Railway Age May 2021 by Railway Age

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LEADERSHIP INFLUENTIAL RAILROADERS SHOW THE WAY FORWARD

Watco Executive Chairman Rick Webb

RAILINC LOCOMOTIVE REPORT

Minor Fleet Adjustments

DIGITAL TRANSFORMATION railwayage.com

Avoiding Unintended August 2017 // Railway Age 1 Consequences

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February May 20212020

FEATURES

Holland

8 22 24 28 33 37 41 44 47

Influential Railroaders Railway Age Readers’ Top 10

Watco and CDL Electric ‘More Like Sister Companies’

Extending Rail Life

Grinding, Milling, Welding

Digital Transformation

Recognizing, Addressing Volatility

Road to Carbon Neutrality A New Approach: Power-to-Gas

Smarter, Safer Railroading

Cybersecurity and locomotive health

Railinc Locomotive Review Minor Fleet Adjustments

Rebirth of the Streetcar The Secret? Vehicle Diversity

TTCI R&D

DEPARTMENTS 4 6 7 49 50 50 51

Industry Indicators Industry Outlook Market People

NEWS/COLUMNS 2 52

From the Editor Financial Edge

Professional Directory Classified Advertising Index

ON THE COVER: Watco Executive Chairman Rick Webb, one of Railway Age’s 2021 Readers’ Influential Leaders Photo: Watco

Effects of Braking on Wheels

Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 88 Pine St., 23rd Fl., New York, NY 10005-1809. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 222, No. 5. Subscriptions: Railway Age is sent without obligation to professionals working in the railroad industry in the United States, Canada, and Mexico. However, the publisher reserves the right to limit the number of copies. Subscriptions should be requested on company letterhead. Subscription pricing to others for Print and/ or Digital versions: $100.00 per year/$151.00 for two years in the U.S., Canada, and Mexico; $139.00 per year/$197.00 for two years, foreign. Single Copies: $36.00 per copy in the U.S., Canada, and Mexico/$128.00 foreign All subscriptions payable in advance. COPYRIGHT© 2021 Simmons-Boardman Publishing Corporation. All rights reserved. Contents may not be reproduced without permission. For reprint information contact PARS International Corp., 102 W. 38th Street, 6th floor, New York, N.Y. 10018, Tel.: 212-221-9595; Fax: 212221-9195. Periodicals postage paid at New York, NY, and additional mailing offices. Canada Post Cust.#7204564; Agreement #41094515. Bleuchip Int’l, PO Box 25542, London, ON N6C 6B2. Address all subscriptions, change of address forms and correspondence concerning subscriptions to Subscription Dept., Railway Age, PO Box 1407 Cedar Rapids, IA. 52406-1407, Or call toll free (US Only) 1-800-553-8878 (CANADA/INTL) 1-319-364-6167. Printed at Cummings Printing, Hooksett, N.H. ISSN 0033-8826 (print); 2161-511X (digital).

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May 2021 // Railway Age 1

FROM THE EDITOR This Space Almost Intentionally Left Blank

ear readers: I write this column on April 30 knowing full well that by the time you read it, the merger game involving Canadian Pacific, Kansas City Southern and CN may have taken yet another direction, rendering my observations moot, or even—gasp!—disingenuous. I’d be better off trying to predict when an asteroid is going to strike the Earth, wiping out civilization and leading to the rise of insects (which already outnumber us by 200 million to one). There’s nothing wrong with being wrong, right? Still, I’ve decided to give my stretched synapses a break and take myself off the hook by sharing a few observations from Contributing Editor Jim Blaze, who knows more than a thing or two about railroad economics, and what drives railroads to engage in strategic maneuvers that involve government regulators: “What we are seeing is something like a Chess game, only the object is not to capture the King across a 64-square playing board. Here, the commercial object is to capture prime real estate rather than pawns and knights. It’s about establishing operating rights on a network of steel rail laid over crossties and stone ballast, a web that in today’s world is too expensive to build anew. Just the raw right-of-way and new construction costs would start at about $4 million or more per track-mile—plus the unimaginable price for the land rights. “Where is the real prize? The parties may argue where the core market access value is. But the richest commercial access rights for the winning bidder might be described as

the growing Mexican market. Mexico is both a consumption marketplace for foods and energy, and a producer (builder/ assembler) of products like automobiles and other diversified parts. Now, with the recent NAFTA replacement legislation agreement, USMCA, its continued attraction as a place for two-way freight movement is cemented for years to come. “Critically, Mexico lacks a strong, modern truck-based highway network and thus is a good place to build up railroad freight volumes for natural resources, energy, merchandise, chemicals and intermodal rail services. Former executives at Kansas City Southern made their bold bid to acquire the prime lines of FNM, Mexico’s national railway system, a few decades ago because they saw the truck-to-rail-diversion business case for what ultimately became KCS de México. “One of the first questions is this: Is CN’s counter-offer a friendly proposal? It might be. But it is still an important question, particularly for regulators who institutionally remember when past mergers developed into congestion and service delay problems in part because of ‘who’s in charge and knows best’ situations. That’s exactly what happened when Union Pacific swallowed Southern Pacific in one huge gulp. UP literally choked. “What’s the outcome? It’s hard to predict, particularly if there are as-of-yet geopolitical unknowns that could twist the plot even further.” More views from others on pp. 6 and 52.

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Industry Indicators AAR: ‘RAIL TRAFFIC NUMBERS IMPACTED BY EASIER COMPARISONS’ “When the pandemic first began around mid-March 2020, firms across the country and across industries shut down or drastically reduced operations, leading to sharply lower volumes for many rail traffic categories,” the Association of American Railroads reported in April. “A year later, rail traffic has rebounded, leading to year-over-year volume percentage gains that in some cases reflect easier comparisons more than underlying market factors. March’s rail traffic numbers were impacted by the easier comparisons. Total U.S. carloads were up 4.1%, their first year-over-year monthly gain since January 2019. For intermodal, U.S. volume in March 2021 was up 24.0%. That’s the biggest monthly gain ever for intermodal.”

Railroad employment, Class I linehaul carriers, March 2021 (% change from march 2020)

TRAFFIC ORIGINATED CARLOADS

MAJOR U.S. RAILROADS BY COMMODITY

TOTAL EMPLOYEES: 115,003 % CHANGE FROM MARCH 2020: -10.06

Transportation (train and engine) 46,404 (-10.42%)

Executives, Officials and Staff Assistants 7,276 (-3.86%)

five WEEKS ENDING april 3, 2021

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

MAR. ’21

MAR. ’20

% CHANGE

127,933 4,503 47,350 29,806 156,056 54,617 310,686 5,018 17,412 27,955 23,364 17,081 45,508 19,783 71,780 93,307 17,928 37,808 17,761 30,502

104,789 4,702 45,769 29,235 163,913 59,690 288,676 5,727 17,342 25,742 21,636 17,736 42,752 18,476 61,737 97,210 18,798 37,982 16,983 31,759

22.1% -4.2% 3.5% 2.0% -4.8% -8.5% 7.6% -12.4% 0.4% 8.6% 8.0% -3.7% 6.4% 7.1% 16.3% -4.0% -4.6% -0.5% 4.6% -4.0%

1,156,158

1,110,654

4.1%

407,015

407,252

-0.1%

1,563,173

1,517,906

3.0%

CANADIAN RAILROADS TOTAL CANADIAN CARLOADS

COMBINED U.S./CANADA RR

Professional and Administrative 10,179 (-5.28%)

Maintenance-of-Way and Structures 28,356 (-6.67%)

Maintenance of Equipment and Stores

Intermodal

FIVE WEEKS ENDING APRIL 3, 2021

MAJOR U.S. RAILROADS BY COMMODITY

MAR. ’21

Trailers Containers TOTAL UNITS

114,861 1,315,470

18,021 (-18.32%)

