March 2017 Railway Age by Railway Age

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March 2017 | www.railwayage.com

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Wick Moorman Reshaping, Rebuilding Amtrak

Intermodal: On the Way Up? Crosstie Choices

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RailwayAge

March 2017

visit us at www.railwayage.com Features Reshaping Amtrak

Short-haul intermodal

M/W Focus: Crossties

TTCI R&D

Columns From the Editor

Watching Washington

Financial Edge

News/Departments Industry Indicators

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Update

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100 Years Ago

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On the Cover Amtrak President and CEO Wick Moorman Photo: Amtrak Railway Age Magazine (Print ISSN 0033-8826; Digital ISSN 2161-511X), (USPS 449-130), (Canada Post Cust. #7204564; Agreement #40612608; IMEX PO Box 25542, London, ON N6C 6B2, Canada) is published monthly by Simmons-Boardman Publishing Corp., 55 Broad St., 26th Floor, New York, NY 10004. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 218, No. 3. Printed in the U.S.A. Periodicals postage-paid at New York, NY and additional mailing offices. SUBSCRIPTIONS: Qualified individuals in the railroad industry may request a free subscription. Pricing for non-qualified subscriptions, printed and/or digital version: $100.00 per year/$151.00 for two years in the U.S./Canada/Mexico; $139.00 per year/$197.00 for two years, foreign. Single copies are $36.00 each. Subscriptions must be paid for in U.S. funds only. COPYRIGHT Â© Simmons-Boardman Publishing Corporation 2017. All rights reserved. Contents may not be reproduced without permission. For reprint information, contact PARS International Corp., 102 W 38th St., 6th Floor, New York, NY 10018. Phone (212) 221-9595. Fax (212) 221-9195. For subscriptions and address changes, please call (800) 895-4389 or (402) 346-4740; Fax (402) 346-3670; e-mail railwayage@omeda.com; or write to: Railway Age Magazine, SimmonsBoardman Publishing Corp., PO Box 3135, Northbrook, IL 60062-3135. POSTMASTER: Send address changes to Railway Age Magazine, PO Box 3135, Northbrook, IL 60062-3135. March 2017 Railway Age 1

From the Editor William C. Vantuono

Editorial and Executive Offices Simmons-Boardman Publishing Corp. 55 Broad Street, 26th Fl. New York, NY 10004 212-620-7200; Fax: 212-633-1863 Website: www.railwayage.com

Crowd psychology at work

eel free to tell me if I’m off-base, but it seems to me that the recent spate of political attempts to squash important rail transit projects is driven by “crowd psychology” (also called “mass psychology” and “mob psychology”), basically a misguided version of the old schoolyard game “Follow the Leader.” German philosopher, sociologist and composer Theodor Adorno, writing about the rise of the Third Reich in the 1930s, described crowd psychology as “the bond linking the masses to the leader.” To paraphrase Adorno: When leaders become conscious of mass psychology and take it into their own hands, people start to believe in them, even if deep down in their hearts they do not agree with what is being said or done. They do not really identify themselves with them but act on this identification and participate in their leaders’ performance. If they would stop to reason for a second, their performance would fall apart. These are extreme examples, but consider the genocide that occurred in World War II Germany, the Balkans in the 1990s, and in politically unstable nations in Africa. Mostly Republican-led efforts to derail transit projects are an entirely different circumstance, but nevertheless they smell of crowd psychology at work. We now have in the White House a President who has engaged in some very bad behavior. While we don’t know yet what the Administration’s federal budget is going to look like, there are strong signs that passenger rail funding—Amtrak, commuter rail, urban and suburban transit—will be targeted for zeroing-out. It seems me that transit-loathing politicians now have a leader who provides them an ideal excuse for engaging in their own form of bad behavior. So much for investing in infrastructure. I’m referring to two specific projects: Caltrain’s Peninsula Corridor Electrification, and a Metro Transit

Railway Age

March 2017

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(Minneapolis-St. Paul) light rail extension. In California, high-speed-rail-loathing Republican House Rail Subcommittee Chair Jeff Denham managed to persuade USDOT Secretary Elaine Chao to defer an FTA Full Funding Grant Agreement for the electrification project, which is only loosely related to Denham’s favorite target, California High Speed Rail. Caltrain is fortunate its two principal contractors, Balfour Beatty and Stadler Rail, agreed to a four-month contract extension from the original March 1 deadline. The other crowd-psychology-induced Republican initiative to crush a mass transit project surfaced at Metro Transit. As told by CBS Minnesota, “Republican [state] lawmakers said they would try to shift federal funding away from a planned light rail route between Minneapolis and its southwestern suburbs and spend it instead on general road and bridge repair. GOP legislators have long sought to block planning and funding for light rail projects, saying they put metro-area priorities above rural Minnesota. The legislation would move $900 million in federal money away from the roughly $2 billion Southwest Light Rail Transit project.” Yes sir, it sure looks like crowd psychology to me—a dangerous form of Follow the Leader. What transit project will be next to suffer? APTA, are you paying attention? Again, so much for investing in infrastructure, which we all know encompasses far more than highways and airports. I hope I’m wrong, but I believe that many stakeholders in our industry, including the people it serves, are going to suffer from the intended consequences of crowd psychology—transit agencies, suppliers, contractors, engineering consultants, and the transit-riding public. Let’s hope that all our elected officials stop to reason for a second.

ARTHUR J. McGINNIS, Jr., President and Chairman JONATHAN CHALON, Publisher jchalon@sbpub.com WILLIAM C. VANTUONO, Editor-in-Chief wvantuono@sbpub.com STUART CHIRLS, Senior Editor schirls@sbpub.com Contributing Editors: Roy H. Blanchard, Alfred E. Fazio, Bruce E. Kelly, Ron Lindsey, Ryan McWilliams, David Nahass, Jason H. Seidl, David Thomas, John Thompson, Frank N. Wilner Creative Director: Wendy Williams Art Director: Nicole Cassano Graphic Designer: Aleza Leinwand Corporate Production Director: Mary Conyers Digital Ad Operations Associate: Kevin Fuhrmann Production Director: Eduardo Castaner Marketing Director: Erica Hayes Conference Director: Michelle Zolkos Circulation Director: Maureen Cooney Western Offices 20 South Clark Street, Suite 1910, Chicago, IL 60603 312-683-0130; Fax: 312-683-0131 Engineering Editor: Mischa Wanek-Libman mischa@sbpub.com Assistant Editor: Maggie Lancaster mlancaster@sbpub.com International Offices 46 Killigrew Street, Falmouth, Cornwall TR11 3PP, United Kingdom Telephone: 011-44-1326-313945 Fax: 011-44-1326-211576 International Editors: David Briginshaw, db@railjournal.com Keith Barrow, kb@railjournal.com Kevin Smith, ks@railjournal.com Customer Service: 800-895-4389 Reprints: PARS International Corp. 253 West 35th Street 7th Floor New York, NY 10001 212-221-9595; fax 212-221-9195 curt.ciesinski@parsintl.com Railway Age, descended from the American Rail-Road Journal (1832) and the Western Railroad Gazette (1856) and published under its present name since 1876, is indexed by the Business Periodicals Index and the Engineering Index Service. Name registered in U.S. Patent Office and Trade Mark Office in Canada. Now indexed in ABI/Inform. Change of address should reach us six weeks in advance of next issue date. Send both old and new addresses with address label to Subscription Department, Railway Age, PO Box 3135, Northbrook, IL 60062-2620, or call toll free (800) 895-4389, or (402) 346-4740. Post Office will not forward copies unless you provide extra postage. Photocopy rights: Where necessary, permission is granted by the copyright owner for the libraries and others registered with the Copyright Clearance Center (CCC) to photocopy articles herein for the flat fee of $2.00 per copy of each article. Payment should be sent directly to CCC. Copying for other than personal or internal reference use without the express permission of SimmonsBoardman Publishing Corp. is prohibited. Address requests for permission on bulk orders to the Circulation Director. Railway Age welcomes the submission of unsolicited manuscripts and photographs. However, the publishers will not be responsible for safekeeping or return of such material. Member of:

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Industry Indicators TRAFFIC ORIGINATED CARLOADS

SHORT LINE AND REGIONAL TRAFFIC INDEX FOUR WEEKS ENDING JAN. 28, 2017

MAJOR U.S. RAILROADS by Commodity 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 and Steel Scrap Motor Vehicles and Parts Crushed Stone, Sand, and Gravel Nonmetallic Minerals Stone, Clay & Glass Products Waste & Nonferrous Scrap All Other Carloads Total U.S. CarLoadS

JAN. ’17 156,508 3,155 36,637 23,565 120,916 40,247 337,751 4,555 11,267 22,579 83,848 16,908 35,409 14,261 64,002 75,920 16,932 23,802 14,757 23,489 996,573

JAN. ’16 154,134 3,568 36,716 25,269 125,372 49,998 301,953 5,342 12,657 23,566 77,331 15,689 33,382 13,302 64,480 74,100 16,565 26,706 12,211 23,817 968,232

% CHANGE 1.5% -11.6% - 0.2% -6.7% -3.6% -19.5% 11.9% -7.6% -11.0% -4.2% 15.5% 7.8% 7.8% 7.2% -0.7% 2.5% 2.2% -10.9% 20.9% -1.4% 2.9%

305,639

276,157

10.7%

1,302,212

1,244,389

4.6%

CARLOADS

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

COMBINED U.S./CANADA RR INTERMODAL

FOUR WEEKS ENDING JAN. 28, 2017

MAJOR U.S. RAILROADS by Commodity TRAILERS CONTAINERS TOTAL UNITS

JAN. ’17 93,388 927,680 1,021,068

JAN. ’16 96,237 943,384 1,039,621

% CHANGE -3.0% -1.7% -1.8%

3,797 235,371 239,168

3,689 234,266 237,955

2.9% 0.5% 0.5%

97,185 1,163,051 1,260,236

99,926 1,177,650 1,277,576

-2.7% -1.2% -1.4%

COMBINED U.S./CANADA RR TRAILERS CONTAINERS TOTAL COMBINED UNITS

Source: Monthly Railroad Traffic, Association of American Railroads

average weekly U.S. Rail Carloads: all commodities (not seasonally adjusted)

% CHANGE 5.4% 43.2% 9.1% 4.2% 14.7% 2.5% 4.3% -66.7% 0.7% 15.1% 76.3% 19.7% 1.2% 6.9% 19.0% 23.0% 7.6%

Railroad employment, Class I linehaul carriers, january 2017 (% change from january 2016)

CANADIAN RAILROADS TRAILERS CONTAINERS TOTAL UNITS

ORIGINATED JAN. ’16 44,638 17,917 19,305 10,448 23,460 6,292 8,007 9,574 16,691 7,313 1,007 1,784 18,460 10,820 44,574 7,723 72,989

TOTAL CARLOADS, JANUARY 2017 vs. 2016

CANADIAN RAILROADS ALL Commodities

ORIGINATED JAN. ’17 47,058 25,656 21,063 10,890 26,904 6,448 8,348 3,184 16,803 8,418 1,775 2,135 18,673 11,563 53,065 9,502 78,553

BY Commodity

Transportation (train and engine) 58,043 (-4.35%)

Executives, Officials, and Staff Assistants 9,076 (-4.93%)

Professional and Administrative 13,189 (-6.27%)

Total employees: 148,427 % change from jan. 2016: (-3.30%) Transportation (other than train & engine) 5,911 (-9.2%)

Maintenance of Equipment and Stores 28,034 (-6.4%)

Maintenanceof-Way and Structures 34,174 (-4.65%)

Source: Surface Transportation Board

class I employment starts new year weaker overall Figures released by the Surface Transportation Board show Class I total railroad employment dropped 5.22% in January 2017, measured against January 2016. While there were decreases across all categories, declines were less severe than the previous month. The largest was in Transportation (other than train & engine) at 9.2%. Transportation (train & engine) had the smallest decline at 4.32%, but that was a marked improvement after slipping 10.97% in December 2016. 4

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March 2017

Industry Outlook Charger charges toward revenue service

The Washington State Department of Transportation (WSDOT) conducted national certification testing of Amtrak’s new Siemens SC-44 Charger dieselelectric locomotive on the Cascades Corridor. The SC-44 is scheduled to enter revenue service later this year. WSDOT has ordered eight of the 4,400-hp, Cummins QSK95 engineequipped locomotives, which are being assembled by Siemens in Sacramento. Washington State, along with Illinois, California, Michigan and Missouri, jointly developed specifications for the Charger. WSDOT operates the Cascades Corridor service with the Oregon Department of Transportation. Hauling a Cascades Talgo trainset sans passengers (testing at TTCI in Pueblo, Colo., pictured here), the Charger operated on various sections

of the existing Vancouver, B.C. to Eugene, Ore., corridor. Amtrak and Siemens staff conducted the tests. WSDOT added that because its eight locomotives are under construction in California, an Illinois-designated unit was deployed for testing. WSDOT’s units are slated to arrive in April. The new locomotive is part of WSDOT’s $800 million federally funded Cascades High-Speed Rail program. The added motive power and other improvements will enable WSDOT to add two more daily Amtrak Cascades roundtrips between Seattle and Portland beginning in the fall. Florida’s privately run Brightline passenger service has been testing the first of an order of five Chargerequipped trainsets delivered in January.

