Railway Age June 2020

JUNE 2020

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

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

PATIENCE

IS A VIRTUE Lessors, Lessees Manage Uncertain Times

PSR, THE NEXT GENERATION

Evolving Toward “Version 2.0”

TECH FOCUS — M/W railwayage.com

Precision Measurement, Detection August 2017 // Railway Age 1

INTELLIGENCE IN RAIL

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DEFECTIVE WHEEL

AILWAY GE

February JUNE 2020 2020

32 FEATURES

10 20

CN

28

Equipment Leasing Guide Patience Is A Virtue

Tech Focus – M/W Geometry, Flaw Detection

FRA RT&D Tech Evolution Vehicle

30

TTCI R&D

32

PSR, The Next Generation

AAR -2A Next-Gen Wheel Profile

The Case For Adopting “2.0”

DEPARTMENTS 4 6 7 36 36 38 38 39

Industry Indicators Industry Outlook Market People Events

NEWS/COLUMNS 2 8 40

From the Editor Watching Washington ASLRRA Perspective

Professional Directory Classified Advertising Index

ON THE COVER: A finished tank car emerges from Greenbrier’s Concarril assembly plant in Sahagún, Mexico.

Photo: William C. Vantuono

Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 88 Pine St., 23rd Fl., New York, NY 10005-1809. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 221, No. 6. Subscriptions: Railway Age is sent without obligation to professionals working in the railroad industry in the United States, Canada, and Mexico.

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

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June 2020 // Railway Age 1

FROM THE EDITOR Blue Skies, Smilin’ At Me ...

O

n a clear day, you can see Los Angeles (or New York, or Chicago). I know why, there’s no smog up in the sky: COVID-19. Apologies to Irving Berlin (Blue Skies), Alan J. Lerner (On a Clear Day) and Harold Arlen (Stormy Weather).

After we’ve defeated COVID-19 with a vaccine, if our civilization is to continue breathing cleaner air and seeing bluer skies—and have better odds in preventing future pandemics—investment in and use of public transportation must increase. But don’t take my word for it. Listen to what a prominent Wall Street firm has to say. Yeah, you heard me right—Wall Street: “Beyond 2020, the solid growth outlook for the transit equipment market remains intact and pillared on the following factors: “Public transit is key in the climate change fight: According to the U.S. Department of Transportation, heavy rail transit such as subways and metros produce on average 76% lower greenhouse gas emissions per passenger mile than an average single-occupancy vehicle; light rail systems produce 62% less; and bus transit produces 33% less. Roughly 29% of greenhouse gas emissions is released by the transportation sector.

“Climate change is key to curbing pandemics: Deforestation and warming temperatures are increasingly causing species to lose habitat and putting them in closer contact with humans, thus raising the risk of animal-to-human spread of viruses. Being key in the fight against climate change, public transit is one of the defenses

against future pandemics. (Emphasis mine.)

“The potential long-term impact of lower ridership on equipment demand could be offset by social distancing measures: In an APTA survey, 60% of responding agencies said they plan to increase service on certain routes to reduce crowding.

“Increased equipment upgrades and replacement: According to APTA, transit agencies will rely on manufacturers to design equipment that promotes better air circulation.

“Some domestic air travel could go to regional passenger rail. This is as social distancing and maintaining clean air circulation may be somewhat easier to achieve on railroad systems such as Amtrak.”

The Wall Street firm that’s in lock-step with reality and common sense is Cowen and Company. Kudos to Jason Seidl, Matt Elkott and Adam Kramer.

To anyone who believes climate change is a hoax, test your hypothesis by running this experiment: Move to the Arctic or Antarctica or anywhere glaciers exist, and observe that the ice is melting. Take a core sample and check for toxic pollutants, and for deadly viruses that have been trapped for thousands of years, thus never encountered before. Let me know of your findings, so that those of us who don’t have our heads buried in the sand can do something to protect ourselves—if we aren’t underwater.

I wish you all good health, a walk in the sun, a ride on a train and blue skies. That’s not a political statement!

WILLIAM C. VANTUONO Editor-in-Chief

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

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Industry Indicators Few Reliable Indicators—Rail Traffic Is an Exception—Are Available “Any industry that’s been around for 190 years has experienced a lot, but railroads have never faced something quite like what they’re facing now: huge swaths of their customer base shut down, with no clear idea when things will get better,” the Association of American Railroads said in reporting traffic for the month of April 2020. “It’s a good thing they’ve never experienced it before, because it means bad things for rail traffic: Total originated carloads on U.S. railroads fell 25.2% in April, their biggest year-over-year percentage decline since at least 1989 and probably for much longer. U.S. rail intermodal originations fell 17.2% in April 2020 from April 2019.”

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

TRAFFIC ORIGINATED CARLOADS

FIVE WEEKS ENDING MAY 2, 2020

MAJOR U.S. RAILROADS

BY COMMODITY

APRIL ’20

APRIL ’19

% CHANGE

48,658 (-1%)

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

108,126 4,866 40,767 25,184 146,171 50,992 252,329 5,317 15,020 25,132 28,062 16,185 34,894 11,576 11,519 101,601 20,126 35,461 14,637 32,570

115,562 3,773 45,822 29,684 165,957 64,774 406,784 5,639 17,635 26,053 31,497 18,971 47,789 18,381 83,956 120,549 20,944 38,789 17,798 29,871

-6.4% 29% -11% -15.2% -11.9% -21.3% -38% -5.7% -14.8% -3.5% -10.9% -14.7% -27% -37% -86.3% -15.7% -3.9% -8.6% -17.8% 9%

Executives, Officials, and Staff Assistants

TOTAL U.S. CARLOADS

980,535

1,310,228

-25.2%

359,087

436,006

-17.6%

1,339,622

1,746,234

-23.3%

TOTAL EMPLOYEES: 124,430 % CHANGE FROM APRIL 2019: -1%

Transportation (train and engine)

7,670 (+1%)

CANADIAN RAILROADS

Professional and Administrative

TOTAL CANADIAN CARLOADS

10,638 (-1%)

COMBINED U.S./CANADA RR

Maintenance-of-Way and Structures

30,518 (+1%)

Maintenance of Equipment and Stores

21,709 (-1%)

Transportation (other than train & engine)

5,237 (-1%)

Source: Surface Transportation Board

CLASS I EMPLOYMENT DROP STEADY-STATE Figures released by the STB show Class I total railroad employment decreased 1% in April 2020, measured against April 2019. Figures of plus or minus 1% have remained constant for more than one year. Four of six employment categories experienced virtually the same percentage drop, 1%, when rounding is taken into account.

This indicates reductions attributable to PSR, but COVID-19-related layoffs may also figure. Looking at the bigger picture, total Class I employment has dropped 14.5% over the past 16 months, from 145,592 in January 2018.

4 Railway Age // June 2020

Intermodal

five WEEKS ENDING MAY 2, 2020

MAJOR U.S. RAILROADS

BY COMMODITY

APRIL ’19

% CHANGE

108,923

1,095,423

1,213,665 1,322,588

-30.6% -16% -17.2%

1 334,228 334,229

0 363,238 363,238

-8% -8%

Trailers Containers

75,561 1,354,091

108,923 1,576,903

-30.6% -14.1%

TOTAL COMBINED UNITS

1,429,652

1,685,826

-15.2%

Trailers Containers TOTAL UNITS

APRIL ’20 75,560 1,019,863

CANADIAN RAILROADS Trailers Containers TOTAL UNITS

COMBINED U.S./CANADA RR

Source: Rail Time Indicators, Association of American Railroads

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TOTAL U.S./Canadian CARLOADS, APRIL 2020 VS. APRIL 2019

1,339,622

AILWAY GE

1,746,234

APRIL 2020

APRIL 2019

Short Line And Regional Traffic Index CARLOADS

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

ORIGINATED APRIL ’20

ORIGINATED APRIL ’19

% CHANGE

46,723 15,251 23,132 10,270 28,913 6,730 9,111 2,539 16,020 3,245 1,292 1,571 18,910 13,079 38,098 7,413 68,586

48,730 23,011 28,460 11,122 25,351 7,674 10,648 2,151 18,498 11,325 2,885 2,284 17,775 14,079 45,323 10,599 78,865

-4.1% -33.7% -18.7% -7.7% 14.1% -12.3% -14.4% 18% -13.4% -71.3% -55.2% -31.2% 6.4% -7.1% -15.9% -30.1% -13%

Copyright © 2020 All rights reserved.

TOTAL U.S. Carloads, 2018-2020

(year-to-date through APRIL 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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June 2020 // Railway Age 5 RA_JobBoard_1/3Vertical.indd 1

9/30/19 3:16 PM

Industry Outlook

FRA: Positive Train Control Implementation at 98% THE FEDERAL RAILROAD ADMINISTRATION (FRA) first-quarter 2020 update on railroads’ self-reported progress on fully implementing Positive Train Control (PTC) by the Dec. 31, 2020 deadline shows that, as of March 31, 2020, the job is 98% complete. Nearly all railroads subject to the statutory mandate are operating their systems in revenue service or in advanced field testing, known as revenue service demonstration (RSD), with PTC technology remaining to be activated on only approximately 1,100 required route-miles.

As of March 31, 2020, PTC systems were in RSD or in operation on 56,541 of the nearly 58,000 route-miles subject to the mandate. Specifically, PTC systems were governing operations on all PTC-mandated main lines owned or controlled by Class I freight railroads and other freight host railroads subject to the mandate.

While most commuter railroads’ PTC systems are in RSD on their entire mandated networks, 63.2% of cumulative required route-miles were PTC-governed, an 8.5% increase since 4Q2019. In addition, interoperability has reportedly been achieved in 48.5% of the 229 applicable host-tenant 6 Railway Age // June 2020

railroad relationship, a 10% increase since 4Q 2019.

“Recognizing that 33 weeks remain until the final implementation deadline set forth

by Congress, FRA continues to direct additional staff resources to railroads at risk of not fully implementing an FRA-certified and interoperable PTC system on their required main lines by Dec. 31, 2020,” FRA noted. “To evaluate the risk of noncompliance, FRA is primarily considering the following factors: (1) the percentage of mandated route-miles currently governed by a PTC system, including RSD; (2) any unresolved technical issue in implementing a compliant PTC system; (3) the percentage of a host railroad’s tenant railroads that have achieved required interoperability; and (4) a host railroad’s expected date to submit its PTC Safety Plan to FRA, necessary to obtain PTC System Certification.

Based on railroads’ self-reported progress on these factors as of March 31, 2020, FRA currently considers the following four host railroads at risk of not fully implementing a PTC system on all required main lines by Dec. 31, 2020: New Jersey Transit, TEXRail, Northeast Illinois Regional Commuter Railroad Corporation

(Metra), and New Mexico Rail Runner Express (Rio Metro).