CANADIAN RAILROADS

Transportation (other than train & engine)

Trailers Containers TOTAL UNITS

MAR. ’20

% CHANGE

83,073

1,430,331

1,070,477 1,153,550

38.3% 22.9% 24.0%

0 373,274 373,274

0 310,319 310,319

— 20.3% 20.3%

83,073

4,767 (-10.16%)

COMBINED U.S./CANADA RR

Source: Surface Transportation Board

Trailers Containers

114,861 1,688,744

1,380,796

38.3% 22.3%

TOTAL COMBINED UNITS

1,803,605

1,463,869

23.2%

Source: Rail Time Indicators, Association of American Railroads

4 Railway Age // May 2021

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BEFORE YOU INVEST IN ANOTHER AIR BRAKE CONTROL VALVE,

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

1,563,173 MARCH 2021

STOP & CONSIDER:

1,517,906 MARCH 2020

Short Line And Regional Traffic Index CARLOADS

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

ORIGINATED MARCH ’21

ORIGINATED MARCH ’20

% CHANGE

53,472 22,049 22,573 11,779 32,630 8,541 10,903 3,395 19,427 9,958 2,503 2,231 18,389 14,857 47,940 11,325 77,417

54,764 15,645 25,890 11,252 26,929 8,380 10,333 2,345 19,472 10,141 2,537 2,172 18,692 13,135 39,520 10,299 74,388

-2.4% 40.9% -12.8% 4.7% 21.2% 1.9% 5.5% 44.8% -0.2% -1.8% -1.3% 2.7% -1.6% 13.1% 21.3% 10.0% 4.1%

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

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

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May 2021 // Railway Age 5

Industry Outlook Combining CN and KCS “will create the premier railway for the 21st century, connecting ports in the United States, Canada and Mexico to facilitate trade and economic prosperity across North America … providing superior service, enhanced competition and new market access to move goods across North America efficiently and safely,” CN said.

CN Makes a Counter-Offer for Kansas City Southern ONE MONTH AFTER CANADIAN PACIFIC (CP) AND KANSAS CITY SOUTHERN (KCS) ANNOUNCED THEIR INTENDED UNION, CN announced its own, unsolicited bid to acquire KCS. CN said on April 20 that its counter-offer is a “superior proposal” that “will result in a safer, faster, cleaner and stronger railway.” CN’s proposal of $325 per KCS share “represents a 21% premium over the implied value of the CP transaction and values KCS at an enterprise value of $33.7 billion.” As KCS immediately “went radio silent,” the strategic moves and public relations campaigns from both suitors started, and became contentious. CP and CN both filed voting trust applications with the Surface Transportation Board (STB), using the same trustee (former KCS President and CEO Dave Starling). CP President and CEO Keith Creel, Railway Age’s 2021 Railroader of the Year, implied in a late-April NEARS 6 Railway Age // May 2021

conference talk with Cowen and Company Managing Director and Railway Age Wall Street Contributing Editor Jason Seidl that the STB holds the key as to whether CP or CN wins the battle for KCS. “Creel was adamant that CP’s proposal was the least risky as it did not have any overlap compared to a notable amount at CN,” Seidl said. “He also did not sound like he would increase his bid if KCS chose to take CN’s offer. He reinforced commentary that with the CP/KCS combination, extended length-of-haul will be offered to customers. The west side of the Midwest (North Dakota, South Dakota, Wisconsin) was highlighted as having a competitive opportunity to reach new markets in Texas and Mexico.” Seidl asked Creel about his views of the overlapping customers that the CN/KCS deal offers, “given there has been clearly opposing views from both sides. CN stated that the only overlaps are the small parallel tracks in Baton Rouge and New Orleans, which is less

than 1% of its overall network. Creel stated that CN is only counting the 2:1 overlap, which is disingenuous, given there are a multitude of 3:2, 4:3 situations that give shippers fewer options and is anti-competitive in nature.” “Creel said that CP is confident that the STB will do the due diligence that will show the true customer overlap of the proposed deals,” Seidl noted. “Because CN is insisting such different viewpoints on overlap, CP gave a submission to the STB using publicly available information on Railinc interline data.” In terms of the voting trust, for which both CP and CN have applied to the STB, designating the same trustee, Creel said that “the most significant part of the deal is in the hands of the STB, who will decide on the outcome of the voting trust with CN,” Seidl said. “If both go into voting trust, then it becomes a bidding war that CN will win. However, CP is confident that CN will not be granted a voting trust because its deal is more complex, anti-competitive, and not in the public interest.” “We believe the next step will come from the STB and not the KCS Board,” Seidl noted. “The KCS Board has nothing to gain by choosing a side in the transaction, if the STB may be taking a different viewpoint. It is clearly a risk/reward judgment that weighs CN’s clearly superior offer price against CP’s lower-risk combination.” “CP will not get into a bidding war for the right to acquire control of KCS railroad and its Mexican concession,” commented Railway Age Contributing Editor Jim Blaze. “If the KCS Board decides to accept the CN higher-bid offer, it is likely that CP might then just decide to accept the near $700 million ‘CPKC breakup penalty’ payment as compensation—and walk away. CP would end up with a relatively weaker O/D network coverage than any of the remaining Class I railroad companies. Creel suggested that CP might therefore have to seek another Class I as a follow-on merger partner in order to remain competitive.” railwayage.com

Market Metra Exploring Battery Locomotive Conversions Metra has issued a Request for Proposals (RFP) challenging manufacturers to convert three of its older F40PH-3 diesels to battery power. A contract is slated for award this fall, with the first zero-emission, battery-powered locomotives delivered about 30 months later. Metra requires the remanufactured locomotives to be fully compatible with the agency’s existing railcars and diesel power, and capable of operating on any Metra line and of hauling two- to 11-car trains while providing “a safe and comfortable ride at all speeds up to the maximum speed of 79 mph.” The batteries must also be able to power passenger car onboard systems.

WORLDWIDE

NORTH AMERICA

French startup LE TRAIN plans to launch open-access TGV services in southwest France at the end of 2022. The company said it will avoid direct competition with SNCF when it introduces services by offering new inter-regional trains on the Arcachon–Bordeaux–Angoulême–Poitiers–La Rochelle corridor, with services extending to Nantes and Rennes on weekends. This would involve operating along the highspeed Bordeaux–Paris line between Bordeaux and Poitiers.

The CITY OF HORNELL INDUSTRIAL DEVELOPMENT AGENCY (IDA) has applied for a $4.5 million grant from the U.S. Economic Development Administration to offset some costs of ALSTOM’S expanded railcar manufacturing facility. Estimated to cost $47 million, the 135,000-square-foot facility will offer space for manufacturing (105,000 square feet), warehousing (18,000 square feet), and offices (12,000 square feet). It will be used to build new carshells for Metra’s recent order of up to 500 multilevels, which is slated to create 258 new jobs and retain 400 more. RETLIF TESTING LABORATORIES has developed and deployed a cybersecurity plan that is in compliance with NIST 800-171 and Levels 1, 2 and 3 of the Department of Defense Cybersecurity Maturity Model Certification (CMMC). The company’s Ronkonkoma, N.Y.; Harleysville, Pa.; and Goffstown, N.H., testing labs are “certified to deliver a higher degree of cybersecurity protection,” Retlif reported.

