Railway Age January 2020

January 2020

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

RAILROADER OF THE YEAR

PAT OTTENSMEYER Kansas City Southern

COMMUTER RAIL COALITION

Improving the “30-Mile Journey”

PASSENGER RAILCAR MARKET AT-A-GLANCE railwayage.com

Orders, deliveries, August 2017 // Railway Age 2 backlogs

THE GREENBRIER COMPANIES CONGRATULATE

Pat Ottensmeyer

2020 RAILROADER OF THE YEAR The Greenbrier Companies is a leading supplier of rail and marine transportation equipment and services, powering the movement of products around the world.

Learn more at www.gbrx.com.

AILWAY GE

JANUARY 2020

12

FEATURES

12 33 38 41

Railroader of the Year Pat Ottensmeyer, KCS

Rail Transit Is In! A Bright, Sustainable Future

Passenger Car Market Orders, Deliveries, Backlogs

Commuter Rail Coalition Advocacy From the Top

DEPARTMENTS 4 6 8 44 44 45 46 46 47

Industry Indicators Industry Outlook Market People Events Products Classified Professional Directory Advertising Index

COLUMNS 2 10 48

From the Editor Watching Washington Financial Edge

On the Cover: Railway Age’s 2020 Railroader of the Year, Kansas City Southern Chief Executive Pat Ottensmeyer Photo: KCS

Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 88 Pine St., 23rd Fl., New York, NY 10005-1809. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 221, No. 1. Subscriptions: Railway Age is sent without obligation to professionals working in the railroad industry in the United States, Canada, and Mexico.

However, the publisher reserves the right to limit the number of copies. Subscriptions should be requested on company letterhead. Subscription pricing to others for Print and/ or Digital versions: $100.00 per year/$151.00 for two years in the U.S., Canada, and Mexico; $139.00 per year/$197.00 for two years, foreign. Single Copies: $36.00 per copy in the U.S., Canada, and Mexico/$128.00 foreign All subscriptions payable in advance. COPYRIGHT© 2020 Simmons-Boardman Publishing Corporation. All rights reserved. Contents may not be reproduced without permission. For reprint information contact PARS International Corp., 102 W. 38th Street, 6th floor, New York, N.Y. 10018, Tel.: 212-221-9595; Fax: 212-221-9195. Periodicals postage paid at New York, NY, and additional mailing offices. Canada Post Cust.#7204564; Agreement #41094515. Bleuchip Int’l, PO Box 25542, London, ON N6C 6B2. Address all subscriptions, change of address forms and correspondence concerning subscriptions to Subscription Dept., Railway Age, PO Box 1407 Cedar Rapids, IA. 52406-1407, Or call toll free (US Only) 1-800-553-8878 (CANADA/INTL) 1-319-364-6167. Printed at Cummings Printing, Hooksett, N.H. ISSN 0033-8826 (print); 2161-511X (digital).

railwayage.com

January 2020 // Railway Age 1

FROM THE EDITOR

AILWAY GE Subscriptions: 800-895-4389

Milestones in Modern Railroading

A

s we enter the 21st c e n t u r y ’s third decade, and Railway Age enters its 165th year of continuous publication (189th, taking into account our earliest antecedent, The American Rail-Road Journal), I wanted to reflect upon some of what has taken place in our industry during my nearly 28 years here: • Through merger, acquisition or divestiture, many long-standing industry names faded into history. Among them: American Railcar Industries. Atchison, Topeka & Santa Fe. Burlington Northern. ElectroMotive Division of General Motors.

Fairmont Tamper. GE Transportation.

General Railway Signal. Harmon. Illinois Central. Modern Railroads (which our parent company, Simmons-Boardman, acquired and merged into Railway Age).

Morrison-Knudsen. Parsons Brinckerhoff.

Thrall Car. Traffic World. Safetran.

Southern Pacific. Union Switch & Signal.

Wisconsin Central.

• The terrorist attacks of Sept. 11, 2001, which claimed more than 3,000 lives and destroyed the New York City Transit and PATH stations beneath the World Trade Center, mobilized the industry to beef up security measures and technology.

• A fatal accident involving a freight train and a passenger train in Chatsworth, Calif., prompted Congress to pass the Rail Safety Improvement Act of 2008, which mandated installation of PTC on selected rail lines.

• Development of hydraulic fracturing to extract crude oil created a huge spike in crude-by-rail traffic. A series of accidents involving CBR trains, the worst of which was the horrific Lac-Mégantic wreck that claimed 47 lives, resulted in new safety standards for hazmat-carrying tank cars.

• Mexico and Canada privatized their nationalized railroads, attracting billions in capital investment dollars, and resulting in formation of Kansas City Southern de México, Ferromex and CN (which succeeded Crown Corporation Canadian National).

• Intermodal surpassed coal as the largest source of freight rail revenue.

• As Class I profits and capex rose, Wall Street—including activist investors and hedge funds looking to squeeze short-term gains from their investments—began paying closer attention to railroads, for better or worse. Terms like “Precision Scheduled Railroading” and “shareholder value” entered railroad lexicon.

• Warren Buffett, who some say is the world’s smartest investor, purchased BNSF—not for short-term gains, but for its long-term-value prospects.

• Rail transit, led by regional/commuter rail and light rail, began a resurgence.

• The world’s first autonomous freight train entered service in Australia. U.S. railroads have now begun to look at autonomy.

I look forward to what this decade will bring. I think it will be an interesting ride!

WILLIAM C. VANTUONO Editor-in-Chief

Railway Age, descended from the American Rail-Road Journal (1832) and the Western Railroad Gazette (1856) and published under its present name since 1876, is indexed by the Business Periodicals Index and the Engineering Index Service. Name registered in U.S. Patent Office and Trade Mark Office in Canada. Now indexed in ABI/Inform.

Change of address should reach us six weeks in advance of next issue date. Send both old and new addresses with address label to Subscription Department, Railway Age, PO Box 1407, Cedar Rapids, IA. 52406-1407, or call toll free (US Only) 1-800-553-8878 (CANADA/ INTL) 1-319-364-6167. Post Office will not forward copies unless you provide extra postage.

Photocopy rights: Where necessary, permission is granted by the copyright owner for the libraries and others registered with the Copyright Clearance Center (CCC) to photocopy articles herein for the flat fee of $2.00 per copy of each article. Payment should be sent directly to CCC. Copying for other than personal or internal reference use without the express permission of Simmons-Boardman Publishing Corp. is prohibited. Address requests for permission on bulk orders to the Circulation Director.

Railway Age welcomes the submission of unsolicited manuscripts and photographs. However, the publishers will not be responsible for safekeeping or return of such material.

Member of:

SBP 2 Railway Age // January 2020

SIMMONS-BOARDMAN PUBLISHING CORPORATION

Editorial and Executive Offices Simmons-Boardman Publishing Corp.

88 Pine Street, 23rd Fl. New York, NY 10005-1809 212-620-7200; Fax: 212-633-1863 Website: www.railwayage.com ARTHUR J. McGINNIS, Jr. President and Chairman JONATHAN CHALON Publisher jchalon@sbpub.com WILLIAM C. VANTUONO Editor-in-Chief wvantuono@sbpub.com ANDREW CORSELLI Managing Editor acorselli@sbpub.com BILL WILSON Engineering Editor/Railway Track & Structures Editor-in-Chief wwilson@sbpub.com DAVID C. LESTER Managing Editor, Railway Track & Structures dlester@sbpub.com Contributing Editors: David Peter Alan, Roy Blanchard, Jim Blaze, Peter Diekmeyer, Alfred E. Fazio, Bruce Kelly, Ron Lindsey, Ryan McWilliams, David Nahass, Jason H. Seidl, David Thomas, John Thompson, Frank N. Wilner Art Director: Nicole D’Antona Graphic Designer: Hillary Coleman Corporate Production Director: Mary Conyers Production Director: Eduardo Castaner Marketing Director: Erica Hayes Conference Director: Michelle Zolkos Circulation Director: Maureen Cooney International Offices 46 Killigrew Street, Falmouth, Cornwall TR11 3PP, United Kingdom Telephone: 011-44-1326-313945 Fax: 011-44-1326-211576 International Editors David Briginshaw db@railjournal.co.uk Kevin Smith ks@railjournal.co.uk David Burroughs dburroughs@railjournal.co.uk Customer Service: 800-895-4389 Reprints: PARS International Corp.

253 West 35th Street 7th Floor New York, NY 10001 212-221-9595; fax 212-221-9195 curt.ciesinski@parsintl.com

railwayage.com

It’s what’s inside that keeps us at the forefront.

Celebrating 125 years of leadership in railcar components.

At Miner, we know what it takes to stand the test of time: Outstanding products, backed by the support of true industry experts. For 125 years now, we have designed, developed, and delivered the most trusted railcar components in the industry. In fact, many Miner components with over a million miles of service are still rolling today. And just like us, they will keep performing on your behalf for decades to come.

Perfecting Railcar Performance minerent.com

D E D I C AT E D T O E N G I N E E R I N G & M A N U FA C T U R I N G E X C E L L E N C E .

Industry Indicators “The Marketplace is Not Being Kind to Railroads” “Rail traffic continues to struggle because U.S. manufacturing is soft, trade disputes and the uncertainty they entail are ongoing, and economic growth abroad isn’t what it could be,” the Association of American Railroads noted as 2019 drew to a close. “Rail volumes should begin to grow again as the manufacturing portion of the economy finds firmer footing and international supply chains stabilize, but for now the marketplace is not being kind to railroads. In November 2019, total U.S. rail carloads were down 7.5% and total intermodal originations were down 7.4% from November 2018—making 10 straight monthly declines for both. In November 2019, carloads were higher in just three of the 20 categories.”

Railroad employment, Class I linehaul carriers, november 2019 (% change from november 2018)

TRAFFIC ORIGINATED CARLOADS

Four WEEKS ENDING NOVEMBER 30, 2019

MAJOR U.S. RAILROADS

by Commodity

NOV. ’19

NOV. ’18

% CHANGE

54,636 (-1%)

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

86,816 3,369 34,348 23,016 121,754 51,426 291,508 4,373 11,750 21,282 26,635 14,473 30,586 12,399 63,411 75,906 14,533 29,521 13,654 24,819

87,676 3,724 35,444 24,036 126,083 51,886 340,927 4,230 12,470 23,447 26,643 16,498 36,033 14,406 64,175 82,826 14,871 28,358 14,852 24,160

-1.0% -9.5% -3.1% -4.2% -3.4% -0.9% -14.5% 3.4% -5.8% -9.2% 0.0% -12.3% -15.1% -13.9% -1.2% -8.4% -2.3% 4.1% -8.1% 2.7%

Executives, Officials, and Staff Assistants

Total U.S. CarLoadS

955,579

1,032,745

-7.5%

307,601

347,988

-11.6%

1,263,180

1,380,733

-8.5%

Total employees: 133,225 % change from NOVEMBER 2018: –1%

Transportation (train and engine)

7,629 (–1%)

CANADIAN RAILROADS

Professional and Administrative

total CANADIAN carloads

10,910 (-1%)

COMBINED U.S./CANADA RR

Maintenance-of-Way and Structures

31,242 (-1%)

Maintenance of Equipment and Stores

23,370 (-1%)

Transportation (other than train & engine)

5,438 (-1%)

Source: Surface Transportation Board

EMPLOYMENT decline remains constant Figures released by the STB show Class I total railroad employment dropped 1% in November 2019, measured against November 2018, consistent with what has been happening all year. All six employment categories experienced virtually the same percentage drop, 1%, when rounding is taken into account. This most certainly indicates headcount reductions attributable to PSR, but declining traffic most likely is a larger factor. Longer term, it appears this trend will continue, and it’s possible that the decline will sharpen, given the rate at which traffic has been dropping.

4 Railway Age // January 2020

Intermodal

Four WEEKS ENDING NOVEMBER 30, 2019

MAJOR U.S. RAILROADS

by Commodity Trailers Containers TOTAL UNITS

NOV. ’19

NOV. ’18

% CHANGE

105,611

1,019,766

995,293 1,100,904

-26.6% -5.3% -7.4%

0 267,412 267,412

0 282,293 282,293

-5.3% -5.3%

77,488 1,209,690

105,611 1,277,586

-26.6% -5.3%

1,287,178

1,383,197

-6.9%

77,488 942,278

CANADIAN RAILROADS Trailers Containers TOTAL UNITS

COMBINED U.S./CANADA RR Trailers Containers

TOTAL COMBINED UNITS

Source: Rail Time Indicators, Association of American Railroads

railwayage.com

TOTAL U.S./Canadian CARLOADS, NOV. 2019 VS. NOV. 2018

1,263,180 november 2019

AILWAY GE

1,380,733 november 2018

Short Line And Regional Traffic Index CARLOADS

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

ORIGINATED NOV. ’19

ORIGINATED NOV. ’18

% CHANGE

48,648 18,299 22,546 11,465 26,606 6,645 8,448 2,157 14,442 9,991 2,459 2,044 16,473 13,473 38,073 8,983 71,810

46,710 18,084 23,830 11,623 25,686 6,901 8,522 2,606 16,523 8,364 2,160 1,876 16,744 12,326 40,890 9,363 87,696

4.1% 1.2% -5.4% -1.4% 3.6% -3.7% -0.9% -17.2% -12.6% 19.5% 13.8% 9.0% -1.6% 9.3% -6.9% -4.1% -18.1%

Copyright © 2019 All rights reserved.

TOTAL U.S. Carloads AND INTERMODAL UNITS, 2010-2019 (year-to-date through november 2019, in millions)

ARE YOU A RAILROAD OR SUPPLIER SEARCHING FOR JOB CANDIDATES?