STB adjusts rail productivity measure The Surface Transportation Board is adopting a tentative new measure of average change in railroad industry productivity for 2011-15. The Board adopted 1.020 (2% per year) as the long-run measure of productivity, an increase of 0.6% from the average of the 2010-14 period. The STB each year calculates any change in railroad industry productivity by comparing year-to-year the average cost of producing a unit of railroad output. It said this year’s calculation 6

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March 2017

was affected by a change in how distances are measured that affected the yearly change in revenue ton-miles, an input to the Board’s calculation of the change in productivity. The STB’s decision in Railroad Cost Recovery Procedures–Productivity Adjustment, EP 290 (Sub-No. 4), may be viewed and downloaded at www.stb.gov, under E-LIBRARY / Decisions & Notices / 02/ 14 / 17. Opening comments were due by March 16 and reply comments are due by April 5, 2017.

GE plants women STEM seeds

GE last month announced goals of having 20,000 women fill STEM (Science, Technology, Engineering and Math) roles by 2020 and obtaining 50:50 representation in all the company’s technical entry-level programs. “The program will significantly increase the representation of women in GE’s engineering, manufacturing, IT and product management roles—a strategy necessary to inject urgency into addressing ongoing gender imbalance in technical fields and fully transform into a digital industrial company,” GE said. “While efforts have been made across the sector through education, funded initiatives and the emergence of non-profit discussion, progress has been slow on this issue. Technical and engineering sectors are still male-dominated and the pipeline for future talent is currently insufficient to meet future needs.” GE said that, without more women in technology and manufacturing, it “expects the skills gap to widen, impacting productivity and diminishing the potential of digital and other new technologies transforming industry and manufacturing.” In a white paper, “Engineering the Future: The Socio-Economic Case for Gender Equality,” GE Chief Economist Marco Annunziata and Global Economist Kimberly Chase outline what they term “the talent crisis for women in STEM roles” as well as “the economic opportunity of addressing gender imbalance across the sector.” “In the U.S. today, only 14% of engineers and 25% of IT professionals are women,” Annunziata and Chase note. “Though women make up 55% of college and graduate students, only 18% of computer science graduates are female, according to the U.S. Bureau of Labor Statistics. Among tech giants, women are under-represented: 13-24% of tech-related jobs and 17-30% ascending to leadership positions. While women tend to outnumber men overall in higher education (55% to 45%), the share is much smaller for STEM education.

Market

NSC: New cottonseed, woodchip cars National Steel Car (NSC) and Curry Rail Services of Hollidaysburg, Pa., are building high-capacity gondolas for cottonseed and woodchip service. These cars have a GRL (gross rail load) of 286,000 pounds and payload of 106.5 tons, with a level cubic capacity of 7,200 cubic feet. In contrast, the current fleet of cottonseed cars is basically comprised of 600 ex-woodchip gondolas. These are 263,000-pound GRL, 6,800-cubic-foot capacity with a 94- to 95-ton per-car payload. NSC’s production involves cars built for Chickasha of Georgia LLC, a cottonseed cooperative owned by several southeastern gins. They are equipped with dual-hinged ends, and doors that swing open from the end top chord. They can also be built with fixed ends and rotary dump capability. “Cottonseed is a relatively new opportunity that has proven timely during a declining woodchip market,” says NSC Senior Vice President Marketing and Sales Bob Pickel. “These new cars replace aging, lowercapacity woodchip cars for woodchip and cottonseed services. We believe the replacement market requires a minimum 7,000-cubic-feet-plus-capacity car with a 210,000-pound (105-ton) payload, and LOPF (length over pulling face) not to exceed 69.5 feet. There are some height restrictions, as COG (center of gravity) is the controlling element of car design.”

North America Progress Rail Services in February successfully completed initial emissions testing of a new switching locomotive, the EMD24B, and has begun the process of certifying the locomotive for EPA Tier 4 emissions standards. Rated at 2,000 horsepower, the EMD24B comes equipped with a Caterpillar 3512C HD engine and aftertreatment technologies to lower emissions. The four-axle unit was constructed with a remanufactured underframe and cab from an existing General Motors Electro-Motive Division GP-40 of pre-1973 vintage. Union Tank Car Company (UTLX) has launched UTLX Repair Link, a BRC and railcar management portal, to

streamline transactions with contract shops during the repair cycle. To manage its fleet of more than 80,000 cars, UTLX turned to technology solution provider RailcarRx, which was already providing its Repair Shop Management System for repair rebilling. The portal has been rolled out in phases; several shops are currently onboard with the system and more are being added, helping the company manage the repair process for shops outside its own network. Shops are now able to access railcar information, upload estimates and invoices, and communicate with UTLX, all through one streamlined platform. UTLX plans to have all of its contract repair shops on board with Repair Link within the year.

Worldwide: China Railway Investment Corp. (CRIC) has issued RFPs for contracts to supply 586 electric locomotives and 40,000 freight cars to China Railway Corp. (CRC). The locomotive order is divided into three lots, comprising 91 100 mph six-axle passenger locomotives, 191 12,875-hp eight-axle freight locomotives, and 304 9,955-hp six-axle freight units. The car order comprises two lots and calls for the supply of 20,000 type X70 intermodal cars, and 20,000 type NX70A flat cars. China’s freight volume totaled 2.65 billion tons in 2016, down 2.3% from 2015, according to CRC. China operates freight services to 15 European cities, including the experimental East Wind. March 2017 Railway Age 7

Update Is CSX prepping for Hunter’s arrival?

ate last month, CSX Corp. announced that Chairman and CEO Michael Ward and President Clarence Gooden will retire, effective May 31. At the same time, the railroad said it was eliminating 1,000 management jobs in the coming weeks, at its headquarters in Jacksonville and throughout its network. CSX followed these announcements by extending its deadline for board nominations to March 10. Chief Sales and Marketing Officer Fredrik Eliasson, a 22-year veteran of the company, was appointed President effective Feb. 15. CSX has been in talks with activist investor Mantle Ridge regarding the hedge fund’s demand for board seats and to install E. Hunter Harrison as chief executive. The company earlier called a special meeting of shareholders to vote on Mantle Ridge’s demands. “CSX announced to its employees the reduction of 1,000 management employees through an involuntary separation program, which will be completed by mid to late March,” the company told Railway Age. “Enhanced separation benefits are being extended to those impacted employees. A majority of those impacted employees are in Jacksonville across multiple locations and subsidiaries but affected employees also are in our field organization. Upon further study and evaluation, we will know both the Jacksonville and field

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management employee impact.” Currently, CSX has approximately 36,000 employees. CSX described the changes as an “orderly transition” of senior leadership that the board “has been considering for more than a year,” adding it is continuing discussions with Hunter Harrison and activist investor Mantle Ridge regarding Harrison becoming CEO at CSX. Eliasson, 46, will maintain his current responsibilities in his new position. He has served as Executive Vice President and Chief Sales and Marketing Officer since September

CSX describes recent organizational changes as an “orderly transition” of senior leadership 2015, and prior to that was Chief Financial Officer from 2012-15. He joined CSX in 1995. CSX’s claim that Ward’s and Gooden’s retirement and the layoff of 1,000 management staff are unrelated to the company’s dealings with Mantle Ridge and Hunter Harrison is being met with skepticism among some industry observers. “The news of the firings came out on the same day the two top executives of Jacksonville’s largest Fortune 500 company officially announced their plans to retire this spring,” noted one. “It also came as the railroad is in discussions with a hedge fund that wants to install the executive who led Canadian Pacific’s turnaround. This isn’t much of a ‘good job, thanks for your support, farewell’ message to the general management staff from its two senior executives who are ‘retiring,’ as 1,000 of the management team will be removed before the ‘farewell retirement party.’

“I’m not sure I can recall this kind of a management slaughter under such conditions of high railroad profitability. In terrible financial times, sure. But CSX is not Penn Central or the Rock Island. CSX claims that Eliasson’s appointment isn’t meant to pre-empt discussions with Paul Hilal’s Mantle Ridge hedge fund about Hunter Harrison becoming CSX’s next CEO. But the hedge fund is not an operating company, so this cannot be part of an advance merger/general and administrative budget strategy by the current board. It has to be a bold attempt to say, ‘We can slash G&A costs as well as a hedge fund group can.’ “While a senior female Executive Vice President might have been considered for the head spot, apparently the existing CSX board—which might soon be replaced—decided to place a marketing person in charge of the ship of state. So far, there is no announcement as to how the existing CSX board and its president will change 2016-2020 strategic market traffic growth plans, intermodal expansion plans, or the bigger/longer trains and two-part network operating plans. This is now an ‘in-limbo’ strategic plan. That information hasn’t been publicly addressed by either the board’s current action or by the hedge fund group. It remains a void to shippers, regulators, investors, and joint parties engaged in PPP projects like the most recent Crete, Ill., project. “Somewhat at risk (or not) are capital projects from Atlanta/Florida to Chicago/Detroit, and along the I-95 corridor between Florida and Baltimore/Philadelphia. The scale of such engineering might well be in the range of more than $6 billion in estimated calculated capital projects on the CSX drawing boards, with various stages of unpublished commitments that the involved multi-state parties and customers don’t know. “This uncertainty might continue until late in 2017, when CSX capital budgets are internally decided by whatever board will by then be in charge.”

