Railway Age April 2021 by Railway Age

APRIL 2021

W W W. R A I LWAYA G E .C O M

AILWAY GE S E R V I N G T H E R A I LWAY I N D U S T R Y S I N C E 1 8 5 6

GOING TRANSNATIONAL Canadian Pacific, Kansas City Southern Join Forces on the “USMCA Railroad”

SPECIAL REPORT

AMTRAK AT 50 railwayage.com

August 2017 // Railway Age 1

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AILWAY GE

February April 20212020

20 FEATURES

Going Transnational

Amtrak at 50, Part 1

Amtrak

CP + KCS = CPKC

A Retrospective

Amtrak at 50, Part 2 A Plan for the Future

Setting the Foundation

Digital Transformation

Railinc Freight Car Review

Crossties and More

Avoiding the Technology Trap

Steady State, Mostly

DEPARTMENTS 4 6 7 45 46 46 47

Industry Indicators Industry Outlook Market People Professional Directory

NEWS/COLUMNS 2 8 48

From the Editor Financial Edge ASLRRA Perspective

Classified Advertising Index

ON THE COVER: Side by side, but in reality, end to end: The first Class I merger in nearly 25 years. Photo: Canadian Pacific and Kansas City Southern

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April 2021 // Railway Age 1

FROM THE EDITOR

AILWAY GE

Quintessential Quintuplets

ultiplechoice question: What do Keith Creel, Pat Ottensmeyer, Dave Starling, Mike Haverty and Hunter Harrison have in common? (This isn’t a trick question, I’m not grading on a curve, and I’m not necessarily against giving a grade of “A+” or drawing a smiley face on your test paper.) A) They all are (or were) railroad CEOs. B) They’re all Railway Age Railroaders of the Year (one of them twice). C) A new tongue-twister acronym, “CPKC” (try saying it 10 times, fast). D) All of the above. The correct answer, which I’ve chosen not to print at the bottom of this page, upside-down in four-point type, or reveal in the May issue, is D, “All of the above.” But you probably knew that before I gave you the answer, because either you’re very well-informed, read Railway Age regularly, or both—though I’m not suggesting that the former is a direct result of the latter, OK? That would be a bit “cheeky,” as my British colleagues at International Railway Journal would say. So, here’s how serendipity (“the occurrence and development of events by chance in a happy or beneficial way”) works, in this case resulting in the betrothal of Canadian Pacific and Kansas City Southern, an event some 30 years in the making: The North American Free Trade Agreement (NAFTA, which was not a disaster, thank you very much!) is signed by the United States, Canada and Mexico. The Mexican government decides to privatize its national railway system. Mike Haverty and

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Kansas City Southern win the crown jewel, the Northeast concession, and proceed to exponentially increase that jewel’s value. Meanwhile, newly privatized Canadian National acquires the Illinois Central, picking up Hunter Harrison and Precision Scheduled Railroading in the deal. Hunter does what he does best, and then retires—temporarily. Meanwhile, Mike Haverty turns the KCS reins over to Dave Starling, and brings Pat Ottensmeyer on board. KCS continues on its independent way, growing stronger and more resilient over time. Dave retires. Pat succeeds him. Meanwhile, Hunter Harrison, too restless to quit railroading, comes out of retirement to run the Canadian Pacific. Keith Creel, his young protégé, joins him from CN. Hunter repeats what he does best, then takes off for CSX, trying for a three-peat, placing Keith in charge of CP. Hunter never gets to finish what he started, as he transitions from icon to legend. Eventually, 2020 happens. With assistance from Pat and like-minded leaders, the USMCA (really, “NAFTA 2.0”) is forged. The White House changes hands; its new occupant immediately gets to work, foregoing Twitter and calls to Fox & Friends to hear himself talk. Fences are mended. Opportunity presents itself. At some point in late 2020, Keith picks up the phone in Calgary, calls Pat in Kansas City, and says, “I have an idea I think you’re going to like.” The story continues on p. 10.

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Industry Indicators AAR: ‘HURRICANES, TORNADOES, FLOODS AND OTHER WHIMS OF NATURE’ “The U.S. freight rail network is subject to, and sometimes at the mercy of, hurricanes, tornadoes, floods and other whims of nature,” the Association of American Railroads reported in March. “In February, the whims included exceptionally cold and icy conditions in most of the country, including in many areas that aren’t used to it. For rail, it meant reduced operations and, in some areas, complete temporary shutdowns. It was so bad, in fact, that total U.S. rail carloads in the third week of February were the lowest of any week in our records that go back to 1988. Volumes recovered the next week, but the net impact was materially lower rail volumes in February.”

Railroad employment, Class I linehaul carriers, FEBRUARY 2021 (% change from February 2020)

TOTAL EMPLOYEES: 114,068 % CHANGE FROM FEBRUARY 2020: -10.63

Transportation (train and engine) 45,794 (-10.99%)

Executives, Officials and Staff Assistants 7,266 (-4.09%)

TRAFFIC ORIGINATED CARLOADS

FOUR WEEKS ENDING FEBRUARY 27, 2021

MAJOR U.S. RAILROADS BY COMMODITY

FEB. ’21

FEB. ’20

% CHANGE

Grain Farm Products excl. Grain Grain Mill Products Food Products Chemicals Petroleum & Petroleum Products Coal Primary Forest Products Lumber & Wood Products Pulp & Paper Products Metallic Ores Coke Primary Metal Products Iron & Steel Scrap Motor Vehicles & Parts Crushed Stone, Sand & Gravel Nonmetallic Minerals Stone, Clay & Glass Products Waste & Nonferrous Scrap All Other Carloads

91,164 3,430 33,787 22,765 118,468 39,991 221,946 3,834 13,170 21,347 15,769 12,287 33,104 14,761 55,806 49,288 12,052 25,933 12,514 23,220

78,822 3,883 36,540 23,030 132,417 52,203 253,783 4,182 13,697 20,769 15,548 15,002 36,210 15,312 70,142 73,608 13,718 28,191 13,682 26,869

15.7% -11.7% -7.5% -1.2% -10.5% -23.4% -12.5% -8.3% -3.8% 2.8% 1.4% -18.1% -8.6% -3.6% -20.4% -33.0% -12.1% -8.0% -8.5% -13.6%

TOTAL U.S. CARLOADS

824,636

927,608

-11.1%

293,618

308,922

-5.0%

1,118,254

1,236,530

-9.6%

CANADIAN RAILROADS TOTAL CANADIAN CARLOADS

COMBINED U.S./CANADA RR

Professional and Administrative 10,195 (-5.75%)

Maintenance-of-Way and Structures 27,948 (-7.77%)

Maintenance of Equipment and Stores

Intermodal

FOUR WEEKS ENDING FEBRUARY 27, 2021

MAJOR U.S. RAILROADS BY COMMODITY Trailers Containers TOTAL UNITS

18,115 (-18.29%)

CANADIAN RAILROADS

Transportation (other than train & engine)

Trailers Containers TOTAL UNITS

FEB. ’21

FEB. ’20

% CHANGE

70,788

1,015,995

927,023 997,811

18.7% 0.5% 1.8%

0 271,309 271,309

0 230,541 230,541

— 17.7% 17.7%

70,788

83,995 932,000

4,750 (-10.65%)

COMBINED U.S./CANADA RR

Source: Surface Transportation Board

Trailers Containers

83,995 1,203,309

1,157,564

18.7% 4.0%

TOTAL COMBINED UNITS

1,287,304

1,228,352

4.8%

Source: Rail Time Indicators, Association of American Railroads

4 Railway Age // April 2021

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BEFORE YOU INVEST IN ANOTHER AIR BRAKE CONTROL VALVE,

TOTAL U.S./Canadian CARLOADS, FEB. 2021 VS. FEB. 2020

1,118,254 FEBRUARY 2021

STOP & CONSIDER:

1,236,530 FEBRUARY 2020

Short Line And Regional Traffic Index CARLOADS

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

ORIGINATED FEB. ’21

ORIGINATED FEB. ’20

% CHANGE

46,389 18,164 12,680 9,250 30,152 6.920 8,648 1,510 14,782 7,481 2,374 1,796 15,472 10,795 39,373 9,110 61,131

49,762 12,769 22,048 10,313 24,504 7,711 8,815 2,477 16,313 10,094 2,525 1,839 16,891 10,927 38,837 9,408 67,856

-6.8% 42.3% -42.5% -10.3% 23.0% -10.3% -1.9% -39.0% -9.4% -25.9% -6.0% -2.3% -8.4% -1.2% 1.4% -3.2% -9.9%

TOTAL U.S. Carloads and intermodal units, 2012-2021

(in millions, year-to-date through FEBRUARY 2021, SIX-WEEK MOVING AVERAGE)

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Industry Outlook

Virginia, VRE, Amtrak, CSX Advance $3.7B Rail Improvement Initiative THE COMMONWEALTH OF VIRGINIA, AMTRAK, CSX AND VIRGINIA RAILWAY EXPRESS (VRE) have finalized agreements for a $3.7 billion initiative to improve Virginia passenger and freight rail capacity and relieve automotive traffic congestion. The “Transforming Rail in Virginia” initiative, which Gov. Ralph Northam unveiled in December 2019, will “expand Amtrak and VRE rail services, create a pathway for the 6 Railway Age // April 2021

separation of freight and passenger rail in Virginia, and preserve future rail corridors.” It covers: • Construction of a $1.9 billion doubletrack passenger-rail-dedicated bridge over the Potomac River. Virginia-owned, it will be built adjacent to the existing CSX-owned and operated Long Bridge, the only freight and passenger rail bridge connecting Virginia and Washington, D.C. • Acquisition from CSX of 386 miles of

railroad right-of-way and 223 miles of track at a cost of $525 million. This includes “half of the rail corridor right-of-way from Washington, D.C., to Petersburg, Va., the full extent of CSX ownership from Petersburg to Ridgeway, N.C., and the entire corridor from Doswell to Clifton Forge [Virginia],” according to the Governor’s Office. With the exception of Ashland, Va., “the right-of-way from Washington, D.C., to Richmond is wide enough to construct a four-track corridor, with two tracks dedicated to passenger rail, and when fully built out will allow separate passenger and freight movement.” • Additional infrastructure improvements in the commonwealth, totaling more than $1 billion. During the next 10 years, this massive initiative will: • Double the number of Virginia-supported Amtrak trains, providing nearly hourly service. The commonwealth and Amtrak are entering into a long-term partnership for six new state-supported daily round-trips, and Amtrak will serve as Virginia’s exclusive provider of intercity passenger rail along the I-95 corridor for at least 30 years. Amtrak has committed $944 million to the “Transforming Rail in Virginia” initiative. • Increase VRE service by 60%. “Through our funding agreement with the commonwealth, VRE anticipates providing $200 million toward major infrastructure projects for the ‘Transforming Rail in Virginia’ initiative,” said VRE CEO Rich Dalton. “That, combined with more than $800 million in improvements spelled out in VRE’s six-year Capital Improvement Program, will bring our contribution to rail improvements in Virginia to more than $1 billion. As these projects come on line, VRE will be able to expand service by as much as 60% along the RF&P corridor.” • “Lay the foundation for a Southeast High Speed Rail Corridor; preserve an existing freight corridor between Doswell and Clifton Forge for future east-west passenger service; and create the potential to expand rail to all parts of the commonwealth.” In 2020, Gov. Northam signed legislation creating the Virginia Passenger Rail Authority (VPRA) to manage and govern statewide passenger and commuter rail service. Moving forward, VPRA will also administer all capital expansion projects, infrastructure and land acquisitions related to the “Transforming Rail in Virginia” initiative. railwayage.com

Market Tempe Streetcar’s First Brookville Liberty® NXT Brookville Equipment Corp. has delivered the first new Liberty® NXT streetcars to Valley Metro Rail for the Tempe Streetcar system. Like the previous iteration of the Liberty® Streetcar, the Liberty® NXT will utilize a lithium-ion battery onboard energy storage system (OESS) to operate on sections of the alignment without an overhead catenary system (OCS). The streetcar’s batteries stay charged with OCS traction power. The Liberty® NXT features a three-section articulated carbody, more than 70% available lowfloor standing area, station-level boarding achieved through an automatic load leveling system, seating for 40 passengers, and total capacity of 120 passengers.

NORTH AMERICA

MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY (MMRDA) has awarded ALSTOM a Euros 220 million contract to design, manufacture, supply, test and commission 39 six-car metro trains, including personnel training, for the Wadala-Kasarvardavali Line 4 and the Kasarvardavali-Gaimukh Line 4A extension. Alstom says the acquisition of Bombardier Transportation added new products to the portfolio that it is offering in the Asia Pacific region.

The Board of Directors of the LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY (METRO) has approved contracts with two private-sector teams for pre-development work on the Sepulveda Transit Corridor Project. The project will connect the San Fernando Valley with the Westside and eventually with LAX via a high-speed, highcapacity transit line. SEPULVEDA TRANSIT CORRIDOR PARTNERSBECHTEL was awarded a $69.9 million Pre-Development Agreement (PDA) contract to further develop its proposed heavy rail concept. More than 60% would run underground, with the remainder operating primarily in an aerial section. According to Metro, the team has estimated construction costs at $10.8 billion. LA SKYRAIL EXPRESS was awarded a $63.6 million PDA contract to further develop its proposed monorail concept, an aerial alignment primarily within the I-405 right-of-way between the Valley and Westside. The team’s baseline proposal cost for monorail construction is $6.1 billion, according to Metro. The agency said it expects to begin the environmental review process this fall.