Metra

EAGLERAIL CONTAINER LOGISTICS plans to offer an automated, all-electric, railwayage.com

overhead container transportation system to improve port and intermodal efficiency. Replacing the drayage truck model, containers would travel along an overhead track, and over other infrastructure, to alleviate port congestion. The system could be used for seaport to intermodal corridors, deep-sea berths to onshore stacking operations, and internal terminal and trans-ship operations. “What we do with a 60,000-pound freight container is what Amazon automated warehouses do with a 60-pound box,” Chairman and CEO Mike Wychocki explained. The FEDERAL TRANSIT ADMINISTRATION (FTA) has selected consultant and digital services provider ICF to automate and update the National Transit Database (NTD), improving data visibility, analysis and tracking. The NTD tracks information about the financial, operating and capital asset condition of U.S. transit systems, which report such metrics as Vehicle Revenue Miles (VRM), Vehicle Revenue Hours (VRH), Passenger Miles Traveled (PMT), Unlinked Passenger Trips (UPT), and Operating Expenses (OE). FTA uses the data to apportion grant program funding to urbanized and rural areas, and to produce reports. Governments and other decisionmakers use it for planning purposes. May 2021 // Railway Age 7

2021 Influential leaders

Rick Webb Executive Chairman, Watco

RAILWAY AGE READERS’ INFLUENTIAL LEADERS

he results are in. Through Railway Age’s second annual Readers’ Influential Leaders online poll, qualified subscribers nominated a large number of active (non-retired) people from all areas of the North American railway industry. We are pleased to present the top 10 nominees here, plus five leaders receiving honorable mention. They are all committed to service and sustainability. Annie Adams Executive Vice President and Chief Transformation Officer, Norfolk Southern

8 Railway Age // May 2021

Engaging employees, building bridges between generations in the workplace, and ensuring sustainability are important industry-wide, and they are among Adams’ achievements at NS. She joined the company in 2001 and has risen through the human resources and planning ranks. Appointed Vice President Human Resources in 2016, she was charged with developing and executing talent strategies and employee engagement initiatives. Adams took on her current role in 2019, with responsibility for Information Technology, Human Resources, Labor Relations, Corporate Communications, Sustainability, and Corporate Giving. She heads up

many efforts that are fundamentally changing how NS does business. For example, the Digital | NS initiative is accelerating the company’s digital transformation and building the digital railroad of the future. Another key element of the railroad’s transformation: relocating the Norfolk, Va., corporate headquarters to Atlanta, Ga. Adams has led the new campus’ development, and employee health and well-being are central to the design, which leverages smart building technology and flexible workspaces, including outdoor spaces, to promote inclusion and collaboration. With sustainability oversight, Adams coordinates a company-wide commitment railwayage.com

Watco

The mantra of these railroaders: Making a difference. They’re not only helping to shape the industry, but also tomorrow’s leaders.

2021 Influential leaders that includes locomotive fuel efficiency improvements, hybrid intermodal crane investments, carbon credit programs that benefit customers, and environmental stewardship initiatives.

Annie Adams Executive Vice President and Chief Transformation Officer, Norfolk Southern

Michael Cleveland Senior Manager, Emerging Technology, BNSF

Jim Derwinski CEO/Executive Director, Metra, and Chairman, Commuter Rail Coalition

Michael Cleveland Senior Manager, Emerging Technology, BNSF Cleveland leads BNSF’s battery electrification and energy storage initiative, which he established in 2018. Its aim is to reduce the railroad’s environmental footprint and costs through vehicle technology projects. BNSF has implemented battery-electric yard tractors, sideloaders, and hybrid rubber tire gantry cranes. Cleveland also heads up BNSF’s partnership with Wabtec on the development and demonstration of the first linehaul battery-electric locomotive in California. The key to technology development success is people and always asking, “How can we do this better?” Cleveland says, adding that he is “pleased to work with the best that the industry has to offer on some of the biggest and most challenging problems facing rail today.” Cleveland joined the railroad in 2010 as a mechanical management trainee. In 2015, he moved to the system locomotive team as the locomotive technology expert for the Natural Gas Pilot program. He was responsible for guiding the development of and piloting and evaluating BNSF’s natural gasfueled locomotives. Among his other projects: air brake health effectiveness systems and waivers; locomotive emissions testing, reporting and validation; and rebuilt engine emissions kit development. Cleveland also participates in the Mechanical Committee of the Locomotive Maintenance Officers Association.

Keys to tech development success: people, and always asking, “How can we do this better?”

Jim Derwinski CEO/Executive Director, Metra and Chairman, Commuter Rail Coalition (CRC) Derwinski leads the nation’s fourth-busiest 10 Railway Age // May 2021

commuter railroad—with 242 stations, 11 routes and some 1,200 miles of track. Throughout the pandemic, he has worked with city and suburban leaders to keep Chicagoland moving, providing essential service to the region’s frontline workers, while navigating the exigencies of myriad contract service providers. Under his leadership, Metra has also brought together business and community leaders, and recently sponsored Chicago’s Safe Return To Work Summit. A six-year U.S. Navy veteran, Derwinski began his railroading career with the Chicago & North Western in 1993. In 1997, he joined Metra as an electrician, rising steadily through the ranks to become Chief Mechanical Officer in 2013. In this role, he managed the work of 650 professionals, ensuring the safe operation of nearly 1,200 railcars and locomotives, and oversaw Metra’s railcar and locomotive rehabilitation programs, department contracts and the installation of PTC. The Metra Board unanimously elected him to his current post in 2017, where he is directing new transportation initiatives, including updating the aging railcar fleet. Derwinski is founding Chairman of the CRC, which launched in 2019. He leads CRC’s Board of Directors, helping to steer and grow the advocacy organization, and representing its members—commuter rail agencies, operators and other interested parties—on Capitol Hill, before House and Senate Committees, and in the media. Additionally, he is a member of the APTA Board; AAR Safety Operations and Management Committee; and TTCI Board. Jim Hansen Chief Commercial Officer-Freight Systems, Herzog Throughout his 43-year railroading career, Hansen has played an integral role in promoting innovation and collaboration and serving as an advocate for railway contractors and suppliers. railwayage.com

Congratulations Mark Wallace Executive Vice President of Sales and Marketing Mark Wallace is driving innovative change that is reshaping CSX’s sales and marketing vision and setting the standard for rail marketing across the industry. Mark has implemented strategies that shift our focus into the future – delivering solutions based on real-time analytics and helping us grow from a service provider to a proactive supply chain partner. Through Mark’s visionary leadership, CSX is establishing new levels of customer engagement and forging ahead toward becoming North America’s best transportation provider.

csx.com

CSXT-000444_MarkWallaceRailwayAgeAd-April2021_7x10_rsg.indd 1

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2021 Influential leaders

Jim Hansen Chief Commercial Officer-Freight Systems, Herzog

He got his start in Burlington Northern’s maintenance-of-way department. After more than 10 years of service, he moved on to hold sales and marketing positions of increasing executive responsibility at ESCO Equipment Service Co., Stanley Railroad Products, and RailWorks Corp., where for 30 years he was dedicated to understanding customer needs and championing the

introduction of m/w technology, services and partnerships. Hansen joined Herzog in 2017, and now leads all marketing efforts for freight clients. For 25 years, Hansen has been President of the North American Maintenance Railway Club, now a top railroad networking organization with more than 600 contractor, supplier and railroad members. He is also Chairman of the Board for the National Railroad Construction and Maintenance Association. Under his leadership, the group has launched a sustainability task force and a “First Look” Webinar series, among other initiatives, and he is helping to shepherd the next generation of industry leaders into NRC’s committees and Board. Additionally, Hansen is Vice Chair of AAR’s Associate Advisory Board. Joan Hardy Vice President Sales and Marketing, Grain and Fertilizer, Canadian Pacific Hardy is responsible for commercial customer relationships and product

marketing for CP’s bulk business. She has taught her 25-member team to analyze the facts and think about commercial contracts in a different way, and introduced KPIs and metrics to help them understand specific customer issues and trends. In collaboration with farmers through industry groups, shippers, ports and the grain supply chain, Hardy and CP are delivering record volumes for Canada’s agriculture sector. She and her team introduced CP’s 8500’ High Efficiency Product (HEP) model in 2018. By the end of 2021, more than 40% of the CP-served grain elevators in western Canada will use it, creating significant additional capacity. Hardy, who holds a degree in mechanical engineering, spent 21 years at CN in Mechanical, Operations, Sales and Marketing, and Customer Service roles; and 12 years leading transportation activities for grain merchandiser and processor Richardson International. She is Chair of CP’s Gender & 2SLGBTQ+ Diversity Council, which spearheaded a