Visit http://bit.ly/railjobs To place a job posting, contact: Jennifer Izzo 203-604-1744 jizzo@mediapeople.com

railwayage.com

January 2020 // Railway Age 5 RA_JobBoard_1/3Vertical.indd 1

9/30/19 3:16 PM

Industry Outlook

CP, KCS, USD, Gibson Energy, ConocoPhillips Canada Forge DRU Deal US Development Group, LLC (through wholly-owned affiliate USD) and Gibson Energy Inc. (Gibson) jointly announced last month an agreement to construct and operate a diluent recovery unit (DRU) near Hardisty, Alberta, Canada.

ConocoPhillips Canada has been contracted to process 50,000 barrels per day of inlet bitumen blend through the DRU to be shipped by Canadian Pacific and Kansas City Southern to the U.S. USD and Gibson are currently in commercial discussions with other potential producers and refiner customers to secure long-term, take-or-pay agreements for an additional 50,000 barrels per day at the proposed DRU. USD’s patented DRU technology separates the diluent that has been added to the raw bitumen in the production process.

“This meets two important market needs: It returns the recovered diluent for reuse in the Alberta market, reducing delivered costs for diluent, and it creates DRUbit™, a proprietary heavy Canadian crude oil specifically designed for rail transportation,” CP said.

“DRUbit™ is crude oil or bitumen that has been returned to a more concentrated, 6 Railway Age // January 2020

viscous state that creates safety and environmental benefits when transported by rail in Canada and the U.S. DRUbit™ is a market access solution that will satisfy demand for heavy Canadian crude oil on the U.S. Gulf Coast and in other markets at a cost that is economically competitive to the crude oil that is transported by pipeline today.”

Following separation at the DRU, the DRUbit™ owned by ConocoPhillips Canada will be moved by rail by CP and KCS from the existing Hardisty Rail Terminal to a new terminal in Port Arthur, Tex., under a long-term contract with CP, subject to standard conditions.

The new terminal in Port Arthur will be constructed, owned and operated solely

by USD. It will have capability for rail unloading, barge dock loading and unloading, tank storage and blending, and will be pipeline- connected to Phillips 66’s Beaumont Terminal, providing customers access to a large network of refining and marine facilities.

ConocoPhillips said it will re-blend the DRUbit™ with a variety of diluents “to create higher-value customized blends that better-meet the needs of customers.”

The U.S. Department of Transportation last month announced a new pilot program, the Railroad Rehabilitation and Investment Financing Express (RRIF Express), to expedite long-term, lowcost loans for short line and regional freight railroads.

RRIF Express, USDOT said, “is aimed at reducing the time and costs associated with securing loans to modernize aging freight rail infrastructure. In addition to expedited handling of loan requests, the program provides up to $26 million in additional financial support.

“The DOT Build America Bureau will administer this new program in an effort to support economic activity and improve the safety, capacity and reliability of this freight transportation sector.”

For qualified applicants, RRIF Express “will significantly cut credit risk premium costs and advisor fees, costs that borrowers would otherwise have to pay in the traditional RRIF program,” USDOT said.

Letters of Interest will be accepted beginning Jan. 12, 2020 and ending April 11, 2020.

The Notice of Funding Opportunity can be found on the Bureau’s website at https://www.transportation.gov/ buildamerica/rrif-express.

“We’re so pleased that this Administration is launching a serious and smart effort to make the RRIF program work for smaller operators,” said Chuck Baker, President of the American Short Line and Regional Railroad Association.

“Access to long-term, low-cost capital is a challenge in this industry, especially for railroads serving small-town America. Railroad Rehabilitation and Investment Financing can be an effective solution, but only if it can be reliably and quickly accessed. The RRIF Express program shows great promise for meeting that need.” railwayage.com

Bruce Kelly

For Small Roads, “RRIF Express”

OKONITE The Premier Manufacturer of Vital Circuit Signal Cables Vital Signal Cables are the backbone of Railroad signaling systems. For over 140 years, Okonite has been the leader in the design and production of vital signal cables. Okonite was the first to formulate EPR insulation for these cable systems and our 50 years of installed service stands testament to its unmatched reliability.

Today, with our fleet of 6 manufacturing plants, with over 3 million sq. ft. of manufacturing space, 5 service centers and 23 local sales offices, Okonite has demonstrated the highest level of customer service available. Even during the unprecedented demand for vital signal cable during Positive Train Control initiatives, Okonite took measures to expand and modernize our plants to ensure customer service remained at levels our customers required.

Unmatched cable quality and customer service. That's our goal and one our employee owners strive to meet every day.

Okonite since 1878. 100% Made in America.

THE OKONITE COMPANY

Okonite Cables...A higher Standard!

102 Hilltop Road, Ramsey, New Jersey 07446 201.825.0300

www.okonite.com

Market TRRA Selects CloudMoyo OTS Terminal Railroad Association of St. Louis (TRRA) has contracted with CloudMoyo for the company’s Operational Testing System (OTS), which will be deployed across the entire railroad for safety and regulatory compliance.

The cloud-based OTS is described as “a foundational component of the CloudMoyo Rail Transportation Management (CRTM) solution suite, which harnesses the power of advanced analytics to intelligently create configurable master test plans and allows rapid operational testing in the field utilizing mobile devices.”

WORLDWIDE

NORTH AMERICA

Wabtec Corp. last month marked delivery of 10 ES30ACi Light Evolution Series locomotives to Egyptian National Railways (ENR) and the Ministry of Transportation (MoT). The delivery marks the first stage in fulfilling Wabtec’s 2017 order and services agreements, originally forged with ENR by GE Transportation. The ES30ACi Light Passenger Evolution Series locomotives are equipped with a fuel-efficient 12-cylinder, 3,200-hp EVO prime-mover.

New Jersey Transit has awarded the ARINC rail solutions team at Collins Aerospace Systems a three-year contract to replace its Train Management and Control (TMAC) and Supervisory Control And Data Acquisition (SCADA) Systems.

These systems are the main command and control platforms for NJT’s entire operating area, providing real-time monitoring and control under normal and emergency conditions. They’re being upgraded to include Positive Train Control (PTC) functionality, enhanced reporting features, new interfaces to external systems and increased data capacity. Through ARINC’s Advanced Information Management (AIM) rail system, NJT will “receive a modern platform design to meet the monitoring and control requirements of its commuter rail operations.” In addition, the platform is expandable so it can easily accommodate future rail line extensions.

The new platform will not only provide new functionalities for the system administrator and Centralized Traffic Control (CTC) and SCADA dispatchers, it also will include an information repository for

8 Railway Age // January 2020

selected real-time data available to users and customers outside the control centers.

The work will be conducted at NJT’s dispatch center in Kearny, N.J. ShipChain recently launched a new Final Mile delivery platform, Delivery Experience Manager, in an effort to help improve visibility for customers, shorten waiting time and delivery windows, reduce damage claims, and provide a seamless delivery experience.

The new Delivery Experience Manager aims to allow buyers, carriers and shippers to track transports in real-time and verify delivery time, location and quality of goods with every single shipment. The technology can be integrated into existing hardware or utilized via the ShipChain mobile app. The Delivery Experience Manager provides “a verified and immutable digital report of the delivery process that increases transparency and ensures all claims can be easily checked for accuracy. This includes photographic evidence of transfer, allowing customers and carriers to confirm safe delivery of goods and mitigate any damage.” The new platform also allows the buyer to change an address, schedule deliveries and change other shipping criteria. railwayage.com

LIGHT RAIL 2020 PRESENTED BY RAILWAY AGE AND RT&S

PLANNING, ENGINEERING AND OPERATIONS TOPICS INCLUDE: • MBTA: Overview of a Legacy LRT System • Engineering for Operations • New Start Lessons Learned • Hydrogen Fuel Cell Vehicles • OC Transpo High-Capacity Light Rail • Integrated Fare Collection: The Best Ticket is No Ticket

APRIL 22 & 23 Courtyard Boston Downtown Boston, MA

BOOK A ROOM Reserve at the Courtyard Downtown Boston for $269/night.

Call 800.321.2211 by 3/31/20.

SPONSORS:

EXHIBITS & SPONSORSHIPS AVAILABLE Jonathan Chalon 212.620.7224 jchalon@sbpub.com

REGISTER NOW 212.620.7205 conferences@sbpub.com www.railwayage.com/lightrail

Watching Washington

Haverty Factor Fueled Rail Trade Growth

W

hen Mexico’s President Porfirio Diaz lamented more than a century ago of his nation being “so far from God and so close to the United States,” he hadn’t contemplated the North American Free Trade Agreement (NAFTA), which demonstrably enhances efficiency, encourages innovation, increases consumer purchasing power, makes a wider assortment of goods available and raises standards of living.

While trade-augmenting NAFTA and its progeny, the United States-Mexico-Canada Agreement (USMCA), were negotiated in Mexico City, Ottawa and Washington, D.C., its success throughout North America has much to do with the iron horse and the vision of railroader Michael R. (Mike) Haverty. Significantly, it’s why Haverty, now retired and age 75, was enshrined in the National Railroad Hall of Fame in 2012, and was the 2001 Railway Age “Railroader of the Year.”

With pluck worthy of Alexander the Great, and none of the collywobbles of his peers who watched with barely masked mockery, Haverty, as President of Kansas City Southern Railway (1995-2005), made a $1.6 billion bet on the future of the barely one-year-old NAFTA—and Mexico’s soonto-be privatized rail system.

Acquired by KCS was the concession to operate the Northeast line of Mexico’s nationalized railroad, FNM (Ferrocarriles Nacionales de México), linking the border crossing at Laredo, Tex., with Mexico City,

$1.6B

MIKE haverty’s bet

in 1995 on the future of the barely one-year-old north american free trade agreement

10 Railway Age // January 2020

Monterrey, the Gulf ports of Tampico and Veracruz, and the deep-water Pacific Coast port of Lázaro Cárdenas—the latter port named for a 20th century Mexican president who, during the 1930s, nationalized the very railroads whose 1995 partial privatization allowed for the KCS concession.

The results of that gutsy wager? Since 1996, when the newly privatized and renamed railroad, Transportación Ferroviaria Mexicana (TFM), turned its first wheels, KCS north-south, cross-border traffic has grown from virtually zero to 28% of total KCS carload volume and 33% of total revenue.

But there’s more to Haverty’s advancement of free trade, which profoundly depends upon efficient transportation.

Advancement of free trade profoundly depends upon efficient transportation.

A decade earlier, while President (19891991) of a BNSF predecessor, Atchison, Topeka & Santa Fe Railway (Santa Fe), Haverty pitched a consequential revenue carload generating concept, inviting trucking visionary Johnnie Bryan Hunt aboard a Santa Fe business car hooked to an intermodal train racing between Chicago and Kansas City.

Hunt was the founder of J.B. Hunt Transportation, which he grew into America’s largest publicly traded motor carrier. The savvy Hunt was quick to notice on one side of the train an opposite-direction procession of flatcars carrying 100 or more trailers; and, on the other, parades of heavy combination trucks on adjacent highways—each requiring one cab and one driver.

Possessing the shrewdest pencil in the trucking business, Hunt was quick to calculate the corresponding cost of

running by highway his trailer freight between the Midwest and California vs. teaming with Santa Fe. One of the most famous handshakes in rail history followed—Haverty and Hunt soon after memorializing the agreement.

“The great majority of Santa Fe intermodal business was then booked by third parties that moved their traffic from one railroad to another in exchange for rate reductions,” Haverty says. “In most cases, we didn’t even know who the primary customer was. Marketing wanted to buy a trucking company; but we had already sold one (Santa Fe Trails Transportation Co. in 1984) that we didn’t know how to run. I wanted to partner with a trucker.” In fact, that was the subject of a paper Haverty wrote while an MBA candidate at the University of Chicago. Thus, the impetus to invite Hunt aboard the Santa Fe business car.

Born in 1989 was the rail industry’s first dedicated premium-service, premium-priced intermodal service—called Quantum. “For the first time, we were charging a higher price for intermodal service to customers other than UPS,” Haverty said. “We signed an exclusive agreement with Hunt so that he wouldn’t play one railroad against the other.

A BNSF marketing guy told me last April that he expects revenue from J.B. Hunt intermodal units handled this year to be about $1.5 billion.”

Growing up in a “union, yes” family outfitted Haverty with another skill essential to selling premium service at premium prices, but still constrained by market forces, such as the ready availability of nonunion truck drivers. Santa Fe’s costs had to be contained, as Hunt knew to the penny the tipping point between shifting loads back to the highway. Train crew size had to be trimmed from five, and the 100-mile distance dating to 1916 for measuring a day’s straight-time pay had to be increased.

Haverty was not just another management “suit” holding town hall meetings with train crews to discuss economic reality. He was a fourth-generation railroader and former union member—his great-grandfather emigrated from County Galway, Ireland, during the mid-19th century to hire out as a carpenter on Santa railwayage.com

Watching Washington

Fe; his grandfather and father were in train service on Missouri Pacific (MoPac, now part of Union Pacific); and Mike worked summers—sometimes more—as a MoPac track laborer and trainman to help pay college tuition and support a growing family before entering MoPac’s management training program.

Successful negotiations were contentious, but less so on Santa Fe, which was beset with financial difficulty and in fear of a hostile takeover by an opportunist hedge fund. Recalled were news reports of thousands of lost jobs and the voiding of union contracts in bankruptcy proceedings initiated by takeover artist Frank Lorenzo at Continental Airlines. New industry-wide labor agreements, initiated

by Santa Fe, kept railroads competitive, accelerated a shift of traffic from highway to rail, made rail jobs more secure and strengthened the railroads’ ability still to pay wages and benefits higher than in almost all other American industries.