Brookville Equipment Corp.

WORLDWIDE

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Under a new partnership, PROCOR LTD. will provide railcar repair and cleaning services at VIP RAIL ULC’S (VIP) industrial parks in Ontario. VIP, an ALPENGLOW RAIL company, owns a 50-acre, 1,000-car rail yard in Sarnia and a 112-acre, 400-car rail yard in Corunna, which are located near refineries and petrochemical producers, and offer access to CN and CSX. In addition to storage and railcar cleaning, VIP provides switching and transloading services. The agreement, the partners said, “has created an opportunity to offer existing and new customers a broad range of high-quality railcar services” at both VIP locations. As VIP “does not focus on maintenance and repair, this partnership with Procor will further our service offering, allowing VIP to provide customers a one-stop shop for all rail needs,” Alpenglow Rail CEO Rich Montgomery said. “Procor’s commitment to safety and customer service has positioned Procor as a great culture fit and partner for VIP.” The “new partnership with VIP will allow us to continue to provide high-quality and cost-effective solutions,” added Jay McGill, Vice President and General Manager of North American Field Services for Procor, a Marmon/Berkshire Hathaway company and an affiliate of Union Tank Car Co. April 2021 // Railway Age 7

Financial Edge Next-Gen Freight Rail Sets Agenda for the 2020s

he tone and context of Railway Age’s Next-Gen Freight Rail conference held virtually on March 10, 2021 changes rapidly when viewed through the blockbuster announcement of Canadian Pacific’s (CP) acquisition of Kansas City Southern (KCS). One can only wonder what messages Creel and Ottensmeyer were sending to each other in the private chat of the conference platform: “How cool would it be if we could announce it right now?” “Oh, that’d be so awesome, NO ONE’s expecting this. There’d just be silence.” “LMAO. C’mon let’s do it.” “Ugh, my BOD would kill me.” “Me too ;-).” Kidding aside, the conference highlighted initiatives from the railroad perspective and one slight divergence between railroads and industry observers regarding the future of rail freight. There was optimism on behalf of the railroads for post-pandemic growth. There was enthusiasm for top-line revenue growth at the Class I and from the short line levels. There were discussions on ESG and what rail CEOs are thinking about in 2021. At the other end of the spectrum, the non-railroad participants emphasized the necessity for railroads to improve service, and for all railroads to change their operational and growth focus from the shorter term to the longer term. Union Pacific (UP) Chairman, President and CEO Lance Fritz shared enthusiasm for loadings growth in 2021 and beyond. He discussed UP’s new intermodal ramp in the Twin Cities and opportunities to originate and terminate new levels of intermodal traffic. This is an opportunity to increase consumable market share in that region. UP can take inbound loads from the Port of Los Angeles and create outbound opportunities to additional destinations growing traffic and getting loads off the highways. Domestic intermodal growth is an opportunity for railroad growth, revenue and environmental health. Fritz also dangled the idea of diesel alternative fuels (“batteries and something else”) in UP’s future, without detail. 8 Railway Age // April 2021

Pat Ottensmeyer, President and CEO of KCS, discussed opportunities available for growth associated with USMCA, KCS’s involvement and optimism related to nearshoring, and opportunistic new trade f lows. In the context of the newly announced CP purchase of KCS, this is a key element for North American traffic growth on a north to south basis that can exploit this supply chain. Ottensmeyer reaffirmed KCS’s focus on ESG and greenhouse gas reductions with few planned details. Dan Smith, CEO of Watco Companies, discussed how Watco sees the opportunity to grow by doing the things that the Class I’s do not do. What does that mean? Smaller (shorter) hauls and serviceoriented shipper service. Watco sees itself as the quintessential partner for the Class I’s. Watco’s continued expansion into terminal port operations is its primary ESG play where it’s working to curb greenhouse gases. Watco feels that opportunities for expansion are on the company’s ongoing horizon. The railroad side closed with Keith Creel, CP’s President and CEO, who was honored as Railway Age’s 2021 Railroader of the Year. Creel discussed CP’s topline growth and leveraging CP’s strength working with customers to improve service, decrease costs and increase the customer bottom line while improving CP’s top-line revenue. He identified delivery reliability as a growth mechanism. Creel described CP’s level of service (for example, moving intermodal between Vancouver and Chicago) as “truck like.” He stated that CP will not over-promise, but focus on leveraging excellence for growth and using expertise to enter new markets and expand sustainably. Creel highlighted CP’s effort to reduce greenhouse emissions by removing truckcarried loads off the roads and improving railcar capacity. He stated that he expects CP to be operating a hydrogen-fueled switching locomotive by the end of 2022. On the non-railroad side, Jason Seidl, Managing Director from Cowen and Co., discussed how intermodal growth needs

There is conflict between the railroad definition of growth and a customer focus on what growth might mean.” to come with increasing customer service focus. Seidl is very acute in discussing this point. There is conflict between the railroad definition of growth and a customer focus on what growth might mean. Gil Lamphere, Chairman of Midrail LLC, discussed the railroads’ focus on cost cutting and EPS at the expense of longterm sustainability. Lamphere sees this in all aspects of the industry from asset maintenance to service levels. He advocates predictive maintenance to develop availability, reliability and a service product. Watching the railroads manage the perceived conflicts between profitability, growth, service, reliability, OR and PSR has been “must see” railroad viewing for many years. One attendee said they have been watching the same problems for 40 years. The Next-Gen conference suggests we won’t have to wait another 40. Got questions? Set them free at dnahass@ railfin.com.

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CP/KCS MERGER

GOING TRANSNATIONAL

he early March 21, 2021 announcement by Canadian Pacific Railway and Kansas City Southern that the two Class I railroads intend to tie the knot in an end-to-end, north-south transnational merger touching Canada, the United States and Mexico came as a complete surprise to most rail industry stakeholders and observers. If approved by the Surface Transportation Board— and at present there is no reason to believe 10 Railway Age // April 2021

otherwise—the US$29 billion combination of CP and KCS into CPKC (“Canadian Pacific Kansas City”) will be the first merger of its type since the Conrail split of the late 1990s. CPKC: The name doesn’t roll that easily off the tongue (actually, it’s something of a tongue-twister), but if the benefits of this merger to shippers and the North American economy come to pass as strongly as the partners are promoting, the freight will be rolling on the rails a whole lot

better. That will have a lot to do with USMCA (United States-Mexico-Canada Agreement), which replaced NAFTA in mid-2020. KCS President and CEO Pat Ottensmeyer earned Railway Age’s 2020 Railroader of the Year Award largely for his efforts on USMCA. His two predecessors at KCS, Mike Haverty and Dave Starling, were presented the award in 2001 and 2012, respectively, for creating and growing KCS de México. Our 2021 Railroader of the Year, CP President and CEO railwayage.com

CP/KCS MERGER

Canadian Pacific and Kansas City Southern join forces to create the “USMCA Railroad.”

Canadian Pacific/Kansas City Southern

BY WILLIAM C. VANTUONO, EDITOR-IN-CHIEF

Keith Creel, has taken to the next level the growth and performance that his mentor, the late Hunter Harrison, 2015 Railroader of the Year, brought to CP. (Harrison was so-honored in 2002 for his work at CN/ Illinois Central, but that’s another story). Harrison died before his vision of a transcontinental railroad could be realized. Creel and Ottensmeyer have embarked on creating the first-ever “USMCA Railroad,” a transnational spanning North America. Starling is trustee of the voting trust CP is railwayage.com

establishing to acquire KCS shares. Five Railroaders of the Year who are part of this initiative: Coincidence? No way. Call it serendipity. CP and KCS described the US$29 billion as “enterprise value” that includes the assumption of $3.8 billion of outstanding KCS debt. The transaction, which has the unanimous support of both boards of directors, values KCS at $275 per share, representing a 23% premium, based on the CP and KCS closing prices on March 19,

2021 (and $270 per share, representing a 26% premium, based on the respective CP and KCS 30-day volume weighted average prices, VWAP). THE PROCESS Upon shareholder approval of the transaction, and satisfaction of customary closing conditions, CP will acquire KCS shares and place them into the voting trust. This step is currently expected to be completed in second-half 2021. Following the closing into a voting trust, common shareholders of KCS will receive 0.489 of a CP share and $90 in cash for each KCS common share held. KCS common shareholders are expected to own 25% of CP’s outstanding common shares, “providing the ability to participate in the upside of both companies’ growth opportunities,” the railroads said in their announcement. “Following final STB approval, KCS shareholders will additionally participate in the realization of synergies resulting from the combination.” To fund the merger’s stock consideration, CP will issue 44.5 million new shares. The cash portion will be funded through a combination of cash-on-hand and raising approximately $8.6 billion in debt, for which financing has been committed. As part of the merger, CP will assume approximately $3.8 billion of KCS’ outstanding debt. Following the closing into trust, CP expects that its outstanding debt will be approximately $20.2 billion. CP and KCS said the combination “is expected to be accretive to CP’s adjusted diluted EPS in the first full year following CP’s acquisition of control of KCS, and is expected to generate double-digit accretion upon the full realization of synergies thereafter.” “Joining seamlessly in Kansas City, Mo., in America’s heartland, CP and KCS together will connect customers via single-network transportation offerings between points on CP’s system throughout Canada, the U.S. Midwest, and the U.S. Northeast and points on KCS’ system throughout Mexico and the South Central U.S.,” CP and KCS said. “The combined network’s new single-line offerings will deliver dramatically expanded market reach for customers served by CP and KCS, provide new competitive transportation service options, and support North American economic growth. The transaction April 2021 // Railway Age 11

CP/KCS MERGER

From the West, CP connects directly with KCS. From the East, CP must operate over Norfolk Southern through central Michigan via limited trackage rights into Chicago, then over CP short line subsidiary DM&E-South.

is also expected to create jobs across the combined network. Additionally, efficiency and service improvements are expected to achieve meaningful environmental benefits. “While remaining the smallest of six U.S. Class I railroads by revenue, the combined company will be a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people and generating total revenues of approximately $8.7 billion, based on 2020 actual revenues. “The combination will provide an enhanced competitive alternative to existing rail service providers and is expected to result in improved service to customers of all sizes. Grain, automotive, auto parts, energy, intermodal and other shippers will benefit from the increased efficiency and simplicity of the combined network, which is 12 Railway Age // April 2021

expected to spur greater rail-to-rail competition and support customers in growing their rail volumes. A single integrated rail system will connect premier ports on the U.S. Gulf, Atlantic and Pacific coasts with key overseas markets. The combination of CP and KCS networks will offer unprecedented reach via new single-line hauls across the combined company’s continent-wide network. Importantly, no customer will experience a reduction in independent railroad choices as a result of the transaction. Additionally, with both companies’ focus on safety and track records of operational excellence, customers will benefit from a seamless integration of the two systems without service disruption. “CP and KCS interchange and operate an existing shared facility in Kansas City, Mo., which is the one point where they connect. This transaction will alleviate the need for a

time-consuming and expensive interchange, improving efficiency and reducing transit times and costs. The combination also will allow some traffic between KCS-served points and the Upper Midwest and Western Canada to bypass Chicago via the CP route through Iowa. This will improve service and has the potential to contribute to the reduction of rail traffic, fuel burn, and emissions in Chicago, an important hub city.” Following STB approval, CP will acquire control of KCS. Creel, whose contract has been extended to 2026, will serve as the CEO of the combined company. Calgary will be the global headquarters of CPKC, and Kansas City, Mo., will be designated as the U.S. headquarters. The Mexico headquarters will remain in Mexico City and Monterrey. CP’s current U.S. headquarters in Minneapolis-St. Paul “will remain an important base railwayage.com

