficient yard switchers. Since that time, our products have evolved into GenSet locomo-

www.railwayage.com

GE Transportation has leveraged the global reach of its venerable parent company to land sales of its Evolution Series locomotives in South Africa and Brazil, as well as in JUNE 2012 Railway Age North America.

GE TRANSPORTAION

R.J. Corman RailPower Locomotives believes its next big challenge is to determine what solutions the railroads are willing to accept for meeting EPA 2015 Tier 4 requirements. Railpower has not yet committed to a “standard” Tier 4 design “because we are interested in which solutions the railroads will embrace as their baseline,” a company spokesman says.

Unlike General Motors, General Electric never gave up on locomotives. In the postStaggers era, GE Transportation has become a dominant player not just in North America but worldwide. GE’s annual reports to shareholders, along with TV commercials, take pains to push cutting-edge locomotive work into public (and Wall Street) view. Erie, Pa.-based GE Transportation currently sports three versions of its Evolution Series locomotive design, with BNSF ordering 25 units of the newest model, the ES44C4, last November. The ES44C4 (Evolution Series, 4400 hp, AC traction, four traction motors) is designed with the center axle of each truck being unpowered, giving an A1A-A1A wheel arrangement and promoting fuel efficiency. Asked if BNSF is perhaps a logical first customer, GE Ecomagination Leader for Transportation Peter Lawson allows, “BNSF is a railroad that is not afraid to take a risk, to take a chance with a new technology, kind of like General Electric itself—it’s in that same mold.” GE Transportation’s risk came during the Great Recession, when, much like the Class I railroads, it decided to invest in research and development despite economic headwinds. “We continued to invest significantly in our technology, in our product, and continued to bring new products to the rail industry that help lower the operating cost of a railroad,” Lawson recalls. “Some of it is on the locomotive side, some of it on the signaling solution side.”

Locomotive design

How Norfolk Southern is “getting the lead out”

S-999, Norfolk Southern’s experimental 100% electric (all-battery) switcher, is undergoing an extensive rebuild with a new type of battery that, according to supplier Axion Power International, “is ideally suited for both electric and hybrid locomotive applications due to its high charge acceptance, fast charge and discharge capabilities—important in regenerative braking—and an inherent ability to equalize voltage when utilized in large string configurations.” The battery is an advanced-technology PbC® (lead-carbon) battery that, according to Axion Power Chairman and CEO Thomas Granville, “is stable and safe because of similarities it shares with lead-acid batteries—a chemistry that has been safely deployed for more than a century. Unlike some of the batteries being used in various vehicular applications, PbC® batteries operate safely at all temperatures, are 100% recyclable, and are priced well below some of the more highly publicized exotic battery chemistries.” Axion’s PbC® battery is really an evolution of the traditional lead-acid battery. The case and the positive electrode and the electrolyte are essentially the same as those in a lead-acid battery. Axion has taken the negative electrode and replaced it with an activated carbon electrode, thus giving the PbC® battery its unique properties. The charge acceptance rate, at 100 to 200 amps, is up to 10 times faster than a lead-acid, “which is ideal for locomotives,” says Granville. “Lead-acid batteries provide fast discharge but shallow recharge rates, because their negative terminals tend to crystallize and slow down charging. The weakest battery in a string is the weakest link. Our PbC® batteries equalize themselves after just five cycles, to attain an equal state of charge, and can withstand 2,500 100% depth-of-discharge cycles.” NS’s string configuration is 54 batteries per string, which provides at least 600 volts for traction motors. To repower NS-999, NS purchased $400,000 worth of PbC® technology, part of a $475,000 total order that will be used in commissioning the locomotive. To date, this is the single-largest PbC® battery order that Axion has received. Following NS-999, NS’s next sustainable locomotive project will be a road unit. NS is considering equipping this road locomotive with PbC® batteries—twice the number of those in the switcher. It will probably be deployed as one-third of a three-unit consist; the other two locomotives will be traditional diesel-electrics. The battery-powered unit, which will operate in a partial state of charge, will use regenerative braking from the consist for charging. As such, the consist will function as one hybrid locomotive. Axion’s PbC® battery won the Frost & Sullivan Technology Award for North America in the field of lead-acid batteries. According to Frost & Sullivan, these batteries “have the potential to revitalize the lead-acid battery industry by breathing new life into an established technology that is not well suited to the requirements of important new applications like hybrid electric vehicles and renewable power.” Axion says its technology “is the only class of advanced battery that can be assembled on existing lead-acid battery production lines throughout the world utilizing our proprietary carbon electrodes.” The company has a 50,000-square-foot production facility in Newcastle, Pa., and has plans to expand to 75,000 square feet to manufacture up to 3,000 PbC® batteries per day. —William C. Vantuono

Railway Age

JUNE 2012

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tives that serve both yard and switching functions” improving adhesion while saving fuel. “Sustainability isn’t just about putting an eco-friendly design into the marketplace,” a spokesman says. “It’s putting the design out there and taking feedback from end users, which, at R.J. Corman, uniquely includes our own short lines. We also learn from reliability analysis, ensuring the design continually improves to maximize reliability and asset utilization. Inherent to our design, GenSets naturally provide improved reliability through engine redundancy.” Keeping up with the Environmental Protection Agency isn’t always easy. “Originally, the EPA based its tighter 2008 switcher standards on what it saw GenSets accomplishing,” the spokesman says. “ If not for the GenSets, switcher standards may have been set higher than linehaul, as they always have been historically. Had railroads not adopted GenSets as a common way of meeting these more stringent standards, the market may have looked different today. “With that in mind, Railpower’s next big fork in the road will be what solutions the railroads are willing to accept for meeting 2015 Tier 4 requirements.” Railpower has not yet committed to a “standard” Tier 4 design “because we are interested in which solutions the railroads will embrace as their baseline,” the spokesman says.

Brookville Equipment Corp.

Don’t forget all the small new customers needing locomotives, including nascent passenger rail operators, obser ves Michael Lunsford White, marketing manager for Brookville Equipment Corp., Brookville, Pa. “Brookville is the supplier able to supply two locomotives, or five locomotives, not necessarily 25 locomotives or more,” White asserts. That’s a marketing plus when courting new passenger rail startup efforts across North America that need sustainable technology as much—or even more—than larger established operators. Metro-North Railroad isn’t small, but it is indicative of a market for sustainable locomotive design that traditionally might have been overlooked. Brookville Equipment’s dual-purpose locomotives include switcher/passenger units Metro-

Continued on p. 21

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RailwayAge

Supplement to

2012 guide to

Equipment Leasing

2012 guide to equipment leasing

Everything you always wanted to know about finance leasing ... but were afraid to ask! By Anthony Kruglinki, Financial Editor

Why lead off with an article on finance leasing with this year’s special edition? Quite simply, because a combination of factors, including evolving accounting principles, new rules on calculating required bank capital requirements, low interest rates, and current tax policy, are making this an extraordinary year for finance leasing! What is “finance leasing?” For purposes of this article we are using the term “finance leasing” to mean any medium- to longterm net lease where maintenance, insurance and taxes are for the account of the lessee and the terms give the lessee of the equipment long-term control of the equipment, either through one or more purchase options or options to renew the lease for long terms of time at a preset rent. To explain this situation, I have asked for the help of one present associate—my partner at Railroad Financial Corpora-

tion, David Nahass—and a former associate at RFC who today is Rail Equipment Finance Conference’s Capital Markets expert: Michael Dockman of AMA Capital Partners in New York City. Kruglinski: Mike, when you worked for Railroad Financial 15 years ago, what kinds of finance leases were available from the market at that time? Dockman: We were seeing a number of leveraged leases on both railcars and locomotives with terms of 20-plus years. The equity (lessor) for the leveraged leases was provided by banks, finance company subsidiaries of large corporations and independent finance companies. The debt was initially provided by insurance companies, then by institutional investors via passthrough certificates. Single investor leases (where the entire purchase price came from one investor) were also provided for shorter terms and credit standards were not necessarily as high as for leveraged leases. Pricing on leveraged leases was less than www.railwayage.com

JUNE 2012

Railway Age

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HOWARD ANDE

cover photo by Norfolk southern

ost years when we tackle this special issue on leasing, we lead with an article on “operating” leasing. We do this because many of our readers are operating lessors or operating lessees or work for companies supporting the nearly 60% of the North American railcar fleet owned by operating lessors. (Hint: First Union, CIT, and GATX are operating lessors.) This year, however, we are going to shift gears a bit and start with an article on “finance” leasing.

2012 guide to equipment leasing

Michael Dockman AMA Capital Partners

On a $45,000 railcar, a lessee under a leveraged lease could expect an average monthly rent over the 20-plus-year term of the lease in the range of $300.

David Nahass Railroad Financial Corporation

We are also in the middle of an extended period of amplified “bonus” depreciation for new cars and locomotives and historically low interest rates.

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single investor leases. On a $45,000 railcar, a lessee under a leveraged lease could expect an average monthly rent over the 20-plus-year term of the lease in the range of $300. The 10-year Treasury at that time ranged from 5% to 8%, compared with around 2% today. I think it’s safe to say that from the time long-term finance leasing of rail rolling stock began in the 1970s until today, costs and terms have gone from being generally lessor-friendly to being generally lessee-friendly. Those first leases had FMV (Fair Market Value) purchase and renewal options, but over time lessees were able to negotiate both fixed purchase and renewal options, and these fixed price options were in many of the leveraged leases done in the 1990’s and 2000’s Kruglinski: So who were our principal finance lessee customers 10 or 15 years ago? What kinds of companies leased from operating lessors? Dockman: Typical finance lessees under 15- to 20-year finance leases were Class I and regional railroads, and industrial companies like power generators or chemical companies, particularly companies with investment grade credit ratings that had no problems qualifying for long term credit on favorable terms. The finance lessors at this time assumed (read: Hoped) that the equipment would be eventually purchased by the lessee under an Early Buy-Out Option (EBO) or end-of-term Fixed Price Purchase Option (FPPO), because these institutions weren’t really in the equipment recovery and releasing businesses! Kruglinski: What eventually happened? Dockman: For the most part, the lessees did purchase the equipment or renew their leases at lease-end. For this reason, the financial lessors had little reason to worry about recovering the equipment at lease-end and having to dispose of it for the residual amount assumed in the original lease. However, this has changed in the last five years or so, as car design and demand have rendered certain car types undesirable for lessees. Higher fuel costs, cyclical downturns, and environmental legislation have also caused railroad lessees to turn back locomotives in recent years. Having experienced this, finance lessors will likely be more focused on potential obsolescence risk and will be conservative on their end of lease residual values going forward. Kruglinski: David, what’s changed today? Nahass: To begin with, changes in the regulatory environment for banking institutions june 2012