Joseph M. Calisi

PANYNJ slates record-size capex plan The Port Authority of New York and New Jersey (PANYNJ) Board of Commissioners last month approved a $32.3 billion 2017-2026 Capital Plan. The largest capital plan in agency history, the Capital Plan includes $29.5 billion in direct spending on PANYNJ projects, and the authority’s $2.7 billion commitment to support debt service on the Gateway passenger rail tunnel project. PANYNJ expects it to result in the creation of 235,400 job-years, $20 billion in total wages and $56 billion in overall economic activity. The Capital Plan also includes funding to rebuild some of Port Authority Trans Hudson’s (PATH) aging rapid transit rail stations and to upgrade other critical rail system infrastructure to ensure safety and service reliability. Among these projects is signal and train control modernization with CBTC (communications-based train control). Funds also are included to plan and build an extension of the PATH system from its current terminus at Newark Penn Station to the Newark Liberty International Airport Air Link Station, a project designed to improve airport access and enhance trans-Hudson commutation. The Capital Plam also includes funds to build AirTrain LaGuardia, providing the airport, located in a congested area of northern Queens Borough, with rail access to and from Manhattan and other New York City destinations for the first time. PANYNJ establish a rail link to John F. Kennedy International Airport a few years ago. PANYNJ also points out that the committment to $2.7 billion for the Gateway trans-Hudson rail tunnel link between New York and New Jersey and Portal Bridge North projects “represents the largest contribution of any stakeholder to date.” The contribution will pay debt service on expected borrowing by the Gateway Program Development Corp. from low-interest federal RRIF (Railroad Rehabilitation and Improvement Financing) loans. “There’s no question that the region’s transportation needs are growing at a far greater rate than the resources that are available to address them,” said Port Authority Chairman John Degnan. “For that reason, this Board has spent tireless hours coming to a consensus on how our resources will be spent to benefit the region and the customers we serve. We have developed a plan that invests in the most critical projects, including critical improvements to trans-Hudson capacity, while providing the flexibility to make future changes should new, more vital needs emerge.” “This region needs state-of-the-art airports, new mass transit infrastructure and bridges designed to handle 21st century traffic levels if we are to meet growth projections,” said PANYNJ Executive Director Pat Foye. “This 10-year plan provides a record level of investment in all of these areas that will meet and support the region’s growth and serve as a major job creator for the next decade.” March 2017 Railway Age 9

Update BNSF sees $3.5 billion in economic development Development along BNSF Railway’s network totaled nearly $3.5 billion in 2016, including completion of a $1.3 billion steel mill in Arkansas and a sugar facility in Illinois. The investments by the railroad’s customers are expected to generate more than 3,000 new jobs in local communities. Thee mark the sixth consecutive year that BNSF customers and local economic development organizations have invested more than $1 billion in a calendar year for new or expanded facilities. BNSF said it helped generate new or expanded development in 115 communities across its network, from agriculture, chemicals, and consumer products to ethanol, fertilizer, industrial products and petroleum. Development included: • The world’s first Flex Mill built by Big River Steel in Osceola, Ark. The

largest economic development project in Arkansas history, the mill will produce a variety of steel products, including advanced automotive and electrical steels. It is expected to have more than 400 workers on-site daily. • A new bulk sugar storage and transfer facility built by United Sugars Corp. in Montgomery, Ill., that opened its doors in November 2016. The facility allows United Sugars to moreefficiently store its product closer to its large customer base in the Chicago and Great Lakes areas. The 20-acre complex includes a 26,000 square-foot bulk storage dome that stands 134 feet high and 183 feet wide (right). It has the capacity to store 60,000 metric tons of sugar and will transfer nearly twice that much to customers annually. “Our customers’ investments are a direct reflection of the effective and efficient transportation solutions our

rail network provides to a range of businesses and industries,” said BNSF Assistant Vice President, Economic Development Colby Tanner. “The role of BNSF’s economic development team is to help facilitate and expedite the process of establishing rail service and a transportation infrastructure that is attractive to a variety of industries, which then helps drive investments and employment opportunities across the communities we serve.”

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Watching Washington Frank n. wilner

Labor’s double-down bet on Trump

ith collective-bargaining between 13 labor unions and the nation’s Class I freight railroads (plus some regionals and short lines) over wages, benefits and work rules in its third fitful year, the National Mediation Board (NMB) could declare an impasse as early as late 2017. That puts rail labor on a path to assign the outcome to a President whose businesses were cited scores of times for failure to pay minimum and overtime wages and violating workers’ rights; and whose first choice for Labor Secretary—Andrew Puzder, who withdrew—“routinely violated labor law, disrespected workers [and] opposed a living wage,” according to the AFL-CIO. Upon an NMB-declared impasse, the Railway Labor Act allows naming of a Presidential Emergency Board (PEB) to make non-binding settlement recommendations. Traditionally, PEB appointees are seasoned arbitrators, but there is precedent for selecting those with an anti-labor animus—a probable outcome from Donald J. Trump, who historically walks a walk less labor-friendly than his talk. If the sides cannot settle based on PEB recommendations, Congress typically imposes them through legislation. This Republican-led Congress is not a recommended testing ground to achieve better. Indeed, labor-friendly Democrats accuse the Republican majority of seeking to “bankrupt” labor unions, such as with a national right-towork law allowing many union members to opt out of paying dues. Over the past decade—notwithstanding a banking calamity, an economic downturn and concessionary labor agreements accepted by most non-rail labor unions—rail workers fared exceedingly well at the

bargaining table. Their previous national contract, retroactive to 2010, delivered wage hikes of from 17% to 18.6% over 60 months. The largest of the unions said that agreement delivered “a greater boost in purchasing power than any other national contract in the past 40 years.” Funding those gains was the strength of America’s energy sector— rail haulage of coal, materials for oil and natural gas exploration, and the crude oil extracted. No longer. The economic storm clouds that have

This Republicanled Congress is not a testing ground to achieve a better settlement. affected the global economy and other American industries now hover over railroads. Rail revenue from coal traffic is down more than $4 billion since 2011, and lower global oil prices damped domestic oil and gas exploration, decreasing crude-by-rail shipments. A Trump-promised upsetting of global trade agreements could sharply curtail intermodal container shipments. Hopes for massive infrastructure spending, benefiting railroads that haul construction materials, could be dashed by congressional budget hawks resistant to increasing federal deficits. Duplication of the previous rail agreement’s hefty wage increase, which included a cap on healthcare insurance premiums, is unrealistic in

today’s economic climate, and more improbable given election results. A significant obstacle to settlement is the share of ever-increasing healthcare costs to be borne by rail workers, who now pay just seven cents (railroads pay 93 cents) of every healthcare-dollar cost. Federal workers and non-rail private sector employees pay a considerably larger share. Rail workers have lower deductibles and copays, and their monthly healthcare insurance premium, capped at $228.89 since 2010 (with health care costs climbing 30% since), is less than half that paid by other private sector workers, says the Kaiser Family Foundation. Unlike other plans, rail worker premiums do not increase as family size does. No matter the tilt of the playing field, voluntary settlements are preferable to ones imposed by Congress. Just the threat of a work stoppage damages union members and railroads alike, as it propels substantial freight to trucks, adversely affecting jobs along with profits. Elected rail labor leaders, who solicit votes by talking tough, are promising members they “never” will accept what carriers are proposing, even though no details have been released. NMB mediators seek common ground ahead of more strident oration. Given that few, if any, American workers enjoy the wage level, healthcare advantages and retirement benefits of American rail workers, it is relevant to invoke labor icon Samuel Gompers, who tempered his strident, “more, now” refrain with a sober caution: “The worst crime against working people is a company that fails to operate at a profit.” And did we mention the risks to labor of the current political environment? March 2017 Railway Age 11

RESHAPING, REBUILDING AMTRAK Wick Moorman brings more than 40 years of Class I experience to a role that’s been described as “the toughest job in railroading.”

early 20 years have passed since Amtrak has had a President and CEO with actual hands-on railroading experience. That was David L. Gunn, who was hired in 2002 to essentially clean up a bureaucratic and operational mess left behind by the now-deceased George Warrington, who had left Amtrak to run New Jersey Transit after New Jersey’s then-Governor, scandal-plagued (and soon-to-resign) Jim McGreevy had forced out Jeffrey A. Warsh, who years later is still regarded as one of NJT’s most visionary leaders. In 2005, Amtrak’s board fired Gunn, its then-Chairman David Laney (who had raised more than $100,000 for President George W. Bush’s 2000 campaign) stating that “Amtrak’s future now requires a different type of leader who will aggressively tackle the company’s financial, management and operational challenges.” In reality, Gunn was kicked out by Bush Administration appointees who had very different motives—namely, carving up Amtrak into pieces that could be “privatized,” whatever that meant. “It’s pretty clear that the Administration’s designs on Amtrak have been very different than mine,” Gunn said in an interview on National Public Radio shortly after he was shown the door. “And the Board is just a puppet for the Administration and DOT. They’re not an independent board. I was standing in the way of their plans to dismantle the company. The other thing that was happening was we were actually being fairly successful in bringing order and fiscal discipline to the company, which was making it more and 12 Railway Age March 2017

more difficult for them to carry out their plan.” In August 2016, Charles Wickliffe “Wick” Moorman IV, who had spent all of his four-decade-plus rail industry career at a Class I railroad—retiring as Executive Chairman of Norfolk Southern—agreed to take over as Amtrak President and CEO after a search to find a replacement for Joe Boardman, who announced his intention to retire late 2015, proved fruitless. Drawing no salary, Moorman says he will stay on until a worthy successor is found. That won’t be easy. Moorman is an experienced and deeply respected Class I freight railroader who brought more than 40 years in railroading to the position. A graduate of Georgia Tech and Harvard Business School, he joined Norfolk Southern predecessor Southern Railway in 1970 as a civil engineering co-op while attending Georgia Tech. He was a track worker, and is probably as skilled today at wielding a track bar as he is managing and motivating employees. Moorman served in a number of leadership positions at Norfolk Southern, among them Senior Vice President Corporate Planning and Services, President of Thoroughbred Technology and Telecommunications, Vice President Information Technology, and Vice President Personnel and Labor Relations, before becoming Chairman, President and CEO. Add up all those credentials, and you have the right person for the job, at the right time. Moorman, Railway Age’s 2011 Railroader of the Year, grabbed Amtrak’s throttle with both hands on Sept. 1, 2016.

Amtrak

By WILLIAM C. VANTUONO, Editor-in-Chief; and FRANK N. WILNER, Capitol Hill Contributing Editor

March 2017 Railway Age 13

RESHAPING, REBUILDING AMTRAK

14 Railway Age March 2017

“I have two jobs to do: finding a long-term replacement and initiating the movement to turn things around.”

• Construction of the Portal North Bridge and new Hudson Tunnels, both parts of the larger Gateway Program that will ensure that 450 daily Amtrak and NJ Transit trains can continue to serve New York City from the south. • Construction of a new B&P Tunnel and Susquehanna Bridge in Maryland to expand service and improve trip times. • Expansion and improvement of Chicago and Washington Union Stations to improve accessibility, expand capacity, spur local development and enhance safety. • Construction of a fleet of new or rebuilt diesel locomotives to support Amtrak’s national network. • Construction of track, signaling, and other improvements to remove chokepoints on host freight railroads or restore service in key underserved markets, such as along the Gulf Coast. Amtrak, Moorman said, is focused on identifying ways to improve collaboration with the 21 states and numerous commuter agencies it partners with to provide service on corridors across the country as well as the Northeast Corridor. He urged the federal government to explore different ways to back intercity passenger rail service, such as direct investments, public-private partnerships and innovative

Amtrak

He is only the second Amtrak chief executive with practical railroad experience since the legendary W. Graham Claytor, Jr., who ran the Southern Railway from 1967 to 1977, retired from Amtrak in 1993 after 11 years. (Claytor was named Railroader of the Year in 1989). David Gunn began his career with the Santa Fe in the 1960s. “I view this as public service,” Moorman told Railway Age the day his appointment was announced. “Amtrak is important to the freight rail carriers, and to the country. This is something I really want to do, and I believe I can contribute to making Amtrak a better railroad. I’m sure the work will be interesting, and I hope it will be fun as well.” Moorman added that he “is not doing this for the money” and that he “has not been unhappy in retirement.” Five months later, Moorman has made sweeping changes, and for all intents and purposes does seem to be enjoying his work. He has nothing to lose. He has no hidden agenda, and no motivation beyond applying his considerable railroading and management skills to making Amtrak a better company, for both its 31 million customers and its employees, many of whom have often felt like they were trying to operate a train with overheated wheel bearings. Moorman is a true “Southern gentleman” (he hails from Hattiesburg, Miss.), a soft-spoken yet confident man who’s about as open and accessible as a person in his position can be. The 64-year-old grandfather has a heartfelt love of railroading he’s eager to share. But don’t let Moorman’s brand of quiet confidence lead you to think he might have problems dealing with the overinflated egos that tend to populate Capitol Hill. He recently told lawmakers that “a new era of infrastructure investment is needed to ensure a healthy future for long-distance passenger rail travel in the U.S.” At a hearing of the Senate Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security last month, Moorman made a very strong case for investment in Amtrak’s infrastructure, fleet, and stations. “The time is now to invest in our aging assets,” Moorman said. “More than ever, our nation and the traveling public rely on Amtrak for mobility. The future of Amtrak depends on whether we can renew the cars, locomotives, bridges, tunnels, stations and other infrastructure that allows us to meet these growing needs.” Amtrak had record ridership of more than 31 million passengers and ticket revenues of $2.2 billion in 2016, Moorman noted. “I’m certain that we can get even better by relentlessly improving our safety culture, modernizing and upgrading our products and strengthening our operational efficiency and project delivery.” Amtrak, now approaching 50 years of age, needs additional support from Congress and the Trump Administration to upgrade aging assets, to continue providing reliable services and network operations. The benefits to the traveling public and the national economy are worth significant investment, said Moorman, who offered several critical projects as examples:

RESHAPING, REBUILDING AMTRAK

financing, streamlining of the environmental review process, and less bureaucratic red tape. Moorman added that such rail infrastructure investments “not only help Amtrak better serve passengers, but also stimulate job growth in construction, manufacturing, and professional services. Railcars, locomotives, steel, concrete, machinery, signals and track are sourced from across the nation. Investments in these sectors can help spur the rebirth of America’s passenger rail manufacturing and supply sector.” In mid-February, Moorman sat down with Railway Age in Amtrak’s Washington D.C. headquarters to talk about what progress has been made so far, and what he wants to accomplish, longer-term. RAILWAY AGE: What are the most pressing issues you’re dealing with? WICK MOORMAN: The Amtrak world has what I’ve defined as Tier 1 through Tier 5 issues. We are well under way on Tiers 1 and 2. Tier 1 encompasses the organization at a high level. We are still reorganizing at the department and division head level, but we are a much stronger organization today, as we are more closely aligned with our business. Tier 2 issues are engineering and state of equipment. Safety and training is a long-term process, as is budgeting the capital program and managing expenses going forward.

There are many things we can do better. A high priority has been reorganizing the company into three separate business lines: Northeast Corridor—the most complicated piece of railroad in the nation—state-supported, and long-distance. But underneath, Amtrak is a business, a corporation—and a government contractor like others that rely on government funding, for example, from the Department of Defense. But we have a different business model, a user-pay model that relies upon the government for the balance. But that doesn’t mean we run things any different. Of course, the Federal Railroad Administration funding flow could be a lot more streamlined. Amtrak is a long way from dysfunctional. I have two jobs to do: finding a long-term replacement and initiating the movement to turn the ship around. I feel reasonably well about where we are. We have a foundation of good people. They are bright and very capable. But there are a few holes to fill. RA: You brought in three consultants who had recently retired from Norfolk Southern to help you get your arms around this company. WM: Yes: Mark Manion, who looked at service and safety; Deb Butler, who took on technology; and Juan Cunningham, who took on human resources. At Norfolk Southern, those are the three drivers: service and safety, technology and

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people. I brought in Mark, Deb and Juan so I could better understand where Amtrak stood in those three areas. I have absolute confidence in them. They are best-of-breed. Mark determined that Amtrak did not have a uniform view of safety and rules compliance, which is foundational. We could be more effective with money. We need to build a stronger safety culture, a behavior-based safety culture. The Safe-2-Safer program, initiated in 2009, had some informational flaws. We’ve created a series of management training modules and initiated a pilot leadership program around the issue of safety. It involves 2,000 people, and lasts six weeks. Deb looked at technology. Amtrak IT was a good organization under Jason Molfetas, who is now in marketing. Our significant IT projects revolve around centralized IT management involving uniform project management and priority tech projects. We’ve taken a system view with our call centers, station agents and EPIC. RA: Tell us about some of the top-level organizational changes you’ve made, and what’s left to do. WM: The real responsibility of marketing is on the revenue side. Joe McHugh, who ran Government Affairs, is now in charge of state-supported services. Mark Murphy is in charge of long-distance trains. We need to rethink the long-distance train network. Human resources is now under DJ Stadler.

16 Railway Age March 2017

Amtrak has no college management training programs or out-of-the ranks training. We’re changing that. We’re still sorting through engineering and determining how we can get better. Mark Yachmetz is in charge of the Northeast Corridor. There is a sharper focus on growing ridership and revenue. Our operations people, now led by Scott Naparstek, have a full focus on safety and rules. Amtrak is not at Class I railroad standards, and that’s where we’re headed. Our onboard services need to be more consistent, and we need to hold people accountable. The company has been under such cost pressure that we have cut in places that impact service quality. We are trying to reverse that. We need to do the best we can with what we have, and are working on our product. At the end of the day, it’s all about service and customer experience, value for the money. I’m very impressed with the operation in California. There’s lots of innovation on the West Coast. RA: What are your equipment initiatives? WM: Short-term, new Northeast Corridor trainsets are coming from Alstom, and we have a new schedule with CAF, which is way behind, for the Viewliners. We are testing the Siemens Charger diesel-electric locomotives (p. 6). Our long-term needs involve Amfleet replacement, but there are

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RESHAPING, REBUILDING AMTRAK

“I have a strong relationship with the Class I CEOs. But that doesn’t mean the issues go away.”

RA: What do you feel you bring to the job? WM: I have certain perceptions and credibility that can be trusted. The job is interesting, rewarding, and fun. I have a desire for public service. My goal is to put Amtrak in a place where my successor inherits a company that is in good shape. This, in some ways, compared to a Class I railroad, is a more interesting job, as there are more challenges of different kinds. There is a retail component; an equipment component; a service quality component. And the Northeast Corridor is just different. There are issues on Capitol Hill. There are major projects and requirements. We have the lead role in Gateway. We need to rebuild the B&P tunnels. We need a new bridge over the Susquehanna River. RA: You come from a Class I background. How are things going with your host railroads? The on-time performance issues with the STB and the AAR? (Frank Wilner’s coverage of that thorny situation follows.) WM:Our relationship with the Class I railroads is “okay.” My background as a Class I president gives me the perspective of knowing how they think. I have a strong relationship with the Class I CEOs. But that doesn’t mean the issues go away. We ought to be able to solve the STB issue bilaterally. 18 Railway Age March 2017

On Capitol Hill, Amtrak brings a constituency to the railroad conversation that might not normally be there. For example, the STB’s pushing of reciprocal switching is a terrible idea that will lead to freight railroad congestion and higher costs that are bad for Amtrak. What’s bad for the Class I’s is bad for us. This is one industry. We’re all in this together.

A rail soap opera with no end in sight FRANK N. WILNER

s for long-running soap operas, it’s not as old as General Hospital at 54 years, but this one, starring Amtrak as an abused tenant of freight railroads, is in its 44th year, with no finale in sight. The precis is thus. In 1970, with privately owned railroads resembling the then-poverty-stricken and deteriorating South Bronx, Congress, seeking to avert rail nationalization, transferred to taxpayer responsibility the money-losing intercity passenger train service born as Amtrak. Included was a requirement that the resulting freight-only railroads allow Amtrak passenger train track access, with Amtrak paying user charges. In 1973, Congress created an undefined statutory “preference” to help assure on-time

Amtrak

no plans to do that quickly. The Superliners are great cars, but they need some freshening.

Sean Kelly

RESHAPING, REBUILDING AMTRAK

performance (OTP) of Amtrak passenger trains using freight rail tracks. There began the kerfuffle, with the two ever since reveling in verbal thrashings of each other. Where Amtrak alleged willful violations of the undefined preference requirement, the freights cited Amtrak shortcomings, unavoidable operational conflicts when 79-mph passenger trains operate over a network with slower coal trains, and inadequate Amtrak user charges set by statute. Congress returned to the fray in 2008 with the Passenger Rail Investment and Improvement Act (PRIIA), suggesting Amtrak delays were the fault of the freights. PRIIA Section 207 instructed the Federal Railroad Administration (FRA) and Amtrak jointly to establish metrics and standards (M&S) to measure Amtrak OTP over host freight-rail track. If OTP fell below 80% for two consecutive quarters, the Surface Transportation Board (STB) was to investigate. If it found the freights at fault, it could appoint an arbitrator to prescribe a cure and impose monetary damages. The freights sensed a dystopian cabal between Amtrak and the FRA in writing the M&S, alleging them largely unachievable and subjecting them to unlimited fines. PRIIA, said the freights, violated the Constitution’s “non-delegation doctrine” by improperly transferring legislative power to a private entity—Amtrak, which, notwithstanding perennial subsidies, was created as a “for profit” corporation. The D.C. Circuit Court of Appeals agreed, but the Supreme Court reversed, terming Amtrak a government entity to which Congress could delegate quasi-legislative power. The case returned to the D.C. Circuit, which found other reasons to invalidate the PRIIA provisions. They violated the Constitution’s Fifth Amendment’s Due Process Clause, allowing self-interested Amtrak to regulate activities of the freights; and violated the Constitution’s Article II Appointments Clause by giving the STB authority to appoint, absent Executive

Branch nomination and Senate confirmation, a private citizen to exercise government power as an arbitrator. The storyline thickened. A request for rehearing by the D.C. Circuit was denied, leaving open a second Supreme Court review. Department of Justice (DOJ) attorneys, defending the PRIIA statute, were given until Feb. 6, 2017, to so file. The STB, meanwhile, took it upon itself to promulgate its own version of the M&S, causing the freights to file a separate challenge in the 8th Circuit Court of Appeals, alleging the STB grasped powers not provided it by statute. A decision is pending. Cue the election of President Donald J. Trump, allergic to most government regulation. A politically astute solicitor general nixed the filing by DOJ attorneys of a new appeal to the Supreme Court, leaving intact the D.C. Circuit’s second invalidation of the PRIIA. Alas, successful soap operas never want for

storyline extension. DOJ attorneys, only under the sway of the solicitor general in filing Supreme Court appeals, seized the now politically toxic PRIIA football and asked a federal district court to preserve what the higher authority D.C. Circuit struck down in entirety as constitutionally invalid. Their legal theory is that if the district court merely severs the arbitration provision of the PRIIA, the district court can then resurrect the same M&S that the Appeals Court declared unconstitutional. Who would provide enforcement is unknown, as is the “Twitter fate” of these attorneys should the President learn of their actions. Yet to be heard from is television’s Judge Judy, who could borrow a tag line from advertiser Mike Slocumb’s personal injury law firm to introduce the entire cast as “frogs on a lily pad in a lake of pain.” RA

Amtrak’s Empire Builder, seen here at Spokane, Wash., has been plagued with freight rail-caused delays in recent years.

March 2017 Railway Age 19

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Short-haul for the long term? By Stuart Chirls, Senior Editor

Rail intermodal may be coming up “short” this year—and that could be the best news for carbuilders, fleet managers and carriers.

Bruce Kelly

ail intermodal services over short-haul routes— corridors from 250 to 500 miles—are looking as tempting as the vast reserves of oil and gas that boomed to record energy carload traffic in recent years, only to bust amid changing market forces and the decline of coal. Throw in uncertainties over a new Administration and the specter of autonomous trucks down the road, and the rail industry may be increasingly looking to shorthaul intermodal as the next big thing. That’s not to say railroads and their partners are starting from scratch. Freight volumes in 2016, while as a whole off from previous annual peaks, were far from disastrous. Early

results from major U.S. container ports indicate continued signs of solid growth that began in the fourth quarter and bode well as 2017 gets under way. “We are very optimistic about how the intermodal market is going to play out this year,” says Jeff Heller, Vice President, Intermodal and Automotive for Norfolk Southern. “Our outlook is for a good year.” For NS, the domestic segment is the largest of its intermodal business channels, Heller says. International, hauling 20-, 40- and 45-foot containers is next, followed by a small but important premium service catering to parcel carriers. Intermodal traffic bumped along in 2016—“it wasn’t March 2017 Railway Age 21

short-haul INTERMODAL

Greenbrier reached an historic milestone of 100,000 intermodal cars built when a five-unit Maxi-Stack car rolled out of its Gunderson production facility in January.