Establishing Santa Fe as a change agent for intermodal innovation, and then acquiring, for KCS, one of the Holy Grails of railroading—the Mexican Northeast concession—ain’t bad at all for a guy who grew up on the blue-collar side of the tracks.

Indeed, Haverty’s acquisition of FNM’s busiest line, and its subsequent rehabilitation, realized what KCS founder Arthur E. Stilwell had unsuccessfully attempted in 1900 through a second railroad, aspirationally named Kansas City, Mexico & Orient Railway.

Haverty’s success in Mexico began in 1991, when, as Santa Fe President, he held trade discussions with Mexican business executives. But the courage of Santa Fe board members to invest—especially in Mexico—had been sapped by the 1986 rejection by regulators of a merger with Southern Pacific (SP), and haunting knowledge of financial losses incurred by Southern Pacific de México before its 1951 nationalization by the Mexican government to become Ferrocarril del Pacifico.

Auspiciously, while NAFTA was being negotiated, Haverty was elected KCS President, with permission to pursue what Stilwell had failed to accomplish. By 2005, railwayage.com

the KCS minority control of the Mexican railway operating concession Haverty obtained at auction in 1996 grew to 100%, and there occurred right-of-way rehabilitation and a name change to Kansas City Southern de México (KCSM).

With ownership, also, of Texas-Mexican (Tex-Mex) Railway and its International Bridge spanning the Rio Grande River between Laredo, Tex., and Nuevo Laredo, Mexico, KCS forms, through a marketing alliance with CN, a near seamless NAFTA railroad. It stretches from Canada’s Pacific and Atlantic coasts via CN track into the U.S., then south along CN subsidiary Illinois Central (IC), connecting then with KCS, Tex-Mex and KCSM. A proposed BNSF-CN merger, which could have cut KCS out of the U.S. portion of the marketing alliance, was scuttled in 2000 by a Surface Transportation Board (STB)-imposed merger moratorium pending the writing of less-favorable rail merger rules. BNSF, however, still connects at Laredo with Tex-Mex and KCSM, while both BNSF and UP have numerous alternative cross-border connections with Ferrocarril Mexicano (Ferromex), in which UP has a minority interest. But it’s not the NAFTA railroad of which KCS is a part.

That efficient KCS-CN marketing alliance fuels future merger speculation, but no formal Class I merger application has been made to the STB since imposition of those tougher merger standards two decades ago. Notably, however, the tougher standards specifically exempted—as sought by Haverty—only KCS, the smallest of Class I railroads, meaning an easier evidentiary standard in a KCS merger with another Class I. Now retired, with energies redirected to a recently obtained minority ownership of the Kansas City Royals baseball team, Haverty is but an observer. Yet whatever the future, the causation will be coupled to the Haverty factor—his enduring pioneering foresight in achieving for all railroads unprecedented traffic growth through more efficient intermodal operations, and forging for KCS the long-elusive link to attain more commercial fruits offered by NAFTA.

28%

of kcs carload volume comes from crossborder traffic

33%

of kcs revenue comes from cross-border traffic

49%

of kcs route-miles are in mexico, operated

by KCSM

FRANK N. WILNER Contributing Editor January 2020 // Railway Age 11

RAILROADER OF THE YEAR

2020

RAILROADER OF THE YEAR

PAT OTTENsMEYER Kansas City Southern

How good service and cross-border railroading beget growth.

By William C. Vantuono, EDITOR-IN-CHIEF

12 Railway Age // January 2020

railwayage.com

railwayage.com

he 57th annual recipient of Railway Age’s Railroader of the Year Award is Kansas City Southern President and Chief Executive Officer Patrick J. Ottensmeyer, a leader in positioning North American railroads as a critical part of the globally competitive, integrated supply chain.

Ottensmeyer’s tireless efforts on behalf of the North American rail industry have supported mutually beneficial trade and robust economic growth. He chairs the U.S. Chamber of Commerce U.S.-Mexico Economic Council, ensuring the rail industry has a voice by working with public- and private-sector leaders to strengthen bilateral commercial ties. At Kansas City Southern, his leadership has produced efficient and fluid operations on the railroad’s crossborder and northern Mexico corridors.

Ottensmeyer has also been instrumental in KCS’s adoption of advanced technologies.

Ottensmeyer was elected as KCS President and CEO July 1, 2016. From April 2015 to June 2016, he served as President of KCS. From October 2008 through March 2015, he served as KCS Executive Vice President Sales and Marketing. He joined KCS in May 2006 as Executive Vice President and Chief Financial Officer and served in that role until October 2008. Ottensmeyer has a broad range of railroad experience from the various senior executive positions he has held at KCS over the past 13 years, and also with BNSF. During his time as Executive Vice President Sales and Marketing, he developed a deep understanding of KCS’s strategy as well as its customers and growth opportunities. He has an extensive understanding of financial matters, which helped him lead KCS’s Finance department during his time as CFO. He came to KCS with substantial experience in financial matters from serving in various executive roles, including treasurer and chief financial officer positions. Ottensmeyer holds a Bachelor of Science in Finance from Indiana University.

“Pat joined Kansas City Southern as CFO in 2006. With his banking and finance background, and his time in the railroad business as Vice President of Finance and Treasurer for BNSF, he was the individual we needed as CFO,” now-retired KCS Executive Chairman and 2001 Railroader of the Year

Mike Haverty told Railway Age. “Just prior to his arrival, KCS had taken over 100% of the Mexican Northeast rail concession, was preparing to rebuild the acquired old Southern Pacific ‘Macaroni Line’ between Rosenberg and Victoria, Tex., and to completely rebuild the line serving the critical Port of Lazaro Cardenas that was being upgraded by the Mexican government and Hutchison International Terminals to be a competitive North American port on the Pacific Coast.

These were all critical investments that have led to the success that Kansas City Southern enjoys today, but the company needed a financial leader at that time who could help craft these major capital investments during a time KCS was struggling financially. Pat was that person.

“Eventually, Pat became Executive Vice President Sales and Marketing for Kansas City Southern and led the team to grow the revenue benefits of the strategic investments that he had helped to finance. He clearly understood the importance of these investments in developing the value of the KCS franchise and, as the current CEO, he continues to lead the management team in executing plans to improve that value.

“Free trade in North America is critical to the success of Kansas City Southern, its customers, employees, shareholders, and communities and states that it serves in the U.S. and Mexico. The survival of Kansas City Southern as a rail transportation holding company can be attributed to its successful investment in the privatized Mexican rail network in 1996 that was developed following the passage of the North American Free Trade Agreement (NAFTA) in 1994. That is why it was so gratifying to see that Pat was chosen by the U.S. Chamber of Commerce in January 2017 to serve as Chairman of the U.S. Chamber’s U.S.-Mexico Economic Council, as NAFTA was being renegotiated as the new United States-Mexico-Canada Agreement (USMCA) to replace NAFTA. “What impresses me about Pat’s role as KCS CEO today is that while he has developed a team to help improve operations and reduce the operating ratio, just as important, he has them focused on revenue growth as well. There has been an overemphasis, in my opinion, on focusing too much on reducing the operating ratios in the railroad industry today, but Pat clearly understands that growth is essential to the January 2020 // Railway Age 13

Photo Credit:

Kansas City Southern

T

RAILROADER OF THE YEAR

RAILROADER OF THE YEAR Detroit, which is now part of JP Morgan. I left to go to Chicago about five years later to work for a West Coast bank, Security Pacific National Bank. I moved to New York City for a few years.

RA: Your first experience with the rail industry is rather interesting. This goes a long way back, to the 1980s, to Santa Fe Southern Pacific.

OTTENSMEYER: Santa Fe Southern Pacific was one of my clients when I was in Chicago in banking. This was after the holding companies had merged, but the two railroads were separated, and Southern Pacific was actually owned and controlled by a trust awaiting Interstate Commerce Commission approval. The ICC rejected the merger, the company appealed, but the rejection was finalized in 1987, effectively putting the company in play. It became the target of a hostile takeover attempt. Security Pacific and JP Morgan were the co-leaders of a $4.8 billion leverage recapitalization in 1987 to defend the company from a hostile takeover attempt. The years after that became literally like a banker’s dream—a lot of deals, a lot of restructuring. And I worked very closely with the finance staff and the CEO, Rob Krebs. It almost became a full-time job for me for about four or five years, with a lot of restructuring activity, a lot of refinancing. And at the end of all of that, it became a pure play railroad. Shortly after that, they struck the deal with Burlington Northern and merged to become today’s BNSF.

RAILWAY AGE: Pat, on behalf of Railway Age and Simmons-Boardman Publishing Corporation, I’d like to congratulate you on your selection as our 2020 Railroader of the Year.

OTTENSMEYER: Thank you, Bill. It is really an honor. I’ve been in and around the railroad business, working for railroads 14 Railway Age // January 2020

for more than 20 years. I’m very familiar with the people who have won this award.

And, I’m extremely honored to be part of that group.

RAILWAY AGE: You are from Indiana originally.

OTTENSMEYER: I am a Hoosier.

I grew up in a small town in southwest Indiana called Vincennes, right on the border of Illinois and about 50 miles North of the Ohio River and the Kentucky border.

Okay. My alma mater is Indiana University. I graduated with a bachelor’s degree in finance from Indiana. I started my career in the commercial banking business in Detroit, where I went to work as a trainee and credit analyst at National Bank of

RA: What brought you into the railroad industry full time?

OTTENSMEYER: A result of knowing the people very well and developing a great relationship, and trust, with the person who ultimately became Chief Financial Officer, Dennis Springer. After he was promoted to CFO, he needed to replace himself, and he called me to see if I was interested in moving back to Chicago and getting into the railroad business in a finance capacity.

That was 1993.

RA: How did you get to Kansas City Southern?

OTTENSMEYER: I left the railroad industry after a few years with BNSF. I left the industry for a few years, and dabbled railwayage.com

Kansas City Southern

success of the company, and you cannot just concentrate solely on cutting costs. In other words, he understands that a company cannot save itself into prosperity, and must have growth.”

In early December 2019, Ottensmeyer sat down for an extensive interview with Railway Age Editor-in-Chief William C. Vantuono at KCS headquarters.

HIGH CAPACITY I PRECISION I RELIABILITY

Your partner for life The Plasser GRM3000T is a heavy-duty, high performance switch and production tamping machine. It is a multi-function tamping machine and has fully automatic track lifting, lining, and cross-leveling capabilities. The machine’s compact design and weight allow for flexibility when transporting with flat cars or road trucks. The machine is constructed for ease of operation and maintenance. The optional GRM2X Tamping Trailer is an integrated, independently working tamping trailer that can be connected to the GRM3000T via TampLink to increase productivity levels.

Plasser American – Your partner for life.

www.plasseramerican.com ”Plasser & Theurer“, ”Plasser“ and ”P&T“ are internationally registered trademarks

RAILROADER OF THE YEAR

RA: What attracted you to KCS? What did you see in KCS that made you think this was a great opportunity?

OTTENSMEYER: I was 49 and had been out of the public company finance world for a few years, and thought the timing was right to come back in as CFO of a publicly traded company. I knew a number of the players, including Mike Haverty. I didn’t know Mike well at the time, but he and I had some dealings when he was at Santa Fe and I was their banker. Art Shoener, President of Kansas City Southern at the time, I knew a little bit better. Generally, I had some awareness of Kansas City Southern because of my years in the industry. This was early in 2006. In 2005, Mike Haverty accomplished something that a lot of people at the time thought was not ever going to happen: He got control of what is now Kansas City 16 Railway Age // January 2020

“I realized that Mexico was a huge gamechanger for KCS.” Southern de México and put together this cross-border network that dramatically changed the strategic significance of the company that we are today.

RA: The Mexican portion was TFM, of which KCS ownership was 49% at the time.

OTTENSMEYER: I came on as CFO and realized again, partly because of my years in the railroad industry, that this was just a huge game-changer for the company.

In fact, one little tidbit that I have often told people: When I joined the company in 2006 as CFO, there were two sell-side Wall Street analysts that followed the company.

They’ve changed firms, but they’re both

still followers of our company. If you read their research reports in 2006, you would have read what the company was worth as a takeover or as a breakup, because no one believed that we would ever get control of the Mexican subsidiary. There was no one who really understood or talked about the company as a going concern. But this was such a strategic game-changer, and one of the very first things I did when I joined the company as CFO was to develop that independent valuation thesis. So in 2006 and 2007, we began to really put together the story. What is this company worth as a going concern as a standalone publicly traded company? And Mike and I, you know, figuratively killed ourselves going around the country and the world telling that story and really generating a lot of enthusiasm and excitement.

RA: Kansas City Southern de México is where traffic growth is these days.

OTTENSMEYER: That’s been the biggest success since 2005, 2006. We’ve been around for 132 or 133 years. But the railwayage.com

Kansas City Southern

in some venture capital. I did a number of different things, including teaching. And then, in 2006, had an inquiry to come back into the public company finance realm as Kansas City Southern CFO. I jumped at it.

MORE THAN PARTS. PERFORMANCE. Amsted Rail, the global leader in fully integrated freight car systems for the heavy haul rail market.

TRAIN SMARTER F R E I G H T | T R A N S I T | D I G I TA L amstedrail.com

RAILROADER OF THE YEAR

company that you see today was really born in 2006, the seamless cross-border network connecting the two countries right in the heart of North America. That all began in 2006. Cross-border business has been the fastest growing. Our volumes for the past two years have grown in the low- to midteens, 12% to 15%; in some quarters as much as 18% —in spite of the fact that our overall volumes are flat.