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with U.S. tax appetite have had a dramatic impact on the leasing business. New accounting rules seem determined to make banks show all types of “non-recourse” debt as debt on any bank’s balance sheet. (Structurally, leveraged leases relied on debt that was not a liability of the equity investor [lessor].) That will mean that a bank will have to pledge expensive risk capital against those obligations even though the bank is not responsible for repayment. That additional capital pledge combined with an increase in capital adequacy has (for the most part) taken away the leveraged lease as a financial product. In addition, as a result of similar capital adequacy concerns, many banks (say roughly 50%) no longer lease equipment for terms beyond 12 years. Whereas 10 years ago, 20-year lease terms were the norm and lease terms could extend out as far as 22 to even 25 years. Lease terms of 7-to-10 years, once the province primarily of operating lessors, is now a fertile area for bank style “finance” leases. We are also in the middle of an extended period of amplified “bonus” depreciation for new cars and locomotives and historically low interest rates. Provided lessees maximize the value these circumstances offer, this allows companies across the credit spectrum to see effective lease borrowing costs that are at historical lows. In some investment grade cases rates below 2.50% are not uncommon. What has also been helpful in encouraging the leasing environment is that North American rail assets generally continue to hold their value as well as any asset class around the globe. Kruglinski: How are these new medium term finance leases being priced? Nahass: Generally, these leases are being priced based on the perceived risk to the lessor of repayment and recoupment of the residual investment. For a typical $95,000 railcar, a high investment grade company might see 12-year lease rates of $475 per car per month for 12 years, while a low investment grade might see $575 per car per month for eight years. Total cost may be from the 2.50% I just mentioned to a higher rate of 4.25%. [Author’s note: If you are not working out a comparison of the rent Mike Dockman reported on deals years ago, against the rent for much more efficient equipment more than twice the price today, you have missed the purpose of this article!] Kruglinski: Would today’s medium term

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2012 guide to equipment leasing

finance leases have the same EBOs and FPPOs of the older longer-termed finance leases? Nahass: Yes, but, of course with shorter terms, the purchase options will be correspondingly more expensive. Kruglinski: Can you still do a longer-term finance lease? And if so, are these leases as economically beneficial as the older long term leveraged leases? Nahass: For the better credits, terms extend to 15 years. There are still 20-year players and situations where an institution will make an exception to win a deal, but, as they say, 15 is the new 20. These leases are good leases, but they are not as economically effective for borrowers as leveraged leases completed in a competitive market. Kruglinski: Finally, do equipment end-users need an advisor like Railroad Financial Corporation to assist them in arranging a finance lease? Nahass: Any company with a good banking relationship with a large regional or national bank can usually find someone at the bank to give them a quote on finance leasing railcars or locomotives. Banks have had good experience with rail equipment investments.

RFC’s customers have used us for almost a quarter century because we offer them access to dozens of competing finance lessors to assure the best possible pricing, as well as the expertise to assure them that lessee-friendly terms and conditions are made part of the lease. This is particularly important with regard to maintenance, return and insurance requirements. Kruglinski: Final question: Why do banks and financial institutions do this kind of business? Dockman: Simple, equipment leasing is one of the last devices available to them to defer taxes on their other income. Rail equipment and rail equipment lessees have traditionally been “good” risks for banks with few defaults or losses. Returns on rail equipment leasing have historically been very profitable for them. Michael Dockman can be reached at mdockman@amausa. com. David Nahass can be reached at dnahass@railfin.com. Tony Kruglinski is a Contributing Editor to Railway Age, President of Railroad Financial Corporation, and Chairman of Rail Equipment Finance Conferences. Tony can be reached at tkruglinski@railfin.com.

The right equipment. The right terms. The right people. Taking your product to market efficiently and reliably requires the right equipment. First Union Rail has just what you need: modern railcars and experienced professionals who can offer reasonable leasing terms that make sense for your company. Let us help move your business forward with: Railcar financing and leasing • Reliable fleet management services • Modern, high-quality fleet Ready to learn more? Call today at 847-318-7575 • Firstunionrail.com © 2011 Wells Fargo & Company. All rights reserved. First Union Rail Corp. is associated with Wells Fargo & Company, a company that is not regulated in Canada as a financial institution, a bank holding company or an insurance company. MC-2235

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june 2012

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Operating leasing from the inside out

By Anthony Kruglinki, Financial Editor

The oil and gas industry, with the frac sand and crude oil cars, is the single largest growth industry today.

www.railwayage.com

JUNE 2012

Railway Age

STEVE SCHMOLLINGER

First Union Rail President Jack Thomas

s much as we all know who they are and what they are, there are many people in our industry who only know North America’s railcar operating lessors from an outsider’s perspective. Few really understand them from the inside out. One of those individuals who does understand the operating leasing industry from this unique perspective is our good friend Jack Thomas, president of First Union Rail, one of North America’s largest operating lessors of railcars with a fleet of nearly 90,000 cars. Kruglinski: What types of railcars does First Union own and lease out? Where are your biggest concentrations of cars? What percentage of your fleet is currently out on lease? Finally, how many customers does First Union have? Thomas: First Union provides all types of leases and financial structures for the use of rail equipment. FUR has a very diversified fleet of 90,000 assets consisting of covered hoppers, coal cars, scrap and steel cars, automotive equipment, forest product cars, intermodal equipment and tank cars. Although not a hard, fast rule, we somewhat try to mirror the composition of the North American fleet. Currently, FUR is well above 90% in fleet utilization with approximately 400 customers. Kruglinski: First Union serves a variety of industries. From your perspective, what industry is posing the greatest challenge at the moment? What industry is posing the biggest opportunity? And could elaborate a bit on what First Union is doing to deal with the challenge and to exploit the opportunity? Thomas: Most products shipped in tank cars today are a big challenge to determine whether there will be a secondary market for that car after the initial lease term. The oil and gas industry, with the frac sand and crude oil cars, is the single largest growth industry today. With the increasing lead times for new equipment more planning will be required to insure that the equipment will be needed when it is delivered. Kruglinski: Jack, most people look at our large operating lessors as complex service providers. But you also are a customer of significant size for railcar builders and many, many component suppliers. Can you give us some idea of the amount of money that First Union spends each year on new cars, components and maintenance services and which are the principle areas in which this is spent? For instance, wheels? Axle? LG7

2012 guide to equipment leasing

Identifying secondary markets for tank cars poses a challenge to First Union’s fleet following an initial lease term, says First Union President Jack Thomas.

Thomas: As you are well aware, the industry is very cyclical, so from year to year there are significant swings in the total dollars spent. But to give some color, we spend between $200 million and $400 million dollars a year. Total maintenance spend has been substantially increasing year over year and is now $90 million to $95 million, with about a third of that total attributed to wheelset replacements. Roughly 10% of our annual maintenance spend is for direct purchase of components from suppliers. Kruglinski: Jack, the rental rates that operating lessors receive have risen, some might say dramatically, over the last two years. Can you give us some general comments on whether you think that overall, the rents now possible in the market support new investment in railcars? Thomas: Well, certainly rental rates have increased, but from very depressed levels. Rental rates vary by car type, but overall they are approaching or near normalized levels. Clearly, there is strong new car demand for a number of different car types. We wouldn’t order new equipment unless we felt that both the initial and projected renewal rental levels would provide us with a fair return on our investment. We are closely monitoring the increase in new car prices because at some level they may begin to negatively impact demand. Kruglinski: You have also been an advocate of fair dealing between the operating leasing fraternity and North America’s Class I railroads. Can you comment on this role and where operating lessors and Class I’s stand today on issues relating to Class I car maintenance standards imposed on operating lessors? Thomas: A letter was recently sent to the AAR signed by current and former members of the Associates Advisory Board outlining the concerns

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of operating lessors. The letter frames the issues very well and I paraphrase the salient points of that letter: • The continuous improvement of the safety, efficiency and cost competitiveness of the North American freight rail system is critically important for both railroads and private railcar owners. • In order for this progress to continue, the AAR rule-making process must properly allocate the costs of this continuous improvement in alignment with the distribution of the benefits.

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• Simply put, the party that primarily benefits from the implementation of a new or modified rule should similarly pay its fair share for such rule implementation and compliance. • This is an urgent issue, and every day that passes without resolution puts an unfair economic burden on private railcar owners. • If this problem is left unresolved, private railcar owners will be forced to curtail investment, eroding this important source of capital for our North American rail system.

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Investors’ Guide to Railroad Freight Cars and Locomotives 2012 - 2013

Railway Age

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2012 guide to equipment leasing

Freight rail market growth to 2050:

The impact on leasing By Bill Rennicke, Partner, Oliver Wyman, and Manny Hontoria, Partner, Oliver Wyman

Manny Hontoria, Partner Oliver Wyman

Unlike almost any time in the past 75 years, rail network capacity is close to tapped out. Traffic growth won’t mean much if the capacity “bucket” doesn’t grow as well.

ony Kruglinski asked us about growth in the freight rail equipment leasing market over the near and long term. Along with underlying commodity demand, how big the freight rail equipment leasing market gets over the next several decades will be closely tied to the size and fluidity of the rail network. Too much or too little capacity will be critically important to the rail equipment leasing industry—here’s why. Rail traffic growth drives short-term and operating leased equipment demand. And rail volumes grow pretty much in line with how well the economy does—a relationship we don’t expect to change. But unlike almost any time in the past 75 years, rail network capacity

is close to tapped out. Traffic growth won’t mean much if the capacity “bucket” doesn’t grow as well. Let’s look at some figures: • U.S. GDP growth is likely to slow a little in the long term. Various estimates call for GDP to grow in the range of 2.4% to 2.7% through 2050 (down from 3% per year 19972007). But even then, the economy could grow from $14.3 trillion in 2009 to $38.1 trillion in 2050. • The 2007 AAR/Cambridge Systematics National Capacity Study, the most comprehensive recent review of long-term railroad growth, estimated 88% growth in rail activity from 2007 to 2035. (Post-downturn, many do

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not see the 88% level being reached until 2040). • Louis Thompson of the OECD recently projected 110% growth in rail freight ton-kilometers from 2005 through 2050 for the U.S. and Canada. What do these numbers lead us to? Broadly, the suggestion that rail traffic could double by 2050. With reasonable assumptions about productivity, that would mean adding 900,000 railcars and 16,000 locomotives to the current fleet. Although it’s difficult to determine the precise size of the operating lease market, the top 10 lessors plus TTX account for around 700,000 freight cars, or close to half of the North American fleet. For operating lessors, if today’s short-term and operating lease market share holds, they could have nearly half a million more cars under management by 2050. Looking out just 5-to-10 years, if the puts and takes from energy exploration increases and possible coal transportation decreases play out and the current fleet grow by just 4%, lessors could see over 50,000 growth-related net addi-

LEASING

tions during the next decade. That’s not the end of the story. Without surplus capacity, the velocity at which traffic moves through the network also will impact equipment demand. If that capacity keeps getting tighter and the network becomes constrained, traffic will move more slowly and more equipment will be needed to compensate. How important is velocity? If congestion decreases equipment utilization by say, 10%, the 2050 fleet might need 2.4 million cars and 44,000 locomotives, almost double the current fleet. Over the short term, poor utilization and bottlenecks might increase demand by 4,000 or 5,000 cars per year. The consensus right now is that if nothing is done, capacity could become continually constrained year over year. In fact, if 2035 traffic were put onto the current rail network, more than half of the system would be near or over capacity. That might seem like a good thing at first: capacity shortfall would drive up equipment demand. But in the long run, the system would choke. Slow and inconsistent

Bill Rennicke, Partner Oliver Wyman

If 2035 traffic were put onto the current rail netowrk, more than half of the system would be near or over capacity ... in the long run, the system would choke.