CONGRATULATIONS, M.D. “Mike” Stolzman! General Manager of New Orleans Public Belt Railroad Under your leadership, NOPB is thriving as a safe, efficient, and environmentally sustainable rail service, exceeding customers’ needs with world-class transportation solutions. The Port of New Orleans salutes you and all the 2021 Railway Age Influential Leaders. 12 PortofNewOrleans_Apr_V2.indd Railway Age // May 2021 1

www.portnola.com

4/19/21 12:03 PM railwayage.com

Gulf & Ohio Railways

CONGRATULATIONS TO

PETE CLAUSSEN

—a pioneer in the shortline and green locomotive industries—on being selected for honorable mention by Railway Age as one of the rail industry’s most influential leaders.

Knoxville Locomotive Works

2021 Influential leaders

Joan Hardy Vice President Sales and Marketing, Grain and Fertilizer, Canadian Pacific Women’s Leadership Network; established a mentoring program with streams for women in operations and in non-operations roles; and connected CP with Pride at Work. In addition, Hardy is an active member of the United Way Winnipeg Board of Trustees, and recently completed a two-year term as Chair.

Matthew McClaren Chief Mechanical Officer-Car, CN McClaren got his start in railroading as a NS Conductor. He moved on to CN, holding Conductor and Yard Supervisor positions, before taking on a management role, Assistant Transportation Manager. Over the past 20 years, McClaren has served as Superintendent Illinois, Superintendent Chicago/ Iowa Zones, General Superintendent, and General Manager in Network Operations. He recently took on his current role in the Mechanical department, overseeing the inspection, maintenance, asset planning and safety for all railcars across the CN network. McClaren has led many initiatives at CN, including a successful plan to reduce overall cycle times on unit trains. This resulted in the team receiving a People’s Award of Excellence, one of CN’s highest achievements. He also played an integral role in the construction of Harrison Yard–Memphis, Tenn., in 2008, and helped implement a new computer-aided dispatch system for

CN’s Eastern Region. He is most proud of leading a safety culture transformation in the Operations Center. Through consistent support from the Center’s leaders, employees focus on understanding the “why” behind what they do and controlling what they can. Reinforcing a safety-led culture that is empowered to live by safety over productivity is key. McClaren is known for investing in his team the most precious asset leaders have—time. Clark Ponthier Senior Vice President-Supply Chain and Continuous Improvement, Union Pacific Ponthier is responsible for overall leadership on strategic sourcing, warehousing, planning, supplier quality, and fueling and wastewater treatment operations. Under his direction is UP’s Supplier Diversity program, which supports local communities. Its aims: developing relationships with qualified suppliers, offering

Named as one of Railway Age magazine’s

“2021 Readers’ Influential Leaders” Congratulations to Executive Chairman Rick Webb on being recognized by his peers for his passion, commitment, and impact on the rail industry

14 Watco_Railway_2021 Railway Age // May 2021 Leaders_RickWeb_HalfPg.indd 1 Influential

railwayage.com 4/21/21 9:09 AM

THIS IS BNSF. Going the extra mile for our customers and our communities.

BNSF proudly congratulates

MICHAEL CLEVELAND

for being chosen as one of Railway Age’s Most Influential Industry Leaders.

BNSF.com/Careers

2021 Influential leaders

Matthew McClaren Chief Mechanical Officer-Car, CN

them opportunities to compete for UP business, and helping them identify growth opportunities. In 2020, the team increased its diversity spend 29% by recruiting new vendors, expanding current diverse vendor portfolios, and auditing vendors’ diversity status. Not only is Ponthier’s team signing up for another 25% increase in spend in 2021, he has also built progressive KPIs

around diverse bid inclusion, onboarding and mentoring. This critical diversity and inclusion work is in addition to Ponthier’s voluntary role as UP’s LGBT+ Employee Resource Group Executive Sponsor. Among his other accomplishments: Ponthier and his environmental team completely revised how wastewater treatment is handled, leading to significant environmental improvements across the UP network; and in March 2020, during the pandemic, his supply team identified more than 6,500 N95 masks and several 55-gallon drums of hand sanitizer and isopropyl alcohol, which they donated to Nebraska Medicine, the largest hospital network in the state. Ponthier serves on the Board of Directors for the United Way of the Midlands and as an officer on the Board of the Association for Supply Chain Management. Rafael Santana President and CEO, Wabtec A native of Brazil, Santana has more than

25 years of commercial, product management and executive leadership experience. He oversaw Wabtec’s growth into a Fortune and S&P 500 company, and led the merger with GE Transportation, positioning Wabtec with a strong, diversified portfolio. Under Santana’s direction, Wabtec not only helped 70 customers meet the recent U.S. federally mandated deadline for PTC, but also is driving sustainability. The Pittsburgh, Pa.-based company—which traces its roots to inventor George Westinghouse, whose automatic air brake was introduced in the pages of Railway Age in the 19th century—is working with BNSF and the California Air Resources Board to test its FLXdrive Battery Locomotive, the industry’s first 100%, heavy-haul batterypowered unit to operate in revenue service. In addition, Santana is leading the company on additive technology, artificial intelligence and autonomous rail operations initiatives. Santana announced Wabtec’s establishment of a research institute in partnership

Our commitment to sustainability is at the heart of everything we do.

WabtecCorp.com/Sustainability

16 Railway Age // May 2021

railwayage.com

2021 Influential leaders emissions with battery- and hydrogenpowered locomotives, and enabling safer trains,” he said. Wabtec’s goal, Santana noted, is to “develop the next generation of zero-emission locomotives. Wabtec has a clear path to power new locomotives—and repower existing locomotives—with batteries, hydrogen internal combustion engines, and hydrogen fuel cells.” Clark Ponthier Senior Vice President-Supply Chain and Continuous Improvement, Union Pacific with Carnegie Mellon University and Genesee & Wyoming in March. The Freight Rail Innovation Institute is slated to develop and deploy advanced rail propulsion, logistics and safety technologies. “Within the next nine years, we are committed to developing the technology to enable the expansion of freight rail utilization, accelerating the reduction of GHG

Mark Wallace Executive Vice President of Sales and Marketing, CSX Wallace is setting a new standard in rail marketing. Since being named CSX’s sales and marketing leader in 2018, he has transformed the department: recruiting professionals from outside the industry to broaden the company’s sales and marketing vision; creating a new strategy team to focus on analytics and data-driven marketing; incorporating the customer service team, which was renamed customer engagement, with a focus on collaboration and proactive

outreach; providing sales and marketing with additional support and tools; equipping customers with improved transparency for shipment tracking; and creating a tighter alignment between the sales and marketing teams, emphasizing the importance of addressing customers’ challenges over quoting prices. Through these initiatives and more, sales and marketing is now centered on offering new supply chain solutions and converting freight from highway to rail. Employees are leveraging improved service and expanding value-added services, such as transloading and warehousing, to capture new opportunities and elevate CSX from a service provider to a proactive supply chain partner. Prior to joining CSX in 2017, Wallace was Vice President of Corporate Affairs and Chief of Staff at CP, and held a variety of senior management roles at CN. Wallace serves on the Board of Directors of Wolfson Children’s Hospital in Jacksonville, Fla.