RA: A lot has happened since 2016 and the election and the change in power in Washington. Much has to do with the relationship with Mexico—cross-border trade and traffic.

You have been an integral part of shaping USMCA (U.S.-Mexico-Canada Agreement), the successor to NAFTA. What are the key differences between NAFTA and USMCA? OTTENSMEYER: The key differences 18 Railway Age // January 2020

are in the areas of intellectual property, e-commerce, the pharmaceutical space, etc.

In the automotive space, some of the rules of origin, the content thresholds and regulations for things like automobiles and other manufactured projects, but particularly automobiles, have changed. North American content has been increased. One of the more significant changes in this new agreement has to do with labor market reforms that have taken place in Mexico at the insistence of the U.S. side to, over time, try to equalize that labor advantage—the belief being that there have been huge outflows of manufacturing jobs from the U.S. to Mexico because the old NAFTA didn’t effectively stop that. So part of the agreement that was signed a year ago by the three countries required the Mexican government to change its labor laws through their

RA: Your role in this has been significant.

OTTENSMEYER: It really has been out of necessity. It’s so important to our company and to our customers and to the communities that we serve. We were one of a few U.S. publicly traded companies that didn’t participate in the celebration and the party that took place after the election in 2016. President Trump was elected, there was a Republican Congress, a Republican in the White House, stock markets were up, all the other railroads were up the day after the election. We lost literally 12% of our market capitalization in about the first hour of trading because we were so closely associated with Mexico and NAFTA. There was a lot of confusion. I came to work the next day, not intending to write a letter that started with “Dear fellow Kansas City Southern Colleagues,” but I did because I was told that there was a lot of concern about what this meant for our company. And in that letter, I said something like, “I’m going to try to get involved in the process and influence the outcome and protect our interests and those of our customers and employees.”

I’d been CEO for four months. I literally had no idea what that meant.

RA: You figured it out, though.

OTTENSMEYER: We started calling railwayage.com

Kansas City Southern

Congress, which they did in April or May of 2019. But there was, even after that, some criticism and concerns on the part of U.S. Congress thinking Mexico didn’t have the resources or the commitment to enforce those new labor laws. So the U.S. Congress went back to Mexican government officials and said, “Prove to us that you have the resources and the commitment to enforce those laws.” And they did that, in the form of a letter that was written from the President of Mexico to Congressman Richard Neal (D-Mass.), Chairman of the House Ways and Means Committee, laying out exactly what they are going to do, the funding and the resources that were available to enforce the new labor laws in Mexico.

That was one of the last hangups to get to the point that we are today, where a new version of the agreement has been signed by the three countries. It has been approved by the legislature and the Congress in Mexico, and it’s literally on the doorstep of the U.S. Congress to be approved.

C O N G R AT U L AT I O N S

Patrick J. Ottensmeyer Kansas City Southern President and CEO

2020 RAILROADER OF THE YEAR

As companies committed to maximizing performance, efficiency and safety, LoramÂŽ and GREXÂŽ are proud to partner with the 2020 Railroader of the Year, who embodies those same values and shared commitment to excellence.

www.Loram.com

www.Georgetownrail.com

Rail Grinding | Ballast Maintenance | Friction Management | Material Handling | Tie and Geotechnical Inspection Services

RAILROADER OF THE YEAR people. And lo and behold, we were able to get meetings with White House and members of the Cabinet as they came together, the leadership in the Congress, and the same thing in Mexico. We really were outspoken in Mexico as well, because we are really a Mexican company and a U.S. company that happened to be joined together at the top. We are not going to rip up our track and move it to Pennsylvania. We’re there for the long haul. We’re an important part of the economy. If you think about how important a critical infrastructure like railroads are to a nation’s economy, we play a different role than even a manufacturing company that is bigger than us in terms of the number of people they employ, because we’re not going anywhere. And all those other companies that are in Mexico— Mexican companies and foreign companies—rely on our network and our service to be efficient, get their products to market, get their raw materials, all of those things.

RA: How does KCS’s role in Mexico

“There are many companies in Mexico relying upon us.” compare with Union Pacific and BNSF, which also do a considerable amount of business in Mexico? Although I would think not to the extent of KCS. OTTENSMEYER: We are the only one of the three that has invested so much in physical infrastructure in Mexico in the past 20 years. Since [we won] the concession 22 years ago, we’ve invested more than $5 billion in Mexico. We have a much different type of exposure. We were a little quicker to become outspoken, in defense of the U.S.Mexico relationship because of our role and our investment and the nature of our business. Then because of the fact that we are,

again, really a Mexican company. That did a lot for us with respect to building a different type of relationship with the Mexican government and business community.

Probably one of the reasons that I was asked to be the U.S. co-chair of the U.S.-Mexico CEO Dialogue is because they recognized we had a different role. We were speaking not just for ourselves. We were representing our customers, and we really played a different role than a lot of other U.S. companies.

RA: Everybody’s favorite subject these days: PSR, Precision Scheduled Railroading. KCS has its own version, which is a bit different. What’s different about it and what is your strategy for implementing it? What drives that?

OTTENSMEYER: We’re a year into the PSR transformation. We haven’t closed any yards or consolidated any routing options. We’re pretty much a single-line railroad. We don’t really have the options that some of the larger, more complicated networks have to move traffic to certain

CP congratulates Patrick J. Ottensmeyer Kansas City Southern President and Chief Executive Officer on being named Railway Age’s 2020 Railroader of the Year.

20 Railway Age // January 2020

railwayage.com

KUDOS AND CONGRATULATIONS PAT OTTENSMEYER! Progress Rail congratulates Pat Ottensmeyer, President and CEO of Kansas City Southern, for being named Railway Age’s Railroader of the Year in recognition of

+1 800-476-8769 • progressrail.com •

@progressrail •

@Progress_Rail

190120

his outstanding accomplishments.

RAILROADER OF THE YEAR

locations, create density that might then make it possible for them to close yards.

We never had any hump yards; we didn’t have any hump yards to close. Those are just some of the more obvious examples of things that other PSR railroads did that

didn’t really apply to us. What did apply to us was thinking about our scheduling differently, about train length, service schedules, the way we used our yards and eliminating a lot of unnecessary handling, trying to streamline activities.

We have eliminated congestion on our network. We have gotten out of our own way. When we really looked at the way we were running trains, we were bumping into ourselves all too often. We did kind of a thoughtful redesigning of the network. We

HI-RAIL TRUCKS 17 FAST TRACK SPECS CUSTOM VOCATIONAL BUILDS EXTENSIVE NETWORK - 26 LOCATIONS

MOBILE SERVICE PARTS WE ARE YOUR ONE SOURCE

CONGRATULATIONS TO RAILROADER OF THE YEAR, PATRICK OTTENSMEYER 22 Railway Age // January 2020

844-816-7368 | RAIL@CUSTOMTRUCK.COM CUSTOMTRUCK.COM/RAIL railwayage.com

Kansas City Southern

24-HOUR PHONE SUPPORT

WHEN YOUR BUSINESS RELIES ON RAIL, RELY ON US As North America’s premier provider of comprehensive railcar solutions, more companies rely on our expertise than any other. Thanks to our integrated platform of railcar products and services, we’re able to provide your business with the single source you need for true peace of mind. Learn more at TrinityRail.com.

RAILROADER OF THE YEAR traffic with fewer assets. So far we’ve had really good success. Our volumes overall have been flat, as has the industry for the past year or so. But we’re handling the same amount of freight, the same number of carloads, with 12% fewer locomotives, about 8% or 9% fewer cars and fewer train starts. We’ve significantly reduced congestion on line-of-road and in the yards, and our asset utilization, cycle times and transit times have improved significantly. We are handling the same amount of traffic with fewer assets and less cost.

Pat Ottensmeyer with Congressman Henry Cuellar (D-Tex.) in his Capitol Hill office just before the USMCA vote.

brought in an executive who has significant PSR experience, Sameh Fahmy, who was part of the Hunter Harrison team at CN and then at CSX for a period of time, to really help us understand what is it that,

given our network, could work and be effective in reducing congestion, rethinking how we design our train schedules, how we use our locomotives and crews, how we use our yards to be able to handle the same or more

RA: So you’d call your implementation of PSR a more measured approach?

Thoughtful, even?

OTTENSMEYER: We’re approaching it differently. We are trying to be very thoughtful. Our grain business is a good example. We changed the service, reduced congestion. We saw a very quick and noticeable improvement in transit times. We had excess hopper cars fall out of that, but we made a decision not to get rid of them, but

Stay Connected and Stay on Track with Iridium Certus® Featuring MissonLink™

by Thales

Command Center July

15

Satellite

Schedule Adjustment Route set-up and adjustment Proactive Incident Management Speed Monitoring Customer Information Updates

Train Staff

Passenger Payment Transactions Voice Calls to/from Operations Centers Comms with Upcoming Stations Internet Access Email Antenna

Sensor Data (Braking, Speed, Engines, etc.)

Preventative Maintenance Safety Applications Collision Prevention

Smartphone

Terminal

Kansas City Southern

Train Automation

Wi-Fi Sensors © Copyright 2019-2020 Iridium Satellite LLC. All rights reserved. Iridium, the Iridium logo and Iridium Certus are registered trademarks of Iridium Satellite LLC and its affiliates. Information is subject to change without notice.

24 Railway Age // January 2020

railwayage.com

N O .

T E R N A I CK. L N O ON TIME.

Railway Equipment Company has a 40-year track record of solving railroads’ toughest challenges in keeping trains moving during adverse winter conditions. This has resulted in industry-leading winter protection for switches and hot box detectors. Our winter protection products include: gas hot air blowers, electric hot air blowers, electric controllers with heating elements, fiberglass switch covers, pan heaters, and a hot box detector protection package. For more information on how we can help you this winter, please visit rwy.com.

15400 Medina Road | Minneapolis, MN 55447 P: 763.972.2200 | F: 763.972.2900

Bruce Kelly

sales@rwy.com | www.rwy.com

Battery Chargers and Monitoring Systems

Switch Heaters

Remote Monitoring of Wayside Assets

Crossing Gate Arms, Lamps and Accessories

RAILROADER OF THE YEAR to hold them, because we had this belief that there was more business that we could go after. Our customers were telling us that.

So we held onto those cars for a period of time. And then, lo and behold, we literally did see business come to us that we had either lost or didn’t have. We started to see market share increase because our service had improved. Those improvements were sustainable, and we kept the capacity to be able to generate more revenue.

RA: This ties in with your mantra, three great words, “Service Begets Growth.”

OTTENSMEYER: That’s right. It really started to be very noticeable in the third and fourth quarters of 2018. Our service had really begun to suffer. I think it was in two earnings calls and probably three board meetings that I had to say the following words: “There was more business available to us than we could handle because our service was not adequate.” For me and our executive team, we had a very strong belief and conviction that there was

26 Railway Age // January 2020

“We believed that there was more business available to us.” business available to us. We just needed to demonstrate that we could handle it. And if we did that, we thought the growth would be there and the business would come back.

That was the genesis of the phrase “Service Begets Growth,” a high conviction that the growth opportunities were there. And even through that period of time, the Wall Street community believed that we had these great business opportunities. The best example that really applied uniquely to us and, to a lesser extent the other large railroads, was refined petroleum products moving from U.S. Gulf Coast refineries to terminals deep into Mexico as a result of the opening up

of the Mexican markets, because of some congressional and constitutional changes they had made in their energy markets.

That was a real opportunity. Those markets were open.

We knew there was a huge amount of interest on the part of U.S. Gulf Coast refineries moving into that market. We just had to get the service right. Those products wanted to move in Mexico. They wanted to move by rail. There isn’t sufficient truck capacity, nor is there pipeline capacity to move it. So we knew that if we got our service right, improved consistency, reliability and resiliency, creating additional capacity by running our railroad differently, the business would be available for us. And it has worked out very, very well. Refined petroleum products has been the single-fastestgrowing part of our business for the past 12 to 18 months, with growth rates as high as 40%. As that base gets bigger, those growth rates are going to come down, obviously.

But that’s been a real success story.

If we can maintain and sustain the type

railwayage.com

CONGRATULATIONS TO KANSAS CITY SOUTHERN PRESIDENT AND CEO

Patrick J. Ottensmeyer for being honored

by Railway Age as Railroader of the Year

kcsouthern.com

RAILROADER OF THE YEAR of service that we’re delivering today, there are going to be more growth opportunities in that area.

RA: It seems to me that the railroads are at what I call an inflection point. They’re facing things like autonomous trucks. The traffic mix is changing. Traffic has been falling off—which is cyclical, of course; it goes up and down with the economy. What do railroads have to do going forward to stay relevant? What are the biggest problems or challenges as you see them?

OTTENSMEYER: The world around us is changing. There’s a lot of Wall Street buzz and interest about autonomous trucks.

I’ve gotten into arguments with a number of Wall Street research analysts who believe that autonomous trucking is going to have the same impact on the railroads in the future as the Interstate Highway system did 50 or 60 years ago. We certainly can’t dismiss it. But shame on us as an industry if we let that happen, because there are a number of factors I think, if we do the right

Congratulations to Pat Ottensmeyer

2020 Railroader of the Year

Kansas City Southern

cn.ca

28 CNC_191102_Ann_Horizontal_100Years.indd Railway Age // January 2020 1

dossier : CNC-191102

client : CN

description : 100 Years titre : On Track for 100 Years

date/modif.

railwayage.com 19-12-19 16:53

rédaction

relecture

D.A.