BUYING SELLING RAILCAR REPAIRS FABRICATION TRANSLOADING

NINE For further details, and shop locations, please call: Wayne Willis Rob Hassen (419) 891.6336 (419) 891.2998 wayne_willis@andersonsinc.com rob_hassen@andersonsinc.com

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2012 guide to equipment leasing

service would drive traffic off the rails, and leased equipment demand would drop—possibly for good. So the burning question is: Can railroads keep up with capacity demand? Or more to the point, what will it cost to keep capacity growing at the same rate as traffic? For 2007-2035, the AAR estimated that cost at $150 billion; Oliver Wyman believes the true cost through 2050 is more likely to be in the range of $200 billion. Class I railroads account for the lion’s share of infrastructure capex. Currently, they put about 17%-to-18% of revenue into track maintenance/renewal and expansion. They expect to spend a record $13 billion in capex in 2012, fueled by a regulatory environment that has supported healthy railroad performance. During the last decade, Class I railroad-marked cars have represented a declining share of the freight car fleet, so the Class I’s rely on shippers and leasing companies for the rest. Since the pressure to focus capital on infrastructure is only going to intensify, it’s likely that leasing will be used to cover most of any fleet increase. Exactly how much capex the railroads can support to expand infrastructure will depend largely on the government’s regulatory stance. Policy changes to watch out for include tax-related investment incentives, rate and service regulation, safety and security, labor and fuel policy, changes to truck weight/size, and

Railcar Leasing We’ve doubled our fleet to more than 10,000 cars. And with one of the youngest and most diversified fleets in the industry, Macquarie Rail provides leasing and financing in a wide array of structures and terms.

Macquarie Rail Inc. is a rapidly growing freight car lessor serving the North American marketplace

Call +1 (312) 756 3882 www.macquarierail.com

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We make 20th century railcars work for the 21st century.

highway construction funding. How these issues play out will impact equipment demand over the long term, by determining whether railroads earn their cost of capital, whether trucking becomes more or less competitive, the viability of public and private funding, and what happens to network capacity and velocity. With these considerations in mind, we believe that up to the mid-century mark: • Rail traffic will keep growing at or near the rate of GDP, leading to at least a doubling of traffic by 2050 and solid 10%to-15% growth in the next decade. • Railroads will continue investing in capacity and the network won’t become substantially more congested. The probability of congestion-driven changes to leased equipment demand is remote. • At present, no technology or spending level suggests that network velocity will increase much, either. So the fleet will keep growing at historical productivity-adjusted rates. As the railroad industry grows over the next five to 10 years, the rail equipment leasing industry should grow faster than rail traffic. Long term, our crystal ball tells us that if it’s not broke, don’t fix it: the railroads will want to continue focusing their spending on infrastructure, while relying on the leasing industry to be the go-to provider of rolling stock.

U.S Operating Lessor of Railcars & Intermodal Equipment. • Over 50,000 units of transportation equipment consisting of railcars, intermodal chassis, containers and trailers. • In-house mechnical & engineering expertise. • Cars refurbished and upgraded to meet our customers’ specifications. • Exceptional customer service. • Flexible leasing options (Full Service, Net, Per Diem). Larry Smith Vice President Equipment Sales Office: 678-904-6306 Cellular: 678-296-9709 Email: lsmith@infinityfunds.com

Lee Martini Assistant Vice President Sales & Marketing Office: 678-904-6315 Cellular: 404-290-9233 Email: lmartini@infinityfunds.com

Corporate Offices 1355 Peachtree Street NE Suite 750 - South Tower Atlanta, GA 30309 www.infinityfunds.com A venture of Infinity Capital and Perella Weinberg Partners

Where do you find one-of-a-kind solutions to manage transportation assets?

Bridlewood Capital. Customized services : Remarketing • Advisory • Acquisitions

312.254.8691

mikeogara@bridlewoodcapital.com

Bridlewood Capital

Always one jump ahead of the competition.

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JUNE 2012

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2012 guide to equipment leasing

RailwayAge

The following pages of the 2012 Guide to Equipment Leasing (through p.LG14)

Leasing Resource Directory

contain the profiles of companies that provide equipment leasing and financial services and products to the rail industry. All of these firms have advertisements elsewhere in this section or have used paid profile space to present their background and capabilities.

RAIL GROUP 480 West Dussel Drive Maumee, OH 43537 Formed in 1989, The Andersons Rail Group has enjoyed steady growth in the number of cars leased and managed from Maumee, Ohio. Currently, our portfolio consists of approximately 23,500 cars and 150 locomotives. To better serve our customers, The Andersons Rail Group operates a large fleet of mobile units, nine repair facilities and a steel fabrication facility to produce custom rail components. 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.andersonsinc.com.

Chuck Brown, Sales Manager Chuck_brown@andersonsinc.com Phone: (419) 891-6386 Jerry Smith, Sales Representative Jerry_Smith@andersonsinc.com Ph. 419-891-6613 Matt Keck, Sales Representative Matt_Keck@andersonsinc.com Ph. 419-891-6693

Here’s an important number for your speed dial.

(312) 254-8691.

Call Bridlewood Capital for one-of-a-kind solutions. Remarketing Advisory Acquisitions •

•

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C.K. Industries a privately held corporation, began its U.S. leasing operations in 1980, and offers its services to shippers, shortline, regional and class 1 railroads in Nor th America. New investment opportunities up to $10MM of both new and used types of freight cars will b e c o n s i d e re d . O u r e x i s t i n g l e a s e f l e e t 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. C.K. INDUSTRIES, INC. P.O. Box 1029 Lake Zurich, IL 60047-1029 Tel: 847-550-1856 • Fax: 847-550-1854 rmeyers@ckrail.net; Richard E. Meyers, President

The David J. Joseph Company

The David J. Joseph Company’s (DJJ) Rail Equipment Group offers a wide variety of rail transportation services at any point in the life of a railcar. The company is active in equipment marketing with flexible sale and lease options, including short term, long term, net, modified and full service leases. As an operating lessor, as well as large user of railcars transporting company bulk commodities, DJJ is sensitive to the equipment needs of railroads and private industries. The David J. Joseph Company Rail Equipment Group 300 Pike Street • Cincinnati, OH 45202 (513) 419-6200 • f (513) 419-6221 www.djj.com • contact: info@djj.com QR code generated on http://qrcode.littleidiot.be

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With over 100 years experience in the rail and finance industries, Progress Rail Equipment Leasing. is a full-service professional leasing firm specializing in leasing railroad maintenance equipment. We finance and refinance MOW equipment, intermodal equipment, locomotives, railcars, and other rail-oriented equipment. Our experts’ dedication and uncompromising focus on quality sets us apart from the competition. Progress Rail Equipment Leasing 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. In addition, we offer finance and operating leases, sales/leaseback programs, and short and long-term rentals. Progress Rail Equipment Leasing 15173 North Road, Fenton, MI 48430 (810) 714-4626 Voice • (810) 714-4680 Fax Website: www.fcmrail.com

First Union Rail is one of the leading railcar leasing companies in North America. At First Union Rail we specialize in providing superior equipment, customized financing, operating lease structures, as well as marketing and transportation management services. First Union Rail is a relationship-driven, flexible organization, committed to continually exceeding our customers’ expectations by providing greater value, more quality, and the highest standards of service. Richard Seymour First Union Rail 847-318-7575 (P) • 847-318-7588 (F) www.firstunionrail.com A Wells Fargo Company

Gene Henneberry, President and CEO Flagship Rail Services, LLC 300 S. Riverside Plaza, Suite 1925 Chicago, IL 60606

Macquarie Rail Inc. is a rapidly growing freight car lessor serving the North American marketplace. Through combining an experienced team of rail veterans with the strength and expertise of the Macquarie Group, we are building a diverse portfolio of equipment to serve the varied needs of railroads and rail shippers. Macquarie Rail Inc. 1North Wacker Drive, 9th Floor Chicago, IL 60606 Telephone: 312-756-3880 Facsimile: 312-756-3847 railinfo@macquarie.com www.macquarierail.com

Locomotives Railcars Sales Leasing 505 Sansome Street Suite 1800 San Francisco, CA 94111 p: 415-398-4510 f: 415-398-4816 www.hlmx.com

Larry Smith, Vice-President-Equipment Sales (678) 296-9709 • lsmith@infinityfunds.com Lee Martini, Assistant VP-Sales & Leasing (678) 904-6315 • lmartini@infinityfunds.com CORPORATE OFFICES 1355 Peachtree Street • Suite 750 South Tower Atlanta, GA 30309 • www.infinityrail.com

RailSolutions RFC represents domestic and international clients in the following areas: debt and lease financing of rolling stock (… with particular emphasis on coal and tank car fleets); railcar and locomotive fleet acquisitions and sales; lease brokerage; mergers and acquisitions; equity and debt financing of rail property acquisitions, and lease restructurings. RFC also provides continuing education for the industry. Railroad Financial Corporation 676 N. Michigan Ave., Suite 2800 Chicago, IL 60611 312-222-1383 Voice • 312-222-1470 Fax Anthony D. Kruglinski, President David G. Nahass, Senior Vice President Contact: tkruglinski@railfin.com

RailSolutions provides a broad variety of railroad equipment-related consulting, technical and advisory services to financial institutions, railroads, shippers and fleet operators with a primary focus on equipment valuation and appraisal services. Additional areas of expertise include railcar and locomotive inspections, equipment repair and overhaul cost analysis, and portfolio valuations. RailSolutions draws on over 25 years of railroad industry experience in developing multiple quantitative valuation models supported by both a sound base of market data and advanced analytical techniques. James D. Husband, President Brett A. Steele, Vice President 6184 Grovedale Ct., Suite 200 Alexandria, VA 22310 703-922-3800 • Fax: 703-922-8229 www.railsolutionsinc.com

Howard Ande

Flagship Rail Services, LLC is committed to providing innovative rail car leasing products and services to North America’s vital rail industry. Let one of our experienced professionals show you how. Visit us at our website: www.flagshiprail.com, or call us at 1-866-4-RAILCARS.

Infinity Rail is an operating lessor with a fleet of over 7,000 freight cars and 42,000 units of intermodal equipment. 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 railcar fleet consists of boxcars, covered hoppers, flatcars, gondolas, open top hoppers and woodchip hoppers. Our in-house mechanical expertise allows us to offer you equipment maintenance and modifications that keep your leased railcars working for you.

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Nineteenth Anniversary

Railroad Financial Corporation has saved its clients more than $100,000,000 in reduced rents on leased railcars and locomotives over the last 10 years. Lessees with existing leases or new equipment requirements have historic opportunities in todayâ&#x20AC;&#x2122;s marketplace to take advantage of low-interest-rate-driven operating lease financing. Contact one of our financial professionals to learn how to take advantage of todayâ&#x20AC;&#x2122;s market opportunities: Tony Kruglinski David Nahass Will Geiger

CORPORATION C H I C A G O

312.568.1957 312.222.1383 312.222.1383

tkruglinski@railfin.com dnahass@railfin.com wgeiger@railfin.com

Locomotive design Continued from p. 18 North can use to move construction and demolition debris, garbage trains out of Grand Central Terminal, or passengers to and from the famed terminal, White notes. New York MTA’s much-delayed East Side Access construction project, now set for completion in 2019, has its own needs for sustainable locomotives. Brookville Equipment has provided a multi-engine, 700 hp, two-engine switcher locomotive, moving freight into the ESA tunnels from the Long Island Rail Road in Queens and delivering cement tunnel liners to the Manhattan tunnel terminus under Grand Central. In south Florida, Brookville Equipment “is providing 3,600 hp, 20 cylinder MTU engines, Tier 3 now and Tier 4-ready compliance, to South Florida Regional Transportation Authority (SFRTA), operator of TriRail regional rail service,” White says.