Nicely done, Clark. Congratulations to Clark Ponthier, senior vice president supply chain, for being named one of Railway Age’s top 10 influential railroad industry executives.

18 Railway Age // May 2021

railwayage.com

2021 Influential leaders

Rafael Santana President and CEO, Wabtec Rick Webb Executive Chairman, Watco Webb is a logistics and transportation trailblazer. For 37 years, he has led a successful business that includes operating more than 40 short line railroads with additional integrated transportation services in the terminal and port, railcar mechanical, and third-party logistics spaces in North America and Australia. Building Watco from its humble Kansas

roots to what it is today; valuing customers and fellow employees; committing to safety; and championing the industry are among the reasons Webb is an influential leader. Webb joined Watco in 1984, one year after his father, Dick, commenced operations. He cleaned boxcars at Watco’s early third-party switching locations, and by the time the company added its first short line in 1987, he was becoming known for his dedication to customers and for cultivating relationships with Class I’s. Over the years, he took on management and leadership roles in operations, purchasing, marketing, accounting and financial management. His strategic vision and knack for taking smart risks propelled him to CEO in 1998. In 2004, Kansas City Southern turned to the company to operate its Kansas City Terminal Railroad. The following year, KCS announced it would lease five branch lines to Watco. “Rick is a customer focused first, visionary leader,” said David Starling, former KCS President and CEO. “Watco has been a trusted partner of KCS for many years due to the confidence

The Railway Educational Bureau

we’ve had in Rick and the organization he’s built.” Watco went on to own or lease and operate a network of short lines interchanging with each of the seven Class I’s—ensuring dependable and far-reaching market connectivity, especially for rural businesses and communities. Webb also pursued other rail-related lines of business. In 2004, Watco bought a minority interest in Houston’s Greens Port Industrial Park on the Houston Ship Channel and became full owner in 2010. Today, the 723-acre Greens Port Industrial Terminals, with seven deep water docks, nine barge docks and direct access to three Class I’s, can handle and distribute products and create new supply chains for customers. In 2008, Watco began serving new lumber, steel and bulk customers by acquiring warehouses and transloading facilities. Watco expanded internationally in 2012 to provide rail logistics services in western Australia and in 2017 as part of a joint venture with KCS and a third partner to build a terminal in Mexico. It launched a supply chain division in 2014, and opened a centralized training

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2021 Influential leaders HONORABLE MENTION

Mark Wallace Executive Vice President, Sales and Marketing, CSX facility three years later. Webb has earned respect not only due to his achievements, but also his passion for the industry. His 2009 congressional testimony, on behalf of ASLRRA, for instance, stressed the importance of a renewed investment in short lines, and helped lead to the Short Line Tax Credit. He was on the STB’s RailroadShipper Transportation Advisory Council and is an AAR Board member.

Pete Claussen Chairman, Gulf & Ohio and Knoxville Locomotive Works

Ian Jefferies President and CEO, Association of American Railroads

Ryan Coholan Chief Railroad Officer, Massachusetts Bay Transportation Authority

M.D. “Mike” Stolzman General Manager, New Orleans Public Belt Railroad

Robert J. Riley CEO, Rock Island Rail

The CP family congratulates Joan Hardy for being named a Railway Age top 10 Readers’ Most Influential Leader.

Connect to an exciting career at cpr.ca/careers

railwayage.com

May 2021 // Railway Age 21

M/W RAILROAD/SUPPLIER PARTNERSHIPS

Watco and CDL Electric

‘MORE LIKE SISTER COMPANIES’ What started as ‘basically a handshake’ blossomed over time into a mutually beneficial working partnership. ost people who have devoted their careers to the railroad industry know that it’s much like a family, built upon personal relationships. This is particularly true for the large number of smaller suppliers and contractors, those that co-exist with the huge, multi-discipline, multi-national companies that seem to dominate the market. Pittsburg, Kans.-based CDL Electric, founded in 1964 as S&S Electric, is one such company. It has thrived and grown over the years, in no small measure due to a relationship forged with Watco Companies, based also in Pittsburg. Watco’s Executive Chairman, Rick Webb, graces the cover of this issue as one of Railway Age’s 2021 influential railroaders. We spoke with CDL Owner, President and CEO Larry Seward Jr., about the CDL/Watco partnership: “I got a call from Rick asking me if I knew anything about railroad signals. I said, ‘Rick, if it has anything to do with electrical, I can fix it.’ I have an electrical engineering degree from Pittsburg State University and am a master electrician. My dad was a commercial electrical contractor, and I worked with him.

22 Railway Age // May 2021

When I finished school, we branched out and started doing a lot of state work—highway lighting, traffic signals. “I had a meeting with Rick and his dad, Dick Webb, who started Watco in 1983. Dick was quite a character. He called me one day and said, ‘Hey, Seward, I want to talk to you. Why don’t you come down to our shop in Coffeyville?’ At the meeting, he said, ‘Seward, these damn signals are giving me a headache. You’re going to be my aspirin.’ That’s how we started in the railroad signal business. It was something that we picked up fairly quickly. We blossomed into it. “We started out with basically a handshake. Watco was just starting up, and Dick told me that if I took care of him on those signals, I’d be with him as long as I did my job. Well, I’ve been doing my job going on 39 years. We shook hands, and what we have today is still a handshake. The integrity of the Webb family has always been like that. They are very loyal people. Our companies are so intertwined that people think Watco owns us, but we’re two different companies. “What I like about Watco is that they don’t look at us as a vendor. We’re a partner—more like a sister company. CDL does a multitude of things for Watco. We do proposal and

fabrication work for their shops. We take care of their generators. We’ve wired locomotives. We do electrical and signal work. We wrap their tanker cars. Whatever they need us to do, we do it. When they come into a situation and they need something, we can diversify and take care of it. “We’re their signal department. I work with Watco to try to figure out ways that we can help them save money. I think Rick and his people know that I’m going to get the best possible deal for them with the best quality product. They trust me, and I trust them. I look at myself as a CDL-Watco employee. I make decisions that are in Watco’s best interests.” The relationship between the Webb and Seward families goes back many years, to the era when the railroads were transitioning from steam to diesel locomotives. Larry Seward Jr.’s two grandfathers were machinists who worked for Rick Webb’s grandfather at a Kansas City Southern locomotive shop. Today, CDL employs close to 500 people at six Midwestern facilities and does business in 35 states. Watco consists of transportation, mechanical, terminal and port and compliance divisions, with 41 short lines. Yet for both, it’s still all in the family. railwayage.com

Watco

BY WILLIAM C. VANTUONO, EDITOR-IN-CHIEF

M/W focus

EXTENDING RAIL LIFE

WITH PRECISION Grinding, milling and welding product overview and market outlook. egular steel rail maintenance not only extends service life, but also helps ensure safety. That’s why suppliers of grinding, milling and welding equipment and services are always fine-tuning and introducing new offerings to meet railroad needs. They discuss those—and today’s market—below. HOLLAND LP As industry conditions continue to improve, welding customers are looking to increase work efficiency and scheduling flexibility, Holland told Railway Age. And market demand is changing—from large rail gangs installing new rail to smaller gangs and more repair welding work. “Holland’s MobileWelders are being deployed more 24 Railway Age // May 2021

frequently for smaller jobs, taking advantage of the short cycle times of flash-butt welding,” the company said. Holland equipment produces more than 250,000 flash-butt welds per year. “Each of those welds provides us with numerous data points in real-time via our Intelliweld operating system,” it reported. “The system allows us to pinpoint potential issues as they happen and easily tailor our weld programs to customer requirements.” The company’s Weld Quality Lab, coupled with weld data collection, “helps us achieve the highest level of weld quality— over 5.5 sigma quality performance—and continually work to minimize the heataffected zone of the weld.” Initially developed in early 2019, Holland now has two mobile laser welding units,

providing manganese frog repair service. The robotically controlled welding process reduces heating of the base frog material using laser additive manufacturing technology. “The LaserWelder technology also provides significant long-term savings for railroads by extending the life of the repairs and the frogs,” Holland said. “Initial repairs are now approaching two years of service, with most over 100 MGT of traffic. Some will soon be approaching 150 MGT with minimal maintenance grinding required.” The company is expanding, and now offers the Holland Rail Services Australia division, which is performing work in the Pilbara mining region. “We have two in-track MobileWelders operating in Australia, with a third in-country and undergoing commissioning,” Holland said. railwayage.com