épreuve à

sc/client

infographe

production

couleur(s)

Décembre

1

100%

RAILROADER OF THE YEAR thing, look down the road, think ahead and start to invest in some of the technology and innovation available or will be available, there’s no doubt in my mind that we can not only preserve our role in the business world and transportation and logistics, but gain market share.

We’ve spent billions of dollars as an industry on PTC, and maybe we would have done it differently and would prefer that it had not come to us as a government mandate. But here we are; we’ve largely installed PTC. We’re working on interoperability. But that technology is going to be a useful springboard to be able to run a moreautonomous rail network.

What I believe in, and I think the industry is coming around to generally believing in through the AAR SOMC (Safety and Operations Management Committee), of which [KCS Executive Vice President and Chief Operating Officer] Jeff Songer is Chair, is really focusing as an industry on an important issue: How do we go after this and make sure that we don’t become less

“PTC is a springboard to running a more-autonomous network.” relevant or ultimately irrelevant in the way freight is moved around North America?

The real payoff, if we continue down that path and make the right investments, the right choices, would be a tremendous increase in the capacity that we can get out of our network, improved consistency and reliability, and resiliency of the network.

And if we do all of those things and we create that outcome, I think railroads have a very bright future. Not only will it preserve our role, but we’ll be able to grow it. What that’s going to require, given the nature of the rail network, is that we are going to have to work together as an industry to [address] some

of these issues, because of the huge degree of interchange that takes place among the large railroads.

We’re involved in a couple of Blockchain pilots. We’ve taken what I call a partnering type of strategy with respect to innovation.

Everything we look at fits into one of three or four buckets. It’s either customer-facing, how can we become more effective and better at the way we interchange and interface with customers like Blockchain, for example. Some of the technologies we look at and some of the actions we’re considering are in the area of asset health, predictive maintenance—those types of things to get better utilization, longer lives and better performance out of our assets.

Autonomous operations is a different bucket. And then there are other financial types of investments and innovations that we’re looking at. So it’s a distributed model in the organization that all comes together at the executive team. We’ve made some investments. We are a small investor in an autonomous vehicle company involved in

Driving velocity in the rail industry.

TRACK MAINTENANCE

RAIL CAR MOVING

RAIL INSPECTION

railwayage.com NORD0788 AD RT&S Sept 2019.indd 1

January 2020 // Railway 29 8/21/19 Age 1:31 PM

RAILROADER OF THE YEAR looking at closed communities—retirement communities, resort communities—in developing autonomous vehicle technologies. We’re working on some ideas and possibly a pilot looking at how we could use their technology at our intermodal ramps to manage dray and movement of containers within the fence, so to speak.

One of the ways I describe our approach right now is, we’re not looking for the needle in the haystack in terms of the big, homerun type of investment in a single technology or a single company. We’re trying to find the haystacks. That means we’re looking for partners and people, companies investing in similar types of technology, trying to leverage their resources and our relationship with those companies to try to become more aware of new, emerging, disruptive technologies that apply to our business.

RA: A good example of that in the rail industry is TTCI. OTTENSMEYER: Yes. They’re doing a lot of great things in autonomous and the

use of drones and asset health. How can we look at that group as a haystack and get a better understanding of the things they’re doing and find those that we think are more relevant to us. There are lots of other examples, from financial institutions to companies like Siemens and Wabtec—all of those companies and many more we consider to be haystacks that we want to get closer to and understand what they’re doing, leveraging their technology, research and resources to better understand what might apply to us.

RA: Let’s talk about the company’s vision, values and culture.

OTTENSMEYER: It’s a topic that I have spent a lot of time on since I became CEO, and probably when I became President.

I have spent a lot of time with employee groups, in town hall meetings, really trying to tell people what type of company we want to be. I have a little tool that I use, I have in my pocket every day. It’s a statement, and it has been very useful for me as the CEO of

the company to help 7,000 employees across 7,000 miles in two different countries, two languages, two cultures, really understand our vision, our purpose, and what type of behavior is expected and what type of behavior they should expect as an employee.

Our vision is to consistently be the fastest-growing, best-performing, most customer-focused transportation company in North America. So those are the key elements of our vision. So, for example, fast growing certainly means revenue and volume, but it can also be profitability, earnings per share, those types of things.

Over time, we have built our management and executive compensation systems around some of those notions. The other key part of this, which I think is really important, is the values and culture piece, which is really more about behaviors, how we expect our people to behave with each other, with customers, with investors, with partners, vendors, whoever. That has really been helpful, for me and really a lot of our managers, to just be very clear on what

Congratulations Patrick J. Ottensmeyer

Kansas City Southern President and Chief Executive Officer

Railroader of the Year

Visit hollandco.com 30 Railway Age // January 2020

Follow #HollandLP railwayage.com

RAILROADER OF THE YEAR those core values are, and to tell them and help them understand that this is what’s expected. And if you don’t behave this way, you can’t work here. On the other side of the fence, this is what you should expect as an employee. This is the way you should expect to be treated, in your dealings with supervisors and other people in the company.

RA: My experience with Kansas City Southern goes back to the mid-1990s. There are two things that come to mind: Never complacent. Fiercely independent.

OTTENSMEYER: I would agree with that. Maybe some of it is our size. We’ve got to be on our toes because we’re surrounded by companies that are much larger than we are. Complacency would be very troublesome for our company. Fiercely independent? I would say the nature of our fierce independence has changed over time.

A big part of our strategy for the past several years—this is really important—is the way we can connect, our philosophical approach, our desire and willingness to work with the other carriers to get to markets and offer our customers and their customers service options that we wouldn’t have, just based on our own network.

So that again is a very important part of our strategy, more so than most of the other large railroads. Because of our size, of where we’re located, the strategy of developing service options with our connecting carriers and our partners in the railroad industry is very important. I also think a really important part of our value proposition to our customers is that independence. If you’re an auto company building a new plant in central Mexico and you want service options to both railroads in the East, we’re happy to do it. If you want service options to both railroads in Canada, we’re happy to do it. I think we are more valuable to our customers because of our ability and our willingness to do that. If we were part of a bigger network, it might not be so easy.

Railway Age will formally present Pat Ottensmeyer with the Railroader of the Year Award at the Union League Club of Chicago on March 10, 2020, where the presentation has traditionally taken place since 1964, during the Western Railway Club dinner.

An Innovative Approach to

Railroad Maintenance Equipment Lower Operating and Maintenance Costs with the World Wide Support of the John Deere Dealer Network

PURCHASE—RENT—LEASE Customizable and Emissions Compliant

Formerly Rail Construction Equipment Co.

www.rcequip.com 866-472-4570 High Rail and On Track Equipment NEW SERIES RAILAVATORS—245G, 250G Models Excavators—Swing Loaders—Carts Railavators—Brushcutters—Rail Clips Third Rail Applications—Mag Cranes—Tie Cranes

Kansas City Southern

All-Makes High Rail Gear

railwayage.com

January 2020 // Railway Age 31

A world of railway market intelligence at your finger�ps Malaysia

CHILE

Australia

Britain Korea GERMANY Sweden China Japan Peru Canada Brazil AUSTRIA Saudi Arabia Russia FRANCE Poland Spain Morocco Bangladesh

Egypt

SERBIA

Myanmar

Tunisia

Belgium

Kazakhstan

VIETNAM

Cuba

Hong Kong

SRI LANKA

Panama

ISRAEL

Philippines

Czech Republic

Ethiopia GHANA

Ukraine New Zealand Azerbaijan Norway

Tenders

Projects

Fleet

With con�nually updated and searchable content, IRJ PRO gives you a unique and up-to-date perspec�ve on investment in new railways and rolling stock

To find out more visit irjpro.com or email cp@railjournal.co.uk

IRJ PRO

Transit Predictions

TRANSITIS IN!

BY ANDREW CORSELLI, MANAGING EDITOR

Political turmoil and funding uncertainty aside, rail transit is gaining ground as the best way to go.

E

arly last month, the American Public Transportation Association (APTA) hosted an event where operators and agencies large and small looked at the past year in passenger rail, and discussed growth and funding prospects for the foreseeable future. Although there have been some bumps in the road—correction, track—there is light at the end of the tunnel, and it is indeed an oncoming train.

“During the past few years there has not been as much progress in general as we would have liked, but certainly there have been a lot of successes along the way,” APTA Vice President Policy and Mobility Art Guzzetti tells Railway Age. “For example, we hosted the Virgin Rail people from Florida and Nevada (Las Vegas-Victorville project), and they are very bullish on their prospects. The Texas railwayage.com

Central people feel good about their project, as do those from the Cascadia Line in Washington State. Interestingly, those projects are privately funded. You know, it’s amazing that some of the top projects in the country are privately funded, when really around the world, most of them get started with public funds. Sometimes they are able to operate in the black after that. But usually they need the public funds to get started.

“Here, apparently, investors think there’s at least a chance for debt and equity to fund the development of rail projects. Brian Kelly, the head of California High Speed Rail, was here. It hasn’t been easy, but the project is moving forward. They do have cap and trade funds to spend in California, and still some bond funds to spend.”

Guzzetti says that the commuter rail side continues to be a “bright spot” in the public

transportation world. “In general, public transportation ridership has been up, so that has reversed a few years that have been challenging. It looks like that trend is now turning around. State-of-good-repair programs are certainly an important factor.”

Guzzetti laments that some systems are addressing serious funding shortfalls, but there is still a ways to go. A rail trust fund included in reauthorization of the FAST (Fixing America’s Surface Transportation) Act would be a good place to start, he notes.

The current bill is expiring Sept. 30. APTA has developed a set of recommendations for how the FAST Act reauthorization should include a rail trust fund. “The highways have a trust fund; transit is part of that trust fund; we’re proposing a rail trust fund as well,” he says.

With regard to viewing infrastructure upgrades as investments instead of subsidies, January 2020 // Railway Age 33

Transit Predictions Guzzetti feels 2020 could be huge, despite the elephant in the room—the 2020 Presidential election, which is already highly contentious, even this early in the game.

“Congress is working out appropriations as we speak, although next year is a Presidential election, and many people feel that progress is going to be tough on a lot of issues,” says Guzzetti. “We continue to think that infrastructure is a bipartisan issue, one on which there could be agreement. I think everybody hopes to accomplish something. There’s no one saying, ‘Next year is an election year; we don’t want to accomplish anything.’

“We’re thinking that this is perhaps a topic of infrastructure that could be within reach. It’s still a priority. We are having a candidates’ forum in Nevada in conjunction with President’s Day Weekend (Feb. 15-17). We’re working with a number of organizations on that, including the Infrastructure Week Coalition. We have invited all Presidential candidates, Republican and Democrat, to talk about infrastructure, one at a time. So we’re hoping we can get some

interest in infrastructure, which hasn’t been talked about all that much in the Presidential campaign to date. But from here forward, we’re saying it should.”

Commuter rail continues to be a bright spot in the world of public transportation.

NEW TECHNOLOGY’S DIGITAL FACE Mobility-as-a-Service (MaaS) is among the newest technologies the public transportation sector is embracing. Described as “the

movement to a complete mobility experience from the moment you leave your front door until you reach your destination, planning and paying seamlessly based on what and how much you use, without using a private car,” MaaS “aims to empower a new mobility reality in which people no longer buy or use a private vehicle, putting transit agencies at the center of large and small MaaS ecosystems around the globe, ensuring equity, reducing congestion, and helping achieve social and environmental goals.”

MaaS, and other related technologies, is a driving force behind public transport’s resurgence, according to Ben Whitaker, Founder and Head of Innovation at Masabi, a Londonbased tech company that develops and markets mobile ticketing services for public transport companies.

Whitaker says that “new Automated Fare Collection (AFC) projects have a plethora of new channels and technology, including adding Account Based Ticketing with fare capping, cash digitization, retail networks, contactless EMV, mTicketing, MaaS API’s and

TAKING PRIDE IN OUR TRUCKS AND EQUIPMENT FOR OVER 40 YEARS. RENTAL SYSTEMS, INC. 34 Railway Age // January 2020

PHILADELPHIA 800.969.6200 DENVER 800.713.2677 DANELLA.COM/RENTALS railwayage.com

Transit Predictions mobility/journey planning aggregation. It’s becoming increasingly likely that, if an agency procures something to be built or assembled from components to exact specifications, the IT projects underneath will be difficult for it to stay on top of—especially since the high levels of skill required to assemble, test and debug complex systems demand an ‘A Team’ from vendors normally only deployed for the largest of clients. Asking the ‘C Teams’ to deploy a complex, newly assembled package of components for several mid-sized agencies might be less successful and not scale.”

Whitaker believes that, outside of the largest agencies with large technology teams, “many agencies will begin to shift away from design-build procurements to simpler, outcome-based procurement projects, where a request more like an RFI, with high-level goals and targets, will be used to elicit binding quote responses. Those responses will be based more on off-the-shelf fare payment platforms that are ready to use after configuration alone rather than assembly.

The procurement team will spend less time

railwayage.com

on large RFP specifications and more time comparing the responses, but in the end have a lower-risk, faster-to-deploy platform, instead of a large bespoke IT project.”

many agencies are starting to shift away from designbuild to outcomebased procurement projects.

Whitaker adds that “the key to enable MaaS is that each transit mode should offer APIs and SDKs to enable global aggregators and journey planners to offer and fulfill

journeys (and tickets where appropriate) so that travellers aren’t blocked by having to load a local transit card or sign up to three different bicycle- or scooter-for-hire companies. Choice, competition and having these options in the global apps that riders carry in their smart devices is far better for raising the awareness, discovery and convenience of public transit in cities and regions.”