Cummins, Inc.

Eyeing the needs of railroads in the new railway age, Cummins, Inc. last November introduced its QSK95 diesel engine, a 16-cylinder 4,000 hp engine, which the company called “the world’s most powerful high-speed diesel,” promising power comparable to the output of 20-cylinder engines. The QSK95 is designed to meet EPA Tier 4 requirements, to take effect in 2015. “The stronger engine design of the QSK95 means more reliability in-service and less to rebuild at engine overhaul, considerably reducing total life cycle costs,” the company says. “The QSK95 will provide an exceptionally long life-to-overhaul, capable of achieving 1.7 million galas and above of fuel consumed before overhaul, with the significant advantage of no mid-life intervention required.” Tapping the resources of parent Caterpillar Inc. its and subsidiary Progress Rail Services, La Grange, Ill.-based Electro-Motive Diesel offers its EPA Tier 3 SD70ACe locomotive for railroads in North America and across the world. The locomotive is equipped with a modified 710G engine to meet the new Tier 3 regulations. It is also fitted with PTC onboard equipment and cab displays. EMD and Progress Rail say most orders are now being delivered PTC-ready. At Railway Interchange 2011 in Minneapolis last fall, Progress Rail also showcased one of five PR30C demonstrators designed to meet EPA Tier 4 standards. A rebuilt SD40-2, PRCX 3004 was fitted with a Caterpillar 3516 engine and selective catalytic reduction exhaust cleaning equipment. EMD also offers a 710ECO™ Repower locomotive retrofit package, designed to offer “better than EPA Tier 2 performance” while being “eligible for clean air funding—with up to 25% fuel reduction and 50% lube oil savings. The EM2000 microprocessor-based control system operates engine diagnostics, maximizes all-weather tractive effort, and includes an automatic engine start stop (AESS) system. The software can be tuned for future emissions compliance.”

www.railwayage.com

THOMAS MIK

EMD/Progress Rail Services

Metro-North Railroad puts locomotives from Brookville Equipment Corp. to work in various roles throughout its network, including this revenue move in Waterbury, Conn., on the railroad’s namesake branch line.

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Railway Age

Locomotive Design National Railway Equipment Co.

National Railway Equipment Co.’s latest offering in its N-ViroMotive sustainable locomotive series is its N-Viro 2GS36C-DE. The twogenset, 3,600 hp, six-axle locomotive is designed for multipurpose use; it can be utilized as an 1,800-hp switcher, an 1,800- or 3,600-hp hump yard locomotive, a road switcher, or a linehaul locomotive. “This equates to the locomotive being suitable for nearly all work to be found on a typical railroad system, and negates the need to assign it to a dedicated service,” the company points out.

WILLIAM C. VANTUONO

Wabtec

Cummins Inc. unveiled its QSK95 diesel engine last November, sporting 400 hp (2,938 kW) output and billed as “the world’s most powerful high-speed diesel.”

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JUNE 2012

Wabtec manufactures new mid-horsepower passenger locomotives which it says are “suitable for commuter or long-distance service. Available with a variety of power-generation packages, these units can be equipped with the latest microprocessor-based control systems for increased adhesion and tractive effort, reduced fuel consumption and maintenance, and improved equipment monitoring and event-recording features.” the company says. Wabtec also has crafted a microprocessor-controlled switching locomotive fueled by liquefied natural gas. Wabtec’s latest sale came early last month, as the company ‘s MotivePower subsidiary secured an order to build 10 locomotives for CFCLA Rail JV Pty Ltd., a joint venture of CFCL Australia Pty. Ltd. and Marubeni Corp. of Tokyo, Japan. The locomotives, to be delivered in 2013, will be MotivePower’s standard gauge MP33C model, and RA include components from a number of other Wabtec divisions.

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

Last Update Effective:

FRA Part #

Last Update Effective:

FRA Part #

Last Update Effective:

40 . . . . . . . . .10-1-10 209 . . . . . . . .7-20-09 210 . . . . . . . .8-14-89 211 . . . . . . . .7-20-09 213 A-F . . . . .11-8-11 213 G . . . . . .9-13-10 214 . . . . . . . .5-27-09 215 . . . . . . . .5-27-09 216 . . . . . . . .5-27-09 217 . . . . . . . . .3-2-09 218 . . . . . . . . .3-2-09

219 220 221 222 223 224 225 228 229 230 231

. . . . . . . .5-27-09 . . . . . . . .3-28-11 . . . . . . . .5-27-09 . . . . . . . .11-9-09 . . . . . . . . .3-2-09 . . . . . . . .5-27-09 . . . . . . . . .1-1-12 . . . . . . .12-30-11 . . . . . . . .3-16-10 . . . . . . . .5-27-09 . . . . . . . .6-27-11

232 233 234 235 236 237 238 239 240 242

. . . . . . . .5-27-09 . . . . . . . . .3-2-09 . . . . . . . .8-27-10 . . . . . . . .3-16-10 . . . . . . .11-26-10 . . . . . . . .9-13-10 . . . . . . . . .3-9-10 . . . . . . . .5-27-09 . . . . . . . .2-22-10 . . . . . . . . .2-8-12

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

FRA Part #

Each

209 Railroad Safety Enforcement Procedures & 211 Rules of Practice BKTSSAF 213 Track Safety Standards (Subpart A-F) BKTSSG 213 Track Safety Standards (Subpart G) BKWRK 214 Railroad Workplace Safety BKFSS 215 Railroad Freight Car Safety Standards BKROR 217 Railroad Operating Rules and 218 Practices BKRRC 220 Railroad Communications BKEND 221 Rear End Marking Device, Passenger, Commuter & Freight Trains BKHORN 222 Use of Locomotive Horns BKRFRS 224 Reflectorization of Rail Freight Rolling Stock BKHS 228 Hours of Service BKLSS 229 Locomotive Safety Standards BKSLI 230 Steam Locomotive Inspection BKSAS 231 Railroad Safety Appliance Standards BKBRIDGE 237 Bridge Safety Standards BKLER 240 Qualification and Certification of Locomotive Engineers BKCONDC 242 Conductor Certification BKSEP

BKBSS

232

Brake System Safety Standards

50 or more

26.40 8.95 8.55 8.55 6.25 8.55

8.25 7.85 7.85 5.85 7.35

4.15 3.50

3.80 2.75

12.25

10.95

5.25 9.40 8.85 19.95 8.35 5.25 11.75

4.75

10.00

8.10 7.85 4.75 11.00 9.00

Each

25 or more

13.75

12.50 Each

BKTM

Technical Manual for Signal and Train Control Rules. Includes Part 233, 234, 235, 236 - Spiral Bound Order 25 or more and pay only $32.95 each

BKPSS

Passenger Safety Standards 20.80 Part 238, 239 - Order 25 or more and pay only $18.95 each

BKSTC

Signal and Train Control Systems Part 233, 234, 235, 236 Order 25 or more and pay only $16.00 each

17.50

BKMPIE

Motive Power & Equipment Inspection Defect codes for 215, 218, 223, 229, 231, 232 Order 25 or more and pay only $12.50 each

13.95

Drug and Alcohol Regulations in the Workplace Part 40 & 219

35.00

BKCAD

38.75

Reb Says... Final Rule: Part 236 Rules, Standards, and Instructions Governing the Installation, Inspection, Maintenance, and Repair of Signal and Train Control Systems, Devices and Appliances: FRA amends the regulations implementing a provision of the Rail Safety Improvement Act of 2008 that requires certain passenger and freight railroads to install positive train control (PTC) systems. This final rule removes regulatory provisions that require railroads to either conduct further analyses or meet certain risk-based criteria in order to avoid PTC system implementation on track segments that do not transport poison- or toxic-by-inhalation hazardous (PIH) materials traffic and are not used for intercity or commuter rail passenger transportation as of December 31, 2015. This final rule effective July 13, 2012.

Mechanical Department Regulations A combined reprint of the Federal Regulations that apply specifically to the Mechanical Department. Spiral bound. Part Title 210 Railroad Noise Emission Compliance Regulations 215 Freight Car Safety Standards 216 Emergency Order Procedures: Railroad Track, Locomotive and Equipment 217 Railroad Operating Rules 218 Railroad Operating Practices - Blue Flag Rule 221 Rear End Marking Device-passenger, commuter/freight trains 223 Safety Glazing Standards 225 Railroad Accidents/Incidents Effective: 1-1-12 229 Locomotive Safety Standards 231 Safety Appliance Standards 232 Brake System Safety Standards

Mech. Dept. Regs.

BKMFR

$26.95

Order 25 or more and pay only $24.50 each

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

BKCONDC

Conductor Certification

$10.00

Order 50 or more and pay only $9.00 each

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

BKFSS

Freight Car Safety Standards

$6.25

Order 50 or more and pay only $5.85 each

Order Now!

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

www.transalert.com

Add Shipping & Handling if your merchandise subtotal is:

The Railway Educational Bureau Fax: (402)346-1783 â&#x20AC;˘ Email: orders@transalert.com

*Prices subject to change. Revision dates subject to change in accordance with laws published by the FRA. 6/12

1809 Capitol Ave, Omaha, NE 68102

Add $4.10 Add 7.20

25.01 - 50.00 50.01 - 75.00

Add 9.80 Add 10.90

Orders over $75, call for shipping

UP TO $10.00 10.01 - 25.00

The science of train handling Norfolk Southern and New York Air Brake have taken LEADER® from concept to test to proven technology.

