Railway Age January 2021

JANUARY 2021

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

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

KEITH CREEL

Canadian Pacific

RAILROADER OF THE YEAR

PASSENGER RAIL OUTLOOK

Will the New Administration Bring Growth?

COMMUTER RAIL COALITION

Access, Capacity, Public Convenience and Necessity railwayage.com

August 2017 // Railway Age 1

AILWAY GE

February2021 January 2020

10

FEATURES

10

Canadian Pacific

30

2021 Railroader of the Year Keith Creel, Canadian Pacific

Passenger Rail Outlook New POTUS, Better Prospects

34

Commuter Rail Coalition

42

TTCI R&D

Access, Capacity, Public Convenience

NUCARS® Model vs. TLV Data

DEPARTMENTS 4 6 8 44 46 46 47

Industry Indicators Industry Outlook Market People

NEWS/COLUMNS 2 48

From the Editor Financial Edge

Professional Directory Classified Advertising Index

ON THE COVER: 2021 Railroader of the Year, CP President and CEO Keith Creel, with Royal Canadian Pacific steam locomotive 2816, the Empress.

Photo: Canadian Pacific

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. 222, 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© 2021 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: 212221-9195. 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).

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January 2021 // Railway Age 1

FROM THE EDITOR Obligation, Pride and Commitment

I

s that 2021 Railroader of the Year Keith Creel, chief executive of Class I Canadian Pacific, on the cover of Railway Age, an industry trade publication, with a steam locomotive? Indeed it is! Ain’t it grand?

I know what some of you might be thinking: “Good God, Vantuono’s a closet railfan. A train spotter. He probably begged Canadian Pacific to photograph Keith Creel with the 2816, the Empress. Creel probably said, after a staff meeting, ‘Yeah, well, OK. I suppose we could do it. What the heck?’”

Not so—honest! I worked closely with CP Media Relations Advisor Andy Cummings on our Railroader of the Year package (interview, video, etc.). I gave him the specs for a cover shot: letter size (8.5x11), 300 DPI, with room at the top for the Railway Age logo, and nothing “important” in the lower left corner, where the intrusive white box for printed mailing addresses goes. That’s it. The photo is whatever the honoree wants.

A couple of weeks later, Andy informed me that a variety of photos, for the cover as well as for the cover story, had been reviewed by Keith and were waiting for me in my Dropbox account. I downloaded them as a Zip-compressed file, then opened them up in Adobe Photoshop.

As they opened, I exclaimed, out loud, “Holy Christmas!”

My wife (we both work at home) asked, “What’s going on?”

“Canadian Pacific photographed Keith Creel with a steam locomotive! This is wonderful! Different!”

I texted the images to Publisher Jon Chalon and Executive Editor Marybeth Luczak. Both were impressed, and quite pleased. We all like pushing the envelope.

Considering Keith Creel’s appreciation of Canadian Pacific’s heritage and the railroad’s connection to Canada and its people, wanting to be photographed with the 2816—which, despite not having operated on a CP main line for almost a decade, has been lovingly cared for and kept in running condition—isn’t the least bit unusual or surprising. In fact, it’s appropriate.

“As a leader, it’s important that you create vision,” he told me during the interview for this month’s cover story. “And I quickly realized and learned when I came to Canadian Pacific how much pride existed in our company. I competed against CP for 17 years. I knew about CP. I knew it was an iconic Canadian company. But I didn’t fully understand the history, nor did I fully understand the commitment that was tied to that history. In 1885, in partnership with Canada, CP connected the country. It connected British Columbia physically from the West to the rest of Canada. To have that woven into your fiber, to understand the history ... creates a sense of obligation, of commitment, and a huge sense of pride that we take seriously. So I tapped into that.”

Keith’s sense of obligation, pride and commitment stems in large part from his military service. We are honored to name him our 58th Railroader of the Year.

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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 MARYBETH LUCZAK Executive Editor mluczak@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 HEATHER ERVIN Ports and Intermodal Editor/Marine Log Editor-in-Chief hervin@sbpub.com Contributing Editors David Peter Alan, Roy Blanchard, Jim Blaze, Nick Blenkey, Sonia Bot, Peter Diekmeyer, Alfred E. Fazio, Don Itzkoff, Bruce Kelly, Ron Lindsey, Ryan McWilliams, David Nahass, Jason H. Seidl, David Thomas, John Thompson, Frank N. Wilner, Tony Zenga 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

WILLIAM C. VANTUONO Editor-in-Chief

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Industry Indicators AAR: NOVEMBER ‘SIXTH-BEST INTERMODAL MONTH EVER’ “Total U.S. carloads in November 2020 were down 5.8% from November 2019, their smallest year-over-year percentage decline since August 2019,” the Association of American Railroads said in December. “The peak recent decline was 27.7% in May 2020. In November, 9 of the 20 carload categories had year-over-year carload gains. Grain and chemicals led the way. U.S. grain carloads were the most since October 2007, while carloads of chemicals were the second most for any November on record. Meanwhile, November 2020 was the sixth-best month ever, in terms of weekly average originations, for U.S. intermodal. It might have been the best month ever if Thanksgiving week hadn’t pulled down November’s weekly average.”

Railroad employment, Class I linehaul carriers, NOVEMBER 2020 (% change from NOVEMBER 2019)

TRAFFIC ORIGINATED CARLOADS

FOUR WEEKS ENDING NOVEMBER 28, 2020

MAJOR U.S. RAILROADS

BY COMMODITY

NOV. ’20

NOV. ’19

% CHANGE

46,434 (-15.01%)

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

106,835 3,675 36,182 24,355 125,917 41,119 242,208 4,002 12,042 21,095 20,726 11,716 29,249 13,931 58,212 68,084 12,625 30,757 14,422 23,042

86,809 3,371 34,361 23,018 121,764 51,346 291,459 4,375 11,750 21,283 26,635 14,473 30,521 12,387 63,406 75,903 14,533 29,521 13,657 24,820

23.1% 9.0% 5.3% 5.8% 3.4% -19.9% -16.9% -8.5% 2.5% -0.9% -22.2% -19.0% -4.2% 12.5% -8.2% -10.3% -13.1% 4.2% 5.6% -7.2%

Executives, Officials and Staff Assistants

TOTAL U.S. CARLOADS

900,194

955,392

-5.8%

322,847

307,375

5.0%

1,223,041

1,262,767

-3.1%

TOTAL EMPLOYEES: 114,960 % CHANGE FROM NOVEMBER 2019: -13.71%

Transportation (train and engine)

7,316 (-4.10%)

CANADIAN RAILROADS

Professional and Administrative

TOTAL CANADIAN CARLOADS

10,276 (-5.81%)

COMBINED U.S./CANADA RR

Maintenance-of-Way and Structures

27,863 (-10.82%)

Maintenance of Equipment and Stores

18,242 (-21.94%)

Transportation (other than train & engine)

4,829 (-11.20%)

Source: Surface Transportation Board

CLASS I EMPLOYMENT SEES LITTLE CHANGE Similar to the previous month, Class I railroad employment decreased close to 14% in November 2020, measured against November 2019, and is still the lowest since 2012. The double impacts of COVID-19 and a recession that actually predates the pandemic has stifled economic activity, and the impact on rail employment has been significant. Across the industry, headcount drops occurred in all employment categories, with Maintenance of Equipment and Stores dropping nearly 22% and Transportation (train and engine) falling just above 15%.

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Intermodal

FOUR WEEKS ENDING NOVEMBER 28, 2020

MAJOR U.S. RAILROADS

BY COMMODITY

NOV. ’20

NOV. ’19

% CHANGE

Trailers Containers TOTAL UNITS

92,374 1,044,321

76,787

1,136,695

942,993 1,019,780

20.3% 10.7% 11.5%

4 309,110 309,114

0 267,037 267,037

— 15.8% 15.8%

92,378 1,353,431

76,787 1,210,030

20.3% 11.9%

1,445,809

1,286,817

12.4%

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. 2020 VS. NOV. 2019

1,223,041 NOVEMBER 2020

AILWAY GE

1,262,767 NOVEMBER 2019

Short Line And Regional Traffic Index CARLOADS

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

ORIGINATED NOV. ’20

ORIGINATED NOV. ’19

% CHANGE

49,068 16,034 19,873 11,212 31,156 7,869 8,767 2,547 15,357 10,045 2,241 1,988 16,087 14,610 40,971 10,509 69,081

46,479 18,166 22,335 11,171 26,257 6,332 8,294 2,195 14,313 9,815 2,432 1,913 16,171 12,704 38,345 8,804 71,470

5.6% -11.7% -11.0% 0.4% 18.7% 24.3% 5.7% 16.0% 7.3% 2.3% -7.9% 3.9% -0.5% 15.0% 6.8% 19.4% -3.3%

Copyright © 2020 All rights reserved.

TOTAL U.S. Carloads and intermodal units, 2011-2020

(in millions, year-to-date through NOVEMBER 2020, SIX-WEEK MOVING AVERAGE)

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

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January 2021 // Railway Age 5 RA_JobBoard_1/3Vertical.indd 1

9/30/19 3:16 PM

Industry Outlook

Biden Picks Buttigieg For DOT On Dec. 15, 2020, the day after the Electoral College certified Joe Biden as the 46th President of the United States, Biden announced his nomination of former Presidential candidate and South Bend, Ind., Mayor Pete Buttigieg as Transportation Secretary.

“The choice—which represents the first time the President-elect has called on one of his former Democratic Presidential opponents to join his Administration—vaults a candidate Biden spoke glowingly of after the primary into a top job in his incoming Administration, and could earn Buttigieg what many Democrats believe is needed experience, should he run for President again,” CNN noted. “The role of Transportation Secretary is expected to play a central role in Biden’s push for a bipartisan infrastructure package. Buttigieg is seen as a rising star in the Democratic Party, but someone who lacked an obvious path to higher elected office, given the continued rightward shift of his home state of Indiana.”

Buttigieg, CNN said, emerged as the leading candidate for the Transportation 6 Railway Age // January 2021

Secretary role after being considered “for a host of other posts, including U.S. Ambassador to the United Nations and Commerce Secretary. Other Democrats were also considered for the post, including former Chicago Mayor Rahm Emanuel, Los Angeles Mayor Eric Garcetti and Rhode Island Gov. Gina Raimondo.”

Prior to running for President, Buttigieg served as the 32nd Mayor of South Bend, Ind., for eight years, beginning in 2012.

“With bold thinking and innovative leadership, Buttigieg revitalized a city that had been struggling for decades after the Studebaker auto company collapsed and was once called one of America’s ‘dying cities,’” the Office of the President-elect noted. “He brought South Bend back from the brink, creating thousands of jobs and spurring local investment during his tenure. His ‘Smart Streets’ initiative helped change the fortunes of downtown South Bend—revitalizing the city, redesigning the streets, and bringing in major economic investment.

“Buttigieg was a top contender for the 2020 Democratic nomination, the first

major openly gay presidential candidate to win a state caucus or primary in American history, and one of the youngest candidates ever to do so. His candidacy brought a relentless focus on reimagining the future of our economy—calling every community to common purpose around creating good jobs and resilient infrastructure for all Americans.”

In addition to his service as Mayor, Buttigieg was an intelligence officer in the United States Navy Reserve. He deployed to Afghanistan in 2014, eventually earning the rank of Lieutenant. A native of South Bend, Buttigieg graduated from Harvard University and was a Rhodes Scholar at Oxford University. He did not seek reelection as South Bend Mayor in 2019, and became a consultant at McKinsey & Company in Chicago.

If confirmed, Buttigieg, who endorsed Biden for President one day after ending his own campaign and later joined the President-elect’s transition team, would be the first Senate-confirmed LGBTQ Cabinet Secretary.

“Mayor Pete Buttigieg is a patriot and a problem-solver who speaks to the best of who we are as a nation,” Biden said in announcing his choice. “I am nominating him for Secretary of Transportation because this position stands at the nexus of so many of the interlocking challenges and opportunities ahead of us. Jobs, infrastructure, equity, and climate all come together at the DOT, the site of some of our most ambitious plans to build back better. I trust Mayor Pete to lead this work with focus, decency, and a bold vision—he will bring people together to get big things done.”