“Monopolies don’t lead to the best consumer experience, and asking for one city-commissioned app to be the best mobility solution, and keep up with the innovation from Google Maps, Transit App, Moovel or any other billion-dollar journey planner is not realistic,” says Whitaker. “It is also hard for each aggregator app to integrate into multiple single-city bespoke solutions, so platforms that offer multiple cities behind one API or SDK will be easier to add into ‘practical MaaS’ apps. Some cities will commission their own app and that’s fine, but it should not be the only route to access transit services or a MaaS experience. It does not need to be.”

January 2020 // Railway Age 35

NE TGEN R A I L W AY A G E P R E S E N T S

FREIGHT RAIL

Beyond Track. Beyond Trains.

WHERE IS THE GROWTH IN FREIGHT RAIL? DISCUSSIONS INCLUDE:

Building the Freight Railroad of Tomorrow

JIM SQUIRES CHAIRMAN, CEO & PRESIDENT Norfolk Southern

Free Trade & the Railroads

• Automatic freight train operation: How soon?

PATRICK OTTENSMEYER & PRESIDENT

• Railroads, shippers, rate cases and the STB • New business worth – or not worth – pursuing

Kansas City Southern

• Innovative freight car designs

HOTEL | VENUE

SPONSORED BY:

Book at the ULC for $169/night.

Contact clubservices@ulcc.org.

REGISTER NOW www.railwayage.com/ngfr | 212.620.7205 | conferences@sbpub.com

CEO

#NGFR19 #NGFR20

Low- & Zero-Emission Technologies for Railway Motive Power

ANDREAS HOFFRICHTER EXECUTIVE DIR., CENTER FOR RAILWAY RESEARCH & EDUCATION Michigan State University

Rail Service & the Intersection between PSR & the STB

DANIEL M. JAFFE

Slover & Loftus LLP

PARTNER

EXHIBITS & SPONSORSHIPS AVAILABLE Contact Jonathan Chalon 212.620.7224 Jchalon@sbpub.com

MAR. 10, 2020

Union League Club of Chicago

PASSENGER CAR MARKET at-a-glance THESE NEW AND REBUILT CARS WERE DELIVERED IN 2019 Purchaser Amtrak

# of Cars 10

Type

Builder

Intercity

CAF USA

Boston (MBTA)

24

Rapid Transit

CRRC

Edmonton

18

Light Rail

Bombardier

Toronto (Metrolinx)

38

Light Rail

Bombardier

Toronto (GO Transit)

79

Bilevel Commuter

Bombardier

Toronto (TTC)

81

Streetcar

Bombardier

Montreal (STM)

18

Multilevel Commuter

Bombardier

New York (LIRR)

22

EMU Commuter

Kawasaki

New York (NYC Transit)

156

Rapid Transit

Bombardier

San Francisco (BART)

125

Rapid Transit

Bombardier

Seattle-Tacoma (Sound Transit)

18

Light Rail

Siemens

Vancouver

32

Rapid Transit

Bombardier

Washington D.C. (WMATA)

748

Rapid Transit

Kawasaki

WORK PROGRESSES ON THIS UNDELIVERED BACKLOG Purchaser

# of Cars

Type

Builder

Amtrak

252

HSR Intercity (28 Trainsets)

Alstom

Amtrak

25

Intercity

CAF USA

Atlanta

254

Rapid Transit

Stadler

Boston (MBTA)

380

Rapid Transit

CRRC

Buffalo (NFTA)

8

Rebuilt Light Rail

Hitachi

Caltrain

37

Bilevel EMU Commuter

Stadler

Chicago (METRA)

7

Bilevel Commuter

Nippon Sharyo

Edmonton

18

Light Rail

Bombardier

Hawaii (HART)

16

LRV

Hitachi

Kansas City

2

Light Rail

CAF USA

Los Angeles (LACMTA)

64

Rapid Transit

CRRC

Los Angeles (LACMTA)

71

Light Rail

Kinkisharyo

Toronto (GO Transit/Metrolinx)

57

Bilevel Commuter

Bombardier

Toronto (TTC)

5

Streetcar

Bombardier

Minneapolis/St. Paul

27

Light Rail

Siemens

Montreal (STM)

153

Commuter

Bombardier

New York (LIRR)

180

EMU Commuter

Kawasaki

New York (Metro-North)

66

EMU Commuter

Kawasaki

New York (Staten Island)

75

Rapid Transit

Kawasaki

New York (PATH)

72

Rapid Transit

Kawasaki

New York (PATH)

350

Rebuilt Rapid Transit

Kawasaki

Newark (NJ Transit)

113

Multilevel Commuter

Bombardier

Oklahoma City (Embark)

2

Streetcar

Brookville

Orange County

8

Light Rail

Siemens

Ottawa

38

Light Rail

Alstom

Philadelphia (SEPTA)

45

Multilevel Commuter

CRRC

Phoenix (Valley Metro)

11

Light Rail

Siemens

Portland (Tri-Met)

79

Light Rail

Siemens

San Bernardino (SANBAG)

3

Light Rail (Hydrogen Fuel Cell)

Alstom

San Diego (MTS)

44

Light Rail

Stadler

San Francisco (BART)

650

Rapid Transit

Bombardier

Seattle (Sound Transit)

134

Light Rail

Siemens

Vancouver

24

Rapid Transit

Bombardier

Washington D.C. (WMATA

748

Rapid Transit

Kawasaki

38 Railway Age // January 2020

railwayage.com

PASSENGER CAR MARKET at-a-glance ORDERS LIKELY TO DEVELOP IN 2020 Purchaser

# of Cars

Type

Amtrak

75

Intercity

Toronto (Metrolinx)

101

Bilevel Commuter

New York (Long Island Rail Road)

160

EMU Commuter

New York (NYC Transit)

504

Rapid Transit (R262)

THE FIVE-YEAR (2021-2025) OUTLOOK Purchaser

# of Cars

Type

Amtrak

0-70

HSR Intercity

Amtrak

0-600

Intercity

Atlanta (MARTA)

50

Rapid Transit

Baltimore

78

Rapid Transit

Boston (MBTA)

428

Rapid Transit

Boston (MBTA)

24

Light Rail

California (DOT)

49

Intercity

California (Orange County)

10

Light Rail

Chicago (Metra)

200-400

Commuter

North Carolina (CATS)

6

Light Rail

Illinois (DOT)

88

Intercity

Indiana (NICTD)

26

EMU Commuter

Texas (DART)

7

DMU Commuter

Texas (TEXRail)

8

DMU Commuter

Texas Central

TBD

HSR Intercity

Kansas City

9

Light Rail

Los Angeles (LAX)

44

People Mover

Los Angeles (LACTMA)

218

Rapid Transit

Maryland (Purple Line)

26

Light Rail

Montreal (STM)

153

MPM-10

Newark (NJ Transit)

636

MultiLevel Commuter (incl. EMU)

New York (LIRR)

536

EMU Commuter

New York (NYC Transit)

1,980-2,500

Rapid Transit

New York (Staten Island Railway)

75

Rapid Transit

Phoenix (Valley Metro)

67

Light Rail

Portland (TriMet)

60

Light Rail

Seattle-Tacoma (Sound Transit)

11

Commuter

Seattle-Tacoma

5

Streetcar

Seattle-Tacoma

152

Light Rail

Seattle DOT

10

Light Rail

Texas Central

8

DMU

VIA Rail

32

Intercity (Trainsets)

Washington (WMATA)

256-800

Rapid Transit

NEW CAR DELIVERIES BY MODE, 10-YEAR TRACKING

railwayage.com

Year

Commuter/intercity

Rapid Transit

Light Rail/Streetcar

Total

2010

199

782

148

1,129

2011

235

113

149

497

2012

343

243

59

645

2013

531

337

166

1,034

2014

251

484

116

851

2015

251

462

258

971

2016

94

424

188

706

2017

34

34

140

169

2018

373

220

98

691

2019

129

1,085

74

1,288

January 2020 // Railway Age 39

6th Annual

RAILWAY AGE CONFERENCE & EXPO

2020

JUNE

17 & 18

Union League Club of Chicago Chicago, IL Explore the challenges, issues, and trends affecting the North American rail market

REGISTER NOW WWW.RAILWAYAGE.COM/INSIGHTS

• Precision Scheduled Railroading: Is it Working?

SUPPORTING ORGANIZATION

• Regulation in the 116th Congress • Suppliers and Emerging Technologies • Short Line and Regional Insights • Pressure from Wall Street • The Car and Locomotive Market

COMMUTER RAIL COALITION

Who’s Who at CRC •

STEVEN ABRAMS, Tri-Rail, SFRTA

•

JIM DERWINSKI, CEO, Metra

•

JOHN CLINE, Cline Strategic Consulting

•

KEVIN CORBETT, CEO, New Jersey Transit

•

KELLYANNE GALLAGHER, CRC Executive Director

•

JOE GIULIETTI, Connecticut DOT

•

DOUG KELSEY, TriMet

•

MIKE NOLAND, South Shore Line, NICTD

•

TOM PRENDERGAST, Former Chairman, NYMTA and President, Long Island Rail Road

•

MATTHEW TUCKER, North County Transit District

•

PATRICK WARREN, Former Executive Director, FRA

railwayage.com

Improving the

30-Mile Journey Introducing the Commuter Rail Coalition

T

By Susan R. Paisner

his story introduces the Commuter Rail Coalition. To do that, we must first define commuter rail, identify its origin, and address its 50-year growth and evolution.

Commuter rail is not subways or light rail, both of which move people within a metropolitan region under the aegis of the FTA. It is not the first mile, nor the last mile. It is the 30-mile journey. It is also not Amtrak intercity service.

Commuter rail is a system that offers suburban access to higher-wage jobs in the city center, travelling over infrastructure often shared with freight railroads and/or Amtrak, and regulated by the FRA. It is also a cog in the economic engine that drives most of the country’s largest GDP metros.

It is the safest of all modes of travel, according to the National Safety Council—and getting safer every year, according to FRA statistics. It is the greenest of all modes of powered transportation, contributing a scant 2% of the transportation sector’s overall 29% impact

on greenhouse gas emissions, according to the EPA. And, operating on a corridor absent gridlock, commuter rail spares its riders the adverse health effects attributed to the stress of driving in rush hour traffic and from 42 to 84 hours per year spent idling on the nation’s roadways. Commuter rail riders reduce their own carbon footprint and relieve remaining drivers of even worse roadway congestion, delays that waste more than 3 billion gallons of fuel annually.

So, to understand commuter rail better, we begin with its origin, which starts with Amtrak.

The origin of U.S. commuter railroads mirrors Amtrak’s. Amtrak was originally established in 1970 by the Congressional Rail Passenger Service Act to relieve freight railroads—after years of operating at a loss—of their obligations to provide passenger services. The nation’s railroads had provided both long-distance intercity services and shorter-distance services January 2020 // Railway Age 41

COMMUTER RAIL COALITION focused on moving people to job centers in major metropolitan areas. Over time, however, as more freight railroads abdicated their responsibilities to passenger service, commuter railroads emerged to fill the void.

In the 50 years since Amtrak’s founding, commuter railroads have grown to 30 active systems and count nearly 500 million passenger trips annually. By comparison, in 2018, Amtrak served 32 million.

Thus presents the challenge: While passenger rail service in the U.S. has evolved, the rules concerning access and managing the relationship among commuter rail, Amtrak and freight have not. Nor has guidance developed that puts commuter railroads on a level playing field for navigating disputes.

These external factors prevent commuter railroads from expanding and improving services to meet growing demand and being even better stewards of the public funding that supports their operations.

Despite their similar origins, under federal law, certain preferences have been given to Amtrak that have not been extended to taxpayer-funded commuter railroads.

42 Railway Age // January 2020

This is the current status quo, even though, in many cases, Amtrak, freight railroads and commuter railroads share track.

For instance, Amtrak passenger service enjoys favorable trackage charges when Amtrak trains travel over either freightowned or publicly owned local commuter rail tracks. But the similarly publicly funded commuter railroads receive no such deference, and must pay Amtrak’s market rates to use Amtrak’s taxpayer-supported properties as well as freight hosts’ market rates.

Testifying on Capitol Hill in September 2019, Commuter Rail Coalition Chair Jim Derwinski (CEO, Metra) called on Congress to consider “commuter rail’s legislative standing [with regard to] essential public needs as expressed in terms of public convenience and necessity for people, vs. the consideration of public convenience and necessity of freight railroads.”

As he noted, the concept of “public convenience and necessity” has focused on the interests and needs of freight railroads and their customers, and not on the interests of the taxpayer-funded commuter railroads and

the substantial numbers of people who rely on those services every day. And as commuter rail’s ridership grows, noted Derwinski, so do demands for infrastructure support.

The trend of increasing demand for new and expanded commuter rail services continues in most large and growing cities.

The problem, however, is that expanded access to existing corridors for additional services and new access to previously unserved corridors has more often than not been met with roadblocks or outright opposition. Commuter railroads lack the standing to compel a negotiation of terms that may allow for such service expansions or introductions.

Crc Formed There are clearly many issues that have a direct impact on commuter railroads, which helps explain why a group of current and former industry executives coalesced in April 2019 to launch the Commuter Rail Coalition (CRC). Their mission: to selfadvocate, to get out ahead of the issues, and to bring a singular focus to the benefits and

railwayage.com

COMMUTER RAIL COALITION needs of America’s commuter railroads.

The reason they chose to take action and focus on commuter rail’s specific needs?

Because no other organization in Washington has presented these fundamental issues to Congress and the Administration.