Railway Age

JUNE 2012

orfolk Southern locomotives certainly look distinctive in their striking black livery with the familiar gleaming white Thoroughbred logo, but for all intents and purposes, at least 1,000 of them could be painted metallic gold. That’s because those 1,000 units have the most potential for their locomotive engineers to achieve the Holy Grail of train handling, the much-desired “Golden Run,” a combination of optimal fuel economy, well-managed intrain forces, and schedule compliance within the parameters of operating rules. The technology that’s making Golden Runs possible is New York Air Brake’s LEADER® (Locomotive Engineer Assist/ Display & Event Recorder), described by NYAB as “the energy management technology of choice for several railroads in the www.railwayage.com

AAR market, providing a complete solution to optimized train handling. LEADER complements the locomotive engineer’s skills by providing a comprehensive view of a train’s behavior with real-time prompts to optimize train movement. ” Norfolk Southern took the lead with LEADER about six years ago with a test deployment on the “Pumpkin Vine,” a twisty, 105-mile coal route out of Roanoke in the Blue Ridge Mountains on the Winston-Salem District (RA, July 2007, p. 23). Director Operations and Locomotive Coleman Lawrence tells Railway Age NS “is pleased with the results of our deployment of energy management technology to our road locomotive fleet. As we continue to equip our road fleet with the hardware required to support Positive Train Control (LEADER is integrated with the Class I-pre-

new york air brake

By william c. vantuono, editor

ferred Wabtec ETMS onboard PTC platform), we plan to apply energy management capability to substantially more than half of our road fleet. Ultimately, we expect to be running energy management software across our entire network. As we expand LEADER coverage, our deployment strategy is guided generally by the gross ton-mile density of the particular corridor, obviously targeting the highest density corridors first.” To date, NS has seen post-LEADER implementation fuel consumption savings in the mid-single digits range across a variety of train types and territories operating with LEADER. “More specifically, our analysis of post-LEADER implementation train operation indicates just over 6% savings, on a gallons per thousand gross ton-miles basis, compared to the same train types on the same territory before LEADER implementation,” Lawrence says. “These measured savings have been observed with no apparent negative impacts on train speed or schedule adherence. Given the length of the cycles over which benefits in equipment maintenance costs are measured, it is too early in this process to judge what those impacts will ultimately be, but we fully anticipate benefits to materialize over time as variation in train train-handling practices is reduced and general improvement in train handling is realized.”

Train handling in general has improved tremendously in the past 40-odd years. “The reliability of components—wheels, roller bearings, air brakes—has improved,” says NYAB Senior Vice President Marshall Beck. “These are fundamental improvements, but the leaps in train handling have occurred because of three technologies.” The first of these technologies was DP (distributed power), introduced in the 1970s. DP allows longer and heavier trains to be operated safely. “Over the years, DP has improved,” says Beck. “NYAB began working with Harris (now

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New York Air Brake says LEADER® reduces fuel consumption and improves train handling by providing information on track profile, in-train forces, and optimal throttle and dynamic brake control prompts. It gives railroads the ability to capture and analyze operational data to find the best train-handling practices. Norfolk Southern has 1,000 systems deployed to date.

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Railway Age

Training • Books • DVDs • Wall Charts • Maps • Cyclopedias Reduce

Price $99d 1997 Car and Locomotive Cyclopedia

All About Railroading By Railway Age Editor William C. Vantuono All About Railroading-Second Edition is the book for new hires and young adults who want to learn the basics of today’s fascinating, hightech railway industry. Newly revised and expanded from the original edition, All About Railroading presents—in 112 beautifully illustrated pages containing nearly 200 color photographs and diagrams—every aspect of the North American railway industry: freight operations, freight locomotives, freight cars, intercity and commuter rail, light rail, rapid transit, engineering, and signaling & communications. Softcover.

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by William W. Kratville This edition contains more than 1100 pages of state-ofthe-art technical resource information, with extensive descriptions, as well as, high quality technical drawings of freight cars, passenger cars and locomotives in use today and those still in the planning stages. The most versatile, powerful and professional railroad research tool available. Simmons-Boardman has produced several editions of the cyclopedia since 1879. Hardcover. 1136 pages.

BKCLC97

1997 Car & Loco. Cyclodedia

$99.00

Introduction to North American Railway Signaling by the Institution of Railway Signal Engineers Introduction to North American Railway Signaling covers the basics of signaling philosophy and techniques. This is the book to reach for if you need information pertaining to signaling systems used in the various rail transportation modes in North America: freight, main-line passenger service, commuter, lightrail, and heavy rail transit. It presents the underlying principles behind modern day signaling practices for the many systems integrated together to keep railroads running safely and efficiently. Softcover, 224 pgs.

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Freight Car

FRA Regulations

Coal Trains: The History of Railroading and Coal in the United States • BKCOAL • $37.00

Dictionaries

Track Safety Standards, Subparts A-F • BKTSSAF • $8.95

Guide to Freight Car Air Brakes • BKFCAB • $68.75

Dictionary of Railway Track Terms • by Chris Schulte • BKRTT • $29.50

Conductor Certification • Part 242 • BKCONDC • $10.00

Guide to Freight Car Trucks • BKFCT • $82.50

Railway Age’s Comprehensive Railroad Dictionary • BKRD • $29.95

Mechanical Department Regulations • (Parts 210, 215, 216, 217, 218, 221, 223, 225, 229, 231, & 232) • BKMFR • $26.95 General The Railroad: What it is, What it does • by John H. Armstrong • BKRRNN • $42.95 Safety on the Rails - The Union Switch & Signal Story • by Joanne L. Harris • BKSOTR• $39.99 Emergency Responder’s Guide to Railroad Incidents • by Greg A. Rhoads • BKERGRAIL • $30.00 The Official Locomotive Rosters & News 2012 Edition • by James W. Kerr • BKLROST• $38.00 Dispatching Managing Railroad Transportation • BKMRT • 39.95 Elements of Train Dispatching, Vol. I • by Thomas White • BKETD1 • $44.95 Elements of Train Dispatching, Vol. II • by Thomas White • BKETD2 • $41.95 Railway Operation and Control • BKROC • $39.95

Guide to Couplers and Draft Systems • BKCDG • $59.75

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Guide to Locomotive Mechanical Maintenance - SD & GP Locomotives • BKGLMM • $31.25 Guide to Locomotive Electrical Maintenance SD & GP Locomotives • BKGLEM • $39.25 Maps

Urban Transit: Operations, Planning & Economics • BKUTOPE • $150.00 Building Type Basics for Transit Facilities • BKTFAC • $80.00

Railroads of Canada Wall Map • MPRRCAN • $99.00 Railroads of Mexico Wall Map • MPRRMEX • $99.00 Railroads of the Continental United States Wall Map (laminated) • MPWML07 • $39.95 Professional Railroad Atlas of North America • BKATLAS • $74.95 Training Videos (DVD) Daily Locomotive Inspection (DVD format) • DVLOCO • $225.00

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train handling part of GE) to integrate their Locotrol DP system with our electronic brake. NYAB’s second version of the computer-controlled brake, CCBII, eliminated a manifold, extended COT&S (Clean, Oil, Test & Stencil) to eight years, and improved reliability.” DP has not been adopted by all Class I’s. “The thing to keep in mind here is that DP is most useful for long trains in hilly territory,” notes Beck. “The railroads decide what length trains produce maximum productivity based on many factors. Length of sidings, type of freight, schedules, terrain, location, and many other factors come into play.” The second train handling technology is LEADER, where an onboard computer containing consist information (weight, length, and other data); a track profile showing curves, grades, and other data; GPS; and sophisticated algorithms “make realtime decisions on how best to handle a train,” says Beck. The three basics of train handling are to avoid overspeed, run using as little fuel as possible, and limit slack run-in and run-out. LEADER does these things very well. We do a very careful baseline of how the train is handled before LEADER is introduced.” The third train handling technology is ECP (electronically controlled pneumatic) brakes, with which slack action virtually disappears. NYAB and Wabtec are the suppliers of this technology; both systems are interoperable. Wabtec describes ECP’s

benefits as “improved train handling, reduced in-train forces and trip time, and decreased braking distance, service disruptions, and maintenance. Unlike traditional pneumatic brakes, which are initiated from the locomotive and applied to one freight car at a time in a domino-like sequence, ECP uses microprocessor and networking technologies to apply the brakes to each car in the train simultaneously. In this way, ECP eliminates the pushing and pulling of cars against each other during the braking process, which ultimately causes equipment wear and failures, and derailments.” NYAB’s ECP brake system is EP-60, which is available in a dual-mode overlay version that operates using either radio or wire communication and under standard pneumatic command. “EP-60 provides precise braking, onboard diagnostics, and train status reports on many of the world’s mining companies,” says Beck. “ECP is a remarkable improvement in managing in-train forces, but North American railroads have not adopted the technology in large measure.” Why are some railroads adopting new training handling technologies and others are not? “The answer to that question is different for each technology, and every railroad,” says Beck. “However, there are broad themes. One important fact is that North American railroads are working well and are concerned that ECP could have a negative impact on velocity. The issue here is not reliability, but

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Railway Age

train handling rather, availability of power and shops. ECP is preferred by mining customers around the world in large part because its train handling improves mission reliability.” ECP “may have stalled out in North America,” observes Beck. Both NYAB and Wabtec have invested many resources in ECP, and have successfully deployed systems overseas—most notably in South Africa at Transnet on iron ore unit trains—but there hasn’t been a whole lot of progress in North America. “PTC has taken over, even though locomotive engineers prefer ECP technology,” says Beck. “Conventional air brake systems must be able to meet the safety and operational criteria of PTC. It’s really just a case of bad timing [for ECP].” As for LEADER’s future, Beck points out that the technology “is capable of safely controlling a heavy-haul freight train. By that I mean it calculates the throttle, dynamic brake, and air brake needed for a consist. It provides the information necessary to control trains equipped with standard pneumatics, with and without DP, or ECP equipped trains. Later this year, LEADER will add AutoThrottle, where the computer controls the throttle with split-second accuracy. When PTC arrives, a train’s throttle and dynamic brake could be controlled by LEADER-AutoThrottle. Becoming smart, and sensing overspeed andother faults, will be able to hand control back to the engineer.”

Railway Age

JUNE 2012

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“Conventional air brake systems must be able to meet the safety and operational criteria of PTC. It’s really just a case of bad timing [for ECP].” Beck reports that UP has placed an order for more than 500 LEADER systems; BNSF for about 200 units. In Marshall Beck’s estimation, the “perfect train”—one that will make a Golden Run consistently and safely—is one equipped with LEADER and ECP brakes, operating in PTC territory, and employing DP if it consists of at least 120-160 RA cars.

TTCI R&D

Wheel failure is not an option The industry spends close to $1 billion annually replacing bad wheelsets. What can be done to reduce this cost, and to improve safety?

o state the obvious, round wheels are a good thing. Unfortunately, there are many ways a railcar wheel can leave this ideal condition and begin to cause problems, such as high impact loads and potential accidents. Shelling, broken rims, and tread buildup are three major concerns of the railway industry because of maintenance costs and safety risks. Wheelsets are the top rolling stock maintenance item in North America. High impact loads, due to tread damage from shelling and spalling, account for more wheelset removals than any other cause. Transportation Technology Center, Inc. (TTCI) estimates that 582,000 wheelsets are replaced annually at a cost of $828 million. Each year, a very small but important minority of wheelsets fail in a way that causes a train accident. According to Federal Railroad Administration safety data, the top two causes of wheel related train accidents are broken rims and tread buildup. To address wheel problems, TTCI is testing improved wheel steels designed to resist wheel shelling, and conducting root cause analysis of broken rim and tread buildup

failure modes. Domestic and overseas wheel manufacturers produce high performance wheel steels that have the potential to improve wheel life by offering increased resistance to shelling. Eight types of these high performance wheels are being tested in a western railroad unit coal train to quantify the benefits compared to Association of American Railroads Class C wheels. This work is part of the AARâ&#x20AC;&#x2122;s Strategic Research Initiatives (SRI) Program. Six wheel manufacturing companies from around the world each donated high performance wheels for this project. TTCI also developed and patented a high performance wheel steel for use in this test (the wheels were forged by MWL Brasil). After more than two years of operation and approximately 200,000 service miles, the majority of the wheels remain in good condition. The high performance wheels are performing similarly to AAR Class C wheels in terms of rolling contact fatigue and shelling. Benefits of the high performance wheel steels should begin to become evident as the test progresses and more wheels are removed for

www.railwayage.com

JUNE 2012

Railway Age

TTCI

By Scott Cummings, Principal Investigator, TTCI, for Railway Age

Broken wheel rims are increasingly manifesting themselves as vertical split rims (VSR), with an associated decline in the number of shattered rims. cause. Three types of high performance wheels will be further evaluated in a Canadian unit coal train this year. Accelerated results from this train are expected from a combination of high traction forces, braking demands, and cold weather conditions. The FRA has teamed with the AAR to co-fund research to better understand the conditions necessary to produce broken rims and tread buildup.