Vice President-elect Kamala Harris added, “One of the most important parts of building America back better is ushering in a safe, modern, and sustainable transportation system that helps us grow our economy, tackle our climate crisis, and connect all Americans to jobs and opportunity. Mayor Pete Buttigieg is an outstanding choice to help spearhead this work. An innovative problem-solver and trailblazing public servant, Mayor Pete is deeply committed to bringing people together and upgrading our transportation system in a way that serves Americans of all backgrounds and communities of every size—urban and rural—across our country.” railwayage.com

market Stantec/Jacobs JV Lands Toronto Projects Infrastructure Ontario (IO) and Metrolinx have awarded the 360 Transit Alliance Joint Venture, comprising Stantec and Jacobs, a program control services contract for four TTC (Toronto Transit Commission) projects, valued at C$28.5 billion (US$22.07 billion). The partners will provide program controls management, risk management, quality assurance, planning and scheduling, information management, and on-call technical and commercial support services for the Ontario Line, Scarborough Subway Extension, Eglinton Crosstown West Extension and Yonge Street North Subway Extension.

NORTH AMERICA

Freight operator GREEN CARGO, Sweden, has deployed the first two STADLER six-axle bi-mode Eurodual locomotives on its Oslo-Bergen route in Norway. They will be used to increase capacity on the busy route without increasing the number of trains, which risks overloading the network. The locomotives were leased by Green Cargo from EUROPEAN LOC POOL (ELP); the launch follows the October 2020 approval of the locomotive for operating in Norway and Sweden.

CATHCART RAIL and its financial partner, STAR AMERICA INFRASTRUCTURE PARTNERS, LLC, have acquired APPALACHIAN RAILCAR SERVICES (ARS), a railcar repair and maintenance company based in Eleanor, W.Va. ARS was sold from parent company GENNX360 Capital Partners, a private equity firm investing in middle-market business services and industrial companies. ARS provides certified tank car and freight car repair in 10 locations, from Maryland to Nebraska; interior and exterior cleaning, coating and lining services; mobile repair; on-site customer repair operations; switching operations; and railcar storage. It serves companies in the agriculture, chemicals, manufacturing, energy, food processing and logistics industries throughout the Midwest, Southeast and mid-Atlantic regions. Scott Driggers, who has served as CEO of ARS since 2018, now becomes CEO of Cathcart. The combined company will employ 800 people across 60 locations in 22 states. Cathcart, founded in 2015 by Thomas Cathcart and his son Casey, is a diversified freight rail platform operating across the services and transportation sectors. Its other subsidiaries include BUCYRUS RAILCAR

8 Railway Age // January 2021

REPAIR, LLC, with headquarters in Bucyrus, Ohio, and the 48-mile BIP (BELPRE INDUSTRIAL PARKERSBURG) RAILROAD, which is based in Marietta, Ohio, and interchanges with CSX at Parkersburg, W.Va. CHART INDUSTRIES, INC., a significant player in the rail industry for providing equipment for LNG-powered locomotives, has made a significant investment in Vancouver, B.C.-based HYDROGEN TECHNOLOGY & ENERGY CORPORATION (HTEC), which designs, builds and operates hydrogen fuel supply solutions to support the deployment of hydrogen fuel cell (HFC) electric vehicles. Chart, which describes itself as “a leading global manufacturer of liquefaction and cryogenic equipment serving multiple applications in the energy and industrial gas end markets, including hydrogen,” has acquired a 15.6% stake in HTEC. Chart’s C$20 million investment is in capital stock on a fully diluted basis. Chart’s investment in HTEC came at the same time that the Canadian government deployed its Hydrogen Strategy for Canada, and Canadian Pacific announced that it is developing an HFC-powered linehaul locomotive. railwayage.com

Metrolinx

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RAILROADER OF THE YEAR

KEITH CREEL

T

he 58th annual recipient of Railway Age’s Railroader of the Year Award is Canadian Pacific President and Chief Executive Officer Keith Creel.

Creel has been instrumental in Canadian Pacific forging a leadership role in the industry, while acknowledging the railroad’s place in history and its role in driving

10 Railway Age // January 2021

the North American economy forward.

He has helped renew Canadians’ and CP employees’ sense of pride in a company that connected a nation, and connected Canada to the rest of the world. Under his steady hand, and under very difficult circumstances this past year, CP has been a safe, efficient and productive railroad, enabling its customers to connect with

domestic and global markets.

Keith Creel became President and CEO of Canadian Pacific on Jan. 31, 2017. He is the 17th person to lead the company since 1881. Creel was appointed President and Chief Operating Officer in February 2013 and joined the CP Board of Directors in May 2015. Prior to joining CP, he was Executive Vice President and Chief Operating railwayage.com

Canadian Pacific

CANADIAN PACIFIC’S RENAISSANCE RAILROADER

RAILROADER OF THE YEAR Grand Trunk Western Railroad as a Superintendent and General Manager, and at Illinois Central Railroad as a Trainmaster and Director of Corridor Operations, prior to its merger with CN in 1999. Creel holds a Bachelor of Science in marketing from Jacksonville State University. He also completed the Advanced Management Program at the Harvard Business School. He has a military background as a commissioned officer in the U.S. Army, during which time he served in the Persian Gulf War in Saudi Arabia.

RAILWAY AGE: Keith, on behalf of Railway Age and the Simmons-Boardman Publishing Corporation Rail Group, I’d like to congratulate you on being named our 58th Railroader of the Year. Well deserved.

KEITH CREEL: Thank you, Bill. I’d like to thank you and your staff at Railway Age for the recognition. Thinking about the many outstanding and iconic leaders that have preceded me being recognized, it’s humbling. I’m honored to share that history, certainly. But for me, it’s mostly about the 12,000 railroaders that I get the honor to serve and work with day in and day out who have made our collective success possible and continue to make it possible, even today. Thank you again, very much.

BY WILLIAM C. VANTUONO, EDITOR-IN-CHIEF Officer at CN. He held various positions at CN, including Executive Vice President Operations, Senior Vice President Eastern Region, Senior Vice President Western Region, and Vice President of the Prairie Division. Creel began his railroad career at Burlington Northern Railway in 1992 as an Intermodal Ramp Manager in Birmingham, Ala. He also spent part of his career at railwayage.com

RA: You’re very welcome. This has been a particularly tough year, as we all know, in this industry, with the COVID-19 impacts and economic impacts, but the railroad industry in general has weathered it quite well. Can you talk just a bit about your experience this past year and how you handled this crisis? You’re still handling it, obviously.

KEITH CREEL: Well, unique, I guess, is an understatement—certainly nothing I ever anticipated in my history or career prior to that. If you would have told me a year and a half ago this was going to happen, I’d have probably said it’s never going to happen. But I learned a long time ago never to say never. And this has been a challenging situation for all of us. But I’ll tell you where it all started, as a leader. The thing I thought about as number one is the responsibility to protect our employees’ safety and our responsibility to serve the communities and the customers, and serve the livelihoods that we support in this industry, and specifically at CP. So we took a step back at the very beginning, and we said, “Listen, let’s focus on

controlling what we can control, protecting each other so that we can continue to serve.” And that’s what we focused on.

We’ve been very intentional about doing that. Everything has been centered around that key decision of protecting employee safety so that we can continue to serve. And with that mandate, our team went about the business of doing exactly that. And yes, we’ve all been in a storm, we continue to be in that storm, but the CP ship overall I think has fared extremely well, as has the industry. And I think that’s a reflection of the commitment to safety, the commitment to people and the commitment to serve that we all share and uniquely enjoy, and have in common in this industry.

RA: Going back to before your railroading career, you were in the U.S. military, and you served in the Middle East. How does your experience translate to your railroading career?

KEITH CREEL: The military was my segue into the railway. The leadership lessons I learned in the military date back to the Persian Gulf War. I was a very young lieutenant, early 20s, a commissioned officer in an actual war zone. I learned very quickly that to be a leader, you’ve got to earn respect, and to earn respect, you’ve got to treat people with respect. So that’s a very valuable lesson I carried from my military days into my railway days, leading by example, treating people with respect, making sure they understand that, yes, we have a job to do and, yes, we all have to be accountable. But at the end of the day, as human beings, we care about each other. I care about them, they care about me, and that creates the emotional commitment, the emotional connection.

It’s so necessary in our industry, because our industry requires so much of all of us.

It’s an industry where you have to sacrifice often; it’s an industry that never sleeps.

Our families depend upon it; the backbone of our economy depends upon it. It’s a great blend, and it’s also a great honor to serve. So the two married very well for me; they resonate well with my values. And that sense of service is something that, obviously, was required then. It’s something required today, working through people and with people, leading people to accomplish something they otherwise January 2021 // Railway Age 11

RAILROADER OF THE YEAR

couldn’t accomplish alone or individually.

But doing it collectively is something that really motivates me and something good in the railway industry; you get ample opportunity to engage in that.

RA: So how did you transition from the military? What prompted you to join 12 Railway Age // January 2021

our industry? Obviously, you’ve been very successful at it.

KEITH CREEL: Well, I’ll tell you, growing up, when I was in the military, I never dreamed of working for the railway.

As all of us have in our lives, there are certain people who open doors for you, certain connections who give you a hand.

RA: And one of those tremendous people—I guess you call him your mentor— is Hunter Harrison.

KEITH CREEL: When I went to the BN in 1992, Hunter had already shifted and transitioned. He was at the Illinois Central. But his legacy was there, obviously, given the parts of the BN I worked on, the old Frisco territory, which is where Hunter was from. He grew up in Memphis, Tennessee, and worked at Tennessee Yard.

I was working in Cherokee Yard, the sister hump yard to Tennessee Yard the Frisco built in Tulsa, Oklahoma. So I didn’t know him, but I knew all about him. Fast forward four years into my career. The Santa Fe-BN merger occurs. I had an opportunity after the merger to get closer to home. I had a young family.

John McPherson, who serves now on the CSX Board, used to be the Executive Vice President of Operations at that time at the IC. He interviewed me, recruited me and offered me a job in Memphis. I left BN at that point, joined IC, and day one, I met railwayage.com

Canadian Pacific

And I have a very close friend, actually my best friend in life, who still works at BNSF Railway. He opened up the door for me to come to work at the BN and introduced me to the BN. And having a military background, shortly after the Persian Gulf War experience, the BN at that point was recruiting trainees, and, obviously, there was a good fit with my military and leadership experience. I had an opportunity.

Actually, marketing was my degree, marketing and management, when I was in university. And I thought I wanted to be a marketing guy. But at the same time, I had that internal motivation to lead people and I had an opportunity. I said, “Listen, if I’m going to sell business, I need to understand business.” So the military background and the operational background are very similar in a lot of ways. So I stepped into operations, and I never came out. It gets into your blood. Sometimes I’ve said it’s a fine line between love and hate, because some days my job is so demanding, our jobs are so demanding, on us and on our families.

There are times you don’t like it, but there are a whole lot more good days than bad. It’s very rewarding. It has been a very rewarding career. I’ve been blessed to serve and work with some tremendous people.

CONGRATULATIONS, KEITH CREEL Great leaders have vision. Progress Rail is proud to support Mr. Creel and the Canadian Pacific team in achieving their vision as one of the most connected and sustainable railroads in the world.

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On an annual basis for the past two decades, CP has operated two Christmas trains to go across its Canadian and U.S. properties and make stops in communities to raise money to donate to food banks. “It’s been a work of service we’ve been honored to do,” says Keith Creel. “But, obviously, we had to make the tough decision last year that it wasn’t safe to create public events that draw people to collect together. I wouldn’t have felt responsible doing that. So we decided to do something unique and different at our corporate office. We had a mini train trip with our fleet. We presented a concert, and we raised money for those communities and food banks that needed support.”

RA: But, obviously, Hunter saw something in you, as he said in the past. I had many conversations with him. He was Railroader of the Year twice, at the CN/IC and then at Canadian Pacific, and he often talked about you. And he talked about the connection you two had, that you two could almost know what the other was thinking.

You really clicked.

KEITH CREEL: Hunter was a very iconic, visionary leader. I think we all know that, and certainly recognize and respect that. You can’t deny it. But I’ll tell you, from the very beginning, demanding is probably an understatement. Hunter demanded excellence. Effectively, if you were going to 14 Railway Age // January 2021

work with him, you had to produce results.

Having come from similar backgrounds, similar cultures, both being from the South, to some, his influence and his leadership style could be overwhelming. He was more like the coach that you didn’t want to let down or the father or the mentor that you have in your life that you don’t want to let down. At the end of the day, that resonated with me. He challenged me mentally; he challenged me from a leadership standpoint. He continually put me in positions that in the beginning seemed a bit overwhelming. But there was a method to the madness, and it was a learning opportunity.