Railway Age

March 2017

“That is eventually going to reduce the cost structure when you consider the number of people involved,” says Heller. “That is an area we are very aware of. We have to learn to compete, and we are gearing up to compete.” The TTX Perspective

Other intermodal stakeholders are optimistically watching, and waiting, on 2017. “We are seeing some improvement, a lot of that on the East Coast,” says Patrick Casey, Vice President, Fleet Management for TTX Co., the freight car pool owned by nine railroads in the U.S., Canada and Mexico. Chicago-based TTX manages a fleet of 220,000 cars, the largest in railroading, half of which are intermodal. “In 2017 we expect volume improvement of 2% to 3%, and intermodal to turn things around,” Casey says. “Intermodal is the biggest growth opportunity, and short-haul is where we think much of the growth is. As long as the railroads keep costs under control, and as [diesel] fuel prices go up and regulations tighten, it makes rail that much more competitive.” The company says its short-haul inventory is handled mostly by three-unit well platforms for 53-foot containers, or standalone well cars. Trailers, an important component in short-haul that has weakened, ride on spine cars, which can also carry containers. The goal of TTX, Casey says, is to ensure that it has enough railcars on hand to support the demands of its owner railroads. It sizes the fleet to match forecast peak traffic levels in the pre-holidays August-October period. The forecast, derived from discussions with railroads and their customers as well as from Intermodal Association of North America

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particularly strong”—until the fourth quarter. “Then it ramped up. As far as international business, the dollar is strong so imports are picking up.” But so much of what the railroads gain in short-haul are, historically, tied to the fortunes of the trucking business, at once the competition and the partner. “The truckload and less-than-truckload business are more economy-driven,” says Heller. A shortage of drivers has strained over-the-road capacity, while infrastructure issues are pressuring motor carriers from coast to coast, buoying the railroad’s outlook. While fixed costs remain a challenge for any developing product, NS considers the 250-mile haul from the Port of Savannah to Atlanta a “very successful corridor” and model for short-haul operations. “We make the run very fast, with a long, dense doublestack train, about 10,000 feet,” Heller says. “We turn the equipment quickly, to improve efficiency. We make those segments work by keeping costs as low as possible.” Asserting that “we are not in the port business,” Heller notes that state agencies built the intermodal terminals in Savannah and Charleston, de facto partnerships that are a critical part of the equation. The Charleston-Spartanburg service to BMW’s assembly plant is another, perhaps better example, since NS transports imported parts inbound, and moves finished vehicles out. The proximity of business centers in the eastern U.S. has the railroad looking at other potential short-haul routes, for example from ports to Harrisburg and Bethlehem, Pa. “But the traffic and the economics have to work,” Heller says. Autonomous, or self-driving, trucks have the potential to completely run over those economics.

short-haul INTERMODAL

(IANA) and AAR data, is confidential, but Casey says that TTX sees this year’s peak as “competitive” with past years, though not necessarily at the same level. “What’s as important as the forecast is how quickly cars are turned; velocity has improved overall in the past several years,” he notes. “Longer trains, that’s another method for intermodal growth. There’s not a lot of certainty about things; we live in a wait-and-see world. But we haven’t changed our forecast yet.” Greenbrier’s Take

The potential of the short-haul market led The Greenbrier Cos., the largest builder of intermodal cars, in 2016 to test a five-well platform for 53-foot domestic containers. Its articulated, shared-truck design makes it two feet shorter and 2,000 pounds lighter per well than the standard three-well, 53-foot car. “For a 10,000-foot train, that’s 10 more boxes for the same tonnage, with better handling for the crew and fuel savings,” says Marc Allen, Vice President of Sales and Group Manager, Auto and Intermodal. Greenbrier worked on the new design at the request of one railroad, which declined to write orders. “It is hard to effect change when you’re talking about longlived assets,” says Allen. “The real issue is in terminals with strip tracks. Do the longer cars fit? More analysis is required.

That’s how it works with railroads as they’re looking to grow. It’s real money. But, it’s a door that’s open.” Greenbrier has also been upgrading equipment to improve safety and make equipment turns more efficient. Safetyappliance enhancements such as extended ladders, additional handholds, and elevated IBCs (inter-box connectors) were added, based on one railroad’s grades on cars for risk and ease of crew movement. Greenbrier is also looking at selfpowered lighting systems for intermodal and autorack cars. “The railroads often use contract labor to load and unload cars,” Allen says. “They are looking above and beyond what’s mandated, for a more pleasant work environment. I think the railroads are aware as any other employer of the perception of the workplace to job-seekers.” Greenbrier predecessor company Gunderson pioneered the design of the first double-stack car in the 1980s, and its platforms account for 60% of the active fleet. The company reached an historic milestone of 100,000 intermodal cars built when a five-unit Maxi-Stack car rolled out of its production facility in January. It marked the 13th iteration of the doublestack design, a sign that the market continues to evolve. “Short-haul looks like an eastern vs. western U.S. markets scenario. Norfolk Southern and CSX have built up short-haul while the western railroads haven’t embraced it as much,” says Allen, who previously worked in intermodal for BNSF. “The

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decline in commodities traffic has the railroads asking, ‘Where can we grow?’ But lost coal traffic may free up capacity the railroads haven’t used before for intermodal. And technology such as apps that help us get around could improve efficiency by helping truck drivers get in and out of railyards.” But Allen observed that there are fundamental issues to be overcome before substantial short-haul growth can be realized. Short-haul has always been a three-day transit compared to one day for over-the-road. Cut it to two days, and there is a real opportunity for growth. “Railroads are looking at individual corridors and how they run their networks,” he says. “The more-sophisticated individuals will look at the railroad as a part of the larger supply chain.” Allen adds that while the deployment of autonomous trucks won’t happen tomorrow, there’s reason for concern. “It’s out there, and it’s a game changer,” he says. “The railroads have to be scared to death. They’ll have to fight it with regulators as a quid pro quo,” to ensure that truckers are held accountable for their use of highway infrastructure. “You Can’t Shrivel to Grow”

The short-haul market has always been there for the railroads’ taking, says one carbuilder executive. “The window is there to run hot intermodal trains,” says Robert Pickel, Senior Vice President of Marketing and Sales

for National Steel Car Ltd. of Hamilton, Ont. “There is a lot of uncertainty, but because traffic levels are low, there is leeway in the networks for scheduling trains.” Pickel describes current capital expenditures for railcars as minimal, with few intermodal orders. “They are matching supply with demand. Also, railroads are getting better turns on existing equipment, from 2-3 per month to 4-5. Intermodal took a hit, and growth slowed down.” The company’s production lines are active, building covered hoppers for plastic pellet and grain service. Industry car orders in 2015 hit an historic high of more than 80,000, a level not seen since the 1970s, and far above the normal 50,000 to 60,000 per annum. Orders are forecast in the 40,000-range for 2017. Further boosting short-haul is increased transloading of import shipments in 40-foot international containers to 53-foot for domestic delivery. Says Pickel, “The railroads can capitalize on that. In Dallas, plastic pellets are being loaded for export. The steamship line gets its 40-foot back and the 53-foot goes inland as it should. But I don’t think railroads think with a logistics mindset yet. They are not aggressive; they don’t think outside of the box. The railroads need another [freight category] winner. Short-haul intermodal could be it. But there have been cutbacks and layoffs in the business. You can’t shrivel to grow.” RA

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AXION, manufacturer of ECOTRAX® composite ties, anticipates challenges this year in shifting purchasing behavior from incumbent tie types to composites.

Will 2017 bring balance? Crosstie suppliers will be faced with finding new avenues for growth in 2017 while seeking a balance between supply and demand.

AXION

he crosstie sector of the North American rail market is having mixed reactions to the reduced capital spending programs released by the larger freight railroads, but believes promise for growth can be found in the many transit projects under construction or scheduled to begin, as well as the current push from ports to enhance rail offerings. The Railway Tie Association (RTA) says it is entering 2017 with a few more questions than answers regarding the future of U.S. economic growth. “Many of the anticipated impacts of the new Administration’s yet-to-be-enacted policy initiatives, tax reform, deregulation, etc., are not likely to be felt until 2018 or beyond,” says RTA Executive Director Jim Gauntt. “Nevertheless, the RTA econometric model, along with interviews of Class I’s and our members, suggest that the base case for 2017 tie demand will only be down 2.7% from 2016. That places demand for new wood ties at roughly 22.5 million, which is quite respectable. Looking to 2018, the picture is more optimistic. The forecast model projects a rebound to levels nearer 2015 when the market demand for wood was close to 24 million. It isn’t likely we’ll get all the way back to those levels, but if policy becomes reality in the form of meaningful U.S. GDP growth, we could get close starting in 2018.”

By MISCHA WANEK-LIBMAN, Engineering Editor

“Quite respectable” is a decent forecast for an industry that dealt with extreme wet weather and supply issues between 2013 and 2015. Gauntt explains that, toward the latter stages of the sawmills ramping up to meet demand, railroad purchases began to ebb. This set the stage for increased tie production to stay slightly ahead of demand, resulting in the replenishment of air-dry yard inventories. Gauntt believes air-dry yards are now at capacity in most areas. “Optimizing inventory to meet the existing and anticipated demand will likely be a main focus for 2017,” he notes. Should stronger than anticipated rail traffic growth appear in the early part of 2017, railroads may become more confident in add-on capital program spending. “That could mean elective construction projects being green-lighted earlier than anticipated, which could add to growth,” Gauntt says. “Stronger demand for coal and crude oil, with stable prices, could also be additive. Renewal of the 45G short line tax credit for infrastructure investment earlier in 2017 could also boost demand prospects.” One area railroads have focused on is unit pricing as a cost control. In that environment, Gauntt notes, “A well-planned, focused approach to procurement is always in RTA members’ best interests. Whatever market trends are, consistency in procurement planning is the tie industry’s friend. Many March 2017 Railway Age 29

CROSSTIES

years ago, RTA began illustrating how steady-state investment in ties would optimize the tie marketplace for users and producers alike. Achieving steady-state with incremental growth is often elusive, but optimal planning helps lead us toward that goal, so focusing on that is important to both sides of the equation.”

CXT (a division of L.B. Foster) sees growth opportunities for 2017.