“We continue to work directly with all ‘to be complaint’ railroads—providing technical support and guidance as requested—to enable them to satisfactorily meet the Congressional deadline,” FRA Administrator Ronald L. Batory said. “I’m pleased with the growing number of railroads that have reached critical milestones, and continue to encourage all of them to help each other overcome any remaining challenges from their respective lessons learned.

“We strongly urge the collaborating railroads to work in a safe, focused and aggressive manner to meet this end-of-year deadline. FRA has provided nearly $2.6 billion in grants and loans and thousands of hours of technical assistance to help railroads fully implement PTC systems.

“FRA remains fully committed to facilitating railroad efforts to complete all remaining work. In addition, FRA is encouraging state departments of transportation and governors to help any at-risk commuter railroad within their states to ensure they have sufficient technical resources and support to meet the end-ofyear deadline.” railwayage.com

Market FTA Provides Lift to NJ Transit New Jersey Transit has awarded a contract worth $247.95 million to George Harms Construction Co. for the first of three construction phases of the Raritan River Bridge Replacement project on the North Jersey Coast Line. The existing moveable bridge, a swing span built in 1908, sustained significant damage during Superstorm Sandy in 2012. The total cost for all three phases is estimated at $595 million, of which $446.31 million is financed by an FTA Emergency Relief Program grant. NJT allocated $247.95 million of the FTA grant to finance 100% of the phase one contract.

WORLDWIDE

NORTH AMERICA

BEACON RAIL LEASING has ordered 15 Hybrid+ CBD90 switching locomotives from Clayton Equipment, Britain, along with a three-year servicing option. The 90-tonne four-axle locomotive is self-contained, with onboard batteries that can be charged through either a three-phase electric supply or an onboard diesel engine that meets European Union Stage V emissions standards. “This agreement provides a major growth opportunity for Clayton Equipment,” said Managing Director Clive Hannaford.

FOCUSED TECHNOLOGY SOLUTIONS (FTS), a Marmon/Berkshire Hathaway Company, has entered a new market sector by partnering with LATECH RAIL TECHNOLOGIES, a distributor with clients in Mexico. LaTech will carry FTS’ flagship product, the SpikeEase battery-operated spike puller. LaTech—also with locations in British Columbia and Washington State—joins Canadian distributor DAVANAC as the second international reseller to carry the SpikeEase.

“Whenever we’re looking to expand into new markets, we want to find partners who share our passion to provide our customers with the best service possible,” said Peter Bartek, President, FTS. “We feel that LaTech Rail Technologies does just that.”

THE NEW ORLEANS PUBLIC BELT RAILROAD (NOPB) upgraded its locomotive fleet with eight rebuilt units to replace aging equipment, improve efficiency and lower overall emissions. The new locomotives aim to provide reliable service and support the Class III railroad’s commitment to integrating more sustainable business and

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operational practices. The EPA-classified Tier 1 locomotives aim to allow NOPB to reduce its fleet size by 46%, from 15 units to eight. Fuel consumption will be reduced by 25%, and emission improvements include a 40% reduction in NOx (oxides of nitrogen), along with a 50% reduction in PM (particulate matter). In addition to fuel and emissions savings, a five-year, $2.35 million leasing agreement with GATX Locomotive Group allows NOPB to achieve significant operational and capital savings. “The New Orleans Public Belt is committed to providing safe, reliable and efficient rail transportation solutions,” said NOPB General Manager M.D. “Mike” Stolzman. “These new locomotives will be the backbone of our efforts. Not only can we reduce our fleet and fuel consumption, we can be better community neighbors.” “Bringing these lower-emission locomotives on line supports Port NOLA’s and NOPB’s commitment to sustainability,” said Brandy D. Christian, CEO of NOPB and President and CEO of Port NOLA. “With the Port and NOPB now fully aligned, we are able to make strategic investments that provide air quality benefits for the community while providing superior service to our users and Class I partners.”

June 2020 // Railway Age 7

Watching Washington Put Aside Narrow Interests. Think About What’s Best

T

his question should be at the forefront of the Surface Transportation Board’s agenda: What is the future of rail freight transportation? The STB should put all its other discretionary regulatory work to the side and call in the railroads and key stakeholders and facilitate a discussion of how the industry can recover to serve the future American economy. All internecine sniping and conflict should be pushed aside.

As we deal with the current COVID-19 shutdown and watch the economic carnage, I am pondering what the end result might be for railroads. They were already facing some problems with their coal franchise shrinking, but what might the COVID-19 economic collapse do, incrementally or fundamentally to industry prospects?

There is no denying that the COVID-19 situation has crushed the economy. GDP fell 4.8% in the first quarter. After a few years of remarkably low unemployment (it was 3.5% just a couple months ago), unemployment spiked to 14.7%. Both these numbers will get worse, much worse, before they improve.

For perspective, I went to my files and looked at April 2009, which was a time when my STB colleagues and I observed that rail traffic numbers were “cliff diving” because of the Great Recession.

First-quarter 2009 GDP fell 6.1% and employment had reached 8.9%. Those numbers were near the bottom of the Great Recession, so we have already exceeded that unemployment rate and will no doubt breach the GDP low in the second quarter.

In April 2009, railroad traffic really was

FIRST-QUARTER GROSS

4.8%

DOMESTIC PRODUCT FELL

AND UNEMPLOYMENT SPIKED TO 14.7%

8 Railway Age // June 2020

still cliff diving after starting steep declines in November 2008. Carloads fell 23% and intermodal fell 17% when compared to April 2008. But remember, coal was still providing some ballast in 2009. Coal was almost 50% of carload traffic in April 2009.

Now it is only about 25%.

Railroads reported horrible April 2020 traffic numbers. Cliff diving has resumed.

Carload traffic was 25% below April 2019.

Coal was down 38%. Without coal, carloads were still down almost 20%. Intermodal traffic was down 17%.

Railroads were already cautious entering 2020 before COVID-19. In 2019, of the big four Class I’s (BNSF, Union Pacific, Norfolk Southern and CSX), only NS invested enough to keep pace with inflation. In fact, CSX’s investment base (capital including network, facilities, yards, equipment and other fixed assets) shrank in nominal terms without adjusting for inflation (GDP inflation index was 1.7% in 2019; NS’s investment base grew 1.8% before inflation).

The competitive environment will also be challenging. The recent trucker protests around the White House evidence how low highway rates have fallen. The rate environment for intermodal and other truck competitive traffic will pressure profit rates.

Moreover, with fuel prices so low, the railroads’ fuel efficiency advantage vs. trucks is sharply reduced.

Another challenge for rail is the ongoing labor negotiations. It is hard to negotiate with the economy tanking, which exacerbates the industry’s secular decline.

Railroads will have to get as productive as possible to adapt to any future opportunities. This will require a partnership with rail labor, which will not be easy. It will require trust on both sides to make the necessary shared sacrifices.

Similarly, railroad executives need to begin discussions with their customers about how they both can adapt to the new economy.

Maybe STB can facilitate this discussion.

STB should not plunge ahead and change the existing regulatory regime. Put those rulemakings aside. Instead, STB should look at traffic the American economy requires railroads to haul, and of that traffic, what will require a regulation because of weak

stb should not plunge ahead and change the existing regulatory regime .” competitive forces. To take this reading, STB should summon a rail summit with rail management, labor and shippers to discuss how rail stays healthy and best serves the future economy.

It has always struck me how transportation issues rarely divide along party lines. As such, maybe there is an opportunity for a bipartisan solution, which could serve as a model for other problems in these highly partisan times.

But to achieve that, the parties will have to put aside narrow interests and think about what is best for the U.S. Maybe STB can show the way.

Dr. William Huneke is the former Director and Chief Economist at the Surface Transportation Board. He has more than 40 years’ experience in economics, transportation, railroad regulatory policy, management consulting, business analysis and teaching in the commercial and government sectors. He provides economic consulting on regulatory and arbitration matters. At the STB, Dr. Huneke led the Board’s analytical work and oversaw the collection of economic and financial data. Since leaving the STB, he has provided economic and litigation support to Class I railroads and other private-sector clients.

WILLIAM HUNEKE Consulting Economist

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2020 GUIDE TO EQUIPMENT LEASING

PATIENCE IS A VIRTUE

elcome to the 2020 Railway Age Guide to Equipment Leasing. It would not be an exaggeration to say that heading into midyear 2020, the railroad industry and railcar owners and operators are dealing with times and circumstances heretofore never seen in the rail industry and to the lives of those working in it.

The relentless, exhaustive and ever increasing shadow of the COVID19 pandemic has impacted domestic and global business in ways that were

10 Railway Age // June 2020

unimaginable four months ago. This is acutely felt throughout the North American rail business. The statistics are generally awful right now. YOY railcar loadings are down 11.8%, while intermodal loadings are down 10.9% (through April 30, 2020 vs.

2019). Loadings levels have dropped below the level seen during the Great Recession in 2009. Perhaps worse still, freight was already feeling downward pressure heading into 2020. For rail freight, the pandemic is more than from the frying pan into fire. It is the frying pan into a lava pit.

The projections for the remainder of 2020 are dire. New railcar deliveries are projected

to be close to or even below 20,000 units (from a February 2020 projection of 35,000 units). This is impacting the value of existing cars. Together, the lack of demand for new and used cars is having the same impact on the lease market for cars. In other words, pretty much everything is in a down cycle.

It is widely expected for 400,000 stored cars to increase by at least 25%.

Chemicals and farm products (except grain) have been the most resilient loadingswise to date, while autos and auto parts have been an expected and notable underperformer. An outsized decrease in coal loadings has surprised to the downside. Coal’s railwayage.com

William C. Vantuono

W

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2020 GUIDE TO EQUIPMENT LEASING

battering from all sides continues. The volatile cocktail of cheap oil and natural gas, pandemic-related decreases in power consumption and power prices, decreasing costs for renewables and their increasing market share continue to provide downward stress on even the most pessimistic projections for coal demand. The Wall St. Journal reported on May 1 that coal-fired generation is expected to decline another 20% in 2020 (hazily sourced from the Energy Information Administration), while additionally reporting that, by some measures, renewably sourced power out-generated coal in 1Q2020 The net result is that coal loadings are down 22.6% YTD. Big ouch.

There is not one area of the rail transportation supply chain free from the impact of the pandemic. Railroads, railcar owners, railcar operators, railcar manufacturers, shippers across all market segments, intermodal import levels—nothing is immune to the impacts. Its ubiquitousness causes the greatest level of concern. What life looks like on the other side of the pandemic remains the great unknown. Broad scoping questions exist, such as the nationwide 12 Railway Age // June 2020

commencement of the recovery from the pandemic and the length of the recovery to return back to already-depressed 2020 pre-pandemic levels, never mind getting to a period of economic and rail marketplace expansion (remember the first 75 days of 2020 were a period of freight loadings contraction). Perhaps the most important question of all: How will an economy struggling to put people to work and to return everyday life affect the pace of the recovery in freight markets?