Holland MobileWelder

BY MARYBETH LUCZAK, EXECUTIVE EDITOR

LINSINGER (AUSTRIA) Rail milling can extend track life by seven to 10 years, according to Linsinger. Today’s railroads are looking for customized solutions to perform the work, and the company produces machines for networks like DB AG (Germany) and Network Rail (Great Britain), plus light rail and metro systems. It is now working to enter the India and North American markets. In January, Linsinger’s first SF02T-FS-LB rail milling train was delivered to Toronto for operation by Rhomberg Sersa Rail Canada Ltd. Within the first two months, the technicians were trained and more than 25 successful shifts completed, the company reported. Linsinger’s newest offering was introduced in November 2020: MG11 H2, a hydrogen-powered rail milling train (pictured, p. 26). “This ground-breaking innovation is the result of a multi-year project,” Linsinger told Railway Age, “and represents an important contribution to the worldwide efforts to become climate neutral—another big step toward zero-emission mobility.” Based on the MG11 rail milling train concept, which was developed for small tunnel clearances and short work windows, the MG 11 H2 is equipped with “the latest electric drive- and milling-technology, which facilitated the conversion to a hydrogen-powered version. The machine has the same performance capability compared with the combustion engine-powered models, and it can work at least longer than a full shift (including traveling time to and from the work site) with one hydrogen tank load. Due to the scalability, the fuel cell technology can be used for all milling machine types in the Linsinger portfolio.” LORAM Improved track time and maintenance budget utilization are key for railroads today, Loram told Railway Age. “With enhanced inspection and planning tools, we can take advantage of available track windows, and by leveraging our grinders’ flexibility, we can better align grind effort with track conditions to maximize the life of the rail asset.” The company’s RailPro platform helps. “By combining details on past maintenance cycles along with customer traffic levels, Loram leverages vehicle routing tools to schedule grinding multiple months in advance, allowing customers to confirm railwayage.com

they have appropriate grinder capacity and ensure work gets done at the right place and at the right time to maintain rail health,” Loram explained. “RailPro Flex allows the pre-grind Rail Inspection Vehicle to inspect for both production and specialty grinders in a single trip, producing detailed grind plans for both grinders.” In addition, “RailPro Infinity takes full advantage of the capabilities of the RG400 series machines to precisely match the exact needs of each section of track by designing custom grind patterns in real time throughout the shift, based on rail shape and rolling contact fatigue conditions to reduce overor under-grinding, resulting in extended rail life.” ORGO-THERMIT, A GOLDSCHMIDT CO. Orgo-Thermit’s rail grinding clients want a refined product. “This is where our precision grinding division excels as we are capable of matching any desired profile and can achieve a surface finish of 3-5 microns,” the company told Railway Age. It is also moving toward a more targeted, analytical approach to maintenance grinding—with more data to establish and support grinding plans. On the welding side, freight railroads demand “the highest quality of field welding consumables,” Orgo-Thermit noted. “Our latest innovations have come in the form of metallurgical powder weld filler metals, designed to be compatible with the hardness of modern-day premium rail steels.” A more recent company product now eliminates the D.O.T. hazardous for transportation igniter required for initiating the Thermit® reaction: The Safe Start Degradable Crucible System. Also new: An Eddy Current inspection will be included with Orgo-Thermit’s rail grinding service package. The equipment— capable of measuring surface defects up to depths of 2.7mm—will inspect the running surface and, more important, the gauge corner of the rail for instances of rolling contact fatigue, the company explained. “By identifying the scope of the rolling contact fatigue, you will be better informed to take preventive actions, such as rail grinding or rail replacement in extreme cases.” As the rail industry continues to receive funding and support for large infrastructure projects and rehabilitation, OrgoThermit has a positive long-term outlook.

www.linsinger.com # t r u s t t h e i n v e nt o r

Keep your rails perfectly maintained with LINSINGER high performance rail milling technology. Now available in

NORTH AMERICA

For further information please contact us: millingna@linsinger.com May 2021 // Railway Age 25

M/W focus Linsinger’s new hydrogen-powered rail milling train offers the same performance capability as combustion engine-powered models.

PANDROL “Customers are looking for partnerships that can offer support in every stage of the process—from innovative design and installation right through to operation, monitoring and maintenance of their infrastructure,” Pandrol said. The company now offers Pandrol Connect, a mobile app comprising three modules: a mobile version for welders to record on-site data and for welding controllers to review data; an online monitoring app to review weld information from the office, for example; and an online administration tool to apply settings to local standards. To increase documentation, the app can also be connected to preheating equipment, and QR codes allow consumables to be scanned. It not only captures live weld data—and stores that data in the cloud—it

saves time and improves the traceability of welds for contractors and rail network operators, Pandrol said. The company is also offering AutoSeal Moulds, which “have a built-in felt that expands during the preheating phase of welding, creating a tight seal between the mould and rail.” This eliminates the need for luting with paste or sand, Pandrol said, while preventing welding leaks. Compatible with all rail types, these self-sealing moulds allow for faster welding speeds, saving 5-10 minutes per weld; enhanced welder ergonomics; increased reliability; and reduced plastic waste, according to the company. Pandrol told Railway Age that it continues to invest in technical solutions for improving the mechanical proprieties of aluminothermic welds used in heavy-haul applications.

PROGRESS RAIL, INC., A CATERPILLAR CO. “Safely executing high-quality welds in a manner that minimizes delays to the network is key to a successful welding operation. We are continually exploring ways to decrease our welding cycles without compromising quality or safety in order to give track time back to our clients,” Progress Rail told Railway Age. Working with international supplier EO Paton, the company recently developed the Narrow Head Flash Butt Welder for its mobile units. This head can be used with extended boom trucks when welding turnouts and in tight spaces. Tall and narrow, it requires only 8.5 inches of clearance from the adjacent rail or fixed object. Progress Rail noted that clients are increasingly requesting a welding unit with more overall tonnage. “Historically, the requirement for additional tonnage may have been supported by utilizing an ‘external puller’ to supplement the weld head’s on-board tonnage,” the company explained. Its engineers have now developed a high tonnage weld head that eliminates the need for an external pull, which increases system reliability and user safety, Progress Rail says. The new unitized welding head features an integrated puller that is expected to yield 220 tons of force. “The industry faced many challenges resulting from the pandemic, but railroads were able to adapt and carry on with welding work,” Progress Rail said. “Some projects were delayed, but we are optimistic that the backlog of work and increased national focus on infrastructure projects will drive demand for rail welding.”

Keeping your track healthy Our Head Wash Repair welding process provides a cost-effective and efficient solution to repairing railhead defects. pandrol.com 1 26 Design.indd Railway Age // May 2021

21/04/2021 09:56:50 railwayage.com

SIT AND LISTEN William C. Vantuono Railway Age

Bill Wilson

Railway Track & Structures

Railway Age, Railway Track & Structures and International Railway Journal have teamed to offer our Rail Group On Air podcast series. The podcasts, available on Apple Music, Google Play and SoundCloud, tackle the latest issues and important projects in the rail industry. Listen to the railway leaders who make the news.