Stella-Jones Corp. Vice President Marketing George Caric says that while it is too early in the year to predict the crosstie market, 2017 promises to be an “interesting” year. He cites the anticipated lower U.S. Class I demand in 2017, mixed with a steady yet slight increase in the Canadian railroads’ programs. Within Stella-Jones, Caric explains that capital spending cuts have caught up with the demand for treated wood crossties. “In previous years, the railroads took advantage of the slowdown in traffic, especially in coal, to strengthen their track, installing ties and rail,” he says. “So, we were very busy taking care of the demand while trying to get dry inventory built up. We felt the start of the slowdown in the fourth quarter of 2016. Usually in the fourth quarter, we are shipping for the new year. In 2016, this was not the case.” Caric notes that the company’s overall inventories are in good shape as compared to previous years, which readies it

Gross & Janes believes that crosstie inventories will not balance with demand until sometime in 2018. for any uptick in demand. On an optimistic note, Caric says the bridge business is strong: “We are working closely with the railroads to meet the challenge of extending the life of bridge timbers with offering borate pretreatment to bridge timbers and pre-plating the timbers to improve safety and speed during installation.” Lonza Wood Protection anticipates 2017 Class I projects to trend on the conservative side, based on the uncertainty surrounding the recent U.S. presidential election, but has confidence the market could see improvement this year. Industrial Product Manager Tim Carey says, “We see a lot of optimism in the industry that the new Administration may allocate more funding for infrastructure, leading to a better year than originally anticipated.” However, not everyone involved in the market has such confidence in any potential optimism. Koppers Inc. Vice President Class I Sales John Giallonardo recognizes that while reduced capital budgets will create challenges, Koppers is facing more directly the issue of finding proper balance between supply and demand. “Much of 2016 was centered around rebuilding untreated tie inventories, following a period of depressed raw material 30

Railway Age

March 2017

supply,” he notes. “The market has responded well over the past year, and our inventory levels are much healthier at the present time. However, reduced capital spending may create a necessity to throttle back production just as the market recovery nears completion. This may ultimately cause more instability in our business moving forward.” Yet, despite the anticipated capital spending reduction, tie replacement volumes are “relatively solid.” “Intermodal growth continues to be an area of emphasis for the Class I railroads, and there appears to be a great deal of optimism moving forward,” Giallonardo says. “The railroad industry has always proven to be very resilient over the years, and there is still a great deal to be enthusiastic about in 2017.” Gross & Janes Co. President Bill Behan says that, while capital spending numbers may be down 9% year-over-year, crosstie purchase programs could be down by double-digits in 2017. “In short, the crosstie market is contracting, not growing,” he stresses. Behan explains the reason behind this being a combination of three factors: over-production of crossties, too much inventory at treating plants and reduced Class I maintenance spending due to lower economic performances in the last two quarters of 2016 from lower traffic. “I estimate that crosstie inventories will not balance with demand until sometime in 2018,” Behan says. “Further complicating the recovery is the uncertainty of the Administration’s plans for Mexico trade relations. This uncertainty may simply be a cautious strategy by those with exposure to Mexico. If trade relations become a non-event for railroads, there’s plenty of crosstie inventory in the pipeline to

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catch-up. The challenges spill over into the overall supply chain, as none of the above help sawmill producers plan for log procurement or production scheduling for the year.” Concrete Concerns

RAIL.ONE USA Corp. sees concrete tie demand reduced even though the company is seeing more visible preparations for track construction activities this year. “Interesting potential has been identified in transit projects, but market entry remains a challenge, says CEO Bob Bogner. “An important sales argument is reputable references, difficult to achieve for a system introduced to a transit system in the U.S. However, we believe in our ability to demonstrate to our valued potential customers our solution-oriented approach and the flexibility, adaptability and reliability of our innovative track systems for urban transportation applications.” GIC USA also sees potential in transit projects. “While the freight market will present challenges, transit and industrial projects offer good opportunities for growth,” says Engineering and Technology Development Manager Ryan Kernes. “GIC is focused on developing innovative tie technologies to solve technical challenges and increase efficiency.” One solution the company is working on involves a partnership with Nortrak to increase its ability to deliver what the company calls a new generation of highperformance concrete ties and blocks in North America. Another example of a strategic partnership that evolved this past year is Rocla Concrete Tie, Inc., which became part of the Vossloh Group in January 2017. The companies have had a long relationship, and part of the integration will include Rocla’s executive team taking on various leadership roles within the Vossloh North America structure. Rocla was the first North American manufacturer of pre-stressed concrete ties for the Vossloh fastening systems for Class I, transit and industrial use. The company’s concrete 32

Railway Age

March 2017

turnout ties have consistently been supplied to Vossloh’s North American trackwork businesses (Cleveland Track Material, Inc.). “We are excited to build on these synergies to offer our customers more complete and seamless solutions and from a wider portfolio that (in addition to rail fastening and special trackwork) also includes signaling and switch control solutions and rail life cycle services,” says Rocla. Concerning business in 2017, Rocla says it remains optimistic “Rocla (along with the Vossloh North America group of companies) sees the current business climate as an opportunity to position itself to better serve our customers as railroad traffic (and revenues) increase. We expect that many necessary projects delayed in 2016 will be slated for 2017, and have already started to see bidding activity and production levels stabilize or grow again.” According to CXT, Inc. President and L.B. Foster Vice President Concrete Products Steve Burgess, the past year has been challenging, but there will be ample opportunities to drive sales growth. He notes that the decline in capital spending in 2017 may impact tie sales, as most concrete tie consumption by freight railroads is for new construction. “We are, however, continuing development work with several Class I’s and, in one case, are in the second year of a four-year test cycle,” Burgess notes. “So, while we can’t predict market turn-around timing, we definitely see opportunity for our products in times to come. Industrial segment sales have been off due to lower crude oil pricing, which curtailed track expansion projects, but work on port projects continues. “Bidding is up in this segment giving a potential sign of increased activity in the not too distant future.” Burgess also says the transit segment has been solid and is confident the segment will continue to be so with the FAST Act passage and the successful passage of 54 out of the 77 public transportation ballot

Vossloh Welcomes the Addition of Rocla Concrete Tie, Inc.

Vossloh continues to grow as a global leader in rail infrastructure solutions with the addition of Rocla to our worldwide group. The integration of Rocla marks a significant expansion of the Vossloh product portfolio and increases our ability to provide customers with comprehensive rail infrastructure solutions

Valued Strategic Partners

Maintaining Relationships, Building Successes

Rocla has long been a strategic partner of Vossloh. The tie manufacturer was instrumental in introducing Vossloh rail fastening systems to the North American market as the first U.S. producer of concrete ties for our products. Rocla turnout ties are the foundation of many Vossloh special trackwork projects in North America.

Vossloh has a deep respect for the Rocla organization and its position as a market leader. Rocla is recognized industry-wide for quality manufacturing, cost-effective solutions and on time delivery. Vossloh can assure Rocla’s customers and partners that this reputation will not change. While we are committed to providing comprehensive systems from the entire Vossloh product portfolio, Rocla will continue to offer customer-preferred solutions that may incorporate the systems of other suppliers.

In addition to our history, Vossloh and Rocla share a commitment to engineering that ensures our track products are the industry’s most reliable rail infrastructure solutions. The development of advanced switch and turnout systems at the Vossloh Technology Center in Reichshoffen, France and the engineering of highly elastic rail fastening systems at our R&D Center in Werdohl, Germany defines Vossloh’s commitment to innovation. Rocla adheres to exacting manufacturing and quality control processes that have been developed through continuous R&D to produce the most consistent and cost-effective concrete ties available to the rail market. Vossloh’s expanded portfolio now includes special trackwork, concrete ties, signaling and switch control solutions, fastening systems and rail lifecycle services. With the addition of Rocla, the Vossloh North America footprint consists of 14 facilities that are strategically positioned to serve our Class I, industrial and transit customers. Together, we will build on the synergies of our comprehensive portfolio of track products and services to provide complete rail infrastructure solutions.

Rocla Concrete Tie, Inc. • roclatie.com • 303-296-3500

Vossloh has the privilege of welcoming Rocla’s rail professionals to our group. In the coming months the Rocla management team will assume leadership roles within the Vossloh North America organization. Their industry experience will be critical to the future of Vossloh’s regional operations. We believe in the future of rail transport and are committed to offering a complete portfolio of high quality, cost effective rail infrastructure solutions. Together with Rocla, Vossloh is positioned to meet our customers’ needs now and in the future.

Vossloh North America • 888-490-1799 • vossloh-north-america.com

CROSSTIES

initiatives in the November elections. L.B. Foster purchased Carr Concrete in mid-2014 and is close to completing new capacity investment at its Waverly, W.Va., plant. Burgess says the expanded facility will manufacture precast concrete products for its eastern transit, short line and Class I customers. “Our engineers are actively collaborating with customers to determine what will be needed for the next generation of concrete ties and other products, Burgess says. “As a part of that activity, we continue to study changes in mix design to improve sustainability and optimize product properties. I remain optimistic about opportunities for the use of concrete ties in the coming years across the heavy-haul railroad, transit and industrial market segments. Long-term economic progress in North America will require continuing investment in transportation infrastructure.”

composite crossties, switch ties and bridge ties for their new construction and maintenance projects,” says Thomas. “With Class I expenditures continuing to decrease, it makes good sense to invest in a tie that will last longer than traditional tie materials. The use of environmentally friendly composite ties will reduce the on-going cycle of tie replacements, saving not only material cost, but also labor costs, downtime and disposal costs related to tie replacement. “American TieTek ties are a good investment in the future, not only for Class I’s but also for short lines, rail transit agencies, intermodal terminals, ports, and industrial manufacturing facilities.” AXION manufactures the ECOTRAX® line of composite ties, and anticipates challenges this year in shifting purchasing behavior from incumbent tie types to composites, as capital expenditures are reduced. “Main line installations are where the greatest challenges Composite Confidence lie, given the initial price difference between composite and Linda Thomas, President of LT Resources, Inc., distributor of traditional crossties, although I think that composites will American TieTek composite crossties, believes the opportuni- see fewer challenges in 2018 and thereafter,” says Vice Presities for growth are vast. dent of Commercial Development William Jordan. “In terms “American TieTek’s composite tie technology has been of growth, I foresee increasing share in special trackwork fine-tuned to assure product consistency and proven longinstallations, where pricing objections are overcome with term performance, resulting in substantial bottom line cost quality, consistency, and the performance-over-time benefits RA savings for current and potential customers who select 1_2pgHorzWrkStTraining2016.qxp_Layout 1 8/17/16 3:25 PM Page 1 presented by AXION composite ties.” Flexible Scheduling. Anytime. Anywhere. Work Site Training Courses:

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Detecting bad wheels,

on-the-fly By Anish Poudel, Ph.D., Principal Investigator-NDE;

and Matthew Witte, Ph.D., Scientist, Transportation Technology Center, Inc., for Railway Age 36 Railway Age March 2017

TTCI is evaluating a real-time, automated method of spotting defective wheels.

aintaining the integrity of railway wheels is essential to the safe and efficient operation of railroads. Manual non-destructive evaluation (NDE) processes for flaw detection and characterization in railway wheels are laborand time-intensive. Moreover, visual inspection may not reveal purely internal defects. Real-time automated detection of cracked wheels in revenue service is desired that would improve the efficiency, safety, and reliability of the railroads by providing an effective way to monitor wheels with internal/surface defects. Transportation Technology Center, Inc. (TTCI) has been evaluating an Automated Cracked Wheel Detector System (ACWDS) developed by Nanjing Tycho Information Technology Company, Ltd. (Tycho) for its suitability for this purpose in the North American railroad environment. This study is being performed under the auspices of the Association of American Railroads (AAR) Strategic Research Initiatives (SRI) program, in cooperation with the FRA. The Tycho ACWDS technology has been implemented in China for several years, where it is successfully inspecting high-speed trainset wheels. In China, the system is located on a spur track near the Chinese railroad locomotive maintenance facility and operates at a maximum inspection speed of 5 mph (8 kph). The ACWDS installed and tested at TTCI is modified to operate at higher speeds. At the beginning of the project, requirement for the target inspection speed was set to 20 mph (32 kph). Therefore, specially designed track and infrastructure were constructed to U.S. standards and were tested and validated at TTCI to safely inspect trains at speeds 15% higher than the target speed of 20 mph. However, actual maximum achievable speed for reliable inspection was 15 mph (24 kph). The main reason for this is that UT (ultrasonic testing) detection capability falls off quickly above 15 mph. Although the trackwork and

Tycho Wayside ACWD system installed at TTC.