While it may feel like years since the world began sheltering in place, at this writing, the U.S. is two (plus) months into sheltering in place and extensive social distancing.

As a result, the full impact of the pandemic is really unmeasured at this time. Certain financial market impacts were felt quickly.

Liquidity in certain areas of the equipment finance market dried up early, and some railcar investors have moved to the sidelines to see what the future holds. New car prices have dropped, and in certain market segments, secondary market pricing is also dropping. There have been some rumors of railcar sales, but nothing confirmed of

Question One: How deep is the current downturn in the operating lease market?

Deasy: The impacts of lower industrial production and segment-specific challenges were being felt prior to the manifestation of COVID-19. Over the past month, aggregate carload(s) decline(d) near 30% (higher than the “Great Recession”). This impacts the demand for railcars. Shipper response is mixed. Some are returning railcars to lessors to manage their particular situation.

Others are holding on to railcars in order to be positioned to supply product as demand improves.

Edelman: It’s extremely hard to project or measure the depth of this downturn. Aside from a second wave of COVID-19, we think the market will recover steadily into early 2021. The market was in a bit of flux prior to COVID-19 and this situation has led to further challenges. We are concerned about the varied approach to reopening by individual states [and] the current low-level volume of international trade. This issue will create continued uncertainty in the market and may lead to choke points in the supply chain. railwayage.com

William C. Vantuono

a material nature. Scrap prices bottomed out below $200/ton (Chicago Heavy Melt #1) before moving up in May. Some lessors have been able to keep some cars on lease at expiration, but it is generally expected that many cars across all segments will be coming home from their existing leases at expiration. Inevitably, lease rentals will be impacted (see “Around the Market”). The locomotive market is reeling as well (see “No Freight to Pull”).

To get a gauge on the impact of the pandemic on the railcar market, its longevity and lasting impacts, Financial Edge invited the senior officers of four railcar operating lessors to answer the same five questions on the current state and future of the railcar lease market. Their full responses will be available on www.railwayage.com/ finance. Edited versions of their answers are below. The participants are (in alphabetical order) Paul Deasy President, Chicago Freight Car Leasing, a Sasser Family Company; Jeff Edelman, President, Infinity Transportation; Jeff Lytle, President, Rail, CIT; and Greg Schmid, Managing Director, Rail, RESIDCO.

Railcar leasing to power your business forward CIT keeps your operations on track with innovative leasing solutions for your railcar and locomotive transportation needs. With deep experience, and one of the most diversified and high-capacity fleets, we are ready to power your growth.

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• Young, efficient fleet • Comprehensive lease solutions • Fleet management tools Visit cit.com/rail or call us at 312-906-5701.

©2020 CIT Group Inc. All rights reserved. CIT and the CIT logo are registered trademarks of CIT Group Inc.

2020 GUIDE TO EQUIPMENT LEASING Lytle: We’re seeing different levels of resilience and pressure across the markets.

Food-related and petrochemical markets are relatively sturdy. In times like these, our balanced expiration profile and strong and diverse customer base will serve us well.

Schmid: I don’t know if it feels the same as 2009, where the whole world stopped, but the downturn is as bad or worse. Redeployment of assets is a rarity, but renewals for certain car types are still occurring. This is about as dramatic a falloff in demand that there can be, but demand will pick up more quickly than the last crash.

Question Two: Will there be fundamental changes in the lease market related to the mix of softening demand, PSR and modal change that will have a permanent impact on railcar demand?

Deasy: We should expect continued investment in technology to improve scheduled railroading. I would expect shippers to utilize their historic modes of

transportation to service their customers.

We need to see growth in domestic and export rail demand.

Edelman: Despite lower treasury rates, softening demand, PSR and modal changes, we believe yield requirements will rise for investors. Certain investors were willing to accept lower yields to play in the space.

There has been a little taste of reality, and the inherent risks in railcar leasing is front and center again.

Lytle: The railroads have had the benefit of a low-demand environment to implement their operational changes, and I’m hopeful that this will allow them to add capacity and grow their market share over time. I don’t favor “de-marketing” certain lines of business. If you do, it’s hard to bring that business back.

Schmid: The market appears to be in a demand pause, rather than demand destruction like 2009. There will be some long-term softening. PSR is going to have a longer-term impact on the leasing business until the railroads look at revenue growth.

Old and sub-optimal assets are at risk before redeployment.

Question Three: For how long can we expect the market disruption to occur?

Deasy: I think it will be up to two years before we see more significant industrial production improvement and corresponding railcar demand.

Edelman: Depending on portfolio mix, specifically with energy-related car types, the disruption could remain for some time.

Lytle: We’re focused on what we can control. Our leadership team has seen this before, and we’ve never felt more prepared as we lean into this one.

Schmid: Outside of PSR, I am seeing signs of a hockey stick return sometime in Q4 this year and Q1 next year. Reduced regulations, liquidity being pumped into the economy and inventories that need to be re-stocked should all help.

Question Four: What, if anything,

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railwayage.com 3/14/19 4:50 PM

2020 GUIDE TO EQUIPMENT LEASING scares you about the future of railcar leasing?

Deasy: We have a vast and productive rail network in North America. We need to see a resurgence/commitment to leverage this network as a growth mode of transportation.

Edelman: What scares us is that many investors seem to forget they are investing in 40- to 50-year assets. The past couple of years, we have seen that the inherent risk of railcar leasing isn’t priced into the transaction. These aren’t long-term bonds; they are depreciating assets [with] utilization and renewal risk. These fundamentals are lost with certain transactions, and the effect shows itself in the pricing. We’re hopeful that we’ve all just received a reminder of the risks in the leasing market.

Lytle: I’ve been around too long to be scared. We focus on keeping our employees safe and productive, working with customers to develop and deliver railcar leasing solutions and drive the lowest total cost of ownership.

We are well-positioned with a young, diverse

fleet and strong customer service.

Schmid: The railroads have had the breathing room to perfect their own versions of PSR. Shippers are being squeezed to keep private railcar fleets to the bare minimum.

They are being discouraged from incremental business. Railroads purchasing their own core fleets may mean a long-term contraction of demand for certain railcar types.

Question Five: Railcar leasing has always been a relationship-centric business. Do you see any changes in the way companies address their future railcar needs?

Deasy: The complexity of the leasing business leads to the need for strong communication and collaboration. This will not change.

Virtual/technology-supported processes are and will change to do more things that were done face to face.

Edelman: Relationships matter regardless of the economic(s). We aren’t suggesting price doesn’t matter, but without strong relationships, it’s difficult to stay in this

business. We are strong believers in relationships with our customers and working in partnership.

Lytle: There are efforts to market railrelated services, including leasing, on line, and the internet will remain a distribution channel. Relationships matter, and they are tested in difficult environments. We value strong customer relationships and work hard to build them during these challenging times.

Schmid: The operating lease business will always involve intangibles like relationships, customer service and quality that will help companies differentiate themselves.

Bank lessors have regulatory constraints keeping them from being as customerfriendly as they would like. The operating lessor that can maximize flexibility still has an advantage.

AROUND THE MARKET Lease rates are, to be kind, scuffling a bit in the current market. Here is a summary of current rates. Fair warning: This is written

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2020 GUIDE TO EQUIPMENT LEASING in May 2020; these are the rates from the current moment.

Coal: Standard and Poor’s notes the following, “As of April 17, generators had 9,038 MW worth of capacity slated for retirement in 2020 and another 23,010 MW of coal capacity set to retire between 2021 and the end of 2025.” Need one say more? Coal was under stress and still found room to be worse than before. Net rates are low- to sub-$100 per car per month for net leases, and not much higher for full-service deals. Term notwithstanding. Rapids are a little less prevalent, but not enough for it to really matter price-wise. Car owners should prepare for more suffering ahead.

Small-Cube Covered Hoppers: Forget negative WTI. At $30/barrel, long-term frac drilling is unsustainable. Already under pressure from shorter-haul local brown sand, technology and severe overbuilding, this fleet is likely 40,000 cars long. Lease rates are sub-$100 (net) and likely to stay there for the foreseeable future.

Tanks for Crude and Ethanol: Here, WTI pricing is an impactful factor in bringing CBR to its knees. Equally impactful is the further whipsaw of fewer cars on the road, fewer planes in the air and fewer ships in the water. All these factors combined have body slammed refined fuel consumption. While there will be recovery here, some projections have WTI staying below $50 barrel until 2024. Some tank railcars are being used as storage on private tracks, but it’s not enough to hold up prices or demand. Storing crude is highly regulated and almost impossible on the tracks of a Class I railroad. Lease rates for 117R cars are sub-$500 (full-service) while some 117J cars have being quoted below $700

16 Railway Age // June 2020

(in some cases with new cars). DOT 111s are commanding less.

Covered Hoppers for Grain: The supply of covered hoppers for grain remains in excess of demand. The decrease in grain loadings (down 6.1% through April) will be further exacerbated by increases in railcar velocity due to impacts of PSR and the overall drop off in total railcar loadings. Low scrap disincentivizes car owners to take older cars to scrap. This will hold these prices down. 4,750cf cars are leasing for around $200 full-service; 5,200cf cars are leasing for around $300 full-service.

DDG hoppers (an ethanol byproduct) have become excess as ethanol demand has dropped. Those cars are down into the low $300s, full-service.

Covered Hoppers for Plastics: Project delays, some market saturation and consumption-related decreases in product demand have tilted the scales to being more unfavorable for car owners. This is another market that will rebound, but for the time being, lease rates on newer cars are sub-$500 full-service (sub-$450 net). Smaller cars with some age are going to scuffle as demand for those cars will show more weakness.

Those cars are leasing at $300 and might never recover to higher ground.

Pressure Tanks: This market is slightly more resilient, but under pressure right now.

Lease rates (which were tracking above $750 full-service for used and close to $1,000 for new (pre-pandemic)) have come down, and the opportunity to build cars in the short term is keeping prices checked. Lease rates for newer cars are in the $700 range.

Mill Gondola Cars: The steel market remains weak as auto and other industrial

production and construction levels drop significantly. As noted earlier, scrap continues to wallow around $200 per ton. Car demand remains weak and values follow with it. Older mill gons (263K GRL) are in the low- to mid-$200s per car per month, full-service, while newer cars (286K GRL) are in the mid-$300s.