Two maps: Canadian Pacific/Kansas City Southern

CP/KCS MERGER of operations.” Four KCS Directors will join CP’s expanded Board. “The timing is ideal,” Creel told Railway Age. “You’ve got two companies that have been stars in the industry from a growth perspective. Two like-minded CEOs, committed to customer service. The opportunity to put these two networks together checks all those boxes. It allows reach to be extended, service to be enhanced, seamless single-line moves, and creates compelling value that’s unparalleled for customers. It drives job growth, positive for both companies, investment in those communities. Plus something that’s very important: environmental benefits, to be able to create something with a compelling opportunity to take trucks off the road, which uniquely benefits the environment.” “There are many aligned stars,” Ottensmeyer said. “USMCA. Near-shoring. De-risking the supply chain. The uniqueness that this network combined creates, the ability to drive investment, safety and efficiency is unparalleled. You have the two smallest railroads that, as strong as we are, when you put them together, what that unlocks isn’t possible, standalone. It’s extremely compelling in today’s world. Truly, no people suffer. It’s about growth and value creation. There is not a single customer or market where you have a 3-to-2 or 2-to-1. In fact, if you look at the new network that we’re creating here, Mexico and Texas to upper Great Lakes, Chicago Detroit, we are creating a 2-to-3 situation. It fits nicely with the STB’s mindset of enhancing competition, creating a new competitive option that doesn’t exist, a new option for truck to rail conversion.” Shippers appear to be largely in favor. The majority of those that participated in a Cowen and Company survey on the proposed merger have a positive view of the transaction, and merger synergies “look promising,” according to the firm. These shippers (44%) were joined by respondents who said they have “no opinion” of the merger (38%); only 18% said they had a negative view. “This is encouraging,” said Cowen and Company Managing Director and Railway Age Wall Street Contributing Editor Jason Seidl. While it’s still early in the process, 50% of those with a negative opinion said they do not plan to take action with the STB, while 3% do and 47% have not yet decided, according to the survey. CP and KCS said late last month that they have received statements and letters, railwayage.com

all filed with the STB, from nearly 260 shippers, other railroads, economic development authorities, ports and other supporters for their planned combination. Notable is that Genesee & Wyoming, the largest Class II and III railroad holding company, has filed in support of the deal. “Many of these supporters requested the STB to review the transaction as swiftly as possible,” the merger partners said. “They expect the combination would, among other benefits, invigorate transportation competition, expand access to existing and growing markets, and provide new service offerings that would improve transit times and reliability.” “The combination should create customer growth in North America, efficiencies in new single-line routes, increased market reach, and notable synergies,” Seidl said. “Leveraging its network, the combination will allow for KCS traffic to bypass Chicago via CP’s route in Iowa, reducing congestion, fuel burn and emissions. We are confident in management’s ability to execute. Keith Creel studied under Hunter Harrison, and CP is a well-respected operator. KCS’ management team will remain on through the end of the merger. We have upmost respect for KCS management, as they have been successfully

implementing PSR and posting good results while navigating through the difficulties of 2020. In aggregate, we see a low level of risk associated with the deal. The STB updated its merger regulations in 2001, but gave KCS an exemption. Unless the STB reverses its prior ruling, we would expect it to ultimately support the combination.” Residual effects? “CPKC will likely have impacts across the supply chain,” Seidl noted. “We don’t believe this deal will cause the final round of rail mergers in the industry necessarily, for two reasons. The first is that any other mergers will likely be met with far greater scrutiny from the STB, as KCS is the only railroad with an exemption from the 2001 rulings. The second reason stems from the fact that this merger is largely a north/south play and does not create a U.S. transcontinental operation. Hence, the acquisition of Norfolk Southern or CSX by another railroad would not likely be a necessary response.” “Hunter would be proud,” Keith Creel reflected. “He was about value creation, customer solutions, simplicity, taking out hauls. This is positive for assets, efficiency and service. You reward your shareholders and your customers. He is elated now.” April 2021 // Railway Age 13

AMTRAK AT 50

A HALFCENTURY AGO …

A rider and advocate remembers Amtrak’s early years. BY DAVID PETER ALAN, CONTRIBUTING EDITOR

March 1993: The Swedish X2000 tilting high-speed trainset is seen operating on the Northeast Corridor in test Metroliner revenue service, on an evening New York to Washington, D.C., run. Amtrak evaluated the X2000 and the Siemens InterCityExpress prior to ordering the current fleet of Bombardier/Alstom Acela Express trainsets. In 2021, new Alstom trainsets will be introduced to Boston-New York-Washington, D.C., service. This photo was taken from the rear of an NJ Transit North Jersey Coast Line commuter train. 14 Railway Age // April 2021

railwayage.com

William C. Vantuono. All other photos courtesy of Amtrak

railwayage.com

s we prepare to observe Amtrak’s 50th anniversary, my memories of a half-century ago flood into consciousness: memories of the last days of most of the nation’s passenger trains and the magnitude of how many were doomed, memories of Amtrak’s early days and the routes and services that still ran at the beginning, and memories of deep uncertainty about the future of our trains. My assignment, as part of our coverage, is to recall those memories. A few are the “Streamliner Memories” of which anti-rail activist Randall O’Toole is so fond. Most are about riding trains that were about to die, while hoping that the few survivors would live long and prosper. Few seemed to believe that at the time, and many riders (mostly railfans, not the advocates we have today) understood that the purpose of the Rail Passenger Service Act of 1970 was to relieve the freight railroads of the responsibility and cost of running passenger trains. We also perceived that the actual, but unstated, result of the Act was to get rid of passenger trains more quickly than the “train-off” procedures of the old Interstate Commerce Commission (ICC; replaced by the Surface Transportation Board) would allow. At one stroke, we lost 65% of the nation’s long-distance trains (using the 750-mile standard from 2008) and 64% of the trains with shorter runs; both long-distance and medium-distance outside the Northeast Corridor (NEC). The NEC and its branches did much better; two-thirds of those trains survived. Few of us expected the remaining trains elsewhere to survive the 1970s. I personally doubt that many riders would have expected Amtrak to last for ten years, much less 50. It seemed particularly and ironically inconceivable to think that, on its 50th anniversary, Amtrak would be running its lowest level of service in history, even (or especially) as a temporary low point brought on by a global pandemic. No need to recap Amtrak’s history here. Amtrak itself presents a detailed timeline from 1970 through 2019 at https://history. amtrak.com/amtraks-history/historic-timeline. There is more on Amtrak’s history blog, history.amtrak.com, too. An introductory post from 2014 reported: “Amtrak was originally established by the Congressional Rail Passenger Service Act, which consolidated

AMTRAK AT 50 the U.S.’s existing 20 passenger railroads into one. That’s also back when we served 43 states with a total of 21 routes.” Other commentators have recounted Amtrak’s early days, as well. According to Stephen C. Rogers at https://www. encyclopedia.com/history/encyclopediasalmanacs-transcripts-and-maps/rail-passenger-service-act-1970, “Congress enacted the Rail Passenger Service Act (RPSA) (P.L. 91-518, 84 Stat. 1327) in 1970 under the commerce clause of the U.S. Constitution to preserve intercity rail passenger service in the United States. The RPSA required Amtrak to provide passenger service between points within an integrated ‘basic system’ of routes designated by the U.S. Secretary of Transportation, with a view to eliminating the least necessary operations.” The Act also established Amtrak as a “for profit” corporation—a source of trouble ever since, because no passenger railroad anywhere in the world that runs scheduled service makes a profit, in that sense. Still, it is doubtful that Amtrak would have seen the light of day without the fiction that it could turn a profit. Jeff Davis of the Eno Transportation Center

Alan S. Boyd (1922-2020) served as Amtrak President from 1978 to 1982. A lawyer by training, in 1967 Boyd became the first Secretary of the newly created USDOT. He had headed a task force that looked into establishing a cabinet-level department that would be home to a collection of transportationrelated agencies. Between his time with the federal government and Amtrak, Boyd led the Illinois Central Railroad.

April 2021 // Railway Age 15

AMTRAK AT 50

W. Graham Claytor, Jr. (1912-1994) served as the fourth President of Amtrak from 1982 to 1993. He is widely regarded as the finest, most-accomplished President in Amtrak history. A lawyer and World War II naval hero, Claytor gained extensive knowledge of passenger and freight railroading as the Vice President, President and Chairman of Southern Railway between 1963 and 1977. Following retirement from Southern, Claytor began a second career in government service with the Carter Administration. Between 1977 and 1981, Claytor served as Secretary of the Navy, Acting Secretary of Transportation and Deputy Secretary of Defense. Under his leadership, Amtrak established a joint Labor/ Management Productivity Council; restarted the popular Auto Train (Lorton-Sanford); launched the toll free 1-800-USARAIL reservations number; surpassed Eastern Airlines to become the leading WashingtonNew York carrier; introduced a computerized “yield management” system to handle ticket sales; completed the West Side Connection in New York City; initiated Capitol Corridor service; received the first GE Genesis Series diesel-electric locomotives; evaluated European high-speed trainsets for Northeast Corridor service; and fought off attempts by the Reagan Administration to eliminate most of Amtrak’s federal funding. 16 Railway Age // April 2021

presents a detailed history of Amtrak’s formation, including when it was called Railpax, at https://www.enotrans.org/article/amtrakat-50-the-rail-passenger-service-act-of-1970/. The history took some amazing turns during the early days, including how Assistant to the President for Domestic Policy Daniel Patrick Moynihan (later U.S. Senator) and Transportation Secretary John Volpe eventually overcame resistance from President Richard Nixon and Assistant to the President for Domestic Affairs John Ehrlichman (later of Watergate fame). All four are long dead, while Amtrak lives on. Few knew of the Nixon Administration’s resistance at the time. Many did know that the trains were dropping like proverbial flies. In 1970 alone, we lost the Lake Cities on the Erie-Lackawanna (Lackawanna from Hoboken to Binghamton and Erie the rest of the way to Chicago), the portion of the Missouri Pacific’s Texas Eagle that ran in Texas (Amtrak later revived it, but nobody could have foreseen that at the time), and the legendary California Zephyr, including the famous portion on the Western Pacific Railroad. The Act called for a six-month moratorium on train-offs before Amtrak began, but we knew that it was only a short reprieve. 1969 was worse than 1970, because trains were eliminated throughout the year. Many knew that most of the trains were doomed, but didn’t know exactly which ones. Before Amtrak started, I had made a few specific trips: to visit Chicago in 1969, and to visit my grandmother in Florida, riding CSX predecessor Seaboard Coast Line. I also made two relatively long itineraries: in 1970, when I completed my B.S. degree, and in April 1971, after finishing my M.B.A. I had to plan the latter trip before the initial Amtrak route map was announced on March 22, so I was not sure which trains would soon die. I rode some that did: the Nancy Hanks II on the Central of Georgia between Savannah and Atlanta, the Pocahontas on the Norfolk & Western, and the Union Pacific’s City of Kansas City among them. I also rode some that survived but would change: Southern Railway’s Southerner (now the Amtrak Crescent), and Santa Fe trains with their famous Fred Harvey dining service. Some of them lasted for a while under Amtrak but eventually disappeared. Others went away but later returned. Nothing changed at first, except there were fewer trains. The equipment was the same:

streamlined cars in their railroad liveries, crews sporting their railroad uniforms, and the food that made dining cars famous, except that the Santa Fe had taken Fred Harvey’s name off the menu. Participating railroads even printed their own “Amtrak timetables” during 1971 and into 1972 for the trains they still operated. Then came the homogenization. Equipment started appearing in places where it had never run before. An Amtrak consist would carry cars from several railroads. Railfans referred to that time as Amtrak’s “Rainbow Period” before everything was repainted in Amtrak livery. The dining service was standardized in 1973, and regional food specialties mostly became a thing of the past. Ironically and amazingly, the size of Amtrak’s National Network is the same today as it was in the original plan: 14 trains, not counting the Auto-Train, which Amtrak took over from the previously independent Auto-Train Corp. in 1981, and on which passengers without automobiles are not allowed to ride. Except for a few re-routings on short segments and the replacement of the Lone Star Limited (Chicago-Houston on the Santa Fe, which came off in 1979) with the Texas Eagle (Chicago-San Antonio, mostly on the historic Missouri Pacific, now part of UP), which came back in 1974 as the Inter-American to Laredo and resumed its historic name in 1981, today’s long-distance network west of Chicago and New Orleans is unchanged from the 1971 route structure. There have been some changes east of Chicago. A full-service train, the Champion between New York and St. Petersburg, Fla., is gone; replaced by the Palmetto, a coach train that does not run south of Savannah. The Broadway Limited ran between New York and Chicago through Pennsylvania until 1995. The Lake Shore Limited ran between the same endpoints, but through Upstate New York, and was omitted from the original network. It came back on June 11, 1971 for 207 days under an interstate funding agreement that did not work (I rode to Cleveland on the last run), and returned permanently in 1975. The National Limited between New York and St. Louis (through-running to Kansas City) and the Chicago-Florida Floridian were also discontinued in 1979. They were succeeded by the Capitol Limited in 1981 (the last long-distance train added and still operating) and Amtrak’s takeover railwayage.com

Today’s Passenger Experience Begins With The Connected Journey Happy 50th Anniversary, Amtrak

Icomera, your Connectivity Partner for the Modern Era

AMTRAK AT 50

Amtrak officials inspect some of the first concrete ties installed by the new Track Laying Machine at Shannock, R.I., as part of the Northeast Corridor Improvement Project. The track inspectors emerged from the Budd RDC in the background.

of the New Orleans train (now the Crescent) from the Southern Railway in 1979. Congress has frozen today’s long-distance network in time. Section 201(a)(5)(C) of the Passenger Rail Investment & Improvement Act of 2009 (PRIIA; this provision now codified as 49 U.S.C. 24102((7)(C)) defines Amtrak’s National Network as the trains whose routes were at least 750 miles long and which were operating then, so there is no provision for any expansion beyond the original 1971 level. There is one exception: Gulf Coast service east of New Orleans, which ran from 1993 until Hurricane Katrina struck in 2005. Railway Age has reported the current effort to restore service to Mobile, which could happen as soon as next year, but service all the way east to Florida still appears unlikely. Amtrak based its original route structure on endpoints, and was criticized for ignoring intermediate stops, even if all of them were different. When the Lake Shore Limited did not run, Empire Service in New York State hit a dead-end at Buffalo, except for a connection to a separate train on the Toronto, Hamilton & Buffalo (TH&B) and Canadian Pacific (CP) route to Toronto. It was the only train between the two countries at the time. Between Chicago and the Northwest, Amtrak chose the Empire Builder route on Burlington Northern, mostly on the historic Great Northern portion, over the more-southerly North Coast Limited route on the historic Northern 18 Railway Age // April 2021

Pacific route. The latter came back in 1972 as the tri-weekly and inaptly-named North Coast Hiawatha, which was also discontinued in 1979. There have been several unsuccessful efforts to restore service on part of that route over the past 30 to 40 years, and another has recently begun in Montana. Not every railroad joined Amtrak. The Santa Fe considered continuing to run its trains, which were still popular, but joined Amtrak at the last minute. Other railroads kept operating trains under their own flags. The Georgia Railroad ran a mixed train between Atlanta and Augusta. The day I rode, it had one dirty coach that had seen service on the Crescent in better times. The Rock Island ran its Quad Cities Rocket and Peoria Rocket between Chicago and those destinations, complete with a dining car. I bought a ticket to Morris, had a quick dinner, got off at Joliet, and returned to Chicago on a commuter train. The Southern kept running a train between Washington, D.C., and Lynchburg (a remnant of the Birmingham Special), a portion of the Piedmont Limited going only as far south as Atlanta on an all-day schedule, and a tri-weekly connecting train between Salisbury and Asheville, N.C. All of those trains ran post-Amtrak for only about five years. The Southern turned the New Orleans train over to Amtrak in 1979, and it became part of the Amtrak network as originally planned.