Kevin Smith

International Railway Journal

Podcasts are available on Apple Music, Google Play and SoundCloud

DIGITAL TRANSFORMATION

ANTICIPATING, AVOIDING

UNINTENDED CONSEQUENCES

The digital disruption doesn’t have to be disruptive. Here’s how to recognize and address volatility.

igital disruption, the transformation caused by emerging digital technologies and business models, is a reality across industries worldwide, including railroading. It is a paradigm shift that is here to stay, with bone-deep effects for all organizations. Organizations are now challenged to think about their operating principles. They must realize that while strategy is of paramount importance, strategy must be informed by near-real-time understanding of an organization’s operating models and the stresses they undergo. Experimentation needs to be part of the new strategic spirit, where “failing” small and fast is part of the culture, so that the organization can learn quickly, and pivot as needed: guiding globally but acting regionally or locally as needed. Often, as an immediate reaction to addressing digital disruption, organizations resort to making improvements at the surface level, because they appear to be easier to do and are more visible to stakeholders. Unintentionally, organizations end up increasing the volatility in their systems by changing “easier” user interfaces without understanding the full

28 Railway Age // May 2021

implications of those changes, thus spurring a domino effect of one breakdown after another and increasing the risk of failure. Making a seemingly simple change on the surface, such as a more flexible user-friendly application, can create unforeseen problems in back- and middle-office operations that can impact safety and security. How do railroads and their partners anticipate and avoid the unintended consequences that emerge from their digitalization efforts? Based on our experiences in railroading and other industries, we found recurring patterns, three of which we’ll present here, along with approaches to address them. RECURRING PATTERNS, UNINTENDED CONSEQUENCES At its core, digital disruption creates recurring patterns for solutions, which readily transcend across industries. They also spur unintended consequences, of which no industry is immune. These patterns include (see Figure 1): 1. Brand Loyalty through Immersive User Experience – The current level of digital disruption has an impact on brand awareness, which in turn impacts loyalty

of customers, ecosystem partners, and an organization’s employees. Attempting to create a better “user experience” on the surface, while ignoring or short-cutting the much harder to address operational logistics behind the scenes, will not help the brand. Consequently, and unintentionally, mobile applications or user interfaces, for example, become the default brand of the organization. Aspects such as response time, reliability, range of available functionality, language, privacy, and security are all part of that experience. Expectations for more frequent functionality updates increase, to reflect seasonal needs, demographic trends, regulatory rulings, emergency responses, and so forth. In turn, these functionality updates generate more volatility across the entire operating environment, affecting the back office, middle office, and all aspects of logistics that need to support these updates. The processes, data, and application architectures will be stress tested as changes occur in response to forces. The architectures could break at a time when agility and flexibility is needed more than ever. The railwayage.com

Nathan Cervantes

BY SONIA BOT AND SHEPPARD NARKIER

DIGITAL TRANSFORMATION amount of change and the speed needed will increase the brittleness of traditional application interactions. 2. Innovation through Platform Ecosystems – Even in highly agile organizations, it is becoming nearly impossible to strategically innovate fast enough through means that are internally focused. The pursuit of finding greater value is never-ending. As such, innovation acumen and practices are moving toward open and collaborative means, such as platform ecosystems. An organization’s velocity for delivering value increases. Instead of building it all internally from scratch, each player in the ecosystem focuses on developing their strategically differentiating components and integrating them into the shared platform. To boot, platform ecosystems help protect against tech savvy disruptors (who may not be on your radar) wanting to go beyond their original industry, because the new value they bring can transcend industries, and encroach on your value system and addressable market. After deciding to migrate to platform ecosystems, organizations often underestimate the need to re-architect processes, workflows, logistics, controls, applications, reporting, data capture and scrubbing, and deeply entrenched business and operating models to name a few. As organizations move further into their migration, they are caught by surprise on the amount of technical debt they have and must address, as this impedes progress moving forward and sustainability in the future. Internal company politics come into play, where some groups resist the migration, such as falling into the Not Invented Here Syndrome (NIHS). Ecosystem politics also come into play, which includes regulatory bodies, advocacy groups, vendors, and potentially entering contractual relationships with competitors. Creating value distribution among the ecosystem platform participants can become tricky to establish and manage. 3. Strategic Leverage through Risk Mitigation – Railroads since their inception have been about innovation. You must be brave to innovate and take calculated risks. If you don’t innovate, you will become obsolete. Typical approaches to risk management focus on “risk avoidance and aversion” (a cost center model) in areas such as safety, railwayage.com

Figure 1. Examples of Patterns and Areas of Volatility in Digitalization.

disaster recovery, and security. The increasing threats of businesses eroding, bottoming out, and becoming irrelevant, coupled with fiercer than ever competitive forces, are real. In turn, risk management practices are evolving to enable organizations to make strategic decisions regarding the identification of emerging risks and pursuing growth opportunities presented by the ecosystem (a value-added driver model). For example, decisions on solutions and interactions around branding through immersive user experiences and innovations through platform ecosystems can be guided by the strategic leverage approach for risk mitigation. As organizations build out their strategic leverage through risk mitigation, they discover their embedded constraints and technical debt, that have been built over many decades, are not conducive to the rapid change that is needed. The underlying processes, structures, systems, and business models are rarely capable of moving at the speed and direction of change that is needed. SOME EXAMPLES Example 1: Brand Loyalty through Immersive User Experience – To quickly get their foot in the door, railroads and other industries increase their investments in User Experience (UX), plus UX usability and UX marketing tracking to see what the demographics want. Demographics are both external (railroad’s customers and partners) and internal (various

groups within a railroad). Wants are numerous and include web and mobile apps for accurate and real time shipment tracking, “green” shipping options calculators, “Uberizing” the last mile, orchestrating coordinated field/yard and back-office operations, real-time warning for track authority violations, and so on. Then new features or services are provided, showcasing the modern use of technology, while strengthening their brand appeal externally and internally. If done properly, this is a powerful mechanism. However, organizations often underestimate that many of the desired features and services do not easily integrate with existing workflows, data structures, or infrastructure. Workarounds or re-designs of processes, which are already highly interconnected across several functional areas with parallel processing dependencies, must be reconciled as the new features and services are instituted. For example, a work-orchestration app for the maintenance or repair of signal, track, and wayside assets for field personnel must account for the following process areas: PTC subdivision creation and maintenance, Engineering and GIS master data maintenance, interworking with foreign railroads, Wayside & Signals operations, Communications operations, Back Office, Rail Traffic Control operations, Asset and Workflow Management, ITIL | Service Management, etc. Many aspects of the regular workflows cannot be quickly altered for safety, security, regulatory, or other reasons such as the ability for the railroad to absorb the pace and volume May 2021 // Railway Age 29

DIGITAL TRANSFORMATION

Figure 2. Four Zones for Organizing to Compete in an Age of Disruption.

of changes. The added exceptional processing makes it more onerous to test, make follow-on newer changes, and scale the processing. The intervening fixes become their own maintenance nightmare, increasing risks and perpetuating vicious cycles. Example 2: Innovation through Platform Ecosystems – Rail customers, whether freight or passenger, self-service through new technologies that enable a seamless, dynamic, and real time experience. Meanwhile the railroads are continuously responsive to meeting the service agreements as they operate in non-predictable environments. Ecosystem platforms enable this innovation. However, there are collaboration challenges in messaging, data, and image sharing, plus coordinated service workflows and security. Often, the best that can be done, due to regulations, is portal sharing, with many digital signatures behind the scenes between the various entities involved in providing the service to share data. The device integration is often left to the customer, where they end up being the nexus of integration for data. Investments in user feedback services annoy many customers. The investment in customer portals and data sharing is neither small nor simple. It rarely meets the needs and what is worse, there is no clear indication that outcomes are improved. Integrating service access across an ecosystem is not seamless and adds 30 Railway Age // May 2021

significant burden to technical debt that transportation providers incur, impeding more comprehensive approaches available through platforms that support ecosystems. This is the consequence of not taking an architectural approach. Example 3: Strategic Leverage through Risk Mitigation – Threat protection of user data and increased need for privacy make it more difficult for users to access their accounts due to tighter protocols, even as the need for fast mobile access becomes a necessity. The typical approach for addressing this is to build user friendly apps / web sites with multi-factor authentication, usually with backend service portals to the existing data of record often residing in mainframes. Response time suffers most of the time, “slow is the new down”, and local compliance rules become more difficult to update for multi-jurisdictional and multinational companies. The result is that the user experience suffers after all that effort, the attack surface enlarges, and the technical debt increases from the new infrastructure that the company invested in. A more effective approach is to architect security and policy services at the “edge” where all the action is happening, rather than in the traditional back-end data center core. This approach provides for better performance (faster response time and lower latency), plus swiftly enacting locally based policies at the local level.