NO FREIGHT TO PULL With loadings down, it is no surprise that the locomotive market has drifted downward in tandem. The lease market to railroads is virtually non-existent right now, and the few bright spots (rebuilding existing locos) that were hopeful areas heading into 2020 have been marginalized indefinitely. As a result of contracting freight demand and PSR, heading into 2020, only CN and BNSF were not storing locomotives. Now, CN and Canadian Pacific have the fewest number of locomotives stored, while the U.S. Class I’s have larger numbers stored but have been more reticent to release those numbers.

As Union Pacific COO Jim Vena noted in the 1Q2020 earnings call, “We’ve got so many locomotives parked. I’m just about embarrassed to say how many.” Rumors suggest both BNSF and UP could have half or more of their loco fleets stored. (Oftentimes, locomotives are stored serviceable in order to begin operations as soon as there is demand. UP has suggested many units are stored in this condition.) Many railroads are selling more-modern owned units such as SD60s and SD70s. With the order book for new builds decimated and rebuilds sidelined, it is not a good time for this market overall. What needs to happen? One word: Loadings. More loadings.

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Here for the long haul MUL Railcars is a subsidiary of Mitsubishi UFJ Lease & Finance Company Limited (MUL).

MUL is a prominent global leasing company in Japan and a member of the Mitsubishi UFJ Financial Group (MUFG), one of the world’s leading financial institutions. We are built to last with strong financial capabilities and a commitment to the rail industry.

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equipment leasing guide

LEASING RESOURCE DIRECTORY The 2020 Guide to Equipment Leasing (pages 10 through 16) is supported by companies that provide equipment leasing and financial services and products to the rail industry. All of these firms have advertisements elsewhere in this section or have used paid profile space to present their background and capabilities.

The David J. Joseph Company

With more than 50 years of specialized experience in the railroad industry and over $150 Million of equipment leases, 1435 Rail serves as a full-service professional leasing firm, specializing in leasing railroad Maintenance-of-Way equipment. Our experts’ dedication and uncompromising focus on quality sets us apart form the competition. 1435 Rail develops leasing programs to cut equipment costs and provides leasing structures that are tailored to meet the rail industry’s specific and everchanging needs. We offer long and shortterm operating leases, sales/ leaseback programs, and rentals.

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18 Railway Age // June 2020

CIT’s Rail division offers a full suite of railcar leasing and equipment financing solutions to rail shippers and carriers across North America. It manages one of the youngest and most diversified railcar and locomotive fleets in the industry and leverages its deep experience to empower customers. Contact us to learn how our transportation solutions can power your business.

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R S , MUL Railcars, Inc. is an emergent power in the North American railcar leasing and management business, offering best-in-class asset management capabilities combined with a uniquely experienced and talented team dedicated to customer solutions. MUL Railcars offers a complete railcar leasing solution set with railcar asset management, regulatory support, specialized services and leasing products that provide customers with the options they need.

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RailSolutions, LLC provides a broad variety of railroad equipment-related consulting, technical and advisory services to financial institutions, railroads, shippers and fleet operators with a primary focus on equipment valuation and appraisal services.

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TrinityRailÂŽ, provides comprehensive rail transportation products and services designed to provide value by optimizing the ownership and usage of railcars. Our total owned and managed fleet stands at approximately 130,000 railcars representing one of the largest lease fleets in North America.

In addition to comprehensive railcar leasing options; TrinityRail offers fleet management solutions, administrative services, and dedicated customer support. Access is also provided to TrinityRail’s extensive engineering a n d m a n u fa c t u r i n g s e r v i c e s , f l e e t maintenance and repair, aftermarket parts support, and on-site field support for operational assistance and training.

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VTG Rail, Inc. and VTG North America, Inc are the US subsidiaries of VTG AG, one of Europe’s leading rail car leasing and rail freight logistics companies with a fleet consisting of more than 94,000 railcars worldwide.

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June 2020 // Railway Age 19

TECH FOCUS — M/W

SHARPER ANGLES, DEEPER DIVES Railroads don’t struggle with track geometry, or have difficulty detecting rail flaws, due to advancements in technology. eometry—for many, one of the least-favorite school subjects (“When are we ever going to actually use this stuff?!”)—is imperative to the rail industry. Finding faults, on the other hand, is a preoccupation for some people. But for railroads, it’s also critical. Safety depends upon both.

TRACK GEOMETRY Track geometry is an important data stream that provides information on track condition, as well as its performance over time or deterioration rate. And much like teaching methods over the years, track geometry has evolved, says Russ Newberg, Director of Operations – RMSS, Holland. “It started with doing basic geometry testing for a few different data channels,” he says. “Collecting surface and alignment impacts were added. Now, it also includes defects that have evolved over time.”

Holland performs GRMS (Gage Restraint 20 Railway Age // June 2020

Measurement System) testing. “That takes looking at the rail from a static measurement and how it’s laying to what it would look like dynamically,” Newberg says. “We incorporate that with rail profile, taking the rail measurement and looking at it from a cross section.

We can conduct rail and tie wear analysis and perform predictive maintenance for tie replacement planning, rail grinding and related maintenance work.”

Jim Hyslip, Ph.D., P.E., HyGround/Loram, concurs with Newberg, adding that track geometry has evolved from “old mechanical systems” prior to the 1960s to “inertial-based systems” that enable higher measurement speeds and other such benefits. Technology has accelerated this evolution.

“One of the big things was recognizing that there’s more information in the geometry data than just the position of the tracks,” Hyslip says. “You can start using it to obtain further information. A big reason we’re able to use geometry data more effectively now for things

other than just looking at track roughness is computers, obviously, but also good positioning systems—the computing power that allows us to manage and analyze Big Data sets.

“The location determination systems developed during the past decade or so, with higher-accuracy GPS and better hardware, make data management a lot more efficient.

We can overlay subsequent data runs. Aligning the geometry well—and it’s a lot easier to do that now because there’s more accurate location assigned to it—allows trending of geometry condition over time and seeing things like how roughness is developing over time, what the deterioration rate is.

“When we take things like geometry data, which is a routine measurement, and obtain other information about it, like what might be causing roughness and how it could be deteriorating over time, we can start integrating information I refer to as top-of-rail performance, from the geometry car to other information, whether it’s rail wear or other railwayage.com

Sperry

G

BY ANDREW CORSELLI, MANAGING EDITOR

TECH FOCUS — M/W

22 Railway Age // June 2020

high-quality rail consulting services, cuttingedge technological solutions and individual analysis plans that give railroads the ability to inspect, analyze and predict maintenance.

Protran Technology track inspection products deliver detailed insight to railroads on track condition, analyzing current track conditions and planning for future maintenance demands. These inspection products ultimately help railroads understand their track and how to best maintain it, decreasing maintenance costs.”

Hyslip says Loram services “all of the major Class I railroads,” as well as Amtrak, which “by far has the most advanced and the longest history of using track geometry data.”

“Amtrak has been a huge customer of ours, collecting track geometry on the high-speed Northeast Corridor every two weeks,” he says.

“That’s 24 runs over the course of the year, and by aligning them precisely, we can see roughness, how it’s changing over time, and the maintenance needed to correct it.”

Holland’s Newberg adds that the difference between transit and freight is significant for track geometry. “Geometry testing frequency depends on gross metric tonnage; for each railroad it will be different,” he says. “It also depends on whether it’s freight or passenger.

Typical customers will have a minimum of one year, but the frequency could be as often as every 60 days, depending on what type of traffic is running.”

“We are seeing a market shift toward autonomous track geometry measurement technology,” says ENSCO, which has delivered 18 Autonomous Track Geometry Measurement Systems (ATGMS) since 2017. “We believe this shift is due to customer acceptance of, and

RAIL FLAW DETECTION Track geometry’s cousin, rail flaw detection (RFD), is equally important to safety. Hidden internal defects can lead to derailments and catastrophic wrecks. RFD aims to nip such problems in the bud.

Herzog “combines conventional ultrasonics railwayage.com

Herzog

track conditions. And we can start seeing the relationship between other types of condition information, like ballast fouling, and how that relates to track deterioration rate. Now, we can monitor that rate with good geometry data.”

Hyslip adds that the most recent geometry development has been the use of autonomous measurement systems that do not require a manned geometry inspection car. The more prevalent use of these autonomous systems, he says, is “the wave of the future.”

Many companies such as Loram use track geometry data collected by their railroad customers. “We don’t collect track geometry data within Loram,” Hyslip says. “We obtain it to look at overall condition and deterioration rates. We’re not looking at it from a safety standpoint. The main reason for checking geometry, historically, has been to determine what class of speeds can be run. It’s a safety measure. The tolerances that the FRA applies to geometry are all based on safety. We use it for another data stream that gives us information on track condition, as well as from subsequent runs, its performance over time, or deterioration rate.”

Track geometry tools have become extremely sophisticated. Protran Technology’s Callisto system, for example, “was developed to make gathering track geometry data less complicated,” parent company Harsco Rail says. “This is accomplished by using either a traditional Hy-Rail vehicle equipped with Protran’s hardware on the rear hitch, or on a ProTamp-equipped tamper. Callisto collects and displays all geometry parameters required by the FRA, as well as maintenance and safety thresholds, according to the userselected track class, in real time. We offer

confidence in, ATGMS technology. As autonomous technology and systems have matured, so has their performance and repeatability.

Today, ATGMS provides the same or greater level of performance and repeatability as manned track geometry systems with the added advantage of being installed onboard a revenue vehicle, eliminating the need for a host vehicle and onboard operators.”

ATGMS measures track geometry and continuously streams the data to a cloudbased server. Railroad personnel are notified instantly of any exceptions via email.

ENSCO’s Autonomous Vehicle/Track Interaction Monitors (VTIs) are another autonomous inspection product “that continues to grow in popularity.” VTIs, installed on board revenue vehicles to measure ride quality, wheel/rail impacts and track geometry surface conditions, “have been credited with helping identify high-risk track conditions and avoid broken rails and derailments.”

The use of autonomous inspection technologies reduces lifecycle cost of inspection operations and allows for high-frequency track inspections where tracks can be surveyed weekly or even daily. “The rise of Big Data has also helped drive interest in autonomous systems, as ATGMS and VTI systems typically provide greater inspection frequency,” ENSCO notes.

Plasser American offers no fewer than eight Track Recording and Measuring Systems.

“Our wide spectrum of machines and our customer-oriented development philosophy has led to the fact that a great number of different programmable logic controllers (PLC) and visualization systems are available today,” the company says. “For enhanced user-friendliness, the decision was made to focus development on a system that would meet all special requirements.” For example, Plasser’s T2000, equipped with ENSCO’s Track Geometry Measuring System, offers gauge measurement, cross-level, curvature, profile, alignment, automatic location detection, paint spray, ride quality measurement, Differential GPS and video.