Fundamentally, CRC’s key points are that commuter railroads are a public necessity and convenience, and that commuting passengers are at least as equal to interstate commerce as the freight railroads. The mode must be at the table before Congress and federal agencies.

And when they said action, they meant action. In just its first six months, CRC has testified before the Senate Commerce Committee and the House Railroads Subcommittee, held a Washington fly-in to outline the association’s legislative and policy goals, doubled its membership and built brand awareness through coverage in industry press.

In July, the Coalition advanced a series of policy and legislative proposals. Together with the fundamental need for fair and equal treatment, these proposals take aim at the external forces that influence commuter railroads’ ability to be good stewards of public funds.

• Positive Train Control. As the commuter rail industry completes the full implementation of PTC during 2020, the cost of ongoing maintenance is substantial.

CRC has requested a clarification of laws and regulations to ensure PTC maintenance costs are an eligible reimbursable expense, and that Congress factors the costs of maintenance into an overall commuter rail formula program or even as a separate allocation.

• Liability Insurance Pool. It is impossible to purchase the liability insurance necessary in the domestic market to meet the federally mandated minimum, currently $295 million. Coverage of more than $50 million must be purchased abroad, in person and annually. And, despite the commuter railroads’ safety records, premiums rise every year because of the natural disasters covered in the same risk pool and as excess insurers competing for this risk drop out of the market. CRC has requested consideration and creation of a closed liability pool to manage costs, to benefit from a more favorable risk profile, and to avoid spending public funds outside the U.S. to meet the necessary coverage minimums. railwayage.com

• Buy America. Along with unpredictable funding streams, Buy America’s wellintentioned rules challenge commuter railroads’ ability to undertake cost-effective procurements in an already-squeezed rail supply market. The disappearance of Buy America-compliant firms and suppliers from the U.S. market could effectively leave some agencies without competitive bids.

• Commuter Rail Formula Funding.

Converting existing rail discretionary funding programs to formula grant programs and separating current federal formulas programs to cover commuter rail makes federal support predictable and reliable. It also allows for long-term planning and removes the burden of competition for the limited federal funding.

• Parity With Amtrak. There must be parity with Amtrak, at least with respect to access to railroads’ facilities, with compensation for track access based on equitable allocation of costs. Currently, under the law, Amtrak receives certain

preferences while commuter railroads do not. Both are publicly funded passenger services that should be treated equally.

• Access Agreements Between Commuter Railroads and Freight Railroads. Track access charge agreements should become transparent. Currently, the opaque agreements make it nearly impossible for a commuter railroad to pinpoint the per-mile rate it pays for access. Further, there must be a process for final resolution when there are disputes over access and charges.

As more people move away from the cities they work in, the need for commuter rail only increases. And now there’s an organization to speak on those commuters’ behalf, to advocate for a safe, congestionreducing, environmentally friendly mode of transportation. CRC may be new, but its leadership’s collective years of experience show it’s not a newcomer to the arena. And it’s just starting to be heard.

Susan R. Paisner’s publication credits include The Washington Post, and five years as Senior Managing Editor of Passenger Transport, APTA’s biweekly newspaper.

TRANSPORTATION & INFRASTRUCTURE BUILDINGS & FACILITIES CONSTRUCTION MANAGEMENT ENERGY SERVICES

Enduring. Driven. Visionary.

Reaching the century mark isn’t easy – you have to be quality-driven, client-focused, and have a vision for the future. At 100 years, STV is looking ahead. Our planners, architects, engineers and program/construction managers have a stake in the business, and are committed to quality performance. We provide personal attention and timely solutions, with an eye toward sustainability. And with more than 40 offices, we are a local firm with national resources.

When it comes to getting your project delivered right, choose the firm that has the drive and vision to be the best.

Offices nationwide Toll-free: 877-395-5459 info@stvinc.com www.stvinc.com

January 2020 // Railway Age 43

People / Events January 14-16, 2020

MARSHA SMITH

midwest association of rail shippers Winter Meeting

Siemens USA

High profile: Siemens USA has named Marsha Smith Chief Fi-

nancial Officer, an expanded responsibility to her current role as CFO for Siemens Mobility North America, a position she has held since 2017. Her appointment was effective Jan. 1. Smith succeeds Heribert Stumpf, who retired after 38 years with Siemens. She will oversee the finance organization for Siemens USA, which includes the three core businesses of Smart Infrastructure, Digital Industries and Siemens Mobility. She will also support finalization of the Siemens Energy spinoff. Smith has more than 20 years of experience working for Siemens’ financial organizations, beginning her career with Siemens Canada Ltd. and leading projects for Siemens Metals and Pulp & Paper businesses in Atlanta, Ga. In 2004, she joined Siemens Transportation Systems as the finance lead for joint-venture projects and proposals for the New York Metropolitan Transportation Authority.

LTK

Engineering Services last month promoted four members of its management team—Pam Alexander; Lisa Cobb, P.E.; Guy Chertock, P.E.; and Natalie Cornell—to Vice Presidents. Alexander, who’s been with the firm since 1998, has been named Vice President of the Atlanta Region. Alexander, who has spent her entire professional career at LTK, was most recently the Atlanta office leader and a Project Consultant focusing on rail vehicle program support. Cobb, who’s been with LTK since 2010, has been named Vice President of the Northern California Region. She has nearly 30 years of experience in the rail industry and previously served as the San Francisco Bay Area Regional Manager. Chertock, who’s been with LTK since 2009, has been named Vice President of Rail Systems Engineering. He has more than 20 years of experience in the radio and communications fields, including the design and deployment of wireless networks for commercial and public safety entities. Cornell, who’s been with LTK since 2013, has been named Vice President of Business Development. She has extensive project management experience that includes rail vehicle engineering and procurement, and fare collections sales and delivery. Dee Leggett has been hired as LTK’s Director of Zero-Emissions Planning. In the new role, Leggett will aim to lead LTK’s efforts to support clients transitioning to zero-emissions vehicles.

Leggett, who worked as a Senior Consultant at LTK from 2014 to 2015, has 20 years of

44 Railway Age // January 2020

professional experience with expertise in bus and rail operations, business growth and development, project management, transportation operations and maintenance, and capital planning.

Jim Cerulli has joined Reading & Northern Railroad as Vice President Coal Marketing. He joins Bill Clark, Senior VP Coal Marketing, Mike Sharadin, AVP Equipment, and the customer service staff who handle all RBMN’s business under VP Customer Service Susan Ludwig.

Paul Loete has been named Senior Area Manager for Transportation in the Illinois and Wisconsin region at WSP USA. Loete brings 25 years of project engineering experience to the new role. He will be responsible for driving the strategic direction of the Illinois and Wisconsin management team, establishing and maintaining strong client relationships, supporting diversification and growth of the transportation business in the region, and working with other Central Region area managers to develop business opportunities. He will be based in the Chicago office of WSP. Prior to joining WSP, Loete served as the director of highways and chief engineer for the Illinois Department of Transportation.

HNTB Corp. appointed Kimberly Proia, P.E., Vice President and Project Director, Seattle, and Debbie Gies Transit Senior Project Manager, Boston. Proia will serve as deputy project manager for the Sound Transit West Seattle and Ballard Link Extension light rail project.

The Westin Lombard Yorktown Center, Lombard, Ill. https://www.mwrailshippers.com/ event/mars-2020-winter-meeting/

January 23-24, 2020 Southwestern Rail Conference

Magnolia Hotel – Park Cities/SMU, Dallas aylor@texasrailadvocates.org. http://texasrailadvocates. org/2020-southwestern-railconference/

January 28-30, 2020

AAR 32nd Annual Quality Assurance Auditor and Industry Conference Hilton Fort Worth https://transportationtechnologycenter. configio.com/pd/958/ aar-qa-2020-quality-assuranceconference-beginning-2020-01-28-infort-worth-tx?returncom=productlist

March 10, 2020

Next-Gen Freight Rail, presented by Railway Age Union League Club of Chicago conferences@sbpub.com https://www.railwayage.com/ngfr/

June 17-18, 2020

Rail Insights 2020, presented by Railway Age Union League Club of Chicago conferences@sbpub.com https://www.railwayage.com/ insights/

april 22-23, 2020

LIGHT RAIL 2020, presented

by Railway Age AND RT&S Courtyard Boston Downtown conferences@sbpub.com https://www.railwayage.com/ lightrail/

railwayage.com

Products

Loram SBC2400 Shoulder Ballast Cleaner: Speed, Power, Productivity Loram offers the industry’s most advanced and productive equipment available to undertake any shoulder ballast cleaning program. With railroads facing everchanging challenges today, the company continues to develop and integrate technologies in order to optimize safety and efficiency for its customers’ programs.

Loram has been working to further optimize the operation and production of its latest ballast program innovation, the SBC2400 shoulder ballast cleaner. The machine has revolutionized the speed, power and productivity expectations of its already best-in-class shoulder ballast cleaners.

Equipped with four digging wheels and two separator screens, the SBC2400 is designed to handle and clean double the amount of material of Loram’s HP SBC. Enhanced automation and state-of-theart operational technology gives the Loram SBC2400 the capability to clean up to 3,140 cubic yards of ballast per hour at work speeds up to 4 mph, making it the world’s most productive shoulder ballast cleaner. As customers advance their shoulder ballast cleaning programs to utilize the increased productivity of these machines, they continue to experience increased average railwayage.com

operating speeds with each deployment. The increased speeds of the SBC2400 have resulted in customers realizing reduced unit costs and higher work volume completion, while Loram delivers unmatched reliability.

The increased traffic capabilities for a railroad’s remediation investment demonstrates that a Loram shoulder ballast cleaning program ensures a healthy robust railroad infrastructure while delivering maximum ROI. The SBC2400 has incorporated industryleading technologies to improve efficiency and reduce the burden on the operator. Bulk scan equipment monitors the material flow excavated from each set of digging wheels and automatically adjusts the depth to ensure load is shared evenly between the different sets of wheels, and that they are both maximizing capacity. Obstacle detection identifies objects that are in the path of the swing conveyor when it is casting material into the right-of-way and notifies the operator of the potential obstruction. If the operator does not acknowledge the alarm, the machine is brought to a safe stop before contacting the obstacle. The IP Ethernet camera system is trained on all working parts of the machine and can be

accessed remotely to allow troubleshooting assistance from headquarters if needed.

The self-propelled SBC2400 features synchronized 30-inch-wide digging wheels to excavate ballast from the tie ends outward to the edge of the ballast section. To break up mud pockets and restore drainage, dual scarifiers undercut the tie ends up to 5 inches. Like Loram’s HP SBC, the SBC2400 features Loram’s exclusive elliptical throw agitation separators to more-efficiently remove fouling material from ballast. With integrated variable screen leveling, the SBC2400 provides not only more effective ballast cleaning, but the ability to adjust cleaning forces to local conditions and ensure the correct shoulder profile is in place, regardless of the track condition.

Loram continues to drive advances in technology and automation on its complete range of ballast maintenance equipment that allows customers to accomplish preventative programs at minimal cost. In addition to the SBC2400 and other shoulder ballast cleaners, Loram ballast equipment and maintenance program offerings include undercutting, high-speed track lifting, spot undercutting/excavating/trenching and material handling.

January 2020 // Railway Age 45

equipment Sale/Leasing

RECRUITMENT EDNA A. RICE, EXECUTIVE RECRUITER, INC.

Available for Lease

The world’s most accomplished executive search firm specializing in the rail and transportation industries. With 31 years’ experience, we possess the industry-specific knowledge and expertise needed to consistently deliver the exceptional results one would expect for both our clients and our candidates.

3000 cu ft Covered Hopper Cars 4650 cu ft Covered Hopper Cars 4300 cu ft Aluminum Rotary Open Top Gons 65 ft, 100-ton log spine cars equipped with six (6) log bunks 60 ft, 100 ton Plate F box cars, cushioned underframe and 10 ft plug doors 50 ft, 100 ton Plate C box cars, cushioned underframe and 10 ft plug doors 26,671 Gallon, 263k GRL, NC/NI Tank Cars

1500 Marina Bay Drive, Suite 125 Clear Lake Shores, TX 77565

Contact: Tom Monroe: 415-616-3472 Email: tmonroe@atel.com

(713) 667-0406 www.ednarice.com info@ednarice.com

Railwayage.com

The News Destination for the Rail Industry

Marketplace SaleS

Jennifer izzo P: 203-604-1744 F: 203-857-0296 jizzo@mediapeople.com

ALL MAJOR CREDIT CARDS ACCEPTED

The Railway Educational Bureau

Development and Operation of New York's IRT and BMT

Your Guide to Railway Signals Your Guide to Railway Signals is an excellent guide for training signal personnel especially railway cross-function managers, supervisors, and support personnel. High-quality graphics and diagrams have been used throughout.

Complies with all standards and commonly used practices.

BKYGRS

Your Guide to Railway Signals

$99.95

BKNYIRT

BKFCT Guide to Freight Car Trucks

$89.95

History does repeat itself. Many of these issues are brought to life by exploring examples learned from mitigating various issues and tactics used when the NYCTA assumed control of the BMT and IRT lines.

$59.95

Dev. & Op. of NY’s IRT and BMT

Understanding the Railway Labor Act

Guide to Freight Car Trucks Guide to Freight Car Trucks is an in-depth look at freight car truck maintenance covering some of today’s most commonly used trucks. You’ll get a comprehensive overview of AARapproved maintenance procedures to help your shop keep this vital component operating safely and efficiently.

Railroad Resources

Understanding the Railway Labor Act is a book that is both scholarly and readable, a book that goes to the roots of legislation governing railroad labor-management relations and the parties that intertwine with the RLA.