infrastructure is capable of supporting 20 mph, the UT detection technology is limited to about 15 mph, which is not at the goal, but is still a substantial improvement. The testing program at TTCI has allowed Tycho to update the system to meet the wheel inspection requirements of North American railroads. The unique Pueblo, Colo., facility provides an environment where technology providers can develop their systems while TTCI objectively evaluates the results. The Tycho ACWDS uses an array of spring-loaded ultrasonic probes to detect internal anomalies in wheels, and machine-vision cameras to inspect every incoming wheel tread. The ultrasonic probes are aligned with the rail where the wheels can pass over them. Each probe inspects a portion of the wheel with enough probes to inspect the entire circumference of a 38-inch wheel. A liquid couplant is used to transmit the ultrasonic energy to the wheels. There are several interconnected components that make up the system. A custom-designed concrete foundation holds the special trackwork and captures the couplant for return to a nearby sump. The spring-loaded ultrasonic probe arrays are arranged in lines between the rails and a guardrail where they can contact the

tread. Guardrails keep the wheelsets centered over the probes. Throughout the ACWDS, nozzles spray water-based liquid onto the wheel/rail interface to assure ultrasonic coupling. A machine vision system inspects the tread of every incoming wheel. An AEI tag reader, wayside data collection units and a central processor round out the system controls. Inspection results are reported automatically within 10 minutes of the train passing the system. Test results demonstrate that this technology is able to detect vertical split rim (VSR)/shattered rim crack (SRC) wheels, shallow sub-surface delaminations ranging from 0.15 inch to 0.22 inch (3.8mm to 5.6mm), and shelling/gouges at depths of 1/16 inch to 1/8 inch (1.6mm to 3.2mm) reliably at speeds up to 15 mph. Wheels with non-condemnable surface defects such as shelling and tread surface buildup successfully pass the system without alarm. Railway wheels with significant tread damage; i.e., wheels with condemnable spalling, will perform poorly in ACWD ultrasonic detection because the surface condition of the tread prevents adequate coupling between the tread and the ultrasonic probes. The machine vision system is used to identify wheel failures of this type. RA March 2017 Railway Age 37

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High profile AECOM has appointed former Federal Transit Administration Acting Administrator Carolyn Flowers as North American Transit Practice Leader. Prior to joining FTA, Flowers served as CEO and Director of Public Transit for CATS (Charlotte Area Transit System), where she was responsible for countywide rail and bus transit planning and management. She began her career in public transportation with the LACMTA (Los Angeles County Metropolitan Transportation Authority) in 1993 and for 19 years served in many capacities in budget, Flowers administration and operations, culminating in her appointment AECOM as Chief Operations Officer. Flowers has served on a number of professional boards, among them co-chairing the APTA (American Public Transportation Association) Reauthorization Task Force.

April 18-20, 2017 Railway Age/RT&S Light Rail Conference: Planning, Engineering, Operations, followed by Rail Transit Finance. Grand Hyatt Denver, Colorado. Information: http://www.railwayage.com. conferences@sbpub.com. May 23-25, 2017

Cubic Transportation Systems appointed transportation executive Jannet Walker Ford Vice President and General Manager-Eastern Region, Americas, which includes Miami, where the EASY Card revenue management system has become a major Cubic project, and Georgia, where Cubic supports Atlanta’s Breeze smartcardbased regional fare collection system. Other customers include the Washington Metropolitan Area Transit Authority, Maryland Transit Administration as well as Autoridad de Transporte Intregrado and Metropolitan Bus Authority, the primary rail and bus public transport operators in Puerto Rico. Peter Gertler, AICP, has rejoined HNTB Corp. as a Senior Vice President in a corporate and national strategic business development role. He is based in Oakland, Calif. Gertler previously worked at HNTB from 2004 to 2014 as rail and transit market service leader and principal project manager. Prior to re-joining HNTB, Gertler was Vice President Strategic Consulting at HDR, where he managed global business and strategic development. Prior to HDR, Gertler was Director Strategic Programs, Global Consulting Services, Infrastructure at software firm Autodesk. He also served as an Assistant Vice President at Parsons Brinckerhoff, and as a Planning Department Manager at BART. He started his career in 1987 as an Associate at KPMG Peat Marwick.

Reading & Northern Railroad appointed William (Bill) Clark as Senior Vice President-Coal, with responsibility for managing the anthracite coal business as well as the railroad’s 1,200-plus freight car fleet. Clark joins R&N from Talen Energy (formerly PPL), where he managed logistics, coal purchasing and oversight of a 2,000-plus car fleet serving four power plants. Clark spent 14 years at Norfolk Southern in the coal business group, and also had senior marketing roles at the Chicago South Shore & South Bend Railroad and Iowa Interstate Railroad.

100 YEARS AGO in

North American Rail Shippers Association (NARS) Annual Meeting. Parc 55 Hilton, San Francisco, CA. Information: (331) 643-3369; www. railshippers.com June 7-8, 2017 Railway Age Third Annual Rail Insights Conference Union League Club of Chicago Information: http://www.railwayage.com. conferences@sbpub.com. Sept. 25-27, 2017 Institution of Railway Signal Engineers (IRSE) 2017

March 1917 THE RAILWAYS AND THE NATIONAL DEFENSE COUNCIL Through the response by the American Railway Association, the railways are the first industry in the United States to perfect an organization and to offer their services to the Secretary of War. Newton D. Baker, Secretary of War, said in part: “It is a patriotic purpose and shows the devotion of these great railroad interests. We are in a time when war has so far changed in its character that it means, on a vastly greater scale than ever before, the instant mobilization of all the industrial resources of the nation. Transportation is next in importance to the number and size of guns.”

Annual Convention. Dallas, Texas Contact : ray@globalsignals.net http://irsecon17.wixsite. com/dallas. Oct. 19-20, 2017 Railway Age/Parsons International Conference on Next-Generation Train Control Courtyard Philadelphia Downtown Information: http://www.railwayage.com. conferences@sbpub.com.

March 2017 Railway Age

Products

Lat-Lon offers 4G LTE for CTU, STU Lat-Lon’s 4G LTE Category-1 with 3G rollback capabilities is now available in its Compact Tracking Unit (CTU) and Solar Tracking Unit (STU). As one of the first companies to present the newest cellular technology for IoT (Internet of Things) communications, Lat-Lon gives customers the ideal solution when looking to upgrade their equipment from older 2G and 3G networks. Cat-1 is ideal, given the average tracking data packet is 256 bytes, and doesn’t require the maximum 300 Mb/second that 4G LTE can deliver. Throttling the data speed to 10Mb/second offers the advantage of a reduced module size and lower power consumption at lower cost. Cat-1 technology for IoT use has recently been deployed by major LTE service providers, including AT&T, Verizon, T-Mobile, and more. Dave Baker, President of Lat-Lon LLC, says, “Staying current with modem technology is always a challenge with IoT applications. With our choice of LTE-Cat-1 with 3G rollback, we future-proof our product line without sacrificing the network coverage footprint. An added benefit of Cat-1 is lower power consumption, which increases overall capabilities of our solar-powered products.” Through wireless GPS monitoring technology, Lat-Lon solutions provide real-time information such as pictures, location, impact detection, speed, temperature, and more for multiple types of assets. The new 4G LTE Cat-1 modem with 3G rollback will enhance reporting frequency due to lower power draw while simultaneously adding years to the product lifetime before new technology is adapted. Lat-Lon’s CTU, based on the STU, is designed for tight spaces, even in the grooves of a container or any other nonpowered asset. It’s a GPS monitoring system that monitors and protects shipments by providing critical information 40

Railway Age

March 2017

through various sensors: GPS location with speed and course; three-axis accelerometer for impact detection; and wired sensors for temperature, pressure and more. As long as the sun shines, either direct or indirect, the CTU will be replenished with more power. Unlike battery-operated systems, its sends out dozens of important messages a day. The unit has a longer life than traditional battery systems with lithium ion phosphate rechargeable cells, equating to an average lifespan of more than 7 years, and can even work in less than ideal “dark” conditions for up to 5 days. CTUs know if they are stopped or in motion. When moving, the unit sends location reports up to every 10 minutes. Alarms, including impacts, are sent out in real time and can be sent directly to a cell phone. The CTU doesn’t have to conserve power like battery systems and can give better visibility to the how, when and where of a shipment. CTU features include a magnetic mount for easy installation; rugged design for durability; compact size for discreet, secure mounting in tight locations; 10Hz and 100Hz filtered G values to show the true nature of an impact; elapsed time between GPS fix and alarm triggers for precisely locating alarm events; and smart control logic for frequent reports when moving. Lat-Lon LLC was founded in 1999 in Denver, Col., and provides wireless GPS tracking and monitoring solutions for assets. Lat-Lon’s key products include a solar-powered GPS monitoring system (STU) for railcars and trailers that allows fleet managers to know the condition and location of their assets at any given time, a compact tracking unit (CTU) for track and trace capabilities, and a locomotive monitoring unit (LMU). For further information contact Lat-Lon at 877-3006566 or visit www.lat-lon.com. Lat-Lon is owned by BSM Technologies Inc.

Ad Index Company

Phone #

Fax

URL/Email address

Page #

Alstom Transport SA

+1(514)673-5278

Danella Rental Systems Inc

610-828-6200

610-828-8860

Encore Rail Systems Inc.

866-712-7622

303-922-6178

www.encorers.com

Greenbrier Companies The

800-343-7188

503-6847553

gbrx.info@gbrx.com

Herzog Railroad Services Inc

816-233-9002

81+-233-7757

tfrancis@hrsi.com

International Name Plate Supplies

snilsson@inps.net

Koppers Inc

412-227-2739

412-2272841

ambrosegf@koppers.com

L B Foster Co

412-928-3506

412-928-3512

glippard@lbfosterco.com

LT Resources

281-444-3494

281-444-3495

linda@ltresources.com

NRE

618-241-9270

618-242-8519 sales@nre.com

Plasser American Corp

757-543-3526

757-494-7186

plasseramerican@plausa.com

Railquip Inc

770-458-4157

770-458-5365

sales@railquip.com

Railway Educational Bureau The

402-346-4300

402-346-1783

bbrundridge@sb-reb.com

RJ Corman Railroad Group

800-611-7245

859-885-7804

www.rjcorman.com

Road & Rail Services

502-365-5198

SoftRail Inc

888-872-4612

sales@signalcc.com

Stella-Jones Corp

800-272-8437

kdulski@stela-jones.com

elaine.west@transport.alstom.com

412-894-2846

pbarents@danella.com 9

3 16 34,C3 C4

Vossloh NA

Zhuzhou CRRC Times Electric

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

Advertising Sales MAIN OFFICE Jonathan Chalon, Publisher 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com AL, KY, Jon Chalon 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7224 Fax: (212) 633-1863 jchalon@sbpub.com CT, DE, DC, FL, GA, ME, MD, MA, NH, NJ, NY, NC, OH, PA, RI, SC, VT, VA, WV, Canada – Quebec and East, Ontario Jerome Marullo 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7260 Fax: (212) 633-1863 jmarullo@sbpub.com

AR, AK, AZ, CA, CO, IA, ID, IL, In, KS, LA, MI, MN, MO, MS, MT, NE, NM, ND, NV, OK, OR, SD, TN, TX, UT, WA, WI, WY, Canada – AB, BC, MB, SK Heather Disabato 20 South Clark Street, Suite 1910 Chicago, IL 60603 (312) 683-5026 Fax: (312) 683-0131 hdisabato@sbpub.com The Netherlands, Britain, France, Belgium, Portugal, Switzerland, North Germany, Middle East, South America, Africa (not South), Far East (Excluding Korea /China/India), All Others, Tenders Louise Cooper International Area Sales Manager The Priory, Syresham Gardens Haywards Heath, RH16 3LB United Kingdom +44-1444-416368 Fax: +44-(0)-1444-458185 lc@railjournal.co.uk