TECH FOCUS — M/W with more advanced testing methods such as phased array, geometry testing and joint bar inspection,” the company says. “We can offer clients bigger data sets complete with more frequent, accurate results to help them address their particular rail testing goals.”

Herzog offers three vehicle platforms fitted with multi-channel ultrasonic testing hardware “to efficiently traverse different classes of track.” The Hyrail Freightliner, for main line track inspections; the Hyrail Pickup for mountainous regions and urban settings; and the Hyrail UTV, for use in sidings, yards and areas with tight clearance envelopes. Transducers are mounted to the vehicle’s testing carriage at standard industry probe angles to find different types of defects in the rail. Once on the track and ready to test, Herzog employs a different rail testing process according to the specific requirements of each railroad.

In Start/Stop Verification, after a defect is identified, the operator stops the detector car, steps out of the vehicle and manually confirms if the defect is indeed present using a portable ultrasonic device.

In Continuous Testing (CT), the rail is scanned in bulk mode and test data is transferred in real time to an off-site location for analysis by a qualified technician. Any indications that are suspect are then sent back to a field operator for subsequent on-site verification within a specified time frame.

“Most Class I’s have FRA waivers to perform CT,” Herzog says. “CT reduces track time needed for testing and allows more miles to be tested with increased frequency.”

Sperry Rail uses three technologies to inspect rail, says Sperry Rail Vice President, Technology Simon Broomhead. “We use ultrasonic, which is the most common technique around the world, to inspect the head and web of the rail. In North America, we typically use 15 different ultrasonic channels per rail. We also use induction, an electromagnetic technique. It’s proprietary and unique to Sperry. That was the original method of testing rails developed by Elmer Sperry back in 1928. It’s complementary to the ultrasonic tests. Occasionally, we can get transfer defects of the rail head. The newest

of the methods is eddy current, which is relatively new to North America. This is used to inspect the rail surface. It penetrates about a fifth of an inch, five millimeters, down, so it’s very useful for finding rolling contact fatigue.

We use all three in combination, along with integration into our vision system.”

Sperry uses these technologies in two different processes. “The original process in North America is what we call ‘stop and verify,’” Broomhead says. “That’s when the rail flaw detection process is completed in a single vehicle pass, typically at low speed. Basically, the rail flaw detection car progresses on the track, the inspection system collects data, processes it from the ultrasonics, and presents that to an operator in pseudo real time, in the form of a picture. The operator has to be a trained NDT (non-destructive testing) technician who is able to analyze those scans in real time. If there is a suspect indication, the operator stops the vehicle, exits it, and performs a hand test to size it and confirm it. The track is then marked, and a repair team will cut it out and replace the rail. That

Predictive Maintenance Our Geometrical Rail Measurement analyzes the rail and provides a comprehensive report, allowing rail operators to accurately plan their maintenance operations.

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24 Railway Age // June 2020 Design.indd 1

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can’t account for things like broken axles or broken wheels. Anomalies for switching are not caught by RFD, he says. He adds that, much like track geometry work, RFD maintenance depends upon traffic volume.

“If you have a busy railroad, testing could occur up to every 30 days,” he says. “It’s dependent on actual tonnage. FRA sets a minimum standard on how many MGTs can cross the rail before it has to be checked. As

TRUCKS AND EQUIPMENT FOR ALL YOUR RAIL AND TRANSIT NEEDS. 26 Railway Age // June 2020

long as we test the rail more frequently than the FRA demands, the railroad is OK.” Sperry’s Broomhead says the future of RFD is based in technology: “One of our key developments is the use of AI (artificial intelligence) to analyze the B-Scan, which is like a CT scan in the medical profession. We spent a lot of time developing AI to recognize downloads. It’s revolutionizing the way we handle and process data.”

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was the only method that used to be allowed under the regulations in the U.S. “Sperry pioneered what we call Non-Stop Testing, introduced in the 1990s. It divides the rail flaw detection process into two stages.

Test data collected at speeds up to 50 mph is uploaded to an analysis center and reviewed by experts who determine the locations requiring manual verification. Ultrasonic experts then perform manual verification. That’s now becoming dominant in North America.”

Nordco uses ultrasonic exclusively. “We’ve got a 32-channel system consisting of 16 transducers per side set up at different angles in the rail head and web,” Rick Wall, Nordco’s Director of RFD Operations, says. “There are forward-looking and reverse-looking transducers. Sound waves are produced with a ‘spider web effect’ to make sure we get every angle covered, giving us a B-Scan image in real time. We pinpoint it, back up, then move ahead and hand test it to pinpoint exactly where the location of the flaw is.”

Wall says RFD eliminates about 95% to 99% of rail flaw-caused derailments, but it

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FRA RD&T

TECH EVOLUTION

VEHICLE An overview of the Federal Railroad Administration Office of Research, Development and Technology.

C

onsistent with the U.S. Department of Transportation (DOT), the primary strategic goal of the Federal Railroad Administration (FRA) is safety. The FRA mission statement reflects this priority: promoting the safe, reliable, and efficient movement of people and goods by rail. Safety has been and remains the principle driver of FRA research and development, carried out by the Office of Research, Development and Technology (RD&T).

RD&T safety improvements date back to the earliest days of the DOT. 28 Railway Age // June 2020

Highway-rail grade crossing fatalities have decreased by more than 66%, and track-related accidents have decreased by 21% since the 1970s. From 2009-2018, signal-related accidents decreased by 19%. And safety improvements have in turn furthered other DOT strategic goals: state of good repair, economic competitiveness and workforce development.

Continued congressional funding for RD&T has made these safety accomplishments possible.

FRA collaborative research with federal, state and local public partners, academia and private industry supports the

Department’s strategic safety objectives.

Playing an integral role in advancing rail safety research are FRA’s test facilities— the Transportation Technology Center (TTC) in Pueblo, Colo., as well as the Volpe National Transportation Systems Center (Volpe Center) in Cambridge, Mass. TTC consists of facilities, equipment and nearly 50 miles of railroad test track, including a Positive Train Control (PTC) test bed and a tank car impact wall. The Volpe Center is home to the Cab Technology Integration Laboratory (CTIL), a high-fidelity, fullsized locomotive simulator configured with state-of-the-art tools for studying railwayage.com

Federal Railroad Administration

BY DR. MARYAM ALLAHYAR WYRICK, FEDERAL RAILROAD ADMINISTRATION

FRA RD&T

the boundaries of operator capability and performance and the impact of new technologies on operators.

FRA research and development programs correspond to different aspects of the railroad operation systems: human factors, track, rolling stock, equipment, signal and train control communication, and hazardous materials. Research projects are prioritized based on FRA safety performance data and risk analyses. A safety risk model ranks individual hazards and provides an indication of where RD&T project investments may have the greatest safety impact. Note that many topics, such as trespassing, grade crossing safety and derailment, can fall into multiple technical disciplines.

After prioritizing safety risks, RD&T undertakes two main types of research railwayage.com

projects: theoretical and applied research.

The first type acts as a catalyst to introduce new technology. FRA assumes the initial risk and, in some cases, the cost of proving a concept. Prototype development and demonstration is accomplished in collaboration with industry partners.

RD&T research results are then shared in published reports and at various forums, which leads to the adoption of patents for new technology by private industry.

One such technology is the Autonomous Track Geometry Measurement System (ATGMS), which can inspect track conditions using unattended instruments mounted to revenue trains. Today there are dozens of ATGMS systems in service in the U.S., with more in production for future delivery. Another technology is a system for detecting sediment erosion, or scour, around bridge foundations in river beds.

More than 1,000 scour sensors have now been installed on railroad bridges across the country.

The second type of FRA research involves cases where industry seeks to adopt new technology. RD&T provides the scientific foundation for the necessary regulatory compliance waivers or to safely test, demonstrate and ultimately implement the technology on a widespread basis. A recent example is the use of liquefied natural gas (LNG) as an alternative locomotive fuel.

RD&T continues to conduct research and assess safety risks associated with using LNG to establish a basis for FRA standards for safe operation.

Other recent technological innovations to improve safety in train operations and the efficiency of track inspections include automated systems for train control such as PTC, autonomous inspection of railroad assets using unmanned aerial vehicles (UAVs), and artificial intelligence (AI) to process data. The use of UAVs, coupled with AI, has the potential to greatly improve track inspection efficiency and accuracy.

New technology can also mean innovative approaches to safety culture and new operating practices, such as FRA’s successful Confidential Close Call Reporting System (C3RS). Additionally, FRA workshops on trespassing, grade crossing safety and suicide prevention enable industry stakeholders to discuss priorities, concerns and best practices.

Advances in computer simulation give FRA new ways to assess safety without requiring rail vehicle testing during operational service. This approach has been achieved through regulatory streamlining, and yields a reduction in the time and cost required for rail vehicle approval.

FRA research activities occur within the context of an evolving freight and passenger railroad industry. Trends indicate continued growth in freight traffic and increased frequency and speed for passenger train operations. FRA and the rail industry have made significant improvements in safety in recent decades, but major train accidents still occur. FRA will continue to align with the needs of industry while prioritizing safe railroad operations for the American people.

“Research and development is our doorway to evolution,” says Administrator Ron Batory. “Aggressive application of integrated technology in the operating and maintenance disciplines within the railroad industry will ultimately afford the speed in which sustainable change can be achieved.”

For more information about FRA’s Research, Development and Technology program, visit: https://railroads.dot.gov/ research-development/research-development-technology. To sign up for information on FRA’s Research, Development and Technology program, along with other FRA topics of interest, visit: https:// public.govdelivery.com/accounts/usdotfra/ subscribers/new.

Dr. Maryam Allahyar Wyrick is Director of the Office of Research, Development and Technology at the Federal Railroad Administration. She has nearly 20 years of experience as a research scientist in academia, at the U.S. Department of Defense, the National Transportation Safety Board and the U.S. Department of Transportation. Prior to joining FRA, she worked as a senior research psychologist for the Chief of Staff of the Army at the Pentagon. Dr. Allahyar Wyrick has a Ph.D. in Cognition from the University of Washington.

June 2020 // Railway Age 29

TTCI R&D

THE NEXT GENERATION: AAR-2A A new standard wheel profile is providing multiple benefits.

T

he AAR-2A, a new standard wheel profile recently implemented for use in North American freight railway operations, is expected to provide improved service performance for wheelsets. This assessment is based on the analysis, simulation and testing conducted by Transportation Technology Center, Inc. (TTCI).

The new AAR-2A wheel profile was designed to produce a nearly conformal contact condition with a typical rail on the high side of a curve to provide benefits such as improved steering and minimized rolling resistance, wear, fuel consumption and surface damage. Compared to the older AAR-1B profile, the AAR-2A produces a more-even distribution of wear across the wheel flange and tread such that 30 Railway Age // June 2020

the profile shape does not change substantially during the service life of the wheel.