Passenger service representative Patty Saunders, circa 1972.

The most famous holdout was the Denver & Rio Grande, which continued to run its portion of the then-defunct California Zephyr between Denver and Salt Lake City as the Rio Grande Zephyr. It ran on a triweekly schedule that did not connect on the same day with Amtrak’s Zephyr to and from Chicago, so my first visit to Denver lasted 22 hours. The consist was magnificent, with domes on four of its eight cars, and a dining car that featured the railroad’s famous Rocky Mountain Trout for dinner. During that period, Amtrak ran its own San Francisco Zephyr on the Union Pacific’s Overland Route through Wyoming, which continued as part of the Pioneer until 1997. The D&RG’s independent train lasted until 1983, at which time Amtrak moved its train onto the Moffat Tunnel route, as was planned in 1971. So how are Amtrak’s routes doing today? In a nutshell, there are fewer trains than ever on most of them. Some trains have not run at all for the past year, as the COVID-19 virus has shut down many services, including public transportation. Amtrak’s greatest growth has occurred on its corridors; both the NEC and its branches, and state-supported routes elsewhere. Perhaps Amtrak’s greatest irony occurred there, too, because service on most of them has declined so sharply since the virus struck that service has fallen far below 1971 levels. There are only 30 railwayage.com

AMTRAK AT 50

Amfleet cars came in five configurations, including the long-distance Amcoach in this 1981 photo. Long-distance Amcoaches had 60 seats in a 2x2 configuration vs. coaches with 84 seats used on short-distance corridor services.

weekday trains (fewer on weekends) on the NEC and its branches today, compared with 73 in 1971. There were 19 trains on other corridors then (including Empire Service), and there are 23 on those lines today. There are 25 trains running on corridors established later, mostly in California. Things are beginning to look up. The 12 Amtrak long-distance trains that were reduced to tri-weekly operation in October 2020 are returning to daily service in late May or early June. That is a huge step in the right direction. Amtrak is also pushing hard for a new start, the first in two decades. Maybe it’s because Sen. Roger Wicker (R-Miss.) and Transportation Secretary Pete Buttigieg want it, but Amtrak plans to initiate service between New Orleans and Mobile as soon as next year. It would be the first new route since the Downeaster between Boston and Portland, Maine, started in 2001. If the line returns as planned, that in itself could be a harbinger of better times to come. Looking at a hypothetical alternative, though, we don’t know how long the trains would have lasted if the freight railroads had kept running them into the 1970s and maybe beyond. Only the Rio Grande Zephyr made it past that decade by three years. If all trains that were still on the rails in 1971 went through the ICC train-off process, how many would still be running today? railwayage.com

Maybe a few, but probably none. With its statutory mandate for profitability that knowledgeable people knew was fiction, the talk at the time was that Amtrak was designed to accelerate the demise of passenger trains and kill them off during the decade. Amtrak eliminated six trains in 1979, during the Jimmy Carter Administration, but the riding public had other ideas. There weren’t many trains left, but people kept riding them. They continue to object to losing their trains, and Amtrak’s flirtations with tri-weekly long-distance networks in the mid-1990s were reversed by public demand, or perhaps by the sort of political action that results from it. It is less enjoyable to ride Amtrak than it used to be, but at least we still have some trains—a skeletal network with only a few routes. The alternative would probably be no trains at all, except possibly corridors in the Northeast, California, and maybe Chicagoland. The fact remains that the network could grow someday, if circumstances change to support such growth. Amtrak hasn’t yet achieved many advocates’ and riders’ hopes that it would grow into a major national passenger rail network with numerous routes and corridors operating frequent service. But that’s better than no trains at all, which could be the situation today if it weren’t for Amtrak. Happy 50th Birthday, Amtrak!

Paul Reistrup served as Amtrak President from 1975 to 1978. He came to the company following extensive experience in passenger rail services with the Baltimore & Ohio and Illinois Central. Under Reistrup, Amtrak purchased the Beech Grove, Ind., heavy maintenance facility from Penn Central; introduced new Amfleet and Superliner cars into revenue service; and gained control of most of the Boston-Washington, D.C., Northeast Corridor.

A controversial figure, George Warrington (1952-2007) served as Amtrak President from 1998 to 2002. He had worked for the New Jersey DOT and New Jersey Transit, served as Executive Director of the Delaware River Port Authority, and oversaw Amtrak’s Northeast Corridor business unit prior to becoming President. Under Warrington, Amtrak completed Northeast Corridor electrification between New Haven and Boston and launched the high-speed Acela Express. In 2002, he returned to NJT as Executive Director.

April 2021 // Railway Age 19

AMTRAK AT 50

A VERY

SUBSTANTIAL ROLE

mtrak’s 50th anniversary comes at a time when passenger rail transportation in the United States, even in the face of a global pandemic that has decimated ridership and farebox revenues, is poised to grow. Among the faithful who have never given up belief in the passenger train (in its many forms), hope and optimism prevail. Activity in the sector, bolstered by an intelligent, knowledgeable President, Joe Biden, who staunchly believes in rail and is a long-time 20 Railway Age // April 2021

user of the mode, is rising. For Amtrak, it’s an opportunity to increase ridership, add services, and build relevance within the broader transportation spectrum. Railway Age spoke with Amtrak CEO Bill Flynn and President Stephen Gardner about the company and its future. “We just cannot say enough about how great our frontline workers have been through this past year,” Flynn says. Adds Gardner, “The company has performed really well through this period, driven by the commitment of our employees, and also

our recognition that aggressive action was necessary to deal with a crisis of this magnitude. We had to make a lot of hard decisions as a team, our employees did every day. But as a result, better days are ahead. Our government has been a strong supporter through this, and we’re hopefully starting our way toward a recovery. In the meantime, we made a lot of investments and continue to focus our efforts on the important long-term strategic elements of our plan, which puts us actually in better shape in a way than we were beforehand. Our core railwayage.com

AMTRAK AT 50

Amtrak’s Bill Flynn and Stephen Gardner share their vision of the future for “America’s Railroad.”

Amtrak/Marc Glucksman

BY WILLIAM C. VANTUONO, EDITOR-IN-CHIEF

construct here is that we think Amtrak can do a lot more for the nation. There’s just a lot more that passenger rail needs to do and can do. We’ve been really focused on putting the company in position to be able to do more.” Flynn points to several key areas, among them, “the substantial economic impact that Amtrak has and can have as we grow services over time in communities,” he says. “We’re an essential part of the country’s mobility strategy, particularly when you think about constraints that exist in other railwayage.com

surface transportation modes, and the huge sustainability impact we can have in terms of whether it’s our carbon footprint or other elements of natural resource consumption, etc. We hit on all of them.” There’s a strong renewed emphasis on climate change and sustainability in the Biden Administration. What will Amtrak’s role be? “We have a crisis in the country, in the world, driven by climate,” says Gardner. “The largest segment of GHG emissions in the United States is transportation, at 28%. There’s just no way to deal with climate

change and reducing GHGs unless rail does more—passenger and freight.” “We’re excited about the new Administration, and about the conversations we’ve been having with Transportation Secretary Buttigieg and other folks in the Administration, and I would argue, a very good alignment on the Hill,” says Flynn, who points to strong evidence of bipartisanship at recent Congressional hearings, citing questions that were asked about longdistance services and the Northeast Corridor Gateway Project. “Certainly, I believe April 2021 // Railway Age 21

AMTRAK AT 50

Amtrak could be a model for sustainability, going forward,” he says. “We’ve got a good aggressive goal set in terms of GHG, not just that we are a better choice on a perpassenger-mile basis in terms of our carbon footprint, but the work that we’re doing to reduce our carbon footprint so that it improves even on a relative basis.” “There’s no credible strategy that gets us anywhere without mode shift,” notes Gardner. “To get the emission level reductions we need, we’ve got to build alternative methods. Amtrak intercity service is 47% more efficient than driving or domestic air travel. Rail is the low-carbon, high-volume, high-capacity mode. We’ve got to develop it in the right corridors, in the right places where it can make material impacts. And to do that we need high-quality service, 22 Railway Age // April 2021

multiple frequencies and competitive trip times. Electric vehicles do not address the fact that this nation’s population is continuing to grow, and that the capacity in the highway network is not sufficient to scale for that increased growth in population and demand. We have the largest rail network in the world of any nation substantially. We have an existing infrastructure and network to use that we can expand for passenger rail, with relatively small impacts on communities, and create that low-carbon capacity to help economic development and opportunity, and provide a clear mechanism for people to make important trips, but at a much lower carbon price. We’ve already reduced our emissions 20% from 2010, and we’re on track for at least a 40% reduction by 2030.

“We’ve got a dynamic and robust network, so what might make sense for long-distance service might not apply in short corridors, and where we have electric traction in place, we have a different model. So it’s clearly going to take a variety of solutions. Amtrak should be at the forefront of looking at these options, and we aim to work with our freight railroad and commuter rail partners and with the Federal Railroad Administration, which we think should be helping to drive this research and development for the industry as well.” Some of this will require new and/or improved rail infrastructure. One example of such an initiative is already under way, in Virginia, where the commonwealth has partnered with Amtrak, Virginia Railway Express and CSX on an ambitious, railwayage.com

Amtrak

AMTRAK AT 50

$3.7 billion project to add rail passenger and freight capacity to the Washington, D.C.-Richmond corridor. Among many improvements, it involves constructing some passenger-exclusive right-of-way. (Details, p. 6.) With the Biden Administration placing greater emphasis on transportation and infrastructure, there’s reason for optimism, albeit cautious, regarding Amtrak funding. “We are continually being told by our passengers as well as our state partners that Amtrak has a mission to provide services across the country,” says Flynn. “The Biden Administration is supported by a broad coalition on the Hill. There are large swathes of the country where there’s a need for rail service. The population in the South throughout the 50 years that we’ve railwayage.com

been operating has doubled. The Western states have grown by 120%. The level of services that we have across many of these communities and regions is the same we had in 1971. The road congestion in many large population centers has increased from when we started. There’s not really room for two more lanes on each interstate, in terms of cost and time and the economic and environmental impacts. The Administration is highly supportive of what Amtrak can provide our country.” Then there’s the Northeast Corridor, of which Amtrak owns and operates the majority. Some estimates say there’s a $45 billion backlog in state-of-good repair, upgrades and new infrastructure. “Of the 457 miles of the Northeast Corridor, we own 380 or so,” says Flynn.