And not only did he challenge you and put you in situations, he worked alongside you, and worked with you as long as you could understand what he was saying. And I did. Probably what some might say is that the stronger personality traits he had were filtered out, and I focused on the message.

It resonated, and it made tons of sense, great common sense. It’s about doing the right thing. It may not be the easy thing. Often it isn’t. But if you’re willing to do the right thing, then success is going to follow.

I was blessed to have two decades of working with Mr. Harrison. It was

challenging. I survived it. There were certain times that you thought maybe you’ wouldn’t, but at the end of the day, with Hunter, you were going to survive working with him, and meet his demands. You had to learn the way he thought. You had to learn what he looked at, what mattered to him. And he was very predictable in a lot of ways because it was always about the basics of the business. And if you’re not afraid, roll your sleeves up and get to the basics and learn it from the ground up. He wasn’t intimidated. But if you wanted to sort of skate at the top level and try to act as if you knew what you really didn’t, that was very dangerous with him.

RA: So Hunter comes out of retirement to go to the Canadian Pacific; you join the Canadian Pacific. Of course, you had worked with him at CN for a number of years. And then in 2017, he leaves for CSX, which was his last assignment, and you’re in charge. So what is different about the CP today as contrasted with under Hunter? Is it a somewhat different railroad?

KEITH CREEL: I would say, Bill, it’s an evolved railroad. Fundamentals and the foundation are the same. What Hunter railwayage.com

Canadian Pacific

Hunter Harrison. So here I am, a trainmaster, frontline leader, frontline supervisor, entry level on the management side and operations, sitting in an office in downtown Chicago on the 21st floor of the NBC Tower with Hunter Harrison, who at that point was already a legend in the industry. Little did I know how much more his influence would grow on our industry. But I’ll tell you, then, at that point in my life, it was a bit overwhelming, and certainly something that I still remember to this day.

RAILROADER OF THE YEAR

16 Railway Age // January 2021

and all the things that are fundamental to our success. He transitioned out. I had several years. The last, probably, two years, Hunter had some medical challenges, but he was always strong, and he always bounced back. But at the same time, he trusted me.

And he brought me there with a mandate and an expectation. If I performed, I would

RA: And there has been top-line growth.

It’s widely understood that the Canadian railroads really got Precision Scheduled Railroading right, and have taken it to the next level. Talk a bit about the business growth that’s occurred. This year, of course, railwayage.com

Canadian Pacific

brought to CP, and why I joined Hunter on this journey, was to bring to CP a discipline called Precision Scheduled Railroading. We executed that operating model that became the foundation of the way we run the business. Now, when Hunter transitioned, we had been about fixing the company, creating all of our service, controlling our costs,

take over the company. That was the plan.

So I had a lot of time to think about how we would pivot. And as soon as Hunter left, given where we were in our journey, it was time to pivot from being the local service provider to growing it. So the mandate I received from the Board was to provide the growth. And I had a very good knowledge of our network at that point. Given I was running the operations, I knew it quite well. I had experience in North America, and quite a bit of experience in the Canadian landscape with the other railway. So it didn’t take a lot of time for me to put a plan together with our team collectively. Number one: Create the same kind of discipline and culture of accountability within the sales and marketing team as we established in operations, combine the two, and be partners. Take the service, the foundation of what we provide, and create solutions for our customers. Then, we could deliver on increased value in the marketplace without over-committing, without destroying our reputation or our ability to actually run the business the way it has to be run, day in and day out.

So today, my style’s a bit different, but our fundamentals, our philosophies, our core values are the same. The company hasn’t changed in that regard. We’re just evolving. And quite frankly, the talent, the ministry that we focused on—my focus or my legacy is about leadership and about leaving the company better than I found it.

So I’ve spent a lot of my time over the past two years developing and working with the marketing strategy and connecting with customers; rebuilding relationships with employees; and at the same time, helping train and develop leaders so that when I’m gone, I can look back and say, you’ll be able to interview that next CEO one day and say, “You know what? CP has really moved ahead since Keith left. What’s different about the company’s success?” And again, I think it’s going to be a story of evolution, not significant change, just normal growth, mature growth. As we change in this world, you change with it, and you grow with it.

has been rough for everybody, but yet it has been a good year, relatively speaking. So where’s the growth coming from in terms of customers, in terms of what CP does? Your customer base?

KEITH CREEL: Overall, number one, our growth. We’ve led the industry in growth. Compared to last year, we’re flat. But compared to the industry, which shrunk, that’s something to be excited about, that we’re proud of. And even this year, we’ve had a lot of momentum because 18 Railway Age // January 2021

of the initiatives we’ve created. We call them self-help initiatives, customer solution initiatives. But, of course, this pandemic has set us all back, but we’re getting close to flat, which I think, again, is pretty phenomenal.

But that said, it’s been about the strategy.

When I took over as CEO, I sat down with John Brooks, our Chief Marketing Officer. He reported to me prior to that as one of the two key lieutenants on my team.

When I was running operations, they reported to me. I picked John as the leader.

John clearly understood my mandate. We sat down together with a couple of other key leaders in our company and said, “Listen, how can we take all of the capacity we’ve created, plan our network trains and create solutions for customers so they can win in the marketplace?” We were blessed with a franchise, especially in the Canadian space, where we have the shortest length of haul for all the key markets we serve.

So on our best day, running in each of railwayage.com

Canadian Pacific

RAILROADER OF THE YEAR

RAILROADER OF THE YEAR

the key corridors, 200 miles shorter vs. our competitor’s, we should have a superior level of service. But we were not realizing it. So now that we’re realizing it, how do we monetize it? Well, along the way, PSR creates a whole lot of capacity, because the old way of running the railroad is you have a lot of cars and a lot of track, and the more business you have, the more cars you think you need, and the more locomotives and track you think you need. Well, PSR is about turning assets and doing more with less. So as you create longer, more efficient trains, then, obviously, you create capacity. We found ourselves with too many 20 Railway Age // January 2021

locomotives, and too much track. I’ve got to thank our predecessors. They had the vision to do this at every one of our locations in Canada. But in Vancouver, Calgary, Toronto or Montreal, we were blessed with land to expand. So how do we take our superior franchise, combine that with our land holdings that we have contiguous to all of our terminals, and expand customers, and create those solutions? So that’s what we went about doing.

I can talk about each of our business units. There’s a story in each and every one, because it’s about how you take what you have and make it better, whether it’s

RA: We’ve seen quite a few examples of that in recent weeks. Just in the past couple of weeks, we’ve reported on several CP projects having to do with, as you just described, transloading, intermodal. We’ve seen records set in grain haul, and, of course, grain is very big for the Canadian railroads.

But those records continue to be set. So the growth is definitely there.

KEITH CREEL: That’s a work in progress. As we all know, these projects, they’re needle movers, as I call them. They don’t happen overnight. You plant the seeds, and you start the hard work of sowing those seeds to reap the harvest one, two, three years out. So these different self-help initiatives are all coming to fruition, but they’re among many that we haven’t sold.

We announced our plans to convert additional land holdings in Vancouver to create an industrial park adjacent to that same railwayage.com

Canadian Pacific

Canadian Pacific locomotives in military schemes honor veterans. In 2020, CP and the Homes for Heroes Foundation collaborated on the fourth annual Spin for a Veteran event, with all funds going toward building affordable housing for homeless veterans.

The event raised more than $400,000, double the original goal of $200,000, bringing the total dollars donated from the past four years to more than $1.2 million. Each $100,000 raised builds one home, bringing CP’s total to 12 homes since 2016. “CP’s support for the military and veterans is long-standing and steadfast,” said Keith Creel, a military veteran. “We consider it a privilege to support veterans.”

innovation or driving the change narrative.

In Canada, what do successful grain franchises look like? The model five years ago was the 112-car grain train. You could say that’s probably been a standard model in this industry for decades. Well, in Canada, we looked at it from a PSR standpoint.

Is that really the best way to optimize the movement of grain? Well, no, we need to run bigger trains. So we innovated there.

We’ve changed the narrative there.

We’ve gone into intermodal. We’ve taken land that’s strategically located inside our terminal in Vancouver, one of the major metropolises in Canada. It’s also the largest port on Canadian soil. We converted it into a partnership with the largest steamship company in the world, and became supply chain integrators in a transload. We’re building a transload right now that is going to open third-quarter 2021. It’s going to create a mousetrap that can’t be replicated.

We have a unique land. We’ve got a unique franchise. We’ve got a new set of employees and minds to put this together with a partnership that is going to be working well for that customer, helping them grow in the world market and in their space, as we grow with them for many more years to come. So those kinds of things are what we focused on, creating solutions that allow us to win and our customers to win. That’s what growth is all about in a PSR world.

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RAILROADER OF THE YEAR location where we’re building the transload facility. That’s an additional 100 acres.

That’s a two-, three-year vision before we get shovels in the ground to be able to do this, but it takes that kind of planning. And when you are thinking that way, and you’re being entrepreneurial—thinking about how I can help the customer, how I can help the economy, how I can help the environment win—you can lead yourself to those kinds of solutions. So it’s something that we’re blessed with, the opportunity to be able to do that, and the team to be able to convert.

RA: As you know, the railroad industry in the past few years has been almost exponentially deploying advanced technologies, which has really helped not only the operations, but also the relationships with the customers and the level of service. What are some of the important technology projects at CP? KEITH CREEL: Safety and reliability are something that we have an obligation to deliver. I call it table stakes. It’s part of our success platform at our railway and

22 Railway Age // January 2021

in this industry. That’s starting to make some advances. At the same time, when it comes to technology, I don’t want to be on the bleeding edge of technology. And I call it the bleeding edge because you throw a lot of money away sometimes, good money chasing things that are not developed. But I don’t want to be behind. So our approach at CP has been to take a practical approach to develop and implement. You have to be able to do solutions that drive safety. Ultimately, when you drive safety, you improve safety, and you improve reliability, especially in a railway that depends upon asset turns and velocity. And in turn, you drive efficiencies. Safety is the platform, and technology is an enabler.

The past two years, as well as during this pandemic, we’ve been moving and working on some things that have come to fruition, that are needle movers for us.

And it’s taking those practical applications and implementing them. I’ll speak to two that are very material. As you know, we’re a bulk railroad; we move a lot of grain trains,

a lot of potash trains, a lot of coal trains.

This journey started probably a decade ago on coal trains. CP, unique in this industry, developed for our wayside equipment detection an ability not just to measure hot wheel bearings to protect against journal burn-offs derailing trains, but took that same technology and applied it to create what we call cold wheel technology, not just hot bearing technology. It’s the application of those systems to measure the heat of a wheel when a train is in its braking effort.

In simple terms, you deploy them at the bottom of grades. When a train is going by at track speed, that brake use is putting heat on that wheel, and we’re measuring how much heat. Well, obviously, you get a heat pattern across a train. A good-braking train will develop so much heat on a wheel. Then, you can analyze and identify the specific trains and wheels in the cars that are not emitting the heat, which says the brake’s not working as effectively as it needs to. So we deployed that on the coal fleet. We used that as the test case. It’s a closed-loop system. We

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RAILROADER OF THE YEAR took the data and we drove brake reliability on our coal trains up dramatically. The bad actors went down greatly, and the braking effort increased tremendously.

We applied that to our potash f leet.

And again, this was a multi-year journey that came to fruition this year. Transport Canada allowed us an exemption for using this cold wheel technology on our potash f leet. Now, we married that with another technology, which is our portal system. We took a different approach. The train can go through at track speed. We’re using infrared cameras and algorithms instead of the human eye to identify safety defects. We took the test data to Transport Canada and said, “Listen, we’re identifying 87% more defects than the human eye during a walking inspection. Give us an exemption. Let us prove the technology even more, so we can scale it up and apply it to other f leets.”

So now, on our potash fleet, we have an ability to bypass a visual safety inspection by using technology, and at the same time,

bypass one of the brake inspections on that fleet specifically. Every one of those trains moves through the terminal and does not have to stop. We’re saving three to four hours dwell per train. And it’s not just the impact on that train. It ripples across your entire fleet, and every other train that you run through the terminal. So those kinds of practical, applicable solutions that drive safety, reliability and efficiency are the kinds of things we’re focused on most at CP. And we’ll continue to focus with that same mandate, that same mantra.

RA: That’s machine vision technology, which has proven, as you just said, very useful. What about Positive Train Control?