Railway Age

JUNE 2012

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Broken wheel rims are increasingly manifesting themselves as vertical split rims (VSR), with an associated decline in the number of shattered rims. Tightening of the AAR rules for allowable defect size during ultrasonic testing and the addition of a microcleanliness test appear to have been effective in reducing the number of shattered rims. In the VSR failure mode, a vertical crack runs roughly perpendicular to the tread surface, often branching off a shallow subsurface horizontal crack. The vertical crack eventually grows large enough to produce a brittle fracture resulting in a broken rim. TTCI is investigating VSR wheels in a number of ways. Microcleanliness testing was conducted on samples from 30 VSR wheels, and all but two of the wheels met current AAR microcleanliness standards. The two wheels that exceeded the current limits were manufactured prior to the establishment of the AAR microcleanliness criteria. Tensile axial residual stresses on the order of 30 ksi have been measured in service-worn wheels. These residual stresses are developed from rolling contact between the wheel and rail and likely act to propagate cracks in the vertical direction. TTCI is currently attempting to create a VSR failure by cycling a service-worn wheel with preexisting subsurface cracks on a laboratory rolling load machine. The internal cracks are monitored with nondestructive methods to quantify crack growth and orientation as a function of load magnitude and number of load cycles. Tread buildup can form when a wheel slides along the rail. The resulting material left on the tread surface can effectively reduce the flange height and flange angle leading to an increased risk of derailment at track switches and curves. While buildup is condemnable under AAR rules at 1/8-inch height, samples have been found that are multiple inches high. TTCI is exploring the conditions necessary to produce large amounts of tread buildup by pulling cars with locked brakes in a variety of test speeds, drag distances, car loads, and rail friction conditions. By addressing common wheel removal causes like shelling, as well as more dramatic failure modes like broken rims and tread buildup, TTCI hopes to reduce maintenance costs while RA improving safety in the railroad environment.

Railway Educational Bureau

Ready for the future:

Railway Educational Bureau expands its railway industry service offerings

RAILWAY EDUCATIONAL BUREAU

By Douglas John Bowen, Managing Editor

or tens of thousands of industry workers, the Railway Eduational Bureau (REB) has offered a variety of workforce training options designed to make the rail environment a safer and more productive one. REB’s methods of training delivery and its curriculum have evolved over the more than 100 years it’s been in business, offering distance training, work site training, customized training solutions, and workshops to fit individual customer needs, according to REB Director Brian Brundige. “We’ve helped both seasoned and new employees to enhance their job skills, earn promotions, and take on leadership roles,” Brundige says. That includes developing new work site training business and providing REB correspondence courses. REB currently offering more than 140 courses in all. REB, founded in 1909, today is owned by Simmons-Boardman Publishing Corp., parent company of Railway Age. Brundige’s staff, based in Omaha, now includes Railway Age Publisher Emeritus Robert P. DeMarco REB’s work site training allows clients to maximize their training investment, reduce employee time away from the job, reduce travel costs by having the instructor come to a customer’s location, increase employee skill levels, improve productivity, achieve training objectives, and utilize in-house expertise, equipment, and facilities. For years, REB has been providing work site training classes related to freight car maintenance. Recently, REB has begun offering work site training for locomotive maintenance person-

nel. Tom Leary, formerly with GE Transportation and Union Pacific, is lending his expertise to provide instruction on locomotive air brakes, periodic inspection, FRA rules compliance, locomotive electrical and air brake issues, and numerous aspects of distributed power. Most recently, REB has started offering a three-day work site training class for GE Diesel Engine Maintenance Training covering running maintenance for 7FDL, 7FDM, and 7FDS and 8, 12, & 16 cylinder engines. “We see a lot of growth ahead for our training services,” Brundige adds. “Work site training gives us the opportunity to provide both instructor-led and hands-on training. Our mainstay, correspondence training, allows us to continue delivering knowledge training to our clients.” Correspondence courses support on-the-job training (OJT) and apprenticeship programs. Employees gain their hands-on training during their OJT and reinforce it with knowledge training from the REB. Trainers can enhance their programs by including REB courses in their curriculum. Correspondence courses cover: • Freight car inspection and repair • Locomotive electrical and mechanical repair • Locomotive operation • Track maintenance • Basic railroad foundation • Metal trades

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JUNE 2012

Railway Age

REB

“We’ve helped both seasoned and new employees” over the years, says REB Director Brian Brundige.

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The courses can enhance existing training programs; present theory, techniques, and knowledge to employees; standardize training for improved efficiency; manage and document employees’ training; eliminate training development costs; and provide cost-effective training for maintenance personnel. “Many of our tests can be completed online, providing immediate feedback and scores,” Brundige says. Since adding the ability for students to test online, REB has made available more than 600. REB is working to ensure its training courses comply with the FRA’s newly proposed rule, Part 243 Training, Qualification, and Oversight for Safety-Related Railroad Employees. This rule is aimed at ensuring that safety-related railroad employees are trained and qualified on any Federal railroad safety laws, regulations and orders which the person is required to comply with, as well as any relevant railroad rules and procedures promulgated to implement those Federal railroad safety laws, regulations, and orders. In its role as the leading book publisher for the rail industry, REB continues to offer reprints of FRA regulations, books, videos, and charts while keeping an eye to new publication. Frank Wilner’s “Amtrak: Past, Present, Future” is scheduled to be published this summer in paperback and as a Kindle ebook, the latter REB’s first such foray. Also on tap: REB’s in-depth book on locomotives and their subsystems that will explain commonalities between GE and EMD locomotives with insight into how they differ – ideal for today’s new locomotive maintenance personnel. Expect Al Fazio’s “Light Rail Planning, Engineering and RA Operations” to debut this fall.

COAL

For coal, a sharper focus on exports

nvironmental activism, an abundance of cheap natural gas, and the global economy were connected in one way or another with the mixed outlook for coal during the first half of 2012. The effects are being felt by railroads that haul coal to utilities, industries, and export terminals. Domestic consumption of U.S. coal is clearly in decline. Mild winter weather was largely blamed for the drop in coal burned by American power plants heading into early 2012. But in the broader perspective, there’s a long-term, downward trajectory for domestic use of U.S. coal. Strict emission standards brought about by the Clean Air Act and new rules proposed by the Environmental Protection Agency in March 2012 for future power plant construction, coupled with an increase in public pressure from environmental groups, have left many coal-fired power plants with a difficult choice moving forward: invest anywhere from $40 million to $500 million (per facility) in new equipment to become compliant, or shut down altogether. Two power plants scheduled to end their use of coal happen to be located near one of the rail corridors where Powder River Basin coal is now rolling by almost daily on its way toward export to Asia. Portland General Electric’s power plant southwest of Boardman, Ore., has faced a growing barrage of environmental criticism in recent years. In 2010, PGE announced it will be closing its Boardman coal-fired plant by 2020. Environmentalists also targeted TransAlta Corp.’s power plant at Centralia, Wash. This facility is already under a state mandate to switch from coal to cleaner-burning fuel by 2025, but opponents are lobbying to have it shut down by 2015. The loss in trainloads of coal delivered to U.S. power plants is being somewhat offset by a rise in trainloads of coal headed

for export. U.S. coal exports rose more than 31% in 2011 compared with 2010, the strongest increase coming from deliveries to Asia. But a lack of West Coast coal ports (RA, March 2012, pp. 17-18) has kept America’s contribution to the Asian market at a fraction of what other coal suppliers like Australia and Indonesia are doing. Rail shipments of PRB coal to ports on Canada’s west coast, and efforts to build new ports on the U.S. west coast, have become targets for environmental protest. With an abundance of coal flooding the global market, and a number of domestic power plants giving up on coal in favor of lower-priced natural gas, stocks in some U.S. coal mining companies tumbled significantly in recent months. The resulting layoffs of hundreds of mine workers, especially in Appalachian states, reportedly played a role in the May 8 presidential primary in West Virginia, where 41% of the Democrat vote went to a convicted felon who managed to get on the ballot. Voters in coal country were said to be protesting what’s been described as an anti-coal White House. Having warned, during his 2008 campaign, that new regulations would “bankrupt” segments of the coal industry, President Obama has since taken a softer stance on coal. Within days of that narrow win in West Virginia, the Obama reelection campaign added support for “clean coal” to its website. BNSF CEO Matt Rose has described the U.S. coal market as “traumatized,” so what might the next move be from Warren Buffett, BNSF’s primary stakeholder? Buffett’s determined pursuit of coal-based commerce and his support for the Obama administration are, if nothing else, illustrative of the delicate balance necessary to manage the growing gap between coal RA delivered within the U.S. and coal exported overseas. www.railwayage.com

JUNE 2012

Railway Age

bruce kelly

By Bruce Kelly, Contributing Editor

High profile

Reardon CN

Kachroo CN

CN has named Keith Reardon, most recently vice president, supply chain solutions, as vice president, intermodal services. Vee Kachroo, formerly vice president, industrial products, will now assume responsibility for all supply chain functions as well as for iron ore and automotive. Doug MacDonald becomes vice president, industrial products, leading the industrial products division, which oversees forest products, and metals and minerals markets. Fiona Murray becomes vice president, corporate marketing, promoted from assistant vice president, industrial products. James Cairns remains CN vice president, petroleum and chemicals, based in Calgary, and Andy Gonta remains CN vice president, bulk, based in Edmonton. Paul Waite, vice president, intermodal, is retiring after more than 38 years of service with CN. Waite will serve as a senior advisor to CN until year-end. Said CN Executive Vice President and Chief Marketing Officer Jean-Jacques Ruest, “The changes will help us maintain our forward momentum and continue to build on our track record of operational and service excellence. The team is all about execution and growth for our customers and CN.”

AMTRAK—DJ Stadtler named vice president of operations, overseeing transportation, engineering and mechanical departments, and Amtrak-owned infrastructure. DART—Jesse Oliver named deputy executive director, Carol Wise named executive vice president and chief operating officer. DART Senior Vice Presidents David Leininger and Timothy McKay also were promoted to executive vice president. Tim

100 YEARS AGO IN

Newby, previously DART’s assistant vice president of Bus Operations, is now vice president, transportation. KANSAS CITY SOUTHERN—Michael Naatz named senior vice president and chief information officer, with responsibility for information technology and business planning. Naatz will report to KCS President and Chief Executive Officer David Starling. METROPOLITAN TRANSPORTATION AUTHORITY (New York)—Stephen J. Morello named counselor to Chairman and CEO Joseph J. Lhota.