“Roughly 57 million people live in the Northeast Corridor, 17% or so of the country’s population. There are 2,200 trains a day moving up and down that corridor, on infrastructure that was built in the 1900s. The infrastructure needs are great. A large portion of it has not been addressed for more than a century. The nation got a good deal on infrastructure built in the 1870s, like the Baltimore & Potomac Tunnel— when Grant was President, before the electric light bulb and the telephone—and on the bridges and tunnels in and around New York built in the early 1900s, but they simply need to be replaced. Embedded in that is the Gateway, the 10 miles or so through New Jersey, under the Hudson River, and into Penn Station. On top of that, there are the East River tunnels, and bridges April 2021 // Railway Age 23

AMTRAK AT 50 in Connecticut and over the Susquehanna River. This is tremendous infrastructure that simply needs to be replaced. The price tag is large. Not a lot has been done in the past four years, so four years later everything costs more. We need to move forward on this critical rail infrastructure.” There have been some reversals in policies enacted by the previous Administration that indicate Gateway will begin to move forward. “It’s an exciting time for the Gateway Program because we do see some strong support from this Administration on moving forward,” says Gardner. “The two states (New York and New Jersey), Amtrak and the railroads have all been working hard for many years. If we want a Northeast Corridor that is designed to handle the next 50 years, not the past 50 years, we’ve got to create capacity so that trains can do more in the region, most particularly commuter service. We’ve got to make this set of investments. Amtrak intends to grow, but there’s massive demand for more New Jersey Transit service, and ultimately more Long

Island Rail Road and even Metro-North. The Northeast Corridor has a lot of needs, and it provides an incredible value to the region. For the first time in our history since Penn Central, basically, we have a coherent plan among all the owners and operators for improvement, through some work done by the Federal Railroad Administration with all of the owners and operators and the NEC Commission. We’ve created a plan, NEC FUTURE, on which the USDOT issued an environmental decision a few years ago, and that gives us all a pathway forward. We really haven’t had that throughout our history. The original Northeast Corridor Improvement Program (NECIP) was an important investment, but it didn’t involve the kind of collaboration and the comprehensive view of both the intercity and commuter rail service. There are also 70 freight trains a day (pre-COVID) on the Northeast Corridor. A state-of-good repair investment is necessary to keep the present network reliable.” “We need a clear federal partner to make our plan happen over a long duration,”

notes Gardner. “This isn’t about giving Amtrak and some of the states some money once. This is about a sustained 20-year investment program. It’s just like the problem facing the nation with the interstate highway system. How do you build out a comprehensive system? How do you design something that really meets the needs of the interstate system, the nation, in our case the region? How do you go about doing that, recognizing it’s going to take a long time? You have to have a coherent sequencing of projects and programs. We are very hopeful that through advocacy from the stakeholders, through the Biden Administration, and through the states and commuter railroads, we can get attention to addressing this issue. We’ve done the homework to figure out what needs to be done, how to do it, and how much it’s going to cost. What we now need is commitment, a partnership so that we can launch that program. It’s going to take a while, but it’ll produce fantastic benefits.” As for the rest of Amtrak’s national

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Air Brake Hoses and Fittings • End of Car Arrangements • Couplers and Knuckles • Yokes • Draft Systems • Truck Components 24 Railway Age // April 2021

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AMTRAK AT 50 network, “more of America is looking like the Northeast Corridor,” Gardner says. “That’s the key that people forget. Between 1971 and now, 120 million people have been added to this nation, the vast majority of them in the South and in the West. Those communities, those regions, are starting to gain the kind of density and the sort of issues that make rail so important to the Northeast Corridor. Texas and Florida together are 51 million people. Think about the level of service in these two regions. Amtrak has six routes and 11 frequencies serving Texas and Florida, 20 routes and 162 frequencies serving the Northeast Corridor. The Midwest, in places like Ohio, is remarkably underserved for its population and size. We think it’s vital that the nation expand service there and in other regions through a variety of means and services. We need accommodation of long-distance corridor service, and high-speed service where the market makes sense. It’s not one size fits all, but we can and should do more.” A substantial portion of expanding

railwayage.com

services to meet demand is co-existing on the rail network with freight railroad hosts, a relationship that has been, since Amtrak was founded, tenuous. “We work closely with our host railroads, and the relationship isn’t the same across each of them,” says Flynn. “We have some very good working relationships that have the ability to grow and expand, and others where it’s still more challenging to grow and provide the services that Stephen just described. They will all play an important part going forward, not just for our company, but for our country. Yet, we’ve got to move forward to ensure that our passenger operations benefit from the statutory preference they’re entitled to. Resolving this will be an essential component of our ability to grow rail services across the country.” “It’s pretty simple in a sense,” adds Gardner. “We want a strong partnership with freight railroads where they recognize the obligation they have to the public to support passenger service on their networks. In Amtrak’s creation, we essentially became

the agent of their fulfillment of their common-carrier obligation for passengers. We believe that, together, we can do amazing things to grow the capacity of passenger and freight. We need both to grow enormously to meet the challenges of the nation. We view our service as an obligation to the nation, as something we need to deliver. We can do so through access to our host railroad network, and we need their support to meet that mission. We are ready to invest to find those common opportunities, but we want to be treated like a customer and a partner performing an important mission for the nation, not as a hostile impingement on their network, which frankly is, in some cases, what we experience.” Basically, it’s got to be a collaborative effort. The freight railroads and Amtrak have to work together to bring more value to the nation’s rail system. A reliable, perpetual funding stream is a big part of it, in terms of infrastructure, equipment and technology. Such are the elements that need to come together to make it all work.

April 2021 // Railway Age 25

CROSSTIES LT Resources recently acquired American TieTek’s assets. Pictured: TieTek® composite ties installed with standard production equipment.

SETTING THE

FOUNDATION From wood to concrete to composites, suppliers are not only providing crossties, but also related components and tools—plus lifecycle options—to meet market demands.

rosstie consumption is expected to reach just over 19 million in 2021, according to RTA Executive Director Ashley Goodin, as Class I railroad capex—which also includes bridge programs and siding extensions—rises, and short lines boost investments following permanency of the 45G tax credit. With the Biden Administration focused on infrastructure projects, coupled with a stronger GDP (Gross Domestic Product), 2022 could be an even stronger year, eclipsing the 20 million mark for the first time since 2018, Goodin reports. A majority of ties are wood, dualtreated with borate and creosote, but other preservatives, such as copper naphthenate, are making inroads, he says. For more on market conditions and the latest in crosstie and related offerings, Railway Age turned to a variety of suppliers. Their insights follow.

26 Railway Age // April 2021

ENCORE RAIL SYSTEMS, INC. Over the past five years, the specification for using crosstie plugging compounds to seal the tie, fill any voids and keep out moisture has grown, along with concrete tie repair products for rail seat abrasion prevention, according to Nick Delmonico, Director of Sales and Marketing. Encore’s newest product is a larger, 1,500-milliliter cartridge that can be used to plug up to 85 holes before changeout. The company’s continued focus: equipment safety and reliability. “We pride ourselves on our machines’ ‘uptime,’” he says. Although contractor projects were down in 2020 since fewer were put out to bid, business is picking up, according to Delmonico. “We’ve seen that most of our customers have gotten off to a pretty early start this year, as a lot of people were eager to get back to work, and we are hoping that is sustainable throughout the year.” The company anticipates getting back to 2018-19 business levels.

FOCUSED TECHNOLOGY SOLUTIONS To eliminate the need for gas or hydraulics, Focused Technology Solutions (FTS) offers railroads dual-use battery-operated tools. “Everything we do starts with the customer,” President Peter Bartek says. Among the company’s latest developments—suggested by railroads—are in-series and in-parallel battery packs that use standard Milwaukee or DeWalt battery platforms. FTS also has an agreement with Pandrol to produce the EclipEase, “the first battery-operated e-clip inserter and remover,” according to Bartek. Both are expected for release within the next couple of months. In addition, the company is expanding its offerings with products unrelated to tools. FTS is not only working on a system to prevent derailments in rail switching yards, but also anti-collision for locomotives. These technologies, too, will be coming out in a few months, according to Bartek. railwayage.com

TieTek Global

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Ties treated with QNAP are safer to handle and won’t burn skin. And they are less slippery when wet, a feature loved by bridge crews. The environmental profile of QNAP is superior to other oil-borne preservatives. It is not listed as a carcinogen or probable carcinogen. QNAP ties can also be used as boiler fuel repurposed in landscaping or sold to homeowners at the end of life.

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CROSSTIES

GROSS & JANES CO. “The current market condition for crossties remains strong,” says President Bill Behan. “Western Class I railroads have not diminished their procurement plans for 2021, and the long-term outlook looks to be the same. The hardwood lumber market rebound and limited log availability have placed industrial products, like crossties, as the ‘stepchild’ to price. Sawmill operators have more sawing and selling options today vs. 2019. As such, crosstie production will become constricted, resulting in a shortage, which prolongs the cycle. The next 24 months will be an interesting period for crosstie supply.” Purchase orders, he says, are outstripping supply. In addition, “SYP bridge timbers are in high demand at a time in which softwood lumber is experiencing record price highs.” KOPPERS, INC. For Koppers, 2020 was a solid year, according to Vice President of Sales and Marketing John R. Giallonardo. While Koppers’ products are mature, “we’re always looking at ways to extend tie life, always looking at new preservatives where applicable,” he says. Giallonardo, like Gross & Janes’ Behan, tells Railway Age that the company is “starting to see some shift in market conditions” for raw materials, the untreated ties, as housing starts have gone up and lumber is in greater demand. “I’m optimistic about 2021,” Giallonardo says. “I feel like the demand will be there from the railroads. The big thing will be making sure that the supply keeps up with the demand.” 28 Railway Age // April 2021

L.B. FOSTER CO. For more than two decades, CXT® Inc./L.B. Foster has worked closely with owners and engineering firms to standardize its concrete tie design to be environmentally sound and economically efficient, according to the company. “Our engineering and R&D efforts have been focused on solving our customers’ important challenges with specifically developed concrete tie solutions,” says Vince Petersen, Engineering Manager. The company recently branched out into alternative concrete products, and provided regional utility Avista a standalone wall using precast panels. Despite some project delays due to COVID-19, the company says it has been awarded supply contracts by ConQuest for the Division 20 Portal Widening Turnback Facility Project at Los Angeles Metro, and by Railworks for the Houston Metro Rail Operations Center (ROC) yard expansion. “Concrete tie pricing variance relative to timber crossties has been favorable in the past 12 months, increasing our competitiveness,” Petersen says. LONZA “The market conditions in general for wood protection are very robust,” says Tim Carey, Product Line Manager. “Whether it’s residential or industrial usage such as ties or utility poles, it’s been very strong.” Lonza recently wrapped up an eight-year study with Mississippi State University to test ACZA (ammoniacal copper zinc arsenate),

NARSTCO Customers throughout North America are seeing the operational, installation, environmental and financial benefits of steel ties and turnouts, according to Matt Violin, Senior Director of Sales and Marketing. “In keeping up with our ever-changing customers’ needs and requests, we are currently working on projects that involve the rehabilitation of aging infrastructure with NARSTCO’s ‘partial turnout and headblock tie sets,’” he explains. “This allows railroads and industrial rail operators to upgrade one of the more critical areas of a switching yard with top-performing, durable NARSTCO steel ties and turnouts. We’ve also developed a crane rail tie for use in gantry tracks. These have been used in lumber facilities and similar applications.” NARSTCO expects a steady increase in projects throughout 2021. “With the recent strengthening of the Buy America Act, we expect to see more interest and opportunity,” Violin says. NISUS CORP. According to Divisional Vice President Wood Preservation Ken Laughlin, Nisus is “seeing the Class I’s dual-treating about 50% of their ties, which are mostly going into the higherhazard zones, leaving opportunity for railroads to increase tie longevity in other parts of the country.” Many of these railroads, he adds, are using the company’s Cellu-Treat Liquid Borate for dip treating ties before air seasoning to avoid incipient decay, and QNAP copper naphthenate continues to gain market share. Longevity improvements with QNAP and Cellu-Treat dual-treated ties means fewer ties coming out of the track, reducing the volume of ties for end-of-life planning, Laughlin says. railwayage.com

Encore

Encore focuses on equipment safety and reliability. “We pride ourselves on our machines’ ‘uptime,’” says Nick Delmonico.

an industrial preservative, on hardwood ties in harsh environments. It is non-volatile, non-aromatic, non-oily and “fixed” (with limited leachability), according to Carey. In Lonza’s test, it was added to crossties and installed on short line railroads with Class I interchanges in Florida, Georgia and North Carolina, as well as at Mississippi State and Lonza testing facilities. The treated ties have held up over the study period, Carey says. In Florida, for example, the Chemonite ACZA tie is holding up well after eight years of service, while the creosote tie is failing after only seven. Lonza is selling the preservative for use in environmentally sensitive projects, such as bridges on the West Coast.

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CROSSTIES Among the company’s latest offerings is its BTX system, which allows railroads to dualtreat green bridge ties that cannot be air-dried, according to Jeff Lloyd, Senior Vice President, Innovation and Sustainability. It has also developed “a new accelerated diffusion process to enable the dual treatment of switch and cross timbers,” he says. “The railroads are strong environmental stewards, and similar to other industries, they are looking at the full life cycle of their resources,” Lloyd tells Railway Age. “QNAP ties obviously meet the NHSM, but Nisus has also been working on tie biodegradation and gasification to produce energy and sequester carbon from ties at end of life.” It has also been researching recovery and re-use of preservatives from ties as part of end-of-life planning. OMAHA TRACK Omaha Track disposes of about 2.5 million to 3 million scrap ties annually—not only through cogeneration, but also through sales to landfills for use in roadbeds, and reclamation for landscaping and tie replacement, for example, according to President Jeff Peterson. Business has been steady, he says, and PSR (Precision Scheduled Railroading) has tightened work windows. Another challenge: While disposal demand is not declining, the supply of outlets to dispose of ties is diminishing. The value of scrap ties has lessened considerably, Peterson explains, as power companies are paying less since there is more biomass on the market—other wood waste, forestry residue, agricultural waste such as corn stalks, and manure—that can be used as fuel. “We are always looking for new and innovative ways to dispose of railroads ties,” Peterson says. Pyrolysis is one possibility, he says, although the technology has yet to mature.