The U.S. lines of CP are equipped and fully functional. What is the outlook for PTC in Canada? I know that there’s some sort of initiative under way. There is no Canadian federal mandate, but nevertheless, what can we expect from CP, from the Canadian railroads, in terms of PTC? KEITH CREEL: We’re learning from

our experience with the PTC we’ve applied on the U.S. operation. You could say it’s obsolete already. So the Canadian regulator is working in partnership with the Canadian railroads. We’re going to look at it. We’re going to study it, but the view is not replicated. We want to do something that’s more positive, probably quicker to adapt and implement. My guess is PTC will never happen in Canada as we know it in the U.S. Given that we’re a decade later, there are other technologies and other strategies to deploy that can give us a greater step in safety and reliability and efficiency, that you’ll see us deploy eventually, on the Canadian side. I don’t think that’s going to happen anytime soon, though. Again, it’s something there is a focus on and that we’re paying attention to.

RA: I want to talk about the history of CP a bit. Now, the Canadian Pacific, in a sense, built Canada, with the transcontinental and all of the marvelous engineering that was implemented by some of your predecessors.

CONGRATULATES

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24 Railway Age // January 2021

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2020 Year-End Letter from the President Dear Valued Members & Industry Partners, We wanted to take this opportunity to thank you for your continued support and to reflect upon the many accomplishments of our organization as we look ahead to a new year. 2020 has been a challenging year for us all and we at REMSA are proud of our industry’s response during these difficult times. As the railroads continue to operate and transport essential workers and supplies around the globe, the maintenance-of-way community ensures that the railroads have the proper tools and equipment to continue to operate safely and efficiently.

REMSA has been steadfast in our mission to provide knowledge and opportunities to our members and continue to do this through three major pillars and member benefit programs: Trade Shows, Advocacy, and Scholarship.

Representation in Washington is more important now than ever before. Through the REMSA Grassroots Program, we connect our members along with their local railroad customers to their Members of Congress to jointly advocate on our shared industry priorities. REMSA continues to navigate this new environment and is working to connect our members to their elected officials and educate Washington of the legislative priorities of the rail supply industry.

REMSA supports the future of the rail industry through our undergraduate and continuing education programs. This fall, REMSA awarded three undergraduate scholarships and one continuing education scholarship to REMSA member employees and their qualifying family members.

As most companies have had to do for 2020, REMSA has shifted many of our offerings and increased our virtual offerings. We continue to get information out to our members through our virtual webinar series which focus on a range of topics from government affairs updates, career-focused training, veteran career tools, and safely resuming operations. We will continue to offer these sessions and expand on this program in the coming year.

Looking ahead to 2021, REMSA has some exciting changes coming. We are reorganizing our leadership structure and are pleased to announce that Urszula Soucie will be appointed REMSA President effective January 1, succeeding David Tennent, REMSA Executive Director/CEO, who will remain involved with the association. Ms. Soucie has been with REMSA since 2011 and most recently has served as chief operating officer. As president, Soucie will continue to serve the association’s 300+ members and support the overarching goals of the rail industry. In addition, I will be stepping down as REMSA President at the end of the year and Mr. Jay Gowan (RailWorks) will be appointed REMSA Chairman.

Urszula Soucie

I am proud of REMSA, the strong leadership and supporting staff for moving our association and the industry forward during these challenging times. I am looking forward to REMSA’s continued developments and success under our new leadership in 2021.

Additionally, REMSA’s hallmark event, Railway Interchange, will take place at the Indiana Convention Center September 2021. We are full-speed ahead and planning an in-person event and look forward to seeing everyone safely this coming fall.

Jay Gowan

At REMSA our sole focus is on providing value to you, our members, and we are continuously exploring new ways in which to do so. We are thankful for your partnership and support over the last year and look forward to serving you in 2021.

From all of us at REMSA, we wish you a safe and prosperous new year!

Alan D. Reynolds, (Geismar North America) REMSA President (2019-2020)

www.remsa.org

Alan Reynolds

RAILROADER OF THE YEAR You in particular have really paid attention to that history. It’s that focus on what CP means to the communities you serve, what CP means to the nation of Canada as a whole. That’s something you have really embraced. Talk about that a bit.

KEITH CREEL: As a leader, it’s important that you create vision. And I quickly realized and learned when I came to CP how much pride existed in our company. I competed against CP for 17 years. I knew about CP. I knew it was an iconic Canadian company. But I didn’t fully understand the history, nor did I fully understand the commitment that was tied to that history.

In 1885, in partnership with Canada, CP connected the country. It connected British Columbia physically from the West to the rest of Canada.

To have that woven into your fiber, to understand the history and to know how much the nation, commerce, the livelihood of people, the communities, the jobs connect all together creates a sense of obligation, of commitment, and a huge

sense of pride that we take seriously. So I tapped into that. When I took over, bringing back the Canadian Pacific beaver was one of my first decisions.

RA: Right, the logo.

KEITH CREEL: Some might say that was pretty simple. With Hunter, we’d been on a mission to focus the company on reinventing itself. So the beaver in its symbolic importance sort of faded away during those times of transition. But given that we had reinvented ourselves, I wanted something to bring our company together, because we’d be going through a lot of change. And listen, we didn’t get it all right. You don’t drive that kind of change that fast, and get it all right. So I wanted something for people to rally around. And that beaver, that logo, says so much about commitment and hard work in our history. I called Mark Wallace, who works with CSX now. I said, “Mark, the beaver is back. I want it put back up on the corporate office. We’re going to redesign and recreate our next generation’s logo.” So I sat

down with Mark’s team and said, “Listen, this is what CP was. This is what we’ve transitioned with in the new CP, and this is what we’re going to be going forward.”

So it’s all about not forgetting where we came from, realizing that we’ve got a responsibility to our past, but also a responsibility to create success in the future. And that’s where our new CP logo came from.

I don’t want to say it was the best decision I’ve ever made, but certainly, it was one that resonated with our employees and exceeded my expectations. It’s something we’re all very proud of.

RA: Well, it’s important, I think, to give employees a sense of continuity. And also for the younger people coming into the company, so they can feel connected in a way that they realize that they are working for a company with a great tradition, a great history in that sense of Canadian national pride. I think that’s important.

Would you agree?

KEITH CREEL: I would agree. It

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26 Railway Age // January 2021

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RAILROADER OF THE YEAR resonates with people as human beings to feel like you belong to something that’s bigger than yourself, to feel like you’re helping create a success that’s bigger than yourself. I think as human beings, it resonates with all of us. It’s the way God wants it. We want to make a difference. We want to leave it better. And when you can get people around that vision, it’s a glue and a foundation that represents all of those things, past, present and future. A sense of responsibility. I think that’s a great thing.

RA: Let’s talk a little bit about the future in terms of the people at CP and also in the industry. There has been a transition going on now for the better part of a decade. A lot of the experienced people have reached retirement and have moved on, but there are a lot of good young people at CP. Every year with our Under 40 recognition and our Women in Rail, Canadian Pacific has always had somebody there. So the industry is changing, and for the better. Talk about what you’re doing at CP.

railwayage.com

KEITH CREEL: I remember, it seems like yesterday, when I was the young guy. I’m not the young guy anymore. But I can tell you at CP, the people are key to our success. The operating model we deploy, you can have the books about it. It’s not rocket science. It’s all about execution, and to execute, you’ve got to have the right people who are motivated and wired and share similar values and are committed and willing to sacrifice. I’ve been blessed with what I’ve known to be the best team collectively that I’ve ever worked with in the industry, and I’ve been doing this for almost 30 years—like-minded individuals with similar values, all with a sense of commitment to each other, as well as a sense of service. We all understand. Listen, we can all get along; we all do. There’s a very unique esprit de corps within our company.

I see this often. The CP family, we sacrifice for each other, we serve each other, we love each other through the good times and bad times. But at the end of the day, we all have to earn our seat at the table. We all have to pull our own weight.

The people I work with, who I lead and I serve with, all know that there’s no free rides. You produce results. We do it in the right way, in a respectful way. When you do, you don’t have to apologize for it. And the result is going to produce success. And that’s our responsibility to each other, as well as to our shareholders and our customers. Again, that resonates, and it has created chemistry within the company that people want to be a part of.

Success breeds success. We all want to be part of something bigger than ourselves. We all want to be able to one day sit with our kids, and not only provide a good living, but say, “You know what, everything I did in life mattered. I helped create something that otherwise wouldn’t have been able to be created, something we’re proud of.” To me, to create a culture that can give that to people is just as important as the success you create. It’s the way of, again, serving people, working with people. I just think it’s the right thing, the way we’re all wired at CP.

January 2021 // Railway Age 27

RAILROADER OF THE YEAR RA: I always ask our Railroaders of the Year if they can point to one or more defining moments in their careers or in their lives that helped shape them. What are some of yours?

KEITH CREEL: Our stories make up who we are as individuals, but there’s only probably a handful of people and experiences that mark you. I’ve been blessed to work with some really good people. The military gave me my foundation. My family and values, where I came from originally, is where it all started, but the military reinforced that sense of service. And then for me, Hunter, when I came to work in the industry, or shortly thereafter. To see someone who was so motivated to serve and create success was pivotal for me. It was the fuel that lit my fire inside.

And then the next point, meeting my wife.

You’re going to live a railroader’s life, especially if you’re going to do the things we’ve been required to do. We’ve moved 13 times.

She’s got a servant’s heart, and she’s been committed our family. She truly is the one

that has allowed me the space to do what I do, and raised our children. She’s the real CEO in our home, my closest advisor who I love dearly, a very pivotal person for me. Finally, there’s my sense to serve other people, my sense of responsibility that my Christian values give me. At the end of the day, we all want to make a difference in life. I want to leave it better than I found it, and this is an industry that requires sacrifice, that gives you a great reward if you’re willing to do it.

So those things along the way—Hunter, my wife, where I came from, all the people I’ve been blessed to work with. I could say going to work for the IC was when I really learned the fundamentals of railroading.

But then when Hunter left CN, coming to CP, I never would have imagined in my 17 years at CN that I would work for, much less lead, the company that I competed so passionately against.

But when I came, to me, that was God saying, it was fate, and it’s a decision I’ve never regretted. There are a lot of great people at CN. It’s a great franchise. I’m still

friends with a lot of those folks, and I’ll always care about them. But my path and my purpose is to be with this company, and it’s something that every day motivates me to get up and do what I do. I’m really blessed to be a part of the success stories and part of our story at CP. RA: In relation to the company’s history, of course, CP has that beautiful steam locomotive, 2816, the Empress, which has not been in service now for a few years. I understand it has been lovingly cared for and has always been roadworthy. Are there any plans to roll it out again? Much to the delight of the communities and also to a lot of railroaders, we would love to see it running again.

KEITH CREEL: Well, Bill, you probably would not be surprised if I told you that I get that question many times in a year. I’d probably underestimate how many emails or how many contacts I get with a desire to see 2816, that famous locomotive, run again. It last ran on our rails, I believe, back in 2012.

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RAILROADER OF THE YEAR And since then, it has been in storage at our office, being very well, lovingly cared for.

It gets a white glove treatment. But at the same time, to maintain a locomotive like that and to keep it certified, to operate it, is extremely expensive, and it just has not been our primary focus. But we’ve maintained it well. I’ve declined and resisted for eight or nine years now. I’ve said ‘no’ more times than I care to, because it was the right answer at the time. But when exceptional situations and circumstances occur, you do some exceptional things. This past year, certainly, I would suggest has been an exceptional year.

In line with the history of the company, our predecessors created this. It’s something I’m certainly proud to be a part of. On an annual basis for the past two decades, CP has taken our unique, iconic Royal Canadian Pacific fleet—what I consider to be the best in the world run by the best people in the world—and operated two Christmas trains to go across our Canadian and U.S. properties and make stops in communities

we serve to raise money to donate to food banks to feed people who aren’t as fortunate as we are. It has been a work of service we’ve been honored to do.

But, obviously, we had to make the tough decision last year that it wasn’t safe to create public events that draw people to collect together. I wouldn’t have felt responsible doing that. So we decided to do something unique and different at our corporate office.

We had a mini train trip with our fleet. We presented a concert, and we raised money for those communities and food banks that needed support.

To make it unique and special, an exceptional decision was made to get the 2816 out on December 12. We went about the work of putting the 2816 together with the Royal Canadian Pacific fleet, and we ran the Empress 2816 Christmas train in our corporate office compound. It didn’t get out on the main line. It stayed within the yard. But we have some beautiful footage of that locomotive running, and I’ll tell you, when I’m watching it, the hairs on my

arm stand up to think about the day when that steam locomotive was in its prime, running day in and day out with its sisters in this industry. Again, it pulls you back to a past that’s so important for all of us, both at CP and in this industry, and how we’ve connected the country and connected commerce.