Scandinavia, Spain, Southern Germany, Austria, Korea, China, India, Australia, New Zealand, South Africa, Russia, Eastern Europe Baltic States, Recruitment Advertising Julie Richardson International Area Sales Manager The Priory, Syresham Gardens Haywards Heath, RH16 3LB United Kingdom +44-1444-416368 Fax: +44-(0)-1444-458185 jr@railjournal.co.uk Italy, Italian-speaking Switzerland Dr. Fabio Potesta Media Point & Communications SRL Corte Lambruschini Corso Buenos Aires 8 V Piano, Genoa, Italy 16129 +39-10-570-4948 Fax: +39-10-553-0088 info@mediapointsrl.it

Japan Katsuhiro Ishii Ace Media Service, Inc. 12-6 4-Chome, Nishiiko, Adachi-Ku Tokyo 121-0824 Japan +81-3-5691-3335 Fax: +81-3-5691-3336 amkatsu@dream.com CLASSIFIED, PROFESSIONAL & EMPLOYMENT Jeanine Acquart 55 Broad St., 26th Floor New York, NY 10004 (212) 620-7211 Fax: (212) 633-1325 jacquart@sbpub.com

March 2017 Railway Age 41

TRAINING

RECRUITMENT

EDNA A. RICE, EXECUTIVE RECRUITER, INC Part 243 Training & Certification Part 242 Conductor Training Part 240 Engineer Training and re-certification -------------------------------------------------------Modoc Railroad Academy 916-965-5515 info@modocrail.com

EDNA A. RICE, President

(713) 667-0406 FAX (713) 667-1651 Web address: www.ednarice.com Email: resume@ednarice.com

MARKETPLACE SALES

PROFESSIONAL DIRECTORY strAteGic PLANNiNG: • Commuter rail tranSitionS • fra ComplianCe programS • operationS auditing

6750 West Loop South Suite 735 Bellaire, Texas 77401-4111

Contact: Jeanine Acquart Ph: 212/620-7211 Fax: 212/633-1165 Email: jacquart@sbpub.com

Kansas City Office (913) 661-2424 oPerAtioNs trAiNiNG & coNsULtiNG: www.tcsrailservices.com • engineer training & CertifiCation other services: • exCellent HiStory witH fra, ntSB • Staffing • interim management • meCHaniCal & part 238(Qmp)

ALL MAJOR CREDIT CARDS ACCEPTED

GLOBAL RAIL TENDERS

TuRninG OppORTuniTies inTO new Business 42 Railway Age March 2017

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equipment Sale/Leasing

Available For Lease ◆ Pressure Differential (PD) Covered Hopper Cars – 5,125 & 5,230 cu. ft., 286K GRL, operate at 14.7 psi. ◆ Mill Gondolas – 65’ 6” inside length with 5’ sides and 52’ 6” inside length with 4’ 6” sides. ◆ Open Top Hopper Cars – 4,000 cu. ft., three pocket with manual gates and rotary couplers.

Available for Lease 3000 cu ft Covered Hopper Cars 4650 cu ft Covered Hopper Cars 3600 cu ft Open Top Hopper Cars 4480 cu ft Aluminum Rotary Open Top Gons 65 ft, 100-ton log spine cars equipped with six (6) log bunks 60 ft, 100 ton Plate F box cars, cushioned underframe and 10 ft plug doors 50 ft, 100 ton Plate C box cars, cushioned underframe and 10 ft plug doors Contact: Tom Monroe: 415-616-3472 Email: tmonroe@atel.com

For additional information and pricing, please contact John Goodwin phone (605) 582-8318 e-mail jgoodwin@mwrail.com www.carmathinc.com

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SubScribe at: www.rtands.com/RailBrief March 2017 Railway Age 43

Financial edge DAVID NAHASS

He sure plays a mean game of Railroad

hen the Financial Edge last addressed the topic of Hunter Harrison, it was during the failed takeover of Norfolk Southern (NS) by Canadian Pacific (CP). Pursuit of NS was not Harrison’s first transcontinental endeavor. Both before and during his public spat with NS, Harrison pursued CSX, first in October 2014, and then again in January 2016. Having been resoundingly rebuffed by NS, Harrison turned his attention back to CSX in what has clearly become one of the most interesting games of East Coast-style M&A pinball. But there has to be a twist. In this case, Harrison has gone corporate raider and most likely prompted the May 31 retirement of current CSX CEO Michael Ward. And in one of the greatest insult-to-injury moments in recent memory, he’ll make CSX shareholders pay the money he gave up as CP CEO to take over CSX. Check please? How does $300 million sound, plus 1% of CSX common stock? Most people would likely concede that there is a pretty big spread between the Harrison ask and a reasonable payment for his services as CEO. Putting aside for a moment what Harrison’s boardroom end run might mean to a future merger with CP (or in lieu thereof, shared trackage rights that would amount to a merger in everything but name), two interesting issues spring to the foreground in this round of Harrison vs. CSX. The big headline is clearly the pay requirement that Harrison is toting. Since mid-January, when Harrison announced that he was leaving CP, CSX’s stock price has leapt up an easy 30% and added roughly $10 billion in market capitalization. Harrison’s $300 million (plus an additional $440

Railway Age

March 2017

million in stock value) is less than 10% of that increase. Additionally, investors expect an additional run-up post-inauguration of Harrison as happened at CP. (The equity market thinks so: January 2018 $50 call options are trading at roughly $4.50/ share. All in, another 15% above today’s stock price.) An equally important but less eyepopping issue is the following: Since 2007, there have been three CSX activist/takeover events. In response to those attempts, CSX made active, vocal, litigious, and successful responses to anyone who got in its

Check please? How does $300 million sound, plus 1% of CSX common stock? way and tried to tell CSX and Ward how to run the railroad. This includes an activist shareholder dispute in late 2007, which languished in the U.S. appeals court until 2011, between CSX and Children’s Investment Fund and 3G Capital Partners. In this case, however, CSX has pulled an about-face. Within a month, CSX has just about conceded the corner office to Harrison and made significant boardroom concessions. For many industry watchers, CSX throwing in the towel to Harrison is veritable heresy. Harrison’s “Precision Railroading” policies rankle many rail veterans who don’t see precision as much as they see cost cutting (a.k.a. headcount and hard assets) and

resource depletion, all in favor of reducing operating ratio. It is difficult to argue with Harrison’s successful track record, but the more interesting question at CSX is, why at this time, 14 years into his tenure, no one is standing up for Ward? CSX has weathered three big storms in the past decade. Has this current series of events just given CSX an opportunity to tell Ward that he’s not delivering on his promises to improve performance and returns, that they’ve just had enough? Is the arrival of Harrison a way of avoiding finding and possibly losing Ward’s replacement, a second time, to a more lucrative, sexier opportunity (like Oscar Munoz to United Airlines) if they wage a successful fight against Harrison and his activist partners? Other shareholders, seemingly angry at the use of the Harrison bully pulpit, have worked with CSX to create some opposition. The opposition seems somewhat halfhearted and blatantly obvious. (We’re just not going to give them $750 million dollars in cash and stock as a payoff for replacing our CEO, are we?) While probably not unprecedented, watching one railroad CEO hand his crown to another with only a dispute about exactly how much money and stock he should get for remaking the corner office is strikingly unusual. It is even more so when the incoming CEO is a septuagenarian. Maybe the board of CSX, its investors and executives just decided that if you can’t run a railroad your way and make money, maybe you’re just better off taking the money. Check the April Financial Edge for an update from Rail Equipment Finance 2017. Have questions? Set them free at dnahass@railfin.com.

Weâ&#x20AC;&#x2122;re current, are you? FRA Regulations FRA News:

Mechanical Department Regulations A combined reprint of the Federal Regulations that apply specifically to the Mechanical Department. Spiral bound. Part Title 210 Railroad Noise Emission Compliance Regulations 215 Freight Car Safety Standards 216 Emergency Order Procedures: Railroad Track, Locomotive and Equipment 217 Railroad Operating Rules 218 Railroad Operating Practices - Blue Flag Rule 221 Rear End Marking Device-passenger, commuter/freight trains 223 Safety Glazing Standards 225 Railroad Accidents/Incidents Updated 1-1-17. 229 Locomotive Safety Standards 231 Safety Appliance Standards 232 Brake System Safety Standards

$28.95

Mech. Dept. Regs.

BKMFR

Order 25 or more and pay only $26.00 each

Current FRA Regulations Item Code

FRA Part #

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

Update effective

8-1-16 7-20-09 8-1-16 8-1-16 8-1-16 8-1-16 8-1-16 8-1-16 8-1-16 8-1-16

BKHORN 222 8-1-16 BKRFRS 224 8-1-16 BKHS BKLSS BKSLI BKSAS BKBRIDGE BKLER

228 229 230 231 237 240

8-1-16 8-1-16 8-1-16 8-1-16 8-1-16 8-1-16

BKCONDC 242 8-1-16

BKBSS

BKCAD BKSTC

BKPSS

232 8-1-16

FRA Part #

40 219 233 234 235 236 238 239

Update effective

Each

50 or more

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

28.50 10.50 9.50 9.95 7.65 9.95

9.45 8.55 8.95 6.90 8.95

RR Communications Rear End Marking Device, Passenger, Commuter & Freight Trains Use of Locomotive Horns Reflectorization of Rail Freight Rolling Stock Hours of Service Locomotive Safety Standards Steam Locomotive Inspection RR Safety Appliance Standards Bridge Safety Standards Qualification and Certification of Locomotive Conductor Certification

5.95 5.50

5.35 4.95

13.75

12.40

Brake System Safety Standards

6.95 11.00 11.50 23.95 9.95 6.95 13.25

8.95 6.25 11.90

11.50

10.35

Each

25 or more

15.25

13.70

Each

25 or more

49 CFR Parts 236 and 238, Passenger Equipment Safety Standards; Standards for Alternative Compliance and High-Speed Trainsets: On December 6, 2016, FRA published an NPRM proposing to amend its regulations on passenger equipment safety standards. By this document, FRA is reopening the NPRMâ&#x20AC;&#x2122;s comment period, which closed February 6, 2017. DATES: The comment period for the NPRM, (81 FR 88006, Dec. 6, 2016), is reopened. Written comments must be received by March 21, 2017. Comments received after that date will be considered to the extent practicable.

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

BKCONDC

Order 50 or more and pay only $10.35 each

Use of Locomotive Horns at Public Highway-Rail Grade Crossings 49 CFR 222. his regulation provides for safety at public highway-rail grade crossings by requiring locomotive horn use at public highway-rail grade crossings except in quiet zones established and maintained in accordance with this part. 172 pages. Softcover, spiral bound.

BKHORN

10.35

Drug and Alcohol Regulations in the Workplace

37.00

8-1-16 8-1-16 8-1-16 8-1-16 8-1-16 8-1-16

Signal and Train Control Systems

20.50

18.45

Passenger Safety Standards

23.80

21.40

Part 238 covers: Safety planning/General Requirements - Tier I & II Passenger Equipment - Specific safety planning requirements for Tier II passenger equipment. Part 239 covers: Specific requirements - Review, approval, and retention of emergency preparedness plans - Operational (efficiency) tests; inspection of records and recordkeeping. Softcover. Spiral bound. 212 pages. Passenger Safety/Emergency

Order 25 or more and pay only $21.40 each

BKTM

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

33.00

30.00

47.00

42.30

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

$23.80

800-228-9670 www.transalert.com

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

Compliance Manuals BKINFRA

$13.75

Part 238 & 239 : Passenger Equipment Safety Standards and Passenger Train Emergency Preparedness

BKPSS

8-8-16 8-1-16

Use of Loco. Horns at Public Hwy-Rail Grade Crossings Order 50 or more and pay only $12.40 each

6.25

Combined FRA Regulations

$11.50

Conductor Certification

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

UP TO $10.00 10.01 - 25.00

Orders over $75, call for shipping

*Prices subject to change. Revision dates subject to change in accordance with laws published by the FRA. 3/17