For more information, please contact: TieTek Global LLC www.tietekglobal.com 800-440-1517 • 281-444-3494 sales@tietekglobal.com

30 Railway Age // April 2021

PANDROL Pandrol continues to see strong demand for its core products, according to Jim Martin, Vice President of Sales and Marketing for North America. “Clips are still the driving force of Pandrol—that’s the biggest demand,” he says. Class I business remains steady, but transit business is still a question, due to the pandemic. While maintenance schedules continue, Martin says, new project work has been delayed in some cases. Pandrol is also a distributor of SiCut composite crossties, and Martin says there is increased interest in their use. “The beauty

of composite ties is they can be made to any size, shape or dimension, so they can be used on bridges or turnouts or just your standard tangent track and curves,” he explains. “The value is their long life, and they are eco-friendly.” In late summer, Pandrol is slated to introduce the Autoseal Mold for thermite welding in the U.S. Already in use in Europe, it provides a higher quality, consistent weld, Martin says. Pandrol also recently began offering its first battery-operated tool, the Ecoshear. STELLA-JONES CORP. For Stella-Jones, “we haven’t skipped a beat,” says George Caric, Vice President, Railway Tie Marketing. Demand for treating and shipping ties has remained strong. Maintenance has continued for the Class I’s, and short line work has picked up with the permanency of 45G and more companies taking advantage of CRISI and other grants related to tie and rail replacement, he says. Additionally, Stella-Jones is working with copper napthanate treatment for bridge ties and continues to look at tie reclamation and used-tie recycling. As cogeneration capacity decreases, the company is exploring new ways to dispose of spent ties. It is part of a consortium with Indiana Rail Road Co., CSX and Koppers Recovery Resources, which recently signed a five-year agreement with Purdue University to find markets for custom biochar mixtures created from pyrolysis of spent ties. They will study how it can be used in water purification, polymer additives, soil amendments and chemical feedstocks. TIETEK GLOBAL According to President Linda Thomas, market conditions for TieTek® Engineered Polymer Composite Ties have increased substantially compared with last year. Many projects that were delayed in 2020 are now out for bid. “Demand for 2021 and beyond is expected to remain strong,” she says. TieTek Global’s Marshall, Tex., production facility is slated to reach full capacity this year, Thomas tells Railway Age, and there are plans for a new multi-carrier facility to be constructed within the next 12-18 months, providing additional capacity to meet demand for TieTek ties, Endurance composite crossings and related products. Railroads continue to seek quality track materials that provide the best life-cycle benefits, Thomas says. And interspersing TieTek ties railwayage.com

CROSSTIES L.B. Foster Co. is supplying concrete ties for the Houston Metro Rail Operations Center yard expansion project with Railworks.

with treated wood ties or in new construction, she explains, “will reduce and eventually eliminate ongoing tie replacement costs, including not only the cost of the tie, but also associated labor, equipment, downtime and disposal

costs. The use of TieTek composite crossties, switch ties and bridge ties (manufactured using 80% recycled materials and recyclable if mechanically damaged) is also beneficial when addressing internal sustainability goals.”

VOESTALPINE RAILWAY SYSTEMS NORTRAK The Rail Fixation Team at voestalpine Railway Systems Nortrak is focused on building a portfolio of concrete ties, rubber vulcanized direct fixation fasteners and resilient clip and pad systems, leveraging in-house concrete manufacturing, plastic injection molding and its ductile iron foundry. “We have embraced the systems supply approach, and that has lowered costs for our customers, optimized lead times and enhanced product performance with an integrated design and manufacturing process,” says John Stout, Vice President of Rail Fixation Systems. The company is currently involved in multiple system expansion projects in Los Angeles and Seattle, and was recently awarded the San Francisco BART Hayward Maintenance Complex Phase 2 material supply project, which includes concrete ties, fastening components, turnouts and rail. “In alignment with the broader North

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CROSSTIES To eliminate the need for gas or hydraulics, Focused Technology Solutions offers dual-use battery-operated tools.

American economy, we have seen continued recovery for the specialty concrete tie market segment in 2021, but demand has not yet returned to pre-pandemic levels,” says Stout. “Nortrak is forecasting

modest growth prospects, but the longterm outlook is heavily dependent on the recovery of Class I traffic and the progression of passenger rail capacity expansion programs.”

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WILVACO “The interest in restoring crossties rather than replacing them is very high, and we expect this to continue, as reducing maintenance costs and crossties replacement costs is a high priority for most railroads,” says Rob Loomis, Business Manager, Performance Products Division. “Our SpikeFast products have proven through third-party testing to hold gauge in both wood and concrete crossties longer than other traditional methods, such as wood plugs or air-filled foams and epoxies.” Based on customer feedback, the company is offering a new insulated joint repair product “that is quick and easy to install” and a high-performance rail coating “to help isolate the rail from corrosion and electrical current,” Loomis says. “We invest heavily in R&D and innovation with the goal of providing the most cost-effective solution,” he adds. “In a railroad industry that is always in motion, we approach our products and technology in the same way—constantly advancing our solutions to solve the problems of tomorrow.”

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36 Railway Age // April 2021

We call this the cascading technology trap or “The Trap”: Technologies are evolving at a significantly faster pace than the ability of organizations to adapt. This problem is not unique to the railroad industry. We’ve encountered this in other industries that are further into their digital transformations, such as telecommunications service providers and smart cities around the world. The cascading technology trap is more difficult to overcome than

other challenges such as regulatory, financing, and ecosystem partnerships. Organizations and ecosystems get caught off-guard in vicious cycles of technical debt, while the demands on their capability maturity surge. The Trap is activated by at least six triggers that are unavoidable given the nature of the digital transformation and the traditional nature of the organizations undertaking the transformation. How can railroads leverage the rapidly railwayage.com

Shutterstock

s the railroad industry is going through its digital t r a n sfor m at ion — suc h as implementing broadband communications and applications that leverage Cloud technologies, including Artificial Intelligence (AI) and Industrial Internet of Things (IIoT) for operational and commercial purposes—we are finding there is a clear lag in the deployment of technologies vs. what technologies enable.

BY SONIA BOT AND FRANK RAYAL

DIGITAL TRANSFORMATION

changing and competing offerings from Cloud providers, telecommunications giants, 5G equipment manufacturers, system integrators and legacy infrastructure vendors by using the lessons learned from other industries to successfully avoid The Trap? A set of internal and external strategies can be deployed based on factors such as a railroad’s or transportation ecosystem player’s articulated strategy and business objectives, size, location, governance structure and economic conditions. The case study of a broadband communications technology deployment illustrates both the triggers and the strategies to avoid The Trap. railwayage.com

FACTORS THAT TRIGGER THE TRAP Companies have trouble in moving from proof of concepts of digital transformation to full transformation, or they deploy, but miss market windows, requirements, schedule or cost targets due to the following six factors which act as Trap triggers: 1. Pace of innovation is faster than what industries can absorb: The velocity of technology evolution exceeds the ability of railroads (and others, such as system integrators and regulators) to assimilate knowledge, make decisions, plan, design and deploy at scale. By the time evaluations are done or investment commitments are made, there is already a next generation available. This can create strong competition between multiple technologies and draw into question lifecycles of investments. 2. New technologies are forcing multiple paradigm shifts: A move toward virtualization and software defined networks, renders current processes, structures, solutions, business models and financial accounting no longer sufficient or applicable. 3. Standards and regulations have not evolved at the same pace as the technological advances: For risk-averse organizations, it is difficult to bet on which technologies will win. Several technologies end up competing in similar applications, making it tougher to bet on standards and set regulations in the short- and near-term horizons. 4. Disconnected handoffs between technology providers and adopters: The companies that are driving technology innovation, primarily the technology giants such as Amazon, Google and Microsoft, have fundamentally different models of developing and deploying software (such as DevOps) that make it difficult for others to absorb and adopt, with railroads seeing an even greater challenge in doing so. 5. Dealing with the internal corporate chasm: Scaling-up, that is, moving from an explore (Research & Innovation) to an exploit (Develop/Integrate & Deploy) operating model, is a tricky endeavor. Each side of the chasm (explore, exploit) has differing strategic intents, competencies, structures, cultures, skills, risks, rewards, etc. Often, companies are missing the right processes, mechanisms, skills and experience for executing this transition. 6. Increasing complexity of technology is fuelling high tech talent wars: Skillsets

and experience required for implementing the digital transformations are sophisticated and come at a high cost. Technology giants, in particular the Cloud players, are more successful in attracting the top tech talent than railroads. The bulk of the technical knowledge and know-how rests with these giants, while others starve. STRATEGIES FOR ADDRESSING THE TRAP’S TRIGGERS Approaches that enable railroads and the transportation ecosystem to avoid The Trap fall in two categories: a. Leveraging external players b. Developing internal capability maturity Four strategies that leverage external players either directly or indirectly, are based on a railroad participating with external sources to help bring aboard the new technology: 1. Start-ups as catalysts: Fast-moving innovation can come from start-ups, such as those developing AI solutions for rail infrastructure monitoring, or intermodal management; a fast-growing list of opportunities. They are probably the best at integrating rapidly evolving technologies and deploying them economically. The inherent risk of working with start-ups must be mitigated through a well-balanced model of ensuring that the selected ventures have a good likelihood of survival. This can include defining a start-up-friendly deal-flow and procurement process. Railroads need to ensure that they accommodate to the start-up’s cadence, which is fast and lean, so as not to stifle them. 2. Joint ventures or links with leading technology players: Traditionally railroads source their solutions from specialized vendors, often locking themselves into those solutions. Modern technology is complex, with paradigm shifts in hardware and software. System integration becomes an even more critical activity. So now one also needs to bridge into globally leading technology players that have a fair control over technologies central to railroading and transportation. These players are leaders in their technologies who aim at disrupting the status quo in adjacent markets. Primary approaches include providing incentives to these players to dedicate resources to railroads and enacting favorable regulations for them, for example, related to wireless frequencies, data privacy, drones, etc. The advantage of this model is that it ensures that the latest technologies are April 2021 // Railway Age 37

DIGITAL TRANSFORMATION

Figure 1: Converged connectivity network framework and some use cases for the railroading industry.

deployed. On the other hand, the high rivalry between the Cloud players and other players in the ecosystem shifts the challenges to regulatory and politically sensitive ones. 3. Consortiums: The strategy relies on building an ecosystem that includes entities such as railroads, transportation partners, technology players and system integrators, R&D labs, telecom and satellite operators, start-ups, and universities. Solutions are chosen based on a cooperative model among all parties to share experiences and minimize risks. This model has the advantage of creating additional synergies between the various players in the railroad / transportation value chain. On the other hand, decision-making tends to be complex and proper governance must be in place. 4. Fast-follower: This approach is used as a mechanism to accelerate the path and reduce costs to the end goal and not a delay tactic. This model has the advantage of optimizing 38 Railway Age // April 2021

the deployment cost structure, based on the lessons learned from the first-mover. On the other hand, being a fast-follower risks making the technology decision too late, where the technology may have already moved into its next cycle. With each wave of Digital Transformation, the baseline for capability maturity level of the organization re-sets per the new transformation requirements. An organization has the following four levers to improve internally to face the disruption necessary to successfully navigate the transformation and avoid The Trap: 1. Contemporary operating models: Many of the traditional operating models require re-design or re-alignment for operating in a digitally transformed world. For example, network function virtualization (NFV), which replaces hardware functions with software, moves the accounting model from CAPEX to OPEX. Service planning lifecycles are now shorter, resulting in a

paradigm shift from the traditionally long ones. At this time, one strategy does not fit all; hybrids will emerge. One needs to examine on a function-by-function basis to determine the best approach, based on requirements for business objectives, security, performance, reliability, regulatory and cost, to name a few; and to set them in the context of measurable business goals. 2. Aligned and adaptable processes: Processes (such as operating, management, support, enabling) define, capture, and support the new value chain brought forth by the Digital Transformation. Processes for operational and informational technology (OT-IT) convergence must be defined. Processes for evaluating, developing, integrating, testing, and deploying software must evolve to align and adapt to technology industry best practices. The same applies to processes for scaling-up from explore to exploit operational models, integrating railwayage.com

DIGITAL TRANSFORMATION

Table 1: Map of the technology trap triggers vs. effectiveness of the counter strategies for the railroading industry.

start-ups or acquisitions, and so forth. 3. Futureproof Technology Solutions: It is important to have well-defined architectures and interfaces that are well-amenable to evolution and change. For example, 5G comes with many interfaces and APIs built-in for future evolution, so one needs to understand these interfaces to avoid vendor lock-in. 4. High-end talent and innovation culture: Bringing in top-tier experts and tiger teams to bridge the divide between new technologies and their implementation timelines is key. Not only will they deliver faster with higher quality, they can also help develop the in-house talent and build capable technology teams. As with any transformational endeavor, consistent and accountable involvement of the full leadership team, including C-suite, senior executives and executive sponsorship, are essential. They manage and hold accountability for the explicit links to strategy, business objectives and risk appetite. They are integral in driving the evolution of the culture for the next generation of railroading. To inoculate an organization against the most likely Trap triggers, we suggest considering the following strategies “good-better-best” railwayage.com

roadmaps for action. A “good” roadmap would enact at least one strategy for a perceived trigger, and a “best” roadmap would use all applicable best-in-class strategies. (See Table 1.) In addition, consider a railroad’s articulated strategy and business objectives, size,

It is important to have well-defined architectures and interfaces that are well-amenable to evolution and change. location, governance structure and economic conditions. Let’s look at a transformation example for deploying a next generation communication system at a railroad.