SUPPLIERS (JUNE 1912) RETIREMENT OF JAMES J. HILL James J. Hill on the first day of July will retire from the chairmanship of the Great Northern. By this step he gives up the last official position, except that of director, that he held on any American railway. That Mr. Hill, with his large holdings in railways, his keen interest in everything pertaining to transportation, and a mind and body yet very vigorous for a man almost 74 years old, will cease to be a potent factor in railway affairs is inconceivable. Indeed, he has already indicated he expects to continue to have a voice in them. He is succeeded as chairman of the Great Northern by his son, Louis W. Hill, who has been president of that railway. 34

Railway Age

JUNE 2012

Alltranstek LLC named Steven J. McCullough director of Welding and Special Processes. Gannett Fleming promoted Vice President Judy Hricak to chief marketing officer, a new position. Watco Locomotive Services promoted Keith Testerman to assistant vice president and chief mechanical officer, responsible for assisting in the continued growth and improvement of corporate locomotive management. Dan Martin was named a corporate director of locomotive support, responsible for project development and locomotive shipping, and for providing hands-on training and locomotive support to all Watco locations. Tracy Wright has also been appointed a corporate director of locomotive support, responsible for further development of Watco’s training program, portal development, and fleet management, while providing locomotive support to all Watco locations.

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meetings July 9-10 Midwest Association of Rail Shippers (MARS) 2012 Summer Meeting Grand Geneva Resort, Lake Geneva, Wis. Bill Schauer, Email: wrschauer@sbcglobal.net; Website: www.railshippers. com/regional/midwest. July 10-13 UIC Highspeed 2012 (8th World Congress on High-Speed Rail), Pennsylvania Convention Center, Philadelphia, Pa. Website: 222.uic-highspeed 2012.com/. September 16-19 AREMA 2012 Annual Conference & Exposition, Hilton Chicago, Chicago, Ill. Lisa M. Hall, Tel.: 301-4593200, ext. 705; Email: lhall@ arema.org; Website: arema. org/meetings/2012Confindex. html. September 18-21 InnoTrans 2012, Berlin, Germany Tel.: 732-933-1118; Email: mjbalve@globaltradeshow. com; Website: www.innotrans.com. September 22-25 RSI/CMA 2012, Chicago, Ill. Amanda Patrick, Tel.: 202347-4664; Email: patrick@rsiweb.org. October 3-4 Southwest Association of Rail Shippers Conference, The Woodlands Waterway Marriott Hotel, The Woodlands, Tex. Jack Dail, Tel.: 425-818-8240; Fax: 425-358-5035; Email: jdailconsulting@comcast. net; Website: www.railshippers.com/regional/southwest. October 10-11 Railway Age Passenger Trains on Freight Railroads, Washington, D.C. Jane Poterala, Email: jpoterala@sbpub.com; Website: www.railwayage.com.

products OPW 890 Series counterbalance aids loading OPW Engineered Systems, a division of OPW Fluid Transfer Group, says NuStar Energy has selected its 890 Series “HiLoad” Loading Arm Counterbalances in the railcar loading upgrade at its Stockton, Calif., refined products terminal. NuStar recently optimized the railcar-loading times at its 900,000-barrel facility by building a new rail siding that features six loading platforms, and using the 890 Series “HiLoad” Loading Arm Counterbalances, aiding performance, versatility, and reliability. Says Dan Thomas, the facility’s terminal manager, “This new loading system has dropped the loading time from five cars in 10 hours to six cars in three-and-a-half hours. The system is also ergonomic for the operators so they’re no longer getting under the railcar since we’re now top-loading through the boom arms.” The 890 Series Counterbalance is designed for loading arms that are required to handle extremely heavy loads and travel a long distance. It has a high-load spring that does not require a pneumatic system typical for loading arms that have a longer reach or additional weight. The high-load spring technology allows the 890 Series to handle roughly 50% higher load capacities without worrying about the dangerous drift that can compromise load stability. Maintenance is also simplified since spring-tension adjustments can be completed by using only a socket wrench. To watch a video of the 890 Series in operation, access YouTube and seek http://www.youtube.com/ watch?feature=player_embedded&v=o-h8684MNYg. Or access OPW’s website at www.opw-es.com, where Featured Video is displayed. For more information, contact OPW Engineered Systems, 2726 Henkle Drive, Lebanon, Ohio, 45036, Tel.: 513-932-8424; Website: www.opw-es.com.

Tap the sun’s power for those hard-to-reach places Lumastrobe’s high intensity LED solar flasher, Model SLXP-177-24HR, is easily mounted on vertical or horizontal poles. The unit emits a bright 40 flashes per minute, 12-inch diameter signal to identify a danger zone or draw attention to accompanying signage. SLXP-17-24HR is operational 24/7, or from dusk to dawn, adjustable by a flip of a switch. As an option, the unit can be remotely turned on/off within 200 ft. of an operator with a hand-held key fob. Ideal for railroad crossings in remote areas, or for those applications where temporary sporadic flashing lights are desired and AC power is not available. Other recommended installation locations are dangerous or sudden curves, limited visibility area, fog and ice, and construction road and bridge work. The SLXP-177-24HR or remote control version, the RCSLXP-277-24HR, is a one direction, 177 LED self-contained and portable unit that requires no wiring. Available in amber and red. For additional information, contact the Lumastrobe Sales Department at: Lumastrobe Warning Lights, 33 Greenwood Avenue, Midland Park, N.J. 07432, Tel.: 201-444-7041; Fax: 201-445-8575; E-Mail: info@lumastrobe.com; Website: www.lumastrobe. com. www.railwayage.com

JUNE 2012

Railway Age

RA 1_2pg Vert Maps 2 2012_TrainingDVDs 1/26/12 3:29 PM Page 1

products Railroads of the Continental United States Wall Map Transportation professionals and railroad enthusiasts around the world use ''Railroads of the Continental United States'' as an indispensable reference guide for North American railroads. This map features complete U.S. rail system as well as southern Canada and northern Mexico are displayed in this 36'' x 48'' map. Printed in full-colors, the highly detailed map shows more than 7,000 cities, towns, and station points. 2007.

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Company invoicing available, shipping will be added. We ship to the contiguous 48 states, Alaska, Hawaii, Guam, Puerto Rico, Virgin Islands and APO, FPO. Call for shipping rates if products exceed $400.00(US). For deliveries outside the 48 contiguous states, please contact us for shipping costs. Fax: 402-346-1783. US funds only. Allow 15 working days for delivery in US.

Railway Age

JUNE 2012

www.railwayage.com

CSX Transportation tests Virtual Driver simulation Virtual Driver Interactive, Inc. (VDI) offers Virtual HD™, the industry’s first voice-controlled, interactive simulation-based driver safety program designed specifically for corporate driver training programs. Virtual HD is a self-paced series of experiences developed to improve hazard recognition skills, lower accident rates, and reduce distracted driving in less than 90 minutes. “Deployment of Virtual HD will offer significant reductions in training related expenses like vehicle rental, employee productivity, and instructor time while increasing training effectiveness,” said Corey Davis, beta customer and manager of training simulation and technology at CSX Transportation. “This type of simulation-based training complements our current Smith System training by allowing drivers to actually put those principles into practice without putting them into harm’s way.” Driver training on Virtual HD focuses on eliminating the primary cause for crashes: a failure to recognize and react to hazardous driving situations. A key element of the Virtual HD program is vehicle-specific training mimicking actual driving experiences on the job—whether it is in a package delivery truck, van, or passenger car. Company safety slogans are also displayed on billboards, storefronts, vehicles and other signage passed along the road during the simulation training for branding reinforcement. Virtual HD can not only lower crash incidents and associated costs, but also can dramatically lower the cost of training while increasing the rate at which drivers are trained. Proof of course completion allows corporations to easily update training records or learning management systems (LMS). Customers of Virtual HD can choose to have their employees go through the program using the full-size VT Series Virtual Trainer, with the realistic feel of a car, at their training centers, or in the field by using the portable, dVT43 Desktop Virtual Trainer. Both systems feature an expansive 43-inch, high definition, super-wide aspect ratio monitor. Virtual HD provides training concerning: • Deterring distracted driving • Safe following distance • Motorcycles and bicycles visibility • Expert scanning techniques • Rapid hazard anticipation and detection • Parking lots safety strategies •Covering the brake to reduce dangers • City, highway, commercial and rural environments • Day and night situations with inclement weather conditions. For more information, please visit VDI’s website, www.driverinteractive.com.

Reader Referral Service

This section has been created solely for the convenience of our readers to facilitate immediate contact with the RAILWAY AGE advertisers in this issue. Phone #

Fax

Email address

Page #

Aecom

732-564-3200

jon.chiu@aecom.com

Amsted Rail Group

312-922-4516

312-922-4597

kskibinski@amstedrail.com

Andersons Inc., The

419-891-6386

419-891-2749

chuck_brown@andersonsinc.com

816-412-2191

eschoenfeld@autotruck.com

12 C2 LG11

Auto Truck

816-412-2131

Bridlewood Capital Group, LLC

213-254-8690

CIT

212-461-5713

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

CK Industries

847-550-1856

847-550-1854

Curry Supply Company

814-224-0393

dguyer@currysupply.com

Cyclonaire Corp.

402-362-2000

402-362-2001

sales@cyclonaire.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

Electro-Motive

800-255-5355

708-387-6626 genuineparts@emdiesels.com

mikeogara@bridlewoodcaptial.com

LG13 13

rmeyers@ckrail.net

LG12

LG2 7

Ellwood Crankshaft & Machine

724-347-0250

724-347-0254

ecgsales@elwd.com

First Union Leasing Corp.

847-384-5392

847-318-7588

richard.seymour@wachovia.com

LG6

Flagship Rail SVCS, LLC

312-559-4801

312-559-4842

kelli.kaul@flagshiprail.com

LG9

Global Rail Systems

866-883-2213

sales@globalrailsystem.com

Helm Financial Corp.

415-398-4510 ext 347

415-398-4816

jzimmerman@hlmx.com

Holland Co.

708-672-2300 ext.382

708-672-0119

gpodgorski@hollandco.com

Hotstart

509-536-8667

509-534-4216 mfloyd@kimhotstart.com

Infinity Funds

678-904-6306

908-904-4908

lsmith@infinityfunds.com

LG13 27 C3 LG13

LTK Engineering Services

215-641-8826

215-542-7676

tfurmaniak@ltk.com

Macquarie Rail

312-756-3880

312-756-3847

railinfo@macquarie.com

New York Air Brake

607-257-7000

607-257-2389

paula@onlinesms.com

Progress Rail Services

800-476-8769

256-593-1249

info@progressrail.com

Progress Rail Equipment Leasing

810-714-4626

810-714-4680

ddaugherty@progressrail.com

RJ Corman

859-881-7521

859-885-7804

www.rjcorman.com

R&W Machine Division

708-458-4200

708-458-3299

jwarner@rwmachine.com

Rail Solutions

703-922-3800

703-922-8229

railsol@aol.com

RailComm, Inc.

585-377-3360

585-377-3341

sales@railcomm.com

Railquip, Inc.