BKURLA

$41.95

Understanding the Railway Labor Act

The Double-Stack Container Car Manual

Dictionary of Railway Track Terms

With intermodal container freight increasing, keeping double-stack container cars operating safely and efficiently is a growing concern to railroads-keeping customers and manufacturers happy with service is a large part of that concern.

The most comprehensive collection of definitions relating to track. Over 1500 terms from antiquated forgotten slang to today's jargon. Clearly illustrated line art enhances the text.

BKDOUBLE

Double-Stack Containert Car Manual

$19.50

The Railway Educational Bureau 1809 Capitol Ave., Omaha NE, 68102 www.RailwayEducationalBureau.com 46 Railway Age // January 2020

BKRTT Dictionary of Railway Track Terms

800-228-9670

www.transalert.com

$35.00 Add Shipping & Handling if your merchandise subtotal is: U.S.A. CAN U.S.A. CAN

25.01 - 50.00 50.01 - 75.00 75.01 - 100.00

10.78 16.80 11.99 21.20 14.30 27.95

100.01 - 150.00 16.28 36.60 150.01 - 200.00 19.03 49.15 200.01 - 300.00 23.10 61.20

Orders over $300, call for shipping

railwayage.com

Ad Index Company Amsted Rail Group

Phone #

Fax #

URL/Email Address

Page #

312-922-4516

312-922-4597

kskibinski@amstedrail.com

17

Jeremy_Berry@cpr.ca

20

Rajeev.Kak@CloudMoyo.com

C4

canadian pacific cloudMoyo CN

415-640-6129

28

888-888-5909

Custom Truck One Source

816-241-4888

816-241-3710

bboehm@customtruck.com

22

Danella Rental Systems, Inc.

561-743-7373

561-743-1973

SBolte@danella.com

34

Greenbrier Companies The

800-343-7188

503-684-7553

gbrx.info@gbrx.com

C2

Herzog Railroad Services Inc

816-385-8233

jhansen@herzog.com

26

rgehl@hollandco.com

301

Holland Lp

708-672-2300

IRIDIUM COMMUNICATIONS

703-287-7400

www.iridium.com

24

816-983-1372

dcarlson@kcsouthern.com

27

kansas city southern

708-672-0119

light rail

212-620-7205

212-633-1165

conferences@sbpub.com

9

Loram Maintenance of Way, Inc

763-478-6014

763-478-2221

sales@loram.com

19

630-232-3000

630-232-3055

sales@minerent.com

3

next gen train control

212-620-7205

212-633-1165

conferences@sbpub.com

36-37

nordco

414-766-2180

414-766-2379

cnielsen@nordco.com

29

Okonite Co.

201-825-0300

201-825-3524

info@okonite.com

7

plasser american corp

757-543-3526

757-494-7186

plasseramerican@plausa.com

15

Progress Rail A Caterpiller Co

256-505-6402

256-505-6051

info@progressrail.com

21

Rail insights

212-620-7205

212-633-1165

conferences@sbpub.com

40

rails company

800-21-RAILS

973-763-2585

gburwell@railsco.com

42

railway equipment co

763-972-2200

763-972-2900

sales@rwy.com

25

RCE Equipment Solutions

866-472-4510

630-355-7173

dennishanke@rcequip.com

31

402-346-4300

402-346-1783

bbrundige@sb-reb.com

46,C3

stv group

212-777-4400

212-529-5237

info@stvinc.com

43

trinity rail

800-631-4420

trinityrail.com

23

western cullen-hayes

773-254-9600

jm@wch.com

43

Miner Enterprises

railway educational bureau

773-254-1110

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.

railwayage.com

January 2020 // Railway Age 47

Financial Edge Your Perception Meets Their Reality

R

ailway Age colleague Jim Blaze recently identified an article from The Atlantic entitled, “A Major but Little-Known supporter of Climate Change: Freight Railroads.” The Financial Edge is truly against the kind of click-bait journalism represented by this article.

The Atlantic article goes to great lengths to identify Class I railroad association with industry groups that have been, for decades now, on the wrong side of the debate on climate change. The article identifies CEED, ACCCE, Coalition for Vehicle Choice and GCC (readers will have to read the article to play “name the acronym”) effectively as lobbying groups against climate change to which four of the U.S.-based Class I railroads were supporters or members.

“For nearly 30 years, America’s four biggest rail companies—which move the majority of the country’s coal—have spent millions to deny climate science and block climate policy,” wrote The Atlantic’s Robinson Meyer. “In the fight against climate change, the nation’s freight railroads have painted themselves as heroes. Rail is ‘the most environmentally friendly way’ to move cargo over land, says the Association of American Railroads, the industry’s trade group ... [F]or almost 30 years, the biggest players in the freight rail industry have waged a campaign to discredit climate science and oppose almost any federal climate policy, reveals new research analyzed by The Atlantic.”

That the article classifies the Association of American Railroads (AAR) as a “trade association” and then labels the AAR as a primary recipient of some $28 million since 2012 may be its most unusual gesture. As industry participants know, the AAR is much more than a trade association. The AAR is the primary rulemaking body for the U.S. railroad industry, with participation coming from all across North America.

The highlighting of the AAR as an anticlimate trade association does not jive in any way whatsoever with any information available about the AAR. So let’s tackle the primary claim: Essentially, as a result of moving about 4.5 million carloads of coal in 2018, the four U.S. Class 48 Railway Age // January 2020

I railroads made billions of dollars (more than $10 billion in 2018) hauling coal. That is a fact. Second, the railroads therefore are responsible for facilitating 16.5% of carbon pollution in that year. That is also a fact.

So what is the problem?

The article takes issue with the railroads’ posture as a cleaner mode of transportation while supporting anti-climate-change organizations. Railroading is a business, not a charity. Companies, corporations and partnerships support the causes of their customers. It is stock and trade. The article takes issue with the railroads’ hauling of coal and the implied role in increasing climate change while conveniently glossing over the railroad charter and the common carrier obligation.

It would be great to assume that if the railroads adopted an anti-coal stance, that coal would have stayed underground, and that alternative fuels or renewable fuels would have taken over some larger share of the coal-fueled percentage of power generation. Therein lies the rub. Even if the railroads wanted to stop, they could not. Any power generator could have paid a tariff rate for moving any amount of coal and forced the railroads to move the coal. The growth of the Powder River Basin, fueled by utility ratepayer dollars, would have continued to grow. Illinois Basin and Appalachian coal could continue along the same lines, with higher-pollutant semitrailers filling a larger role.

But the real issue is the public image of the railroad industry and how easily poor reporting undermines public perception.

Over the past few months, Financial Edge has covered issues related to the perception of railroad safety and railroads being industry unfriendly to its customers. A common concern with these items is that from the outside looking in, the railroad industry looks like an easy target for a variety of social causes that are reaping the benefits of trashing it. That is a reason for concern.

North American railroads have been having a moment in the sun as a stock market darling. The Hunter Harrison PSR wave was followed by high-profile institutional investors making big, publicly

the industry does n0t sufficiently highlight rail’s positive aspects.” announced moves into and out of railroad equities. Big returns on investment make for a high-profile target that is easy to attack with a mix of half-facts, easy hearsay and random assumptions. In the Internet era, perception becomes reality until someone changes that perception with facts or a better package of innuendo and rumor.

The industry does not do a sufficient job of highlighting the positive aspects of moving freight by rail. A few TV ads on CNBC will not break through the collective conscience and change those perceptions.

Sadly, neither will a Financial Edge column, no matter how well-written ;).

The perception of North American railroads is a financial issue for railroads, shippers and supporting industries. As an industry, the railroads have moved to shake off the sooty image of the prediesel days. It needs to take further steps to remind its customers and the end-of-theline consumer that it remains at the industrial core of America, supporting growth and progress on all fronts, not just for its own pocketbook.

Got questions? Set them free at dnahass@ railfin.com.

DAVID NAHASS President Railroad Financial Corp. railwayage.com

We’re current, are you? FRA Regulations Mechanical Department Regulations

FRA News:

A combined reprint of the Federal Regulations that apply specifically to the Mechanical Department. Spiral bound.

Part Title 210 Railroad Noise Emission Compliance Regulations Updated 4-15-19.

215 Freight Car Safety Standards Updated 7-31-19.

216 Emergency Order Procedures: Railroad Track, Locomotive and Equipment Updated 7-31-19.

217 Railroad Operating Rules Updated 7-31-19.

218 Railroad Operating Practices - Blue Flag Rule Updated 7-31-19.

221 Rear End Marking Device-passenger, commuter/freight trains Updated 7-31-19.

223 Safety Glazing Standards Updated 7-31-19.

225 Railroad Accidents/Incidents Updated 7-31-19.

229 Locomotive Safety Standards Updated 7-31-19.

231 Safety Appliance Standards Updated 7-31-19.

232 Brake System Safety Standards Updated 7-31-19.

$29.95

Mech. Dept. Regs.

BKMFR

Order 25 or more and pay only $26.96 each

Current FRA Regulations Item Code

FRA Part #

209 211 BKTSSAF 213 BKTSSG 213 BKWRK 214 BKFSS 215 BKROR 217 218 BKRRC 220 BKEND 221 BKSEP

Update effective

7-31-19 7-20-09 7-31-19 4-3-17 7-31-19 7-31-19 7-31-19 7-31-19 7-31-19 7-31-19

BKHORN 222 7-31-19 BKRFRS 224 7-31-19 BKHS BKLSS BKSLI BKSAS BKBRIDGE BKLER

228 229 230 231 237 240

7-31-19 7-31-19 7-31-19 7-31-19 7-31-19 7-31-19

BKCONDC 242 7-31-19

RR Safety Enforcement Procedures & Rules of Practice Track Safety Standards (Subpart A-F) Track Safety Standards (Subpart G) RR Workplace Safety RR Freight Car Safety Standards RR Operating Rules and Practices RR Communications Rear End Marking Device, Passenger, Commuter & Freight Trains Use of Locomotive Horns Reflectorization of Rail Freight Rolling Stock Hours of Service Locomotive Safety Standards Steam Locomotive Inspection RR Safety Appliance Standards Bridge Safety Standards Qualification and Certification of Locomotive Conductor Certification

232 7-31-19 Brake System Safety Standards

BKBSS

BKCAD

Each

FRA Part #

BKSTC

BKPSS

40 219 233 234 235 236 238 239

50 or more

30.50

27.45

10.95 10.00 10.50 8.50 10.50

9.86 9.00 9.45 7.65 9.45

6.75 6.25

6.10 5.60

14.75

13.25

7.95 12.50 12.50 25.95 10.50 7.95 14.25

7.15 11.25 11.25 23.35 9.45 7.15 12.85

12.50

11.25

Each

25 or more

16.50

14.85

Combined FRA Regulations Each

25 or more

4-23-19 Drug and Alcohol Regulations in 7-31-19 the Workplace

38.95

35.00

7-31-19 Signal and Train Control Systems 7-31-19 7-31-19 7-31-19 7-31-19 Passenger Safety Standards 7-31-19

21.50

19.35

25.50

22.95

Update effective

Compliance Manuals BKINFRA18 BKTM

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

38.00 49.95

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

34.00 44.95

49 CFR Part 243, Training, Qualification, and Oversight for Safety-Related Railroad Employees. In response to a petition for rulemaking, FRA proposes amending its regulation on Training, Qualification, and Oversight for Safety-Related Railroad Employees by delaying the regulation's implementation dates for all contractors, and those Class II and III railroads that are not intercity or commuter passenger railroads with 400,000 total employee work hours annually or more..

DATES: Written comments must be received by January 6, 2020.

FRA will consider comments received after that date to the extent practicable.

Part 240–Qualification and Certification of Locomotive Engineers This rule clarifies the decertification process; when certified locomotive engineers are required to operate service vehicles; and address the concern that some designated supervisors of locomotive engineers are insufficiently qualified to properly supervise, train, or test locomotive engineers.

162 pages. Spiral bound. Updated 7-31-19.

BKLER

$14.25

Qual. and Certif. of Loco. Engineers Order 50 or more and pay only $12.85 each

Part 242: Conductor Certification The Conductor Certification rule (49 CFR 242) outlines details for implementing a Conductor Certification Program. The FRA implemented this rule in an effort to ensure that only those persons who meet minimum Federal safety standards serve as conductors, to reduce the rate and number of accidents and incidents, and to improve railroad safety. Softcover. Spiral bound. 124 pages.Updated 7-31-19.

BKCONDC

Conductor Certification Order 50 or more and pay only $11.25 each

$12.50

Part 233, 234, 235, 236–Rules & Regulations Governing Railroad Signal and Train Control Systems 49 CFR 233, 234, 235, and 236. Requirements for signal system reporting; maintenance standards; grade crossing signal system safety. Includes material modification of a signal system or relief from requirements plus instructions, standards, and rules governing the installation, inspection, maintenance, and repair of signal and train control systems. Spiral-bound. Softcover, 225 pages.Updated 7-31-19.

BKSTC Regs Governing RR Signal & Train Control Sys.

Order 25 or more and pay only $19.35 each

$21.50

800-228-9670 www.transalert.com

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

Add Shipping & Handling if your merchandise subtotal is: U.S.A. CAN U.S.A. CAN UP TO $10.00 $4.50 $8.75 25.01 - 50.00 10.78 16.80 10.01 - 25.00 7.92 12.65 50.01 - 75.00 11.99 21.20

Orders over $75, call for shipping

*Prices subject to change. Revision dates subject to change in accordance with laws published by the FRA. 1/20