DEPLOYING NEXT-GENERATION RAIL COMMUNICATION SYSTEMS The deployment of Future Rail Mobile Communication System (FRMCS) is a good example to highlight The Trap. The International Union of Railways (UIC) is coordinating activities among primarily European railway associations and the ETSI and 3GPP standard bodies to develop standards for FRMCS which is based on 5G technology. This makes for a major step function in technology from GSM-R, which is based on 2G technology. Europe mandates GSM-R while North America uses a number of systems depending on application, including VHF and UHF narrow-band voice solutions. China, Australia and Korea have implemented LTE-based solutions. (See Figure 1.) Vendors are planning on obsoleting GSM-R by 2030, a technology that was developed in the mid-1990s. In the intervening period of 35 years, 3 generations of wireless technologies came to market at a rate of 1 every 10 years. The rise of Cloud technologies and business models made a defining impact on 5G technology. Let’s illustrate the impact on the operator by using network virtualization as an example. Even though all the triggers April 2021 // Railway Age 39

DIGITAL TRANSFORMATION apply, we’ll focus on a subset here and on the proof-of-concept phase. New technologies are forcing multiple paradigm shifts. Railroad communication systems are monolithic in nature where dedicated hardware solutions perform specific functions. In contrast, virtualization allows software-based network functions to run on standardized hardware. This fundamentally changes the paradigm for the planning, deploying, operating and maintaining communications network. For example, virtualization changes the network architecture allowing for scalability and elasticity in resource provisioning. The result is a different equation between performance and cost economics. In practical means, the operator needs to decide where and how to run the various communication network elements, on private, public and hybrid Clouds. Managing a host of software functions requires a new approach to operational and business support systems to manage the virtual network infrastructure and orchestrate the software functions that comprise and end-to-end service. Automation is core to such activities. Virtualization changes the nature of the relationship between the vendor and the operator such as those related to the division of responsibilities and business models which can shift from CAPEX to OPEXbased models. Virtualization enables faster roll out of services as it reduces the entire planning and deployment cycle. Virtualization requires a cultural shift by the operator from a hardware-centric to a software-centric mentality. Operations of the network will change in terms of organizational design and skills, methods and procedures and associated training and technologies underpinning the transformation. Dealing with the internal corporate chasm. Moving from a proof of concept of network virtualization in a given market vs. retooling all regions from a people, process, and technology standpoint is a chasm of scale that few can accomplish in required timeframes, per requirements, and on budget. How can the railroads resolve these key issues in our case study? For the proof-ofconcept phase, here is how we connect the 40 Railway Age // April 2021

dots in our case study, because of this railroad’s particular characteristics (strategy, objectives, size, geography etc.): Looking at internal strategies to deal with virtualization, the railroad needs to recruit engineers with software expertise to interact with vendors and system integrators and plan new processes for network deployment, maintenance and optimization. Network applications require new processes that span the entire chain from procurement through test and verification to deployment. This also leads to new operating models that impact the organization along both internal and external dimensions. Moreover, proper application programming interfaces need to enable the integration of future applications (future-proofing). As for external strategies, the railroad will have to look at new models and partners, for instance, related to hosting and data center services. Moreover, for certain advanced applications, rail companies may have to work with start-ups developing advanced technology such as computer vision technology. We’ve encountered these triggers and applied these strategies in other industries that are further into their digital transformations, such as telecommunications service providers and smart cities around the world. One word of caution, though, is that playbooks from one industry or organization may not effectively fit another one. This is where some playbooks must be tailored, while others require validation for re-use. BECOME A PROACTIVE ORGANIZATION Building digital capacity and capability in an organization and industry—and avoiding the cascading technology trap—is an evolutionary process, done in well-designed, swift, and controlled stages. Railroads have much in common but also differ in important aspects that necessitate tailored models. While we presented different approaches to avoid the cascading technology trap, it would be a hybrid approach that provides most benefit. New-entrant competitors add to the urgency as they are further ahead in digitalization capabilities, and often, don’t have to undertake a large-scale transformation. They started life as a butterfly, so they don’t have to evolve, from egg to larva to pupa, to beautiful Monarch.

Sonia Bot, chief executive of The BOT Consulting Group Inc., has played key roles in the inception and delivery of several strategic businesses and Sonia Bot transformations in technology, media, and telecommunications companies worldwide. By utilizing methodologies in entrepreneurship, business precision, Lean Six Sigma, systems and process engineering, and organizational behavior she’s enabled organizations to deliver breakthrough results along with providing them a foundation to continue to excel. She was instrumental in PTC implementation on CN’s U.S. lines. Her approaches on the evolution of railroading and transportation are game changers that drive innovation and competitive advantage for adopters in a changing industry. She holds engineering degrees from the University of Waterloo (BMath) and the University of Toronto (MASc) and is a certified Lean Six Sigma Master Black Belt. Sonia can be reached at sdbot@botgroupinc.com. Frank Rayal is founding partner at Xona Partners, a boutique management and technology advisory firm with a global footprint closely tied to leading innoFrank Rayal vations hubs. He helps companies generate new revenues by developing new technologies, markets and strategic partnerships. Frank advises private equity investors on technology M&As including those for telecom and Cloud infrastructure assets. He was a co-founder of BLiNQ Networks, and had held senior management roles at technology vendors Redline, Metawave , and Ericsson. Frank has a MASc in Electrical Engineering and MBA from the University of Toronto. He is a senior member of IEEE, and a member of Professional Engineers Ontario. Frank can be reached at frank@ xonapartners.com. railwayage.com

RAILINC FREIGHT CAR REVIEW 2021

STEADY STATE, MOSTLY Continuous growth in the North American rail fleet paused, slightly, for the first time since the Great Recession.

ailinc’s annual analysis of the North American revenueearning fleet reveals that the total fleet decreased in 2020, with all but one of the major groups—the exception being tank cars— accounting for the loss. The revenue-earning fleet is a subset of the North American rail fleet that is largely composed of freight cars that can be used in interchange service and against which an interline waybill can be placed. It is made up of six subfleets: hoppers, covered hoppers, gondolas, flat cars, tank cars and boxcars. It excludes locomotives, intermodal trailers and containers, maintenanceof-way equipment, and end-of-train devices. The average age of cars in the revenueearning fleet was slightly up, and new cars again trended large, with the majority having gross rail loads (GRLs) of 286,000 pounds. • The total fleet size was down 1.0% from year-end 2019 to year-end 2020, compared with a 0.5% increase the

42 Railway Age // April 2021

previous year. • Tanks grew the most of all the car types, up 1.6%. It was the eleventh consecutive year of decline for hoppers, down 4.0%, followed by gondolas, down 3.5%. Flats and covered hoppers were also down, by 1.0% and 0.5%, respectively. Boxcars—the least populous car type of the revenue-earning fleet—were down by 4.8%. • The average age of the fleet returned to 19.6 years following 2019’s slight decrease—suggesting new cars were joining the fleet at a slightly lower rate than older cars were exiting during the past year. • The number of GRL 286 cars added to the fleet declined by about 43% in 2020. However, these cars accounted for 91% of all new additions in 2020 and about 86% in the past decade. Larger cars enable operational efficiencies that reduce costs and ease logistics

challenges, as well as increasing the fleet carrying capacity when at least one higher-capacity car replaces a lowercapacity car. The revenue-earning fleet realized a net decrease of 16,000 cars in 2020. At the end of 2020, the revenue-earning freight car fleet totaled 1.64 million units, down 1.0% from the previous year (see Figure 1). Boxcars experienced the highest percentage loss in the revenue-earning fleet, decreasing by 4.8% over 2019. Hoppers and gondolas also fell in 2020, decreasing by 4.0% and 3.5% respectively over 2019. Tanks (1.6%) were the sole gain. The average age of railcars in the revenueearning fleet in 2020 was 19.6 years, a 0.1 year increase from 2019. The average has fluctuated between 19.5 and 19.6 years since 2015 (see Figure 2). The near-stability in the fleet over the past several years suggests that new cars have been added at approximately the same rate as old cars have been exiting. About 80,000 new cars joined the railwayage.com

Railinc

BY DAVID HUMPHREY, PH.D., SENIOR DATA SCIENTIST, RAILINC CORP.

RAILINC FREIGHT CAR REVIEW 2021 revenue-earning fleet in the past two years (see Figure 3, p. 44). The year 2020 was the first since 2010 that less than 30,000 cars were added to the fleet. In the past 25 years, railcars with a GRL of 286,000 pounds have accounted for 81% of all new additions to the fleet. This trend continued in 2020, as 91% of new equipment were GRL 286 cars (see Figure 4, p. 44). The number of GRL 263 cars added in 2020 decreased by about 150 cars from 2019. GRL 286 cars dominate among recent additions to the fleet because they enable operation efficiencies that reduce costs and ease logistics challenges. The fleet continues to add GRL 263, 268 and GRL 220 cars, but at a much lower rate than GRL 286 cars. The last year non-GRL 286 cars led among new additions to the fleet was 1992. SUBFLEET TRENDS More than 700 equipment type codes (ETCs) appear in the Umler® equipment registry. Of those, 10 ETCs accounted for 52% of the revenue-earning fleet in 2020. For the sixth time since 2011, nine of the top 10 car types were either tank cars or covered hoppers— the two largest car types in the revenueearning fleet. For tanks, the 2020 rankings saw a slight change compared with the previous year, with T178s and T108s swapping places so that T178s rose to sixth place and T108s fell to seventh. As the demographics of the car groups change, so do the average car sizes and the total combined capacity of all the units in a group. For example, the total tank subfleet capacity has increased by 55.8% since 2009. Most new tanks are large, which has pushed the average car size up by 7.7%. The total fleet capacity for covered hoppers has increased, as well, by 21.2%. However, the average car size has decreased because most new covered hoppers are small, with most additions being either 3,281 or 3,250 cubic feet large. In the past decade, the boxcar population has decreased, which has driven down the total fleet capacity. Large boxcars have joined the fleet, which led to an increase in average car size, but not at a fast enough rate to offset the population loss. From 2011 to 2016, this report presented data on individual car types grouped by their capacity and GRL, which is the sum of the weight of the car plus the lading within the car. That represents the maximum allowed railwayage.com

FIGURE 1: NORTH AMERICAN FREIGHT CAR FLEET, BY GROUP COUNTS AT YEAR-END, SHOWN IN THOUSANDS

FIGURE 2: NORTH AMERICAN FREIGHT CAR FLEET—AVERAGE AT YEAR-END

loaded weight of the car. As of 2017, the report now presents select car types by the kinds of commodities they carry. This provides a more nuanced view of these car types. For example, while covered hoppers carry grain, sand, plastic pellets and other commodities, the types of covered hoppers that transport each commodity are very different in their characteristics. Plastics: Covered hoppers are commonly used to ship plastic pellets. This commodity subfleet added about 10,000 cars in the past two years, about 25% of what was added in

the previous 10 years combined. Cars with equipment type code C214 comprise nearly the entire commodity subfleet as defined here, make up 8% of the revenue-earning fleet, and are the second-most populous equipment type. New railcars have trended large. Of the cars added to the commodity subfleet in the past 20 years, about 94% have had a capacity of 6,000 cubic feet or more. Grain and fertilizer: Railroads move grain and fertilizer in large covered hoppers. This subfleet added about 12,000 new cars in April 2021 // Railway Age 43

RAILINC FREIGHT CAR REVIEW 2021 Aggregates: Commodities such as limestone and crushed stone are shipped in gondolas and open hoppers. The number of these car types added to the revenue-earning fleet in 2019 and 2020 was down nearly 88% over the previous two-year period. Boxcars: Boxcars are the least populous car type in the revenue-earning fleet, and are used to ship a wide variety of products, from consumer goods to automotive parts. The boxcar fleet is older than other car types. Boxcars made in the past two years account for about 19% of all boxcars added to the fleet in the past 12 years.

FIGURE 3: NORTH AMERICAN FREIGHT CAR FLEET NUMBER OF CARS, BY AGE

FIGURE 4: NORTH AMERICAN FREIGHT CAR FLEET NUMBER OF CARS, BY AGE AND GRL

the past two years and make up about 17% of the revenue-earning fleet. Two types of covered hoppers—C114 and C113—account for about 96% of the commodity subfleet and are in the top five of the most populous equipment types in the revenue-earning fleet. Larger covered hoppers with capacities of at least 5,000 cubic feet have made up nearly 88% of the additions to the commodity subfleet in the past 20 years. Sand and cement: Small covered hoppers are used to move sand and cement. Over the past 10 years, the revenue-earning fleet has added almost 77,000 covered hoppers with 44 Railway Age // April 2021

an equipment type code of C112. About 96% of the subfleet is comprised of C112s, which was the third-largest equipment type in 2020. Because of the density of sand and cement, the cars that carry these commodities tend to be smaller. Of the cars in the subfleet, almost all have a capacity of just over 3,000 cubic feet. Coal: Coal is shipped primarily in gondolas and open hoppers. These cars still made up a sizable portion of the revenue-earning fleet—11%, or 187,000 railcars—in 2020. About 81% of those cars were added between 1990 and 2013.