Analytical evaluation, computer simulation and service testing were used over the course of multiple years to ensure that the design goals of the AAR-2A profile were met. Each method of evaluation showed improved curve performance of the AAR-2A profile compared to the AAR-1B profile. Starting with turned wheels, implementation of the AAR-2A profile has been under way since 2016, and it became the primary standard profile in North American freight operations in January 2020.

Although service-worn freight car wheel and rail profiles show a wide distribution in gross shapes, they generally wear to similar shapes in the wheel flange root and high rail gage corner. The annual replacement rates of wheels and rails strongly

imply that the majority of wheels and rails in service at any time will exhibit worn profiles that can potentially diverge substantially from their as-manufactured shapes. Rail grinding is used to control rail profile shapes, but grinding templates are not designed to restore the rail to the as-manufactured shape.

Development of the AAR-2A wheel profile started with the collection of measured service-worn wheel and rail profiles to aid in the investigation of the distributions and patterns of worn wheel and rail profile shapes.

Curves were fit to match the most commonly worn shapes of the high rail gage corners and wheel flange roots. In comparison to the AAR-1B profile, the AAR-2A profile contains more material in the flange fillet to reduce and/ or eliminate the strong two-point contact that occurs when the wheel makes flange contact railwayage.com

William C. Vantuono

BY SCOTT CUMMINGS, SCIENTIST, TRANSPORTATION TECHNOLOGY CENTER, INC.

TTCI R&D with a typically worn high rail in a curve.

Eliminating this two-point contact reduces the initial high wheel flange wear experienced in the first 25,000 to 100,000 miles of service, depending on the railcar types and service routes. Although the flange thickness was revised during the evaluation period, the shape of the flange root area remained consistent. Other critical features of the AAR-2A profile include a 75-degree maximum flange angle and a 1:20 wheel tread slope.

Dynamic performance was initially assessed via simulations with the new wheel profile contacting representative rail profiles through curved and tangent tracks. Limited on-track testing was performed under controlled conditions before starting revenue service tests involving more than 200 cars.

Revenue service testing showed that the AAR-2A wheels maintained largely the same flange root shape as they experienced service wear while AAR-1B wheels experienced substantial change in the flange root shape.

The AAR-2A wheels also showed reduced overall wear in every case. When new, the

Testing in revenue service showed the AAR-2A profile better-retained its design shape and provided a reduced wear rate on both the flange and tread, compared to the AAR-1B profile.

AAR-2A wheels held advantages over the AAR-1B wheels in terms of gage spreading force, though this benefit gradually decreased as the profiles converged through

STAY IN GEAR WITH RAIL GROUP NEWS

natural wear to become more similar in shape. Despite higher conicity of the AAR-2A profile, high-speed stability was not shown to be a problem.

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3/4/19 1:15 PM

PSR 2.0

PSR, THE NEXT GENERATION

BY SONIA D. BOT & JOHN F. ORR

32 Railway Age // June 2020

railroads, industry partners, advocates and policymakers.

This Railway Age series introduces PSR 2.0, which will take PSR to the next level, within individual railroads and across railroad and transportation “ecosystems.” It demands an entrepreneurial culture focused on business rigor, forging productive partnerships, safeguarding origin-to-destination traffic flow and increasing knowledge. It is geared toward increasing relevancy in a world that is rife with existential economic threats, increased competition and urgency to embrace the tail end of the digital age while preparing the foundation of the new era of breakthrough innovation.

To date, PSR has been applied to some Class I’s and has yet to be applied widely to Class II, Class III, short line, tenant and passenger railroads in North America. This

gap in PSR deployment represents about 40% of North American route miles. There is both excitement and apprehension in anticipation of scaling PSR into these new areas.

In Part I, we briefly describe PSR 1.0, pointing out its successes and limitations.

We make the case for PSR 2.0 as the next step, the foundation for extending PSR across the full ecosystem of rail and other transportation stakeholders.

THE URGENCY: NEXT-GEN PSR PSR 1.0 is currently the widely accepted benchmark of financially sound railroads and is starting to materially change the investment landscape. North American infrastructure funds are getting involved in the railroading renaissance. In July 2019, Morningstar reported that PSR is “the surest path to the best operating ratio (OR), a key railwayage.com

CN

P

recision Scheduled Railroading (PSR), as we know it today, is rapidly reaching an inflection point. Escalating trade disruptions, rail strikes, blockades, weather events and the COVID-19 pandemic have highlighted the urgency to make supply chains more resilient. Weaknesses in the international supply chains have been exposed, and the escalating domestic transportation turmoil demonstrates the need for end-to-end approaches, standards, solutions, and greater service level accountability and safety.

The current version of PSR, which we refer to as “1.0,” has produced measurable financial, operational and service improvements for railroads. Yet, some internal growing pains continue, accompanied by shock waves absorbed by shippers, non-PSR

PSR 2.0 chain that is growing more integrated, nimble and transparent. At its core, it is about providing customer service reliably, predictably, effectively and safely; thereby manifesting other benefits for all parties, such as profitability and future-proofing in the face of rapid change.

PART I: The Case for Mainstream Adoption

industry measure of profitability.”

Meanwhile, escalating trade disruptions, rail strikes, blockades, weather events and the COVID-19 pandemic have highlighted the urgency to make supply chains more resilient. Transportation supply chains are under increasing pressure to meet demand while keeping inventory levels low. The weaknesses in the international supply chains have been exposed, and the escalating domestic transportation turmoil demonstrates the need for end-to-end approaches, standards, solutions, and greater service level accountability and safety.

It’s time for the next generation of PSR, which provides the means for implementing and scaling PSR for mainstream adoption—not just within individual railroads, but across railroads and across the entire transportation ecosystem, with a supply railwayage.com

THE FOUNDATION: PSR “1.0” PSR 1.0 is an origin-to-destination method of managing a railroad. It challenges traditional asset utilization and service quality practices, and is geared toward optimizing existing assets. It is based upon operating fixed train schedules that optimize train load and yield and improve service accountability down to the carload level.

The late, now-legendary E. Hunter Harrison defined five key principles, “Pillars of PSR,” to guide railroad management: • Provide Service: Do What You Say You Are Going To Do. • Control Costs: Eliminate Unnecessary Costs.

• Optimize Assets: Use Assets More Efficiently and Productively.

• Operate Safely: Safety is the Top Priority.

• Develop People: Cultivate the Best Team of Railroaders.

PSR 1.0 has driven improvements in line and yard capacity, productivity, asset fluidity and costs. With the impressive improvements in Operating Ratios, PSR is currently widely accepted in investment and finance circles as the benchmark of financially sound railroads.

PSR 1.0 has its limits. Costs can only be cut so far before needing to transform the cost base. PSR 1.0 is focused on individual railroads and their internal operations, optimizing assets for reducing costs while trying to support new business ventures that may not be mature. For others in the transportation ecosystem, this created an issue of downstream impacts, with partners such as Class II and III railroads having to step up as “shock absorbers.” Customers experienced broad ranges of service quality, from painful marked degradations to unprecedented improvements.

EVOLUTION TO PSR 2.0 PSR 1.0 is rapidly nearing an inflection point. It is time for PSR to evolve and scale across the rail network and its ecosystem partners, driving greater business value and

efficiency gains.

To achieve this, we propose that: “PSR 2.0 is a constantly evolving purposeand data-driven origin-to-destination management view of a transportation ecosystem in which railroads commit to reliable service, cost control and asset optimization.

PSR 2.0 is anchored by an operating methodology and structure based on leveraging optimal revenue generation and growth strategies.”

The five Pillars of PSR 1.0 are foundational, timeless and meaningful to everyone, regardless of role. They provide a decisionmaking framework for implementing PSR 2.0. In addition, here are five guiding principles to take PSR to the next level: GUIDING PRINCIPLES FOR PSR 2.0 • Reward Entrepreneurial Culture: Everyone is Innovative, Resourceful and Creating Value.

• Exercise Business Rigor and Relevancy: Precisely Matching Services (Supply) with Markets (Demand) and Business Objectives/Obligations.

• Forge Productive Partnerships: Strengthening Performance and Viability.

• Safeguard End-to-End Flow: Accounting for Downstream Impacts Across Systems.

• Foster a Learning Organization: Continual Mastery and Improvement.

These Guiding Principles serve as enhancers, raising value; accelerators, where progress occurs faster and more effectively; and sustainers, maintaining gains.

PSR 2.0 transcends PSR 1.0 by embracing entrepreneurship and partnerships across railroad and related transportation ecosystems. It expands PSR 1.0 to include revenue generation and growth strategies. Productive partnerships that go beyond individual railroads, extending across the rail industry and embracing others in the transportation ecosystem, are key.

PSR 2.0 requires an entrepreneurial culture, creating a system of shared values, beliefs and norms. It includes embracing ingenuity, valuing creative people and cross-pollinating functional disciplines and industry sectors. It depends upon believing that innovation and seizing market opportunities are critical to survival and prosperity, and to dealing with environmental uncertainty, competitors and threats. Organizational/ecosystem members must be June 2020 // Railway Age 33

PSR 2.0

Transportation Ecosystem Partners

able to respond accordingly.

As a cross-check to maintain system-wide balance, PSR 2.0 introduces and necessitates a culture that also safeguards end-toend flow and impacts within a railroad and across the partner ecosystem. In this new mode of operation, it is no longer acceptable to overlook downstream impacts. Instead, stakeholders must account for downstream impacts across the system, taking action to mitigate adverse impacts. Our mantra: Do no harm. Do good—for us, our ecosystem partners, our customers, and the community.

VISION FOR A PSR 2.0 EVOLUTION A unified PSR platform is central to PSR 2.0 and its governing processes, policies and technologies. This platform is a mechanism to protect the rail industry’s relevance and future. Well-defined hand-offs among parties and legal entities are vital. All parties earn a seat at the table. They must see the cause-and-effect impacts across the end-toend system, as opposed to existing in siloes.

All ecosystem members participate in maintaining flow. The platform allows for better responsiveness and market relevance.

Furthermore, a unified PSR platform with aligned partnerships is an alternative to an exclusive “acquire-and-comply” growth strategy. For mergers and acquisitions, it can facilitate integration.

The interacting players are railroads (Class I, Class II, Class III, passenger, either host or tenant), industry partners (air, seaports, trucking, pipeline, etc.), and public and enterprise advocacy/policy partners (regulators, legislators, unions, industry 34 Railway Age // June 2020

groups, etc.). The timeline is modeled on an adoption lifecycle (innovators/first implementation, early adopters, early majority, late majority, laggards). First-implementers and early Class I railroad adopters create the momentum for others.