I hope we can get back out on the road and run our Christmas trains as normal this year.

RA: Keith, once again, congratulations on being named Railroader of the Year. We look forward to presenting you with the award. It’s well deserved not only for you, but for all the people of Canadian Pacific, and also, by extension, for your customers and all the people of Canada, really.

Congratulations.

KEITH CREEL: Thank you again. For the CP family, we’re honored, blessed and humbled by the recognition. Stay healthy, stay safe, and we look forward to seeing everyone out on the rails.

Driving velocity in the rail industry.

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January 2021 // Railway Age 29

PASSENGER RAIL OUTLOOK

“Transit has continued to serve essential workers in cities, has carried millions of people every day, and continues to be essential to city life. In the midst of all of this, transit workers have been heroes of the pandemic.”

— Art Guzzetti, APTA

BUILDING BACK First, getting through the pandemic—then, building a new normal.

mid uncertainty, there is cautious optimism for passenger rail in 2021. That was the general consensus of industry experts Railway Age interviewed last month.

Among the reasons for it: Congress on Dec. 21 passed a $2.3 trillion omnibus spending bill—a bipartisan, bicameral effort that included a $900 billion COVID-19 relief package, with $14 billion for transit and $1 billion for Amtrak. Outgoing President Donald Trump signed it into law.

President-elect Joe Biden said he was “heartened” by the compromise in Congress, noting it was “a first step and down payment on more action that we’ll need to take early in the new year to revive the economy and contain the pandemic.”

Addressing the dire financial needs of transit agencies and helping to keep their systems running is what this round of funding will attempt to do. New York MTA, for instance, will receive $4 billion, allowing it to avert drastic service cuts of up to 50% and layoffs of some 9,400 in 2021. It still faces

30 Railway Age // January 2021

deficits in subsequent years.

The $25 billion of appropriated CARES Act funds for public transportation can only go so far. As of Dec. 3, 2020, public transit agencies had obligated 94% of those funds through 763 grants totaling nearly $23.5 billion; 59% of these funds had been fully expended, according to the Federal Transit Administration.

“This $14 billion of desperately needed emergency transit funding is vital to the industry’s survival and is a much-needed immediate step in bolstering an industry ravaged by the coronavirus pandemic,” American Public Transportation Association (APTA) President and CEO Paul P. Skoutelas said in a statement as Congress worked to pass the omnibus bill. “APTA and the public transportation industry will continue to advocate for additional emergency funding in the new year, with at least $32 billion needed to serve essential workers and help our communities recover.”

But even that figure may fall short in saving service and jobs. “That’s simply because we can’t hazard a guess right now as to when we’ll hit the final apex of the pandemic,”

says KellyAnne Gallagher, Executive Director of the Commuter Rail Coalition (CRC).

“We simply don’t know when everyone will be vaccinated, or what vaccination levels in the country are going to restore rider and employer confidence. We just don’t know what that tipping point is.”

And while the new relief package funding is important, adds Nicole Brewin, Vice President of Government and Public Affairs for the Railway Supply Institute, just continuing to provide the “bare minimum,” means that at some point, agencies “are not going to be able to invest in their maintenance, their capex. This should be the time that they’re taking advantage of ‘building back better.’”

WHERE TRANSIT STANDS Managing the pandemic’s impact will remain a top priority for transit agencies in 2021. “The magnitude of this is second to none,” says AECOM Executive Vice President and Americas Transit Leader Tom Prendergast, who spent more than 25 years at New York MTA, including as Chairman and CEO. “There is unsureness. Ridership is starting to come back railwayage.com

MTA New York City Transit

A

BY MARYBETH LUCZAK, EXECUTIVE EDITOR

PASSENGER RAIL OUTLOOK albeit slowly, but the revenues that an agency could depend on in terms of ridership are not there, the subsidies to support the operating budget in terms of revenues from real estate or sales taxes are nowhere near what they were before the pandemic.” This is due, in large part, to states’ targeted shutdowns. And then there are the added costs of cleaning and sanitization and other safety measures to protect employees and customers, Prendergast says.

As the pandemic continues, he says, transit leaders must continue to focus on: • Safe, reliable service. “We have to make sure we protect employees and customers, and find ways to ensure the reliability of the services we provide are very, very high.”

• Funding streams. “Find those immediate funding resources to keep the systems running through the crisis stage—money you need to survive today without massive reductions in services and people,” he says. “And at the same time, work expeditiously to find new, longerterm funding sources as you go forward that help sustain these systems”—not only for continued operations, but also to provide for state of good repair and expansion. “You will see congestion pricing, real estate development, third-party finance,” says Prendergast.

Taking care of transit systems’ “most important asset” is also critical. “I’m talking about the rank and file who operate trains, maintain the equipment, do the maintenance on the infrastructure,” Prendergast says. “It’s essential that we provide them with opportunities, especially as the nature of the workforce changes with new technology” and service levels.

WILL RIDERSHIP RETURN? Prendergast predicts that it will be “well into calendar year 2021 before appreciable improvements occur on the ridership side.” At the start of the pandemic, ridership for many systems was down to 10%. “Now, it’s probably closer to 20%-30% [for some systems], so there is still a long ways to go,” he says.

In New York, for instance, subways are carrying about 1.8 million riders per day— about 30% of pre-pandemic volumes. Los Angeles County Metropolitan Transportation Authority reports that ridership is about 50% of its pre-pandemic levels with remaining transit riders predominantly essential workers; and that vehicle traffic is returning faster than transit ridership, with travel patterns changing and many regions railwayage.com

seeing increased car purchases.

“The big question out there is the pace and rate at which people will come back,” says Tom Waldron, Senior Vice President and Global Transit Market Sector Director at HDR. “[Transit agency leaders] are watching the numbers—not only on ridership, but also what’s going on in their community, in terms of COVID-19 spikes, in terms of people out of work, in terms of real estate moves for residential and commercial. They are taking this entire sphere of information to formulate ideas on how they are going to operate service effectively and provide mobility to the people who need it, in an affordable manner.”

CRC members, like others in the industry, are gathering data to prepare for change using their apps to survey pre-pandemic riders about system safety and their plans to return to the rails when offices reopen; talking with subject matter experts like the National Association of Realtors, who can interpret migration patterns, including potential new ridership bases; talking with regional employers on reopening plans, in terms of timing and format; and researching changes in corporate leasing, according to Gallagher. With that data, transit and passenger rail agencies can also plan further marketing campaigns that target rider needs—and build rider confidence. (See p. 34 for more CRC 2021 goals.)

COVID-19: AN ‘ACCELERATOR’ Staggered work hours and telecommuting, and how to spread the rush hour to accommodate them have been industry considerations for years, says Prendergast. “What’s happened with the pandemic, those things have been accelerated, because instead of it being a nicety or the right thing to do from a policy perspective, it’s the right thing to do in terms of a safety and social requirement,” he says.

There has also been a movement to provide more timely and detailed information to riders. “You can show people that if they move their departure time up by 15 minutes, they will have far less crowded stations and less crowded trains, for example,” says Prendergast. “People are saying, basically, ‘I need that information to make informed decisions.’

And agencies are stepping up.”

Waldron adds that TNCs (transportation network companies) such as Lyft and Uber have started to take a greater hold. Going forward, it will be about “how they factor into the transportation mosaic, providing first

SIX POST-PANDEMIC PRIORITIES

A

PTA’s Mobility Recovery and Restoration Task Force—headed

by Phillip A. Washington, CEO of Los Angeles County Metropolitan Transportation Authority—has identified six major post-pandemic priorities: 1. “Broadening the funding base for transit agencies through partnerships with businesses, diversifying federal/state/local/farebox funding sources, and finding new markets for transit services.

2. “Finding approaches to help public transit manage the impact of persons experiencing homelessness.

3. “Developing new metrics for measuring the value of transit to communities, rather than relying primarily on ridership as the key gauge of transit’s success.

4. “Defining transit’s role in addressing racial and economic inequalities in our communities and identifying ways in which public transit can play a larger role in the solution.

5. “Seizing the opportunity to come back differently.” Among the efforts: “Deploy resources more efficiently and where they are needed the most, to use new approaches to fill service gaps, and to balance peakservice requirements. We need to move toward integrated and cashless payment systems, work with cities to repurpose streets.”

6. “Preparing the transit industry with safeguards and mobility practices in anticipation of any future pandemic.”

mile, last mile service,” for example, he says.

“There’s been a big push for blended service, as well, so there is not just one provider but several,” Waldron notes. “And making it seamless to a user, who wants to get from point A to point B in the least amount of time [and using one fare structure]. I’ve always maintained there are the three Cs: comfort, being safety and service quality; convenience, being service frequency and connectivity; and cost, the all-affordable bottom line. I think as the industry continues to strive to provide these, we will all be better off.”

January 2021 // Railway Age 31

PASSENGER RAIL OUTLOOK Waldron estimates a “three-to-five-year leveling period before we get to a normal or a more predictable, stable transit environment. There’s a lot to shake out from COVID19, and that will take time—shifting modal demand, shifting residential and commercial real estate markets, politics, agency finances and funding, changing work/life balance perceptions—the list goes on.”

MOVING FORWARD Throughout his campaign and the transition, President-elect Biden emphasized climate change and investing to rebuild “America’s crumbling infrastructure—from roads and bridges to green spaces and water systems to electricity grids and universal broadband”— and to provide “every American city with 100,000 or more residents with high-quality, zero emissions public transportation options through flexible federal investments with strong labor protections that create good, union jobs and meet the needs of these cities— ranging from light rail networks to improving existing transit and bus lines to installing

infrastructure for pedestrians and bicyclists.”

“They call the President-elect Amtrak Joe for a reason,” says APTA Vice President-Policy and Mobility Art Guzzetti. “He has always been a fan of passenger rail, partly because of his own experience, but based on that experience, he sees its importance, the connectivity it provides, the importance of connecting cities. Beyond that, it’s an economic strategy, it’s an environmental strategy; all of those things are important to him as he takes office, so the picture looks good.”

A comprehensive infrastructure bill may be among the first things out of the gate when the new Congress convenes. How would it be structured? “Reauthorizing the FAST Act could be [the basis for an] infrastructure bill, but other people would say, ‘Oh no, infrastructure means broadband, water,’” Guzzetti says.

“But it could go either way. We will have to see what gets combined. Some people talk about there being energy efficiency legislation. Might there be elements of that in an infrastructure bill? Might there be an initial economic stimulator and job bill? In the end, will that be the

same? It depends on how they shape it. All are in play, so there’s reason for optimism. Some combination is going to work.”

Included in it could be a bigger investment in Amtrak and commuter rail and money dedicated for the development of high speed, according to John Cline, an independent consultant/lobbyist and CRC Government Affairs Director.

The CRC is optimistic about the new Administration. “Longer term, I’m heartened by the Biden Administration’s vision and the President-elect’s choice of [former Presidential candidate and South Bend, Ind., Mayor] Pete Buttigieg as his Transportation Secretary, which prompted a closer look at his own campaign’s $1 trillion infrastructure plan,” Gallagher says. “If President-elect Biden were to have the advantage of both the House and the Senate aligned with a Democratic Party majority, he has got a much better chance of making big transformational change. There are a lot of priorities that need to be dealt with to recover from the pandemic, but building infrastructure puts people to work, and

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PASSENGER RAIL OUTLOOK spending on infrastructure has returns on those dollars, and spending on transportation specifically has returns.�

Another ray of hope: “The fact that transit and Amtrak survived a very contentious relief bill negotiation signals a recognition in Congress that these two beneficiaries are vital to the U.S. economic and social recovery, and the overall U.S. mobility infrastructure, and bodes well for robust federal funding, be it in the new transportation bill or a separate infrastructure measure,� says Waldron. “They’ve got a big task on their hands in terms of what they’re going to be able to accomplish in first 100 days around infrastructure,� adds Brewin, who notes that RSI is interested in working with the Biden Administration on its Buy America plan.