CONCLUSION The North American railcar fleet shrunk in 2020. The total size of the revenue-earning fleet decreased for the first time in a decade, down 1.0% from year-end 2020 to yearend 2019. Freight rail traffic often mirrors the general trends of the economy in North America. When the economy slows—as it did in the earlier months of 2020 due to the global COVID-19 pandemic that depressed overall business levels—freight rail business slows as well. While various factors could account for this shrink in fleet size, it is important to recognize the effect the overall decline in U.S. carload and intermodal rail freight traffic of 7.4% for the 52-week period ending Dec. 26, 2020 has had. However, despite depressed volumes, North American railroads were able to transport vital commodities and meet the high demand for consumer goods throughout a critical time in American history. The revenue-earning fleet added cars in only one of its subfleets—tanks (1.6%). All other subfleets contracted, with boxcars declining the most (4.8%), followed by hoppers (4.0%) and gondolas (3.5%). The average age of cars in the revenueearning fleet returned to 19.6 years after a slight decrease in 2019, suggesting new cars are joining the fleet at a slightly lower rate than older cars are exiting. GRL 286 cars continue to predominate among new additions to the revenue-earning fleet. This size of car accounted for about 91% of all new additions to the fleet in 2020. Larger cars enable operational efficiencies that reduce costs and ease logistics challenges. Railinc is a wholly owned subsidiary of the Association of American Railroads (AAR). For more information, please visit railinc.com. railwayage.com

People ERIC HOSEY

R.J. Corman Railroad Company, LLC HIGH PROFILE: Eric Hosey has taken on the Vice President

of Operations position at R.J. Corman Railroad Company, LLC. Hosey will direct the development and implementation of transportation plans and safety initiatives across the company’s short lines. He started his 27-year railroad career at Norfolk Southern, and moved to Amtrak, where he rose from field to staff management. He then spent approximately five years as Vice President–Northeast Region for Genesee & Wyoming, Inc., before returning to Amtrak as AVP Transportation–Southwest Division. Since 2019, Hosey has held the position of Chief Operating Officer at Metrolink Commuter Railroad in Los Angeles. He has also served in the United States Navy as a Non-Commissioned Officer during the Gulf War. “We are delighted to bring Eric on board as he has the right experience and knowledge to complement our outstanding management staff and will prove to be a strong leader for our exceptional team members,” President Ray Goss said.

itsui Rail Capital LLC has hired Jeff Rasmussen as Director of Sales and Marketing. Rasmussen’s sales and marketing efforts will focus on territories in the Upper Midwest, Pacific Northwest and Western Canada. He has 30 years of rail experience, including 20 in leasing. Rasmussen served most recently as Vice President of Railcar Leasing for CAI Rail, a subsidiary of global transportation company CAI International, where he helped increase assets from $90 million to $500 million in less than five years and worked in a territory covering 17 states and half of Canada. He has also worked for Professional Logistics Group, AllCapital Rail Management, CIT Group, Flex Leasing Corp., and Conrail. Metra has promoted Kevin McCann to Chief Operating Officer. McCann has served as Metra’s Chief Mechanical Officer since January 2018, and will take over as COO starting July 1, upon Bruce Marcheschi’s retirement. A 25-year Metra veteran, McCann started as a carman and rose through the ranks to Senior Rail Inspector, Project Manager for Metra’s railcar procurement program, Superintendent of the railcar rehab program, Director of the Rock Island Line Mechanical Division, Senior Director of Mechanical Operations, Senior Director of Mechanical Capital Projects, and CMO. Prior to joining Metra, he worked for Midway Airlines and Norfolk Southern. In his new role, McCann will lead the Transportation, Mechanical and Engineering departments as well as oversee Safety, Rules, railwayage.com

Regulatory Compliance, Environmental Compliance, Operations Training, T&E Training and Certification. MERMEC, Inc., a wholly owned subsidiary of MerMec S.p.A. and an Angel Group company, which provides analyticdriven maintenance solutions, contracted services for rail infrastructure monitoring, and rail signaling and train control systems, has appointed Fred Ange to Vice President, Chief Financial Officer and Chief Compliance Officer, and Soheil Saadat to Vice President of Business Development and Sales. Ange’s appointment follows his work as Vice President Finance and Control at EMS-Chemie North America. Ange has also served as Controller at Mancor SC Inc., a Tier 1 supplier to Caterpillar and John Deere corporations; and Director of Finance for Whaley Foodservice LLC. As MERMEC’s new Vice President of Business Development and Sales, Soheil Saadat will be responsible for defining and executing strategic business development initiatives, while developing new business opportunities and creating customized solutions for the company’s existing and future customer needs. He served previously as Manager of the Digital Products, Measuring & Inspection Solutions Business Unit for Plasser American Corp. In addition, he has held the positions of Head of Digital Products and Measuring Solutions for Plasser & Theurer Export von Bahnbaumaschinen G.m.b.H.; Director of Track Measuring Systems for ENSCO, Inc.; and

Project Manager for CTLGroup; among several others. Cyrus Reporter has joined CN as Vice President, Government and Regulatory Affairs. Based in Ottawa, Reporter will oversee government engagement, ensuring that “CN’s voice is heard” in Ottawa and every provincial capital, and also in Washington, D.C., and the 16 U.S. states through which CN operates. He will also be responsible for stakeholder and community relations. Reporter has served as Senior Advisor to Canadian Prime Minister Justin Trudeau, as well as Chief of Staff for Trudeau in his capacity as Leader of the Liberal Party of Canada. Most recently, Reporter was Partner at international law firm Gowling WLG, where he provided counsel on regulatory affairs, public policy and corporate compliance. He will report to Sean Finn, CN Executive Vice President of Corporate Services and Chief Legal Officer. Christine Kefauver has joined Brightline Trains as Senior Vice President of Corporate Development. Kefauver will lead Brightline’s government affairs and community outreach for Central Florida, where the company is expanding passenger rail service to Orlando International Airport. (Brightline is also negotiating with the Florida Department of Transportation on an proposed expansion to Tampa.) She served most recently as Operations Lead for Florida, Alabama and Mississippi at HDR Engineering, where she managed a team of more than 600 and was accountable for all transportation, water, power and construction services. During the past two years at HDR, Kefauver was the National Urban Market Development Director for the engineering and architecture lines of business. With 30 years of experience in Central Florida transportation initiatives, Kefauver also served for seven years as the Transportation Policy Advisor for Orlando Mayor Buddy Dyer and helped advance the area’s first commuter rail line, SunRail. “Christine is the right leader for Brightline to build a strong and active presence in Central Florida,” President Patrick Goddard said. Brightline also announced that the company’s former President and Chief Development Officer, Mike Reininger, would lead the newly formed Brightline Holdings. April 2021 // Railway Age 45

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Ad Index COMPANY

PHONE #

FAX #

URL/EMAIL ADDRESS

PAGE # 3

CUMMINS INC ENCORE

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FOCUSED TECHNOLOGY SOLUTIONS

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FREIGHTCAR AMERICA

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ICOMERA

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LT RESOURCES INC/ TIETEK GLOBAL

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NISUS CORPORATION

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PROGRESS RAIL A CATERPILLER CO

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RAIL MOVEMENT PLANNER

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railmp.com

RAILWAY TIE ASSOCIATION

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RAILWAY EDUCATIONAL BUREAU

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bbrundige@sb-reb.com

RELAM

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440-439-9399

cnielsen@relaminc.com

SIEMENS MOBILITY

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STELLA JONES CORP

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STRATO INC

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WVCO RAILROAD SOLUTIONS

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

Advertising Sales MAIN OFFICE Jonathan Chalon Publisher 88 Pine St., 23rd Floor New York, NY 10005 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com AL, KY, Jon Chalon 88 Pine St., 23rd Floor New York, NY 10005 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, OH, PA, RI, SC, VT, VA, WV, CANADA – QUEBEC AND EAST, ONTARIO Jerome Marullo 88 Pine St., 23rd Floor New York, NY 10005 (212) 620-7260 Fax: (212) 633-1863 jmarullo@sbpub.com

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April 2021 // Railway Age 47

Perspective: ASLRRA

Short Lines: Part of the ‘Green’ Solution

lready the leader in fuel-efficient surface transportation, the railroad industry is now making every effort to be a part of the solution to improving the environment, and the short line industry is all in on a variety of fronts. Our friends at the Association of American Railroads (AAR) have done an excellent job of quantifying the substantial environmental benefits of railroad transportation, and the data is now familiar to most Railway Age readers: Railroads account for roughly 40% of U.S. long-distance freight volume, but account for just 2.1% of transportation-related emissions. If 10% of the freight shipped today by the largest trucks were moved by rail, greenhouse gas (GHG) emissions would fall more than 17 million tons annually or the equivalent of removing 3.35 million cars from the road. A ton of freight moving by rail instead of truck reduces GHG emissions by 75%. What is the short line industry doing to promote this? Last fall, the ASLRRA launched an Environmental Committee chaired by Sean Strong, Assistant Vice President of Environmental at Watco, and staffed by Jo Strang, ASLRRA’s SVP of Safety and Regulatory Policy. The committee will address environmental issues on two fronts: sustainability and compliance. On the compliance side, the committee aims to help short lines meet environmental regulations. On the sustainability side, the committee is sharing information about the Environmental Protection Agency’s SmartWay program, of which ASLRRA became an affiliate last year. SmartWay helps companies advance supply-chain sustainability by measuring, benchmarking and improving freight transportation efficiency. It offers tools short lines can use to communicate how shipping by rail can help customers meet their companies’ environmental goals. Reducing a company’s carbon footprint is a growing imperative, but it isn’t easy. We believe that shippers will move from truck to more fuel-efficient rail if we can adequately demonstrate our real contribution to that goal. Unilever and Home Depot are but two high-profile examples 48 Railway Age // April 2021

of major shippers that are now publicly talking about the environmental benefits of using rail. The short line industry is also looking toward new locomotive technologies. Anacostia Rail Holdings’ affiliate Pacific Harbor Line (PHL) recently signed an agreement with Progress Rail to use its EMD Joule battery electric locomotive in a demonstration project at the ports of Los Angeles and Long Beach, Calif. The new six-axle locomotive is zero-emission, zeroidle and low noise. Says PHL President and ASLRRA Executive Committee Member Otis Cliatt II: “Designed by Progress Rail, the Joule is the first battery electric switcher locomotive in North America that appears robust enough for the demanding PHL environment, and what we will learn from this demonstration will hopefully advance the prospects for zero-emission locomotive solutions.” ASLRRA member Knoxville Locomotive Works (KLW) began designing its own line of locomotives in 2008, and provides a near-zero emission single engine locomotive solution, offering low emissions, low fuel consumption and superior tractiveeffort performance. Most recently, KLW was awarded EPA Tier 4 emissions certifications for its SE Series four- and six-axle locomotive designs. In an excellent example of a publicprivate partnership, Genesee & Wyoming’s California Northern Railroad secured a $3.7 million grant from California’s Bay Area Air Quality Management District to purchase two new Tier 4 low-emission locomotives that reduce diesel emissions by 80% compared with the two circa-1976 locomotives that were replaced. Tackling climate change will require a cooperative effort between government and the private sector, and it is likely that an infrastructure funding bill will be the legislative vehicle that shapes that effort. In preparation for writing the rail portion of that legislation, the House Transportation & Infrastructure Committee, Subcommittee on Railroads, Pipelines, and Hazardous Materials recently invited Arkansas & Missouri Railroad President Caren Kraska to be one of four witnesses to testify on the

economic and environmental advantages of rail. She urged the adoption of programs that maximize the ability of short lines to produce the environmental benefits inherent in freight rail transportation. Specifically, she argued for increasing funding for the CRISI grant program that allows direct short line eligibility, and urged the Subcommittee to resist the perennial effort to increase truck size and weight limits, which on her railroad could divert more than 50% of the business to less fuel-efficient trucks. Perhaps the AAR’s most often repeated statistic is that rail can move one ton of freight more than 470 miles on one gallon of diesel fuel. I certainly repeat that one a lot! Let me bring that down to the short line level with a few examples: • The Lancaster & Chester Railroad ships 281,500 tons of soybeans, soy meal and soybean oil each year between the South Carolina cities of Chester, Fort Lawn and Kershaw. That move uses an average of 80,000 gallons of fuel per year. A comparable truck move would use over 320,000 gallons of fuel. • PHL moves 5,000 tons of interchange traffic daily from Wilmington to Long Beach, Calif. That move uses an average of 36,500 gallons of fuel per year. A comparable truck move would use 521,220 gallons of fuel. • The Red River Valley and Western (RRVW) has calculated that in 2020, the railroad moved one ton of freight 496 miles on one gallon of fuel. It is true that the short lines are a subset of the national railroad industry. But to paraphrase one of the better-known passages in the Talmud: “We are not obligated to complete the work of the world, but we are required to try.” Short lines are not the biggest operators of surface transportation, but where we do operate, we make a difference—for the better.

CHUCK BAKER President ASLRRA

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Railway Age April 2021

Articles inside

Going Transnational

Digital Transformation

Amtrak at 50, Part 2

Amtrak at 50, Part 1