770-458-4157

770-458-5365

sales@railquip.com

LG10 for the correctness.

Railroad Financial Corp.

312-222-1383

312-222-1470

tkruglinski@railfin.com

LG16

Railway Tie Association

770-460-5553

770-460-5573

ties@rta.org

Railway Educational Bureau, The

402-346-4300

402-346-1783

bbrundige@sb-reb.com

VTG Rail

618-343-0600

618-343-9015

jwhite@sircrail.com

Advertising Sales

(212) 620-7260 Fax: (212) 633-1863 mconnolly@sbpub.com

MAIN OFFICE Jonathan Chalon, Publisher 345 Hudson St., 12th Floor New York, NY 10014 (212) 620-7224 Fax: (212) 633-1863 jchalon@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 2450 Chicago, IL 60603 (312) 683-5026 Fax: (312) 683-0131 hdisabato@sbpub.com

AL, AR, IN, KY, LA, MI, MS, OH, OK, TN, TX George S. Sokulski Associate Publisher 20 South Clark Street, Suite 2450 Chicago, IL 60603 (312) 683-5035 Fax (312) 683-0131 gsokulski@sbpub.com CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, PA, RI, SC, VT, VA, WV, Canada – Quebec and East, Ontario Mark Connolly 345 Hudson St., 12th Floor New York, NY 10014

GLOBAL advertisement sales, except Italy, Italian-speaking Switzerland, Japan, and North America Donna Edwards Advertisement Manager Suite K5 & K6 The Priory, Syresham Gardens Haywards Heath, RH16 3LB United Kingdom +44-1444-416368 Fax: +44-1444-458185 de@railjournal.com.uk

Australia, Czech Republic, Hong Kong, India, Korea, Middle East, Netherlands, New Zealand, Russia, Scandinavia, South Africa, South America, Spain, Worldwide Recruitment Steve Barnes International Area Sales Manager Suite K5 & K6 The Priory, Syresham Gardens Haywards Heath, RH16 3LB United Kingdom +44-1444-416368 Fax: +44-1444-458185 sales@railjournal.co.uk Italy, Italian-speaking Switzerland Dr. Fabio Potesta Media Point & Communications SRL Corte Lambruschini Corso Buenos Aires V Piano, Genoa, Italy 8+39-10-570-4948

www.railwayage.com

Index of Advertisers

Company

LG12

The Advertisers

LG8 Index is an editorial feature maintained

19 for the convenience of readers. It is not

15 part of the LG9 advertiser contract and Railway Age

C4 assumes no

responsibility

5 20,23,26,36 32

Int. 9+39-10-553-0088 (Fax)16129 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 Craig Wilson 345 Hudson St., 12th Floor New York, NY 10014 (212) 620-7211 Fax: (212) 633-1325 cwilson@sbpub.com

JUNE 2012

Railway Age

Railway Age Classified Section • Craig Wilson • 212-620-7211 • cwilson@sbpub.com

s r

PROFESSIONAL DIRECTORY

Kansas City (913) 661-2424

www.rrtemps.com

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

For advertising information call Classified Sales Representative Craig Wilson phone (212) 620-7211 • fax (212) 633-1325 e-mail cwilson@sbpub.com

products & services

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

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

Rail-served real estate HOUSTON AREA LAND FOR SALE

(ROSENBERG, TEXAS) • 216 ACRES, KANSAS CITY SOUTHERN & HWY 59 FRONTAGE • 214 ACRES, UNION PACIFIC & HWY 90A FRONTAGE Call for Other Rail-served Properties Contact FRANKLIN DENSON, Broker, at 713-334-1114 fmdenson@yahoo.com F.M. DENSON & Co

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

Railway Age

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

JUNE 2012

www.railwayage.com

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

TRAINING Class One saves over $1 million in new hire training costs thanks to Modoc Railroad Academy... Why buy the cow, when you can get the milk for free? info@modocrail.com

Modoc Railroad Academy.com

equipment Sale/Leasing

Available For Lease

◆ 4,200 cu. ft. Gondolas - Interior bracing removed and tub bottoms reinforced for C&D, coke, scrap, aggregates, etc. ◆ 3,600 cu. ft. Open Top Hoppers. 45 degree slopes for aggregate or coke service, etc. ◆ 5,750 & 5,852 cu. ft. Pressure Differential (PD) Covered Hopper Cars. For additional information and pricing, please contact John Goodwin phone (605) 582-8318 fax (605) 582-8304 www.carmathinc.com e-mail jgoodwin@mwrail.com

employment Chief Operations Officer Summary of Duties: Reporting directly to the Executive Director/CEO, plans, directs and controls the activities and operations of Metra to ensure all functions of Engineering, Transportation, Mechanical, Safety, Operations Training and Certification are performed efficiently and effectively. Provides executive oversight and direction to Purchase of Service Agreement contract carriers (BNSF and Union Pacific). Assist the Executive Director/CEO, in strategic projects, staff coordination |and the dissemination of information and communications. Provides executive direction and guidance to the Chief Officers of Engineering, Transportation and Mechanical in the administration of rail operations, rolling stock and facility maintenance, employee and public safety, and human and environmental health. Minimum Acceptable Qualifications: • Bachelor’s Degree in Business Administration, Transportation Studies, or related field from a nationally accredited College or University OR extensive senior level rail operations management experience in a large public or private rail operation or rail organization of similar size and complexity. • Must have significant railroad operations management experience with strong fiscal, organizational, leadership, and supervisory skills; excellent interpersonal skills, critical analytical and strategic capabilities, and an ability to build and maintain relationships. If you are interested in applying for a position at Metra, please send your cover letter and resume to: E-mail: jobs@metrarr.com Metra is an Equal Opportunity/Affirmative Action Employer. It is our policy to fill vacant positions with qualified candidates without regard to race, color, sex, religion, national origin, age, or disability, assuming an individual can perform the essential functions of the job with or without accommodation. 547 W. Jackson Blvd. / Chicago, IL 60661

employment Ansaldo STS is Hiring! We are hiring Signal Engineers, Project Engineers, and Systems Engineers. See the link below for more details and to apply. We are willing to relocate candidates. Ansaldo STS is a global leader in railway and mass transit signaling and turnkey transportation solutions with over 4,300 employees in 28 countries. Visit www.Ansaldo-STS.com and click on Careers for more information.

MKIV Production Tamper Operator Premiere railroad constructionDate: contractor is lookingMay to add experi1, an 2012 enced MKIV Tamper OperatorMedia to its expanding base. Must Order: employee 329562 be able to travel and have a valid license. Military veterans encouraged Size: 3.375” x 5” to apply. Publication: Railway Age Section: Professional Field Mechanic 216.687.1818 Premiere railroad construction contractor is looking to add an experienced Field Mechanic to its expanding employee base. Must be able to travel and have a valid license; CDL class B or A preferred. Military veterans encouraged to apply. Please send resumes in confidence to railgroup@sbpub.com

www.railwayage.com

JUNE 2012

Railway Age

short line/regionalperspective Chip Greiner

165 years of railroad police progress

t took a series of petty thefts in 1847 on the Baltimore & Ohio Railroad in the City of Baltimore to see the need for special law enforcement protection for the railroads. With the commissioning of a police officer by the City of Baltimore to be employed by the B&O, it began a steady progression of law enforcement service that has lasted through a Civil War, two World Wars, and through the threat of global terrorism. A lot has changed on the railroad since 1847—or has it? Technology certainly has lent a hand in increasing the speed, safety and service on our railroads, but some basic fundamentals remain the same. Trains hauling freight still travel on steel rails spaced 4 feet 8 ½ inches on wooden ties and are operated by an engineer and conductor. Thieves also still target railroads. Thefts may no longer be livestock, whiskey, or cigarettes, but they are just as costly. Today’s thieves use 4-wheel drive vehicles instead of horses to access the right of way, and target containerized shipments stealing TV’s, clothing, and electronics. To keep pace, today’s railroad law enforcement relies on a close working partnership with local, county, state, and federal law enforcement. Railroads have some strong historical roots in fighting crime. In early 1898, railroad police chiefs were faced with an increasing wave of criminal activity sweeping the country. They saw the need to share information to get a handle on the problem. They met in June in Omaha, Neb., formed the Railroad Police and Special Agent’s Association, and published a monthly magazine, which shared mug shots, Bertillon measurements, and “Wanted” fliers of criminals. This began the first use of organized criminal intelligence by a law enforcement group. The Association of American Railroads picked up the baton in the 1930’s with the AAR “Protective Section”. In the 40

Railway Age

JUNE 2012

early 1990s the Railroad Police Section of the International Association of Chiefs of Police took over the duties from the AAR. In 2005, the American Short Line and Regional Railroad Association saw the need to assist the more than 525 short line and regional railroads with a committee to deal with security and law enforcement issues on their properties. The Police and Security Committee of the ASLRRA was formed with seven found-

Today’s railroad law enforcement relies on working partnerships. ing members, and is currently staffed by 25 industry professionals, who have diverse backgrounds in law enforcement, security, and railroad safety. This committee meets several times a year and holds bi-monthly conference calls in order to stay on point with hot-button issues. These issues range from the training of our mandated Rail Security Coordinators to dealing with the escalating problem of scrap metal theft from member railroads. The committee is ambitious in its goals and is actively working on about 15 “action” items. These items include the study of federalization of railroad police officers and the assessment of in-house law enforcement vs. contracted law enforcement on short line railroads. We are taking steps to enhance and streamline the communication of time-sensitive security information while also finding more effective ways in reaching the hourly employees on the property. We are

www.railwayage.com

working with one of our private security members to complete and issue a simplified Route Analysis tool for use by Class II and Class III railroads. The committee is developing two model training programs for outreach training to our local emergency first responders. By giving them the required training and industry knowledge, they will be in better position to respond to emergencies that may occur on our properties. Other important goals include the development of a two week training course for law enforcement and a computer based training model to train our in-house Rail Security Coordinators as well as examining security clearance “best practices” for short line railroads. Close relationships are kept with security representatives of the FRA and TSA in an effort to review and enact new security rules that affect the industry. Partnerships have been developed with the Institute of Scrap Recyclers Industry with the expansion and use of their “Metal Theft Alert “email system. This is another avenue the committee is taking in its efforts to curb metal thefts and arrest violators and prosecute thefts of railroad track materials. America’s short line and regional railroads remain focused on security best practices such as updated hazardous materials security training, and security awareness for railroad employees. Relationships with state criminal intelligence fusion centers are being established. Routine information regarding suspicious activity on one railroad can be directed to other law enforcement agencies and industrial stakeholders through these centers to be examined. Cooperation remains the cornerstone of success as we fight against criminal activity and the threat of terrorism on our nation’s railroads. Chip Greiner has been the Chief of Police for the Morristown & Erie Railway since 2004 and has 36 years of experience in municipal, county and railroad law enforcement.

STOP IDLING

SAVE MONEY By equipping a locomotive with a HOTSTART block heater, the prime mover can be shut down and easily restarted. This eliminates the problems with idling including wasted fuel and oil, wet-stacking, emissions and engine wear. Find out how much you can save with HOTSTART engine heaters. Go to www.hotstart.com/fuel-consumption-calculator