The priority now: “We have to live to fight another day,� says Guzzetti. “And the crisis is such that we run the risk of really backsliding unless we can continue operations. You’re already starting to see this now—transit systems and passenger rail cutting back. And how are you going to hire those engineers

back that you’re going to need in another two months? How are you going to hire those operators who we’ve been in a struggle to find in recent years? We think it’s critical to get the relief we need to continue to serve our communities short-term, and then tackle longer-term issues.�

Consultant, former FRA Deputy Administrator and Railway Age Contributing Editor Don Itzkoff agrees. “To avoid erosion of the nation’s public transportation service core and its supply chain, policymakers must continue to address ongoing transit and passenger rail deficits,� he says. “Then, more opportunities for the rail and public transportation investments that fit so well with economic recovery and climate goals can be advanced.�

OPPORTUNITIES AHEAD “There are a lot of suppliers, consultants and contractors out there making some really hard choices right now about where they see business in the next fiscal year,� says Waldron. “We are very optimistic, and I think it’s founded in reality, that there will

be movement on the infrastructure front and the projects we already have on the books will proceed. There is going to be some retooling, readjustments and reprioritization, but overall, it’s an optimistic outlook.�

Prendergast shares that view. “We’ll see a continuation of programs that are already under way,� he says. “And state of good repair is going to continue if not increase.�

As for expansion, Prendergast and Waldron say it may be limited for a while. “We need to get to a place of stability before we can look ahead to capital expansion, and the like,� Waldron says. “We need to know where we’re wanted and needed, and that’s going to take time. But there are geographies that are forward-looking like Austin, Tex.; the San Francisco Bay Area; Los Angeles; Seattle; Broward County, Fla.; Atlanta; and the New York metro area, to name just a few.�

How will agencies come out stronger? “Do all of the things we can to give the customer a better ride,� says Guzzetti, “and make sure everything we do is through a lens of social equity.�

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January 2021 // Railway Age 33

PASSENGER RAIL OUTLOOK

ACCESS, CAPACITY, PUBLIC CONVENIENCE & NECESSITY

Commuter railroads have unique needs and circumstances that cannot be addressed fairly under existing mechanisms.

It’s time for some changes.

D

elivering nearly a halfbillion passenger trips annually (pre-COVID-19), there are myriad benefits that U.S. commuter railroads provide to the metropolitan regions they serve. Commuter rail is safe, congestion-reducing and environmentally friendly, and supports the economic wellbeing of cities, suburbs and families. It is the safest form of transportation, according

34 Railway Age // January 2021

to the National Safety Council. It supports economic development and grows a tax base by providing access to metropolitan job centers. It facilitates the talent demands of employers through safe, environmentally sound transportation to jobs. It provides a city’s workforce with access to more affordable housing beyond the city center. Using commuter rail can prevent the adverse health effects attributable to driving in rush-hour traffic.

Passenger rail is the lowest greenhouse gas emitter among all transport modes. By removing cars from roadways, commuter railroads reduce the carbon footprint of riders, and spare remaining drivers even worse roadway congestion.

STRONG SAFETY RECORD Safety is a commuter railroad’s top priority, and National Safety Council data bear this out. Across the country, railroads have railwayage.com

William C. Vantuono

BY KELLYANNE GALLAGHER, EXECUTIVE DIRECTOR; AND JOHN CLINE, GOVERNMENT AFFAIRS DIRECTOR, COMMUTER RAIL COALITION

PASSENGER RAIL OUTLOOK factor in some commuter rail incidents in the past decade (Spuyten Duyvil, Hoboken and Atlantic Terminal). Reducing fatiguerelated accidents are at the top of the NTSB’s annual “Most Wanted” list, and absent a federal mandate, commuter railroads are voluntarily deploying their own OSA screening, testing and treatment regimens as another measure to ensure their train crews are fit for duty to deliver passengers safely to their destinations.

Modeled after a program already in practice in the airline industry, confidential close call reporting (C3RS) enables employees to report unsafe events and conditions without fear of reprisal. To encourage reporting, employees receive protection from discipline within the C3RS framework, while the railroads benefit from the detailed information necessary to respond to potential hazards.

These are just a few of the safety-focused improvements railroads have introduced in the past decade, and yet, as railroads become safer, liability insurance premiums continue to rise.

adopted myriad safety systems to keep their passengers and personnel safe through the introduction of both mandated and voluntary technical and human factor innovations. Commuter rail is getting safer yet, every year.

Positive Train Control (PTC), the federal mandate that commuter railroads have invested $4 billion-plus to install, will control a train in the event of human error. Before installing PTC’s crash avoidance technology, railroads invested in crash energy management (CEM) to improve railcar buff strength, thereby improving passenger and train crew survival in the event of a crash.

An estimated 25 million Americans suffer from obstructive sleep apnea (OSA), which has been identified as a contributing railwayage.com

POLICY PROPOSALS PTC: This is a system designed to prevent train-to-train collisions, overspeed derailments, unauthorized incursions into work zones, and train movement through switches left in the wrong position. PTC monitors, and, if necessary, controls train movement in the event of human error.

The Commuter Rail Coalition requests clarification of laws and regulations to ensure that PTC’s ongoing annual maintenance costs for component replacements and software updates are an eligible reimbursable expense, and that Congress factors the costs of maintenance into an overall commuter rail formula program or as a separate allocation.

While H.R. 2, the Moving Forward Act, does provide some assurance of that, in our view this needs to be made clearer. Most important, new resources must be identified beyond current federal formula funds, as we expect these ongoing, year-over-year expenses to continue and possibly accelerate as the technology evolves further.

Also, the Commuter Rail Coalition proposes that an independent assessment be conducted of PTC’s incidental benefits to determine whether operating trains under PTC creates redundancies that warrant a

review of pre-existing mandates that no longer independently enhance a railroad’s safety profile.

As publicly funded commuter railroads completed PTC implementation, attention has turned to alarm over early estimates of the ongoing cost of operations and maintenance. Having already spent in excess of $4 billion to install and implement this unfunded mandate, commuter railroads are receiving bids for ongoing operations and maintenance that range from 5%-10% of their total annual operating budget. This significant amount is compounded by the cost of system upgrades that will be required to keep PTC systems state-of-the-art and interoperable with host and tenant railroads.

Liability Insurance Pool: As railroads become safer, liability insurance is harder to acquire, and premiums continue to rise.

The current (but soon to index) federally mandated minimum liability insurance coverage for commuter railroads is $295 million. It is impossible to purchase this amount of coverage from domestic insurers, and increasingly challenging— if not impossible—to build the necessary “tower” of coverage from all available markets. Coverage above $50 million must be purchased abroad, in person, and annually. And, despite the commuter railroads’ own safety records and $4 billion investment in PTC, premiums rise every year due to natural disasters (forest fires, floods, etc.) covered in the same risk pool and as excess insurers competing for this risk drop out of the market.

Our members are now experiencing great difficulty achieving all levels of coverage including the excess coverage. Some have been told by brokers that the insurance providers are retreating from this marketplace due to other risks not in any way connected with commuter rail operations, which have had no major losses for quite some time. Further, initial premium quotes are showing significant increases, as high as 140%. This issue has reached a crisis state, and we are developing a proposal for a pool for commuter rail agencies.

The Commuter Rail Coalition is seeking the creation of a closed liability pool so that railroads may benefit from their more favorable risk profile in order to manage insurance costs, and to keep the public funds spent on liability coverage inside the U.S. January 2021 // Railway Age 35

while ensuring that participating commuter railroads have the necessary coverage minimums. There are a number of examples to draw from in other industries, where the main purpose is to provide reliable liability insurance coverage of incidents of loss where private-sector options are likely not available or are uneconomic. Price-Anderson, for example, ensures the availability of coverage of claims and ensures compensation coverage for the general public.

For the commuter rail industry, we envision a similar no-fault insurance system that is funded by the industry. Claims that exceed the retained holdings of the pool would be paid by the federal government.

Individual commuter rail agencies would pay premiums into the pool each year rather than purchasing policies from private (all foreign) entities.

Buy America: In large procurements and small, the further tightening of Buy America’s well-intentioned rules will challenge commuter railroads’ ability to undertake cost-effective, publicly funded procurements in an already squeezed rail supply market.

Complying with Buy America while operating in a market subject to the unpredictable nature of federal transportation funding creates undeniable stressors on both public agencies and the companies that build rolling stock and otherwise supply the industry. As the Congressional Research 36 Railway Age // January 2021

Service has noted, “demand for passenger railcars and buses is related strongly to the combined level of federal, state and local government funding.” (“Effects of Buy America on Transportation Infrastructure and U.S. Manufacturing,” July 2, 2019.)

It bears noting that some railcar manufacturers in the U.S. have no client base beyond publicly funded transportation agencies. For state and local providers of transportation infrastructure and services, Buy America could increase the cost of at least some projects, and may result in fewer projects being undertaken. Buy America may also raise the cost of rolling stock procurements. The U.S. market is relatively small compared with those in other countries and regions; consequently, domestic producers do not benefit from economies of scale. In addition, Buy America requirements have been blamed for project delays, which can arise from domestic supply problems, the difficulty of compliance and the waiver application process.

The cost implications are significant.

Under Buy America, domestic steel can add 25% to a project’s overall cost before a waiver for the steel content requirement would be entertained. For example, an agency’s single order of 400 railcars—vs. an order of that magnitude spread out over successive years with predictable funding— forces railcar builders to ramp up (and down) their production lines, putting

builders and their local workforce on an unsteady financial footing.

The departure of two firms from the U.S. market in 2018, and efforts to disallow purchases from CRRC over security concerns threaten to leave some agencies without a pool of qualified bidders to compete for their orders.

On a smaller scale, but still illustrative, one Commuter Rail Coalition member reports that, in order to acquire a particular bolt only manufactured overseas, it must commingle the purchase with unnecessary items to meet the requirements of Buy America.

The Commuter Rail Coalition asserts that holding the line on the domestic content share at 70% gives agencies and the firms that supply the industry a chance to negotiate contracts that respect the letter of Buy America while also delivering a fair return on the investment of public dollars.

This, together with a predictable federal funding stream, would more evenly distribute railcar orders and create an environment where Buy America-compliant businesses could thrive, thus protecting the U.S. jobs already created under the program.

Highway/Rail Grade Crossings: The Commuter Rail Coalition believes Congress must act definitively to help states address the most dangerous highway/rail grade crossings. Under current law, the Section 130 program administered by FHWA is onerous, prescriptive, and at $245 million in FY2020, severely underfunded.

Congress should direct USDOT/FHWA to modify the program to allow states more flexibility in how they use Section 130 funds. Also, Congress must scale up the available funding to have the impact necessary to save more lives. At a minimum, the program should be doubled in size, with more of a formula-type allocation of funds, while reserving a portion of funds for discretionary allocation by FHWA. Improving grade crossings, closing them, or introducing grade separation will save lives. According to federal data, 274 people were killed at highway/rail grade crossings in 2017, a number far in excess of the number who would have been saved through PTC in the same year.

Driver behavior has been identified as the main cause of highway/rail grade crossing incidents, making most of these deaths railwayage.com

Keith Barrow

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PASSENGER RAIL OUTLOOK preventable. According to 2017 data, more than 70% of fatalities occurred at gated crossings. One Commuter Rail Coalition member has quad-gated its entire corridor and reports losing 17 gates each month to driver behavior. Commuter railroads are working with their localities and investing in improvements aimed at changing driver behavior on or near crossings. And they are piloting new initiatives, from installing “smart” gates and cameras to flying drones ahead of trains—in a further attempt to preempt behaviors that jeopardize the safety of the driver and others.

Commuter Rail Funding: The Commuter Rail Coalition supports efforts to grow and protect the pot of available federal funding. Additionally, the Coalition advocates transitioning discretionary grant funds into formula programs to give public agencies the funding predictability necessary to make smart planning decisions with public dollars. When railroads are no longer required to compete annually

for discretionary grants, they are proactively planning for the future with funding certainty instead of reactively writing grant proposals. An agency’s ability to establish long-term plans creates an environment for smart, timely and competitive investments.

PRIME (Passenger Rail Improvement, Modernization, and Expansion) Grants: The Coalition was pleased to see the effort to create a new capital program to help improve the rail network. However, the approach is misguided, in our view, in that very little of the money is available for commuter rail agencies, and there is no predictability whatsoever as to what might be allocated for commuters. Having a portion of this program allocated by formula to commuter rail agencies would guarantee the predictability we sorely lack under current FTA programs. The annual funding levels envisioned are quite generous. Allocating a minimum of 30%-50% of the program to commuter rail agencies would achieve the goal of addressing not

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only the commuter needs, but also many of the intercity goals that are intended under the program.