A unified PSR platform grows and matures as more adopters engage. PSR 1.0 was implemented on individual railroads and has been internally focused. The next step, an ecosystem enabler stage, establishes critical mass among the railroads. Integration, phased in by corridors, includes attention to points of hand-off and end-to-end flow. The goal is an integrated ecosystem with a standardized PSR platform.

The unified PSR platform will grow and mature over time. Initial implementations will have PSR 1.0 players adopting basic PSR 2.0. Another transition would include new adopters starting with PSR 2.0 implementation. Over time, as capability matures, the unified platform would be fully established on PSR 2.0. Any laggards—for example, those stopping at PSR 1.0—would receive only partial benefits from a PSR 2.0 platform.

Productive and tight feedback loops among ecosystem parties are crucial.

Feedback loops among only railroads are no longer enough. Industry partners and public and enterprise advocacy/policy partners are also part of the fold. The focus is on being entrepreneurial, collaborative, and productive, for execution and governance.

Bureaucracy creep is thwarted.

THE POWER OF PSR 2.0 Our first example deals with Train Service Agreements (TSAs), commercial agreements

involving Class I, Class II and Class III railroads that define service frequency, interchange locations and dispute resolution mechanisms. When a TSA is constructed, it does not always consider the whole view of the parties and regions involved. Typically, Class II and Class III railroads carry less weight than a Class I. The TSA tends to be used to discuss services failures, thereby invoking dispute resolution mechanisms.

The PSR 2.0 unified platform adds rigor and commitment to front-end planning and balanced execution, rather than to a focus on back-end conflict resolution. It advances commitment to dialog among those constructing the TSA, demands repeatable service level commitments and accountabilities based on facts and data, and upholds agreed-to ways to measure and monitor performance so that one can respond to temporary demand and expectation changes. All parties share improved performance and asset efficiency benefits.

In short, PSR 2.0 establishes a voice at the table for all.

Our second example deals with Class II and III railroads having to react and readjust to Class I PSR 1.0 impacts. To date, Class I PSR 1.0 adoption has been inward facing: shutting down yards, rationalizing assets, rightsizing service and taking other measures. Downstream Class II and III railroads are forced to deal with the impacts.

They unfortunately bear the burden of being “shock absorbers” of these changes and oftentimes respond reactively. Such imposed and unilateral mitigations result in disproportional costs and re-work for delivering agreed-to first-mile/last-mile service. With PSR 2.0, the changes would be proactively planned and executed with a first-mile/last-mile cause-and-effect view to ensure smooth flow throughout the system.

Our third example deals with the relationship between public advocacy/policy partners (STB, CTA, FRA, TC, NTSB, TSB, legislators) and the railroads. Despite structural tensions, regulators’ objectives need to be respected, while the transportation industry can remain responsive to market demands, competition and complexity.

PSR 1.0 has been implemented with little consultation with regulators and policymakers, whose mandate is to protect the transportation system of their nation, often leaving them to guess on what is going on. railwayage.com

PSR 2.0 They were hearing many concerns, possibly biased, as changes were being made. They had little, if any, basis to properly evaluate and respond to them, let alone having to catch up after the fact. With PSR 2.0, public advocacy/partners are engaged upfront in any change process, properly informed and prepared as the changes begin to roll out. It also allows them to be proactive in providing early guidance on regulatory and industry impacts.

Our fourth example deals with supporting repeatable end-to-end execution across geographies and industry partnerships, such as product coming off the shop floor in Asia, transported to a seaport, shipped across the Pacific Ocean to a North American seaport, transported by rail intermodal to an inland distribution center and delivered to retail locations by truck.

Currently, supply chain visibility is generally segmented and does not transcend entities well. Consequently, there are gaps in the downstream work scope, impairing the ability to make precise decisions. All of this results in lost productivity and opportunities to adapt and respond to operational realities and fluctuations. With PSR 2.0, various roles within the span of influence and control among entities in the end-toend supply chain are articulated, agreed, measured, monitored and enforced.

PSR 2.0 SWEET-SPOT The immediate sweet-spot for PSR 2.0’s

launch and evolution would lie with the entry of a Class II PSR implementation, while working together with current Class I PSR-based railroads that are ready to mature to this next level of capability. An optimal cost/benefit balance will begin manifesting across the end-to-end ecosystem. This domino effect will draw in numerous railroads, shipper, and public and enterprise advocacy/policy partners.

We believe that waiting for the rising tide of the economy is shortsighted as it could be a drawn-out wait. And supply chains themselves could shorten as North America contemplates onshoring and building national capacity in critical areas.

PSR 2.0 provides a unique opportunity to transform the rail industry and the entire transportation ecosystem. It has the power to achieve sustainable operational effectiveness, organizational effectiveness and profitable growth.

Stay tuned: In Part II we will present key considerations for implementing and scaling PSR by delivering tangible business and customer value faster than current implementation approaches, while lowering cost and effort in doing so.

Listen to the Rail Group On Air Podcast: Interview with Sonia D. Bot and John F. Orr on PSR, The Next Generation.

This article is based on the novella-sized white paper, “Delivering PSR 2.0 for Entrepreneurial Railroading and its Ecosystems: The Evolution of Precision Scheduled

Railroading” (Bot & Orr, 2020). Drawing from academic theory and deep practical experience, Bot and Orr comprehensively and practically unpack the myths and realities of PSR, define the vision and delivery approaches for PSR 2.0, and bring it all to life with various case studies. For more information, contact Sonia D. Bot at sdbot@botgroupinc.com and John F. Orr at OrrJohnF@outlook.com.

Sonia D. Bot, chief executive of The BOT Consulting Group Inc., has worked at the forefront of technology, media, and telecommunications companies worldwide, and was SONIA BOT instrumental in PTC implementation on CN’s U.S. lines. John F. Orr, a top-level operations executive for railroading and transportation ecosystems, is a fourthgeneration railroader who rose through the JOHN ORR ranks and became CN’s Chief Transportation Officer. With E. Hunter Harrison and his successors, Orr delivered PSR operations, and continues the mission today throughout North America, Europe and Asia.

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Proudly Serving DART For Over 25 Years Vehicle Engineering Systems Engineering Revenue Systems and Technology Opera�ons Planning and Simula�on Op�miza�on Zero-Emissions railwayage.com

June 2020 // Railway Age 35

People / Events YVES DESJARDINS-SICILIANO Siemens Mobility Canada

HIGH PROFILE: Siemens Mobility has appointed Yves Desjar-

dins-Siciliano as Canadian CEO for Siemens Mobility Limited.

Desjardins-Siciliano “aims to build Siemens Mobility’s presence in Canada and lead its team in the provision of transportation solutions to Canadian service providers,” the company said. Desjardins-Siciliano is the former President and CEO of VIA Rail Canada, the country’s national intercity passenger service operator. He was responsible for managing more than 3,300 employees moving nearly 5 million passengers per year. An experienced executive, Desjardins-Siciliano has held several positions at IBM Canada, the Government of Canada (Ministry of Labour & Transport) and Bell Mobility. He initially joined VIA Rail as Chief Corporate and Legal Officer. “With deep industry knowledge and demonstrated customer focus, Yves is well-positioned to grow Siemens Mobility in Canada,” said Marc Buncher, CEO of Siemens Mobility in North America. “He is a visionary executive who understands how we can help Canadian cities and transportation operators transform their operations to meet the needs of tomorrow. I am excited to see how he will lead our Canadian team into a new era.” “I am delighted to join the Siemens Mobility team at a time when Canada’s public transportation infrastructure is about to undergo major modernization,” said Desjardins-Siciliano. “I believe Siemens Mobility is best positioned to provide worldclass, efficient, reliable and sustainable solutions to operators and partners, that enhance the passenger experience, across the country.”

T

he Short Line Safety Institute has hired John Walsh as Director of Hazardous Materials Programs. Walsh’s 30-year career includes experience in public safety, security, emergency management, homeland security and compliance, including 15 years in the freight rail industry. Walsh most recently served as Assistant Vice President Safety and Security with Genesee & Wyoming Railroad Services, Inc. where he was responsible for risk mitigation, various safety programs, regulatory compliance, and workplace violence prevention and training programs. Prior, Walsh spent 13 years with CSX Transportation where he served in several roles before retiring as Director of Police and Infrastructure Protection, overseeing the Railroad Police Department, emergency call center and Infrastructure Protection team. Walsh began his public safety career in the NYPD, where he spent 20 years, retiring as a Lieutenant, Commander Detective Squad overseeing a city-wide technical and investigative support unit.

He has also served as a Board Member for Operation Lifesaver, Inc. The American Public Transportation Association (APTA) has appointed 36 Railway Age // June 2020

HNTB’s Ronnie Hakim, National Transit and Rail Market Sector Leader, and Kimberly Slaughter, Senior National Practice Consultant, to its new Mobility Restoration & Recovery Task Force. Slaughter chairs the task force’s committee on “Transit Leadership in the Post-COVID-19 Mobility Landscape,” while Hakim serves in the priority area of “Service Recovery & Restoration.”

The task force’s timeline is to complete its work in September 2020.

The Board of Directors of the Railway Association of Canada (RAC) has elected Fiona Murray, VP of Public and Government Affairs at CN, as Chairperson.

She is the first female Board Chair in the RAC’s 103-year history. Murray joined CN in 1992, initially working in Public Affairs before moving to positions of increasing responsibility. “Fiona is a very effective and strong leader, as well as an extremely capable railroader,” said JJ Ruest, President and CEO, CN. “I’ve worked directly with Fiona for more than 20 years, and her dedication and commitment to anything she gets involved with has been an incredible asset for CN and will be most beneficial to the RAC. She is the right person to help lead the Board of the RAC and the organization to the next level.”

JUNE 22-23, 2020

25TH ANNUAL AAR RESEARCH REVIEW—WEBINAR In an effort to ensure that social distancing will not hinder AAR’s research, the 25th Annual AAR Research Review will be held in a new all-digital webinar format. The webinar format aims to allow TTCI teams to deliver—and AAR stakeholders to access—the industry’s key research of the past year. As a benefit of the Webinar format, registered Webinar participants will have access to recorded Research Review sessions following the event. The technical program of the AAR Research Review is scheduled for June 23, 2020 as a one-day Webinar. The Early Career Railroader Research Workshop will be delivered as a Webinar on June 22, 2020. More information will be released via AAR.com as well as TTCI’s LinkedIn page. As soon as the platform is ready, a notification will be sent to all Webinar registrants with links to the platform, login details, webinar instructions, tips and Recommendations. Contact Mickey Johnson at michele_ johnson@aar.com.