CRISI (Consolidated Rail Infrastructure and Safety Improvements) Grants: We were certainly pleased to see that commuter rail agencies were added as eligible recipients. The proposal to shift grant management to FTA when commuters are the recipients is also an idea we had advocated, and embrace and support. Again, we would like to see a portion of the program dedicated to commuter rail needs, in particular for infrastructure needs. If we assume that a PRIME program would be used to address infrastructure as well as rolling stock needs, then CRISI could continue to mainly focus on infrastructure needs, including PTC. We support this program remaining fully discretionary so that large projects can be funded more easily.

Currently, the greatest impediment to getting large, complex programs accomplished is the lack of sufficient federal funds under the existing formula programs and the limited available discretionary funds.

CRISI and SOGR (State Of Good Repair): These existing funding sources should be increased and protected.

Commuter rail infrastructure is expensive, but its long lifespan, coupled with the considerable economic benefits rail delivers to a metropolitan region, makes for a sound investment of public dollars. Converting CRISI and SOGR discretionary programs to formula programs would give public agencies a predictable, year-to-year funding stream, allowing railroads to budget and make judicious use of public funds.

Commuter Rail Title: We need to establish a title to isolate and protect funds specifically intended for commuter rail systems.

Current Section 5309 formula funds for all transit systems should provide a breakout portion of funds specific to commuter rail capital needs.

COMMUTER RAIL AS A PUBLIC NECESSITY, AND ACCESS The origin of U.S. commuter railroads mirrors Amtrak’s in that Amtrak was established to relieve freight railroads— after years of operating at a loss—of their obligations to provide passenger services.

The nation’s railroads had provided longdistance intercity services and shorterdistance services focused on moving people railwayage.com

PASSENGER RAIL OUTLOOK to job centers in major metropolitan areas.

Over time, as more freight railroads abdicated their responsibilities to passenger service, commuter railroads emerged to fill the void.

Fifty years since its founding, Amtrak serves 32 million passengers a year. By comparison, commuter railroads have grown to 30 active systems across the country and count nearly 500 million passenger trips annually. As 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. And no guidance has been developed that puts commuter railroads on a level playing field for navigating disputes.

Despite their similar origins, under federal law, certain preferences have been given to Amtrak that have not been extended to taxpayer-funded commuter railroads, even though in many cases, Amtrak, freight railroads and commuter railroads share track. Amtrak passenger service enjoys favorable trackage rates when

their trains travel over freight-owned 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.

These factors restrict commuter railroads’ ability to expand and improve services to meet growing demand, and from being even better stewards of the public funding that supports their operations.

As commuter rail’s ridership grows, so do demands for infrastructure support.

The Commuter Rail Coalition seeks to have Congress acknowledge the common purposes shared by Amtrak and commuter railroads and direct the Surface Transportation Board, as provided for under Section 12 of the STB Reauthorization Act of 2015 (P.L. 114-110), to investigate the terms of existing agreements and the compensation received by Amtrak for the use of its facilities (including rail lines) and services. In dispute are numerous issues, including fees

charged by Amtrak; on-time performance (OTP) calculations; Amtrak’s penalty and incentive payments; and liability for events that result in damage to infrastructure.

These negotiations nearly always involve nationally or regionally significant railroad issues and thus warrant an examination by the STB. Further, Amtrak has in the past filed applications requesting that the STB institute proceedings to establish reasonable terms and compensation for Amtrak’s use of facilities and services of various host railroads.

The STB should consider playing a similar role when local commuter rail agencies encounter similar circumstances when negotiating directly with Amtrak. Commuter rail executives have expressed that cost calculations presented by Amtrak lacked sufficient support and did not adhere to industryaccepted accounting standards. Commuter rail agencies have no recourse for resolving the impasses that often occur in these negotiations. This is an unworkable circumstance, one that taxpayers should not stand for, and

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January 2021 // Railway Age 39

PASSENGER RAIL OUTLOOK one the STB can help to resolve.

Further, the Commuter Rail Coalition asks 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. The concept of “public convenience and necessity” has focused on the interests and needs of freight movement, and not on the interests and needs of the substantial number of people who every day rely on commuter rail operations to reach their place of employment.

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 often 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.

The Commuter Rail Coalition seeks a new requirement added to all federal grant assistance for freight infrastructure improvements requiring that all freight railroads must bargain in good faith over access.

Further, 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.) Finally, and most important, there must be a process for final resolution when there are disputes over access and charges. The Commuter Rail Coalition seeks new authority for the Federal Railroad Administration to adjudicate disputes when commuter rail agencies and host railroads reach an impasse.

The proposal in H.R. 2 to have the STB play a mediation role has no real value. We still believe that a third party with decision-making authority is the only solution.

It is clear from our discussions with STB members that they do not wish to possess this authority and do not believe it is appropriate

for them to play that role. FRA could also play that role and utilize an examiner-type structure to hear the cases and issue rulings.

FRA has not embraced this idea either. The last remaining option is one that has been contemplated previously: an independent arbitrator. We would support this option.

The current circumstances make this issue a pressing need as more people look to the outlying areas of large urbanized areas for their homes but still will need to commute either regularly or frequently to the urban centers. In this way, commuter rail becomes a key ingredient for affordable housing.

As examples, Metra is currently exploring extending service to Rockford, 90 miles from downtown Chicago. Virginia has just made a significant deal to acquire existing right-of-way that will allow for expanded service to and from Richmond. This is a trend that will likely continue and may even be accelerated by the impact of COVID19. The ability of one party to refuse to consider options doesn’t seem like a workable situation.

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

Now Include Part 22 s 4

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 12-11-20.

221 Rear End Marking Device-passenger, commuter/freight trains Updated 12-11-20.

223 Safety Glazing Standards Updated 7-31-19.

224 Reflectorization of Rail Freight Rolling Stock Updated 7-31-19.

225 Railroad Accidents/Incidents Updated 1-8-21.

229 Locomotive Safety Standards Updated 7-31-19.

231 Safety Appliance Standards Updated 7-31-19.

232 Brake System Safety Standards Updated 12-11-20.

49 CFR Parts 218, 221 & 232. FRA is revising its regulations governing brake inspections, tests, and equipment.

The changes include the incorporation of relief from various provisions provided in long-standing waivers related to single car air brake tests, end-of-train devices, helper service, and brake maintenance. FRA is also extending the time that freight rail equipment can be “off-air” before requiring a new brake inspection.

In addition, FRA is making various modifications to the existing brake-related regulations to improve clarity and remove outdated or unnecessary provisions. FRA expects the revisions will benefit railroads and the public by reducing unnecessary costs, creating consistency between U.S. and Canadian regulations, and incorporating the use of newer technologies demonstrated to maintain or increase safety. The rule will reduce the overall regulatory burden on railroads.

DATES: This final rule was effective December 11, 2020.

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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 Use of Locomotive Horns Hours of Service Locomotive Safety Standards Steam Locomotive Inspection RR Safety Appliance Standards Bridge Safety Standards Qualification and Certification of Locomotive Engineers BKCONDC 242 1-14-21 Conductor Certification

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232 12-11-20 Brake System Safety Standards

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Part 231: Railroad Safety Appliance Standards 49 CFR 231. General requirements for safety appliances including: handbrakes, brake step, running boards, sill steps, ladders, end ladder clearance, roof handholds, side handholds, horizontal end handholds, vertical end handholds, and uncoupling levers. 106 pages. Softcover. Updated 7-31-19

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Drug and Alcohol Regulations “Procedures for Transportation Workplace Drug and Alcohol Testing Programs” and “Control of Alcohol and Drug Use.” Both regulations are in one book. Softcover.

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800-228-9670 www.transalert.com

The Railway Educational Bureau 1809 Capitol Ave., Omaha NE, 68102 I (800) 228-9670 I (402) 346-4300 www.RailwayEducationalBureau.com Add Shipping & Handling if your merchandise subtotal is: U.S.A. CAN U.S.A. CAN Orders over UP TO $10.00 $4.75 $9.20 25.01 - 50.00 12.00 20.05 $75, call for shipping 10.01 - 25.00 8.80 15.35 50.01 - 75.00 13.50 25.05 *Prices subject to change. Revision dates subject to change in accordance with laws published by the FRA. 1/21

TTCI R&D RAIL OUTLOOK PASSENGER Bo. Neque reiur? Pelenet idus comnis eliquae. As seriatur rerchici Figure 1: Linear atur? Magnate volorrum iumvariable et asite voluptatio incimus, tem quia pori differential transducer (LVDT) seque erum animus, tecernatent installed on track at TTC. quis dolore int, omnis samus et

CURVE BUFF FORCE

EFFECTS ON CARS

Validating track stiffness characteristics of TTCI’s NUCARS® model against Track Loading Vehicle data.

T

ransportation Technology Center, Inc. (TTCI) is investigating the extent to which large longitudinal buff loads may develop lateral wheel/rail forces great enough to potentially result in track panel shift, and/or rail rollover. TTCI studied factors that inf luence both in-train forces and wheel/ rail forces, as well as the factors that affect track stability and rail roll phenomena.

This work was performed as part of the Association of American Railroads (AAR) Strategic Research Initiatives Program.

42 Railway Age // January 2021

TTCI created NUCARS® multi-body dynamics models comprising a string of three coupled railcars in order to investigate the effect of in-train buff forces.

NUCARS® track models allow the user to simulate different levels of detail in the track characteristics. Various track simulations may include hypothetical track geometries or a measured track geometry supplied by the user. The simplest model is a rigid track model where the rail-toground relationship is defined through a single vertical stiffness and damping value and a single lateral stiffness and damping

value. The rigid track model does not allow the rail to roll. The intermediate complexity track model is the one-layer track model that adds individual connections between the rail and the ground at user-defined locations. This allows for an accurate simulation of rail movement and roll mechanics. The most advanced option is a two-layer model in which each tie is represented as a body that can move; the rail is connected first to the ties, and the ties are then connected to the ground.

This model allows the movement of each tie to inf luence the adjacent ties and for railwayage.com

Two photos: TTCI

BY JACK SCHULTZ, SENIOR ENGINEER, TRANSPORTATION TECHNOLOGY CENTER, INC.

TTCI R&D tie displacement to be evaluated.

TTCI validated the track stiffness characteristics of the two-layer NUCARS® track model against data captured by TTCI’s Track Loading Vehicle (TLV) on-site at the Transportation Technology Center (TTC), Pueblo, Colo. The TLV applied various lateral loads to the rail and measured the rail head and tie lateral deflection for each load. Linear variable differential transducers (LVDTs) measured the lateral displacement of the rail head under various loads during testing at TTC, as seen in Figure 1 (opposite page). Static NUCARS® models were then simulated to match the rail and tie stiffnesses.

The simulations performed in this study included a combination of different three-car models, track geometries, track strength values and applied buff forces. In the simulations, monotonically increasing buff loads up to 1,000 kips were applied to the car string for each scenario.

Most simulations predicted derailment well before the 1,000 kips buff load. The typical derailment mechanism in these simulations was carbody roll toward the outside of the curve after the development of large truck side L/V (ratio of instantaneous lateral load to vertical load of two wheels on the same side of the truck) values. Figure 2 shows the time history for a truck side L/V of one of the cars as well as the animation of one of the axles used in that calculation. Truck side L/V values spike as the axle begins to roll to the outside of the curve, displacing the outside (right) rail as the load increases.

In models representing normal, main line track conditions, the rail did not roll before the simulated carbody roll and subsequent derailment.

The results of the parametric simulations of long car/short car combinations, which varied by up to 40 feet in length, predicted derailment occurring only at buff loads in excess of 350,000 pounds.

This was true considering track curvatures as sharp as 10 degrees with typical superelevation. For the case of identical 53-foot-long hopper cars coupled together, the minimum buff force at predicted derailment was 500,000 pounds or greater for the same track geometry. For simulations with rail restraint intended to represent main line conditions, rail roll is railwayage.com

predicted only as a result of the derailment, not as a cause.

NUCARS dynamic modeling software

is a registered trademark of Transportation Technology Center, Inc. (TTCI), Pueblo, Colo.

Figure 2: NUCARS® predicted truck side L/V distance history and wheel and rail movement.

January 2021 // Railway Age 43

People MARK SCHAEFER

David J. Joseph Company HIGH PROFILE: The David J. Joseph Company (DJJ), a Nu-

cor Corporation subsidiary, has promoted Mark Schaefer to President, succeeding Craig Feldman. Feldman will continue as a Nucor Executive Vice President, based in Charlotte, N.C. Schaefer took on his new role Jan. 1. He joined DJJ, a scrap broker/processor, in 1985, and has held a variety of positions: Brokerage Representative and District Manager in the ferrous trading business, Vice President Logistic Services, President of U-Pull & Pay (DJJ’s self-serve auto parts business), and Executive Vice President of DJJ’s Recycling and Brokerage groups.