SEPTEMBER 9-10, 2020

LIGHT RAIL 2020, PRESENTED

BY RAILWAY AGE AND RT&S Courtyard Boston Downtown, Boston, Mass. conferences@sbpub.com https://www.railwayage.com/ lightrail/

SEPTEMBER 14-18, 2020

RAILWAY OPERATIONS 2020, PRESENTED BY MICHIGAN STATE UNIVERSITY ELI BROAD COLLEGE OF BUSINESS Union League Club of Chicago Loniers@msu.edu https://execed.broad.msu.edu/ programs/railway-businessadministration-leadershiprmcp-302/ railwayage.com

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 7-31-19.

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

223 Safety Glazing Standards Updated 7-31-19.

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

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

229 Locomotive Safety Standards Updated 7-31-19.

231 Safety Appliance Standards Updated 7-31-19.

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

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BKMFR

FRA News: There are no new proposals or final rules to report for this issue. Be sure to check back next month to see if there are any changes to FRA regulations.

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

BKSTC

Current FRA Regulations Item Code

FRA Part #

Update effective

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

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

222 228 229 230 231 237 240

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BKSEP

BKHORN BKHS BKLSS BKSLI BKSAS BKBRIDGE BKLER

BKCONDC 242 7-31-19

BKBSS

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

232 7-31-19 Brake System Safety Standards

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AILWAY GE ARE YOU A RAILROAD OR SUPPLIER SEARCHING FOR JOB CANDIDATES?

Visit http://bit.ly/railjobs 38 Railway Age //June 2020

To place a job posting, contact: Jennifer Izzo 203-604-1744 jizzo@mediapeople.com

railwayage.com

Ad Index COMPANY 1435 RAIL

PHONE #

FAX #

810-714-4626

URL/EMAIL ADDRESS

PAGE #

www.1435rail.com

11

CIT

212-461-5781

212-461-5632

James.Spencer@cit.com

13

DANELLA RENTAL SYSTEMS, INC.

561-743-7373

561-743-1973

SBolte@danella.com

26

DAVID J JOSEPH COMPANY

513-419-6200

513-419-6221

txs@djj.com

15

312-263-4141

312-263-1180

wgbrandt@DSIConsulting.com

C3

HERZOG SERVICES INC

816-233-9002

816-672-0119

telbert@herzogservices.com

21

LORAM MAINTENANCE OF WAY, INC

763-478-6014

763-478-2221

sales@loram.com

25

LTK ENGINEERING SERVICES

215-641-8826

215-542-7676

NCornell@ltk.com

35

dcarlson@kcsouthern.com

17

DEVELOPMENT SPECIALIST INC

MUL RAILCAR

703-287-7400

PANDROL USA, L.P.

800-221-CLIP

856-467-2994

PLASSER AMERICAN CORP

757-543-3526

757-494-7186

plasseramerican@plausa.com

27

RAILSOLUTIONS, INC.

757-903-4606

757-903-4705

bbrundige@sb-reb.com

16

RAILWAY EDUCATIONAL BUREAU

402-346-4300

402-346-1783

conferences@sbpub.com

37

SIEMENS TRANSPORATION

800-SIEMENS

www.usa.siemen.com

9

SMBC RAIL SERVICES LLC

312-559-4800

sales@smbcrail.com

14

SPERRY RAIL SERVICES

203-791-4507

robert.dimatteo@sperryrail.com

23

STV GROUP

212-777-4400

212-529-5237

info@stvinc.com

31

TRIMBLE

678-597-3156

678-597-0156

rail.trimble.com/rail@trimble.com

C2

trinityrail.com

C4

888-RAILCAR

24

TRINITY RAIL

800-631-4420

VTG RAIL

480-248-2457

888-379-2347

Henry.Novell@VTG.com

15

519-452-1233

519-452-7764

railwayinfo@ztr.com

3

ZTR

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

June 2020 // Railway Age 39

Perspective: ASLRRA

What’s Changed? Just About Everything

N

ational survey data indicate that 70% of Americans have not left their homes to visit family or friends, more than 50% have not gone into work, 20% do not leave their home to shop for the essentials of life, and 33% have someone in their household that has either lost a job or took a pay cut because of the coronavirus outbreak. A stunning 39 million Americans have filed for unemployment since early March.

What hasn’t changed is the railroad industry’s ability to provide uninterrupted service, moving raw materials and finished products across the country 24/7/365. Class I’s and short lines alike are up and running over an incredibly resilient network. From the short line perspective, we are leaning heavily on what has always been one of our greatest strengths, providing flexible service based on close communication with our customers, made possible by dedicated, entrepreneurial employees. Here are just a few examples.

The Indiana & Ohio Railway (IORY) delivers inbound and fatty and cyclic alcohols to the Procter & Gamble production facility in Lima, Ohio. The two alcohols are the main ingredients of most hand sanitizers. As a result of the pandemic, IORY has been providing extra weekend switches to accommodate P&G’s increased production of hand sanitizers, and also expedited railcars from Cincinnati so that P&G can generate sanitizer more quickly. “IORY does whatever it can to help P&G when we require urgent or special shipments,” says Tony Fries, P&G’s transportation officer.

40 Railway Age // June 2020

“We appreciate the agility.”

Morning Star Company, a key California Northern Railroad (CFNR) customer, is the biggest tomato processor in California, a state that accounts for 95% of total U.S. output. “CFNR has been critically important to the success of our overall business,” says Morning Star’s Bob Henry.

“We have a tremendous relationship with them, based on daily communication.

What sets them apart from others is their willingness to be flexible with scheduling, and that’s key for us.”

The New Orleans & Gulf Coast Railway (NOGC) moves grain for export and materials and products to chemical plants.

Unusually high water and swift currents on the Mississippi River have put some areas out of reach for ships, making NOGC even more important to customers along the

except our ability to provide uninterrupted rail service.” river. At the same time, the NOGC’s service area is a hot zone for COVID-19 infections, which HAVE kept some of the short line’s employees in isolation. Balancing increasing customer needs with safety and family needs is a difficult challenge that NOGC is meeting every day.

The Gulf & Ohio Railways is making new infrastructure investments to accommodate additional customer requests for car storage, which is unfortunately a critical need for some businesses right now.

To paraphrase Blanche DuBois in A Streetcar Named Desire, you can always depend on the kindness of strangers, especially short line railroaders. In April, Tom Grassel of the Strasburg Rail Road (photo, left) delivered 13,000 candy eggs to the Lampeter Church of the Brethren where

they were given out for Easter, because the Strasburg Rail Road had to cancel its beloved Easter Bunny Train Rides during the pandemic.

Riverport Railroad, LLC (RVPR) has created a virtual train ride for area preschool classes in place of their annual field trip. The company has also been making financial donations to the local food pantry and to the Savanna Chamber of Commerce to support individuals and businesses in need.

Because flexibility is the short line watchword, we are turning our October 5-9 Connections Convention into a virtual event. We are committed to making this online event as invaluable, informative and interesting as the in-person variety.

We will feature insights from key leaders, among them including Federal Railroad Administrator Ron Batory and Pipeline and Hazardous Materials Safety Administrator Howard “Skip” Elliott; executives from rail shippers, Class I’s and short lines; and state and federal regulators and legislators.

The program will include timely panel discussions, deep-dive breakout sessions, interactive Q&A and virtual networking for half the regular registration price (plus, no airfare, travel or lodging costs). Participants will be able to log on from the comfort of home or office and choose from a great selection of live and on-demand content.

We understand that, for our rail suppliers, which are such a critical part of our industry, our annual conference has been an important opportunity for networking and promotion. We are going to make every effort to duplicate those opportunities in this new environment. We look forward to your participation and urge your company to give it a try and support your association, so that we can keep supporting you.

CHUCK BAKER President ASLRRA

railwayage.com

AUCTION SALE OF MASSACHUSETTS COASTAL RAILROAD LLC NOTICE IS HEREBY GIVEN that William A. Brandt, Jr. of Development Specialists, Inc. (“DSI”), as chapter 11 Trustee of San Luis & Rio Grande Railroad, Inc. (“SLRG”) is selling SLRG’s 100% Membership Interest in its wholly-owned subsidiary Massachusetts Coastal Railroad LLC (“Mass Coastal”), a 99-mile short line railroad operating on and near Cape Cod, MA, which currently provides freight rail services primarily for various industrial commodities and the haulage of municipal waste.

The Membership Interest will be sold free and clear of all liens, claims, rights, interests, and encumbrances whatsoever. Mass Coastal’s assets and liabilities shall remain unaffected by the sale of the Membership Interest, as the Successful Bidder is essentially buying the stock of Mass Coastal.

The Trustee anticipates selling the Membership Interest in Mass Coastal pending approval of Bidding Procedures filed in the chapter 11 bankruptcy of San Luis & Rio Grande Railroad, Inc., United States Bankruptcy Court District of Colorado as case number 19-18905-TBM. The Trustee and his professional advisors at DSI have received a Stalking Horse Bid for the Membership Interest from Coastal Rail, LLC. The Stalking Horse Bidder is an insider of the Debtor, as defined in Bankruptcy Code section 101(31), and is an affiliate of the current manager of Mass Coastal, which is 100% owned by SLRG. The Stalking Horse Bid is $952,559, which consists of $625,000 of new cash (the “Cash Purchase Price”) plus a relinquishment of any claims held by Mass Coastal to the $327,559 in net cash currently held by the Trustee on Mass Coastal’s behalf as a result of the assignment of the Section 45G Tax Credits.

Parties interested in submitting a competing Bid must submit an offer to purchase the Membership Interest on substantially the same or better terms as the Stalking Horse Bidder. The aggregate cash consideration proposed by the first competing Bid must be equal to, or exceed, the sum of the Purchase Price set forth in the Stalking Horse Bid plus a further ten percent (10%) of the Cash Purchase Price.

Subject to Bankruptcy Court approval, if the Trustee receives qualified competing bids, an auction will be held on June 19, 2020, at the offices of Markus Williams Young & Hunsicker, LLC in Denver, CO. Also subject to the Bankruptcy Court Approval the following dates shall apply: Bid Deadline: June 16, 2020, at 11:59 p.m. MT Auction Date: June 19, 2020, at 10:00 a.m. MT Copies of the Sale Motion, Motion to Approve Bid Procedures and all other related exhibits, are available (a) upon request by contacting the Trustee’s counsel, or, (b) for a fee via PACER by visiting http://www.cob.uscourts.gov.

Trustee’s Counsel: Jennifer Salisbury Markus Williams Young & Hunsicker, LLC 1775 Sherman St., Ste. 1950 Denver, CO 80203 (303) 830-0800 jsalisbury@markuswilliams.com www.markuswilliams.com

Trustee: William A. Brandt, Jr. Development Specialists, Inc. 110 East 42nd St., Ste. 1818 New York, NY 10017 (212) 425-4141 bbrandt@DSIconsulting.com www.DSIconsulting.com

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