Schaefer was named Nucor General Manager in 2013 and Nucor Vice President in 2014. Cincinnati, Ohio-based DJJ and parent company Nucor and its affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. DJJ runs 12 domestic and international ferrous and nonferrous scrap brokerage offices; trades ferro-alloys and specialty pig iron; and operates 12 self-serve used auto parts stores as well as six regional scrap recycling companies in the U.S., which include a network of more than 60 facilities.

R

ailSolutions LLC promoted Senior Vice President Mike Mahoney to President, effective Jan. 1, 2021. Mahoney, who succeeds Rob Blankemeyer, has assumed responsibility for the company’s day-to-day operations. Blankemeyer will remain with RailSolutions as Senior Vice President. Mahoney, based in Boulder, Colo., had been with RailSolutions for six months as Senior Vice President, focusing on appraisals, the RailSolutions Investors’ Guide to Railroad Freight Cars and Locomotives and special projects. Prior to RailSolutions, he served in various senior management roles with Helaba and DVB Bank, GE Capital, NatWest Markets, and others. Mahoney has 40 years of experience in railroad equipment leasing, valuation and financing. He holds an MBA in Finance and Information Systems from New York University and a Bachelor of Science in Finance from the University of Virginia.

HDR has elevated Erin Slayton to Transportation Program Management Director.

She will serve clients in all transportation markets and continue to diversify the consulting firm’s service capabilities. Slayton has nearly 20 years of experience in the planning, design and delivery of major transportation infrastructure programs. Since joining HDR in 2006, she has worked with clients on-site to provide project oversight and coordination of management services. From 2012-14, Slayton served as Department Manager for the $4.56 billion Washington State DOT SR 520 Floating Bridge Replacement and HOV Program.

44 Railway Age // January 2021

More recently, she helped develop and manage the procurement and delivery of the $1.7 billion Arizona DOT South Mountain Freeway Project, before moving to Columbia, S.C., in 2018 to manage the South Carolina DOT’s $1.6 billion Carolina Crossroads Project. Prior to HDR, Slayton worked for the Seattle Popular Monorail Authority.

HDR also promoted Sam Tso to Western Region Transportation Director. Tso will provide strategic leadership for the continued diversification of HDR’s aviation, highways and bridges, transit, freight rail and maritime practice areas, and for the expansion of the consulting firm’s multidisciplinary technical capabilities throughout the region, which spans from Montana, Utah and New Mexico to the Pacific coast as well as Alaska and Hawaii.

Since joining HDR in 2018, Tso has served in several leadership positions. He is the Principal-in-Charge for the Honolulu High Capacity Transit Corridor project and successfully led the pursuit of the NDOT I-11 Tier 1 EIS as Project Manager.

Herzog President Jim Hanlon has been elected to the American Short Line and Regional Railroad Association (ASLRRA) Board of Directors. Hanlon will serve on the ASLRRA Board as a representative of Associate Business Members (suppliers; ABM), succeeding Wabtec Product Manager/SME JoAnne Miner, whose term expired. A 22-year railroad veteran, Hanlon joined Herzog in 2009 as a Systems Project Manager, and moved up the ranks to serve as

Director of Special Projects, Assistant Vice President of PTC Services, Vice President of Rail Technology, and President. He started his career at CSX, and also worked for Southwest Signal Engineering. Shea McLaughlin, National Sales Director-CDL Electric Railroad Signaling Division and Serrmi Products, is also an ABM representative on the Board.

Transit Wireless named Jyoti Mahurkar-Thombre Chief Technology Officer. Mahurkar-Thombre will drive technology strategy at Transit Wireless, a BAI Communications and 5G wireless infrastructure company. She will be based in New York City. With more than 30 years of technology experience, Mahurkar-Thombre served previously as CTO of Landis+Gyr, a smart metering technologies firm. She has also held leadership roles at Alcatel-Lucent and Nokia.

Erik Henderson has been appointed Global Head of Rail Solutions at Cordel, which produces an artificial intelligence platform for railroad inspection. Henderson served most recently as Technical Director, GIS Field Services, Robotics and Automation at CSX, driving the automation of asset survey, inspection and inventory across its 20,000-mile network.

Henderson is an expert in Positive Train Control (PTC), asset change management, and the use of remote sensing technologies such as LiDAR and UAVs for railroad engineering applications. He spent several years developing and completing the PTC validation and verification process for Federal Railroad Administration (FRA) approval at CSX. Craig Richardson has been promoted to Executive Vice President, Chief Legal Officer and Corporate Secretary of Union Pacific (UP), succeeding Rhonda Ferguson.

He will be responsible for overseeing legal affairs, including commercial transactions and litigation, regulatory matters, and labor and employment; and supervising the compliance and ethics program as well as risk management initiatives, including the railroad police department. Richardson served previously as UP’s Vice President of Commercial and Regulatory Law. He has also held the position of Associate General Counsel. Before joining UP, he worked for nearly 10 years as Chief Legal Officer of El Paso Corp.’s Pipeline Group. railwayage.com

WE SIFT THROUGH THE NEWS SO YOU DON’T HAVE TO RAIL GROUP NEWS brings you a daily round-up of news stories from Railway Age, RT&S, and IRJ. This email newsletter offers North American and global news and analysis of the freight and passenger markets. From developments in rail technology, operations, and strategic planning to legislative issues and engineering news, we’ve got you covered.

RAIL From Railway Age, RT&S and IRJ GROUP http://bit.ly/rail_news NEWS

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Ad Index COMPANY

PHONE #

FAX #

URL/EMAIL ADDRESS

PAGE #

AMSTED RAIL GROUP

312-922-4516

312-922-4597

kskibinski@amstedrail.com

23

CANADIAN PACIFIC

415-640-6129

Jeremy_Berry@cpr.ca

C3

CAPITOL METRO

32

DANELLA RENTAL SYSTEMS, INC

561-743-7373

HERZOG RAILROAD SERVICES INC

816-385-8233

561-743-1973

SBolte@danella.com

24

jhansen@herzog.com

19

HOLLAND LP

708-672-2300

708-672-0119

sales@hollandco.com

22

LORAM

763-478-2627

763-478-2221

alexis.b.nubbe@loram.com

15

MAXACCEL

303-494-1214

psutcliffe@maxaccel.com

C2

NATIONAL STEEL CAR

905-544-3311

hnicholson@steelcar.com

17

NORDCO

414-766-2180

414-766-2379

kmathesius@nordco.com

29

OKONITE CO

201-825-0300

201-825-3524

info@okonite.com

3

PLASSER AMERICAN CORP

757-543-3526

757-494-7186

plasseramerican@plausa.com

C4

POWERRAIL INC

570-883-7005

570-883-7006

Sales@ePowerRail.com

33

PROGRESS RAIL A CATERPILLER CO

256-505-6402

256-505-6051

info@progressrail.com

13

RAGNAR BENSON LLC

815-654-6993

Libby.Ward@williamcharles.com

26

RAILWAY EQUIPMENT CO

763-972-2200

763-972-2900

sales@rwy.com

27

RAILWAY EDUCATIONAL BUREAU

402-346-4300

402-346-1783

bbrundige@sb-reb.com

37,41

202-715-2921

202-204-5753

info@remsa.org

25

585-226-9500

585-226-2029

chrisjacobs@star1889.com

40

STRATO INC

732-317-5406

732-981-1222

korozco@stratoinc.com

39

STV INC

212-777-4400

212-529-5237

info@stvinc.com

38

TRINITY RAIL

800-631-4420

trinityrail.com

22

WESTERN CULLEN HAYES

773-254-9600

jm@wch.com

28

REMSA STAR HEADLIGHT AND LANTERN

73-254-1110

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 2021 // Railway Age 47

Financial Edge Will Railroads Be Fully Involved in the ESG Wave?

C

anadian Pacific Railway, led by Railway Age 2021 Railroader of the Year Keith Creel, announced recently that CP intended to develop a hydrogen fuel cell-powered locomotive. The report in Railway Age noted that CP, in compliance with guidelines provided by the Canadian government, will field test the locomotive for use in linehaul service. Naysayers regarding the CP press release will focus on the lack of details and timing for the fuel cell project. Here at Financial Edge, however, we see a different story behind CP’s activities.

In my November 2020 Financial Edge column, the possibility of railroad reregulation, even with a changing Presidential Administration, was discussed and summarily dismissed. However, reregulation is one thing. Regulation is another.

CP’s activities demonstrate the second move by a Class I railroad to make a splashy statement regarding limiting locomotive emissions. The first is the BNSF partnership with Wabtec for a full battery-operated locomotive last seen moving across the U.S. to its tax-affected home in California.

a huge (“Yuuge”) difference between the STB weighing in on rates and rail carrier shipper rules, and the Executive Branch using the power of the executive order to politely encourage shifts in momentum on environmental-related issues.

But what’s the reality? Sources suggest that the cost of a hydrogen fuel cell locomotive is a multiple of traditional dieselpowered units. That is a cost likely to prohibit any large-scale introduction of the fuel cell unit anytime soon. The BNSF BEL44C4D is heavy and distance challenged; it is boutique rather than marquee.

Class I emission improvements are more likely to come from a source such as compressed natural gas, where a company like CNGmotive, Inc. has validated technology, economics, emissions, and a long-term carbon neutral solution on its side, all available as a turnkey.

The takeaway is the pressure to begin to shift in advance of regulation. Jason Seidl and Matt Elkott from Cowen and Company, on a recent Rail Group On Air podcast (link below), made mention that while PTC “1.0” is now completed (at a

Will pressure on ESg concerns push north american rail into further embracing customer-focused technology?” hopper right now. It’s the unavailability of technology capable of providing the data that aggravates customers (as if you have never wondered why USPS can’t provide interim tracking updates on your packages like Fedex and UPS).

PODCAST URL: https://www.railwayage.com/podcasts/2021-freight-rail-and-equipment-market-outlook-with-david-nahass-jason-seidl-and-matt-elkott-rail-group-on-air-podcast/

Unless you lived a previous life under Joe Stalin’s 20th century Russia, two is generally not a crowd. However, when there are only seven Class I railroads, initiatives by 30% of the field are noteworthy. What we are seeing, in a North American railroading way, is a move by the Class I railroads to get involved in the ESG wave sweeping through global corporate culture. ESG is Environmental, Social and Corporate Governance as a measure of a company’s social consciousness. The industry that made its bones (thanks Mo Green) moving King Coal for decades is feeling pressure to move with the times.

Don’t underestimate the anticipation of stronger moves from Washington regarding emissions and potential support (or at least a lack of opposition) for implementation of a California-led Tier V emissions standard as one potential motivation behind these moves. While that is not reregulation, it is regulation. There’s 48 Railway Age // January 2021

cost of $15 billion), compliance was like a shotgun wedding. Moves being made in anticipation of changes in policy are interesting and different than the norm. That makes them worth watching.

The second act is to see whether pressure on ESG concerns pushes North American rail into further embracing technology. In the same podcast, Seidl and Elkott note that they see pressure on the railroads from the shipping community to embrace more detailed and reliable carload and location data. The ubiquity of GPS technology on Uber Eats deliveries, UPS packages and self-updating Google Maps arrival ETAs all show how railcar location reporting lags readily available location tracking. It’s the other side of the “Reason not the Need” coin. (Railway Age 2021 Financial Desk Book). As Seidl notes, rail customers want it because they know they can have it. It’s not so much that a shipper needs to know the location of that grain-filled covered

North American rail has never been customer-focused in a way that embraces the trends. Some decisions, like those that will need to be made on emissions, may be pushed forward by the hand of government.

When the decisions are fully discretionary, a cost item to the railroad and indeterminate or negative in generating additional revenue, they seem less likely. Discretionary expense without added revenue is a clear drag on the operating ratio, something the rails eschew. Perhaps CP’s announcement is a harbinger of a shift in direction.

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

DAVID NAHASS President Railroad Financial Corp. railwayage.com

“I am proud to accept this honor on behalf of the entire CP family of railroaders. It is one of the great privileges of my lifetime to lead and serve with the dedicated people who make this iconic company run safely and efficiently.”

– Keith Creel, President and CEO 2021 Railroader of the Year

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