VOLATILITY The unintended consequences of digitalization revolve around the capability of addressing volatility in the end-to-end system, whether it be with business models, processes and hand-offs, technical architectures and interfaces, products and services, skillsets, or corporate culture, plus their synergistic interactions. Volatility deals with the rate of change that is occurring, which is constantly increasing and usually more than what an organization can absorb, plus an organization’s ability to effectively address this rate of change. High volatility leads to unstable, unpredictable, and uncapable systems and businesses. Most unintended consequences of changes to meet digital disruption forces occur at the customer and partner facing “edges”. Good strategy and design are critical for long-term success and are judged, in part, by their ability to adapt to change. Change is inevitable in today’s global marketplace where business processes and rules need to be fluid, regulations change, new competitive forces emerge, and the key to success is refining and adding new products, services, and functionalities. Change cannot be inhibited, for example by existing processes and technology architectures, otherwise the company’s brand and viability will suffer. In our experience, changes to software interfaces and business processes have the largest cascading impact on the system if the design does not explicitly account for their frequent need to change. The goal is to continually keep volatility low so that the ability to adapt to change is high. ORGANIZING FOR NAVIGATING THE DIGITAL DISRUPTION How can organizations deal with the heap of issues that keep piling-up as side effects of digital disruption? First, we need to unravel the heap, by partitioning it into four zones, such as the ones proposed by Geoffrey Moore in Zone to Win. (See Figure 2.) This helps organizations understand their current context, helping them focus on mobilizing effectively. Railroads, like most established companies, operate in both the Performance and Productivity zones. The Performance zone focuses on financial outcomes that are mission critical and rely on their sustaining innovations, the home of operating ratios. The Productivity zone deals with functions that do not have direct accountability for revenue numbers, instead the focus is on efficiency, railwayage.com

DIGITAL TRANSFORMATION effectiveness, and regulatory compliance (such as, Customer Service, Marketing, Supply Chain, Human Resources). Digital disruption first hits the Performance zone. Here, companies notice their revenue expectations are not being met; projections and actuals slip. Companies mobilize on remediating this, where the natural inclination is to address this with immediate-term and “quick-fix” solutions, after all the Performance zone deals with the current timeframe. Often, as creating new options are explored, companies fail to realize that they are in the Incubation zone, which is a future horizon endeavor that positions the enterprise to catch the next wave. Incubation zone solutions look attractive on the surface; however, organizations fall short in comprehending the extent of underlying infrastructure work is required to bring the solutions to fruition. If companies race too fast through the Incubation zone, the risk is that the Performance and Productivity zones will not get the attention they need, until something undesirable happens, such as the unintended consequences we mentioned and not meeting top-line and bottom-line targets. Technical debt grows and volatility increases because companies don’t want to deal with refactoring and re-architecting upfront. Companies can get away with this for some time, though at some point breakdowns will occur and they will not be trivial to resolve. The Incubation and Transformation zones must not be confused. The Incubation zone works well for getting started in creating new solutions; skunkworks, experimentation, trying something out. It is the Transformation zone that goes to the next level, where the newly devised solutions are matured for mainstream use. Here you integrate the new solution into the mainstream processes, organizations, and systems used in the Performance and Productivity zones. It’s a transformational undertaking. Companies need to balance the ratio between running the organization (Performance and Productivity zones) with changing the organization (Incubation and Transformation zones). During periods of stability, the Performance zone funds the whole operation, while doing groundwork for the Incubation zone and building up reserves for the next transformation. The Productivity zone is the standard cost center. During periods of disruption, the Transformation zone dominates. We observe that when it comes to railwayage.com

Figure 3. Relationship among business, process, and enterprise technology architectures.

digitalization, companies are prone to starving the incubation and transformation fronts, by insufficiently investing finances, expertise, resources, and time. STRATEGIES FOR ANTICIPATING THE UNINTENDED CONSEQUENCES To start, we must always bear in mind that the raison d’être of a railroad, or other traditional industries, is not technology. The evolved railroad, including its service design, is better because of the re-design of the system or railroad, where technology is an enabler. Here are two of our strategies for anticipating the unintended consequences of digitalization, which are based on this reality. 1. Architecture as a Core Competency. The implementation of business objectives, in an environment of digital disruption, requires a direct and comprehensive view of the endto-end business operations, organization structure and culture, and Operational and Information Technology (OT and IT). Business Architecture, Process Architecture, and Enterprise Technology Architecture are core competencies required for responding swiftly to new demands. (See Figure 3.) Business Architecture links business objectives to strategy and execution. Business objectives are translated into initiatives considering factors both internal (such as, culture, organization, operations, processes, capabilities, technologies, projects) and external (such as partners, suppliers, vendors, regulators, trends).

Process Architecture deals with designing, building, and evolving the environment that needs to be put into place to effect the change required by Business Architecture; an environment that is process-based, with references to roles, organizations, objects or things, and the emergence of digital twins. Enterprise Technology Architecture delivers options for data and automated support for the operational and process changes. While assessing emerging technological capabilities, factors such as how technology-based solutions affect business support and speed at which OT and IT can support business changes are considered. Business, process, and enterprise technology architects work together, hand in glove. They must work across all layers and spans of the organization. Borrowing the metaphor from Gregor Hohpe’s Architect Elevator, these architects must ride the elevators between the penthouse and engine room, stopping on floors wherever it’s needed to support their efforts. The architects remove roadblocks at the right floor. They also visit upper floors to provide strategic and tactical options, to obtain support or funding, and to unblock or trigger organizational changes. In essence, these architects create the alignment from the penthouse to the engine room. 2. Couple Design Thinking with Futures Thinking. Better decisions can be made in the face of uncertainty by evolving an organization’s thought processes to include both Design Thinking and Futures Thinking. (See May 2021 // Railway Age 31

DIGITAL TRANSFORMATION Sonia Bot, chief executive of The BOT Consulting Group Inc. and a Railway Age Contributing Editor, has played key roles in the inception

and

delivery

of several strategic businesses

Sonia Bot

and

transforma-

tions in technology, media, and

telecommunications

companies worldwide. By utilizing methodologies in entrepreneurship, business precision, Lean Six Sigma, systems and process engineering, and organizational behavior she’s enabled organizations to deliver breakthrough results along with providing them a foundation to continue to excel. She was instrumental in PTC implementation on CN’s U.S. lines. Her approaches on the evolution

Figure 4. Design Thinking and Futures Thinking as a mindset for design.

Figure 4.) After all, digitalization is a hefty and complex investment, with a huge upside, that no one wants to squander. Design Thinking is a multidisciplinary process for creative problem solving, centered around uncovering latent human/persona needs within the immediate future. These needs are matched with what is technologically feasible and viable business strategies, which in turn deliver customer value and market opportunity. Understanding users, challenging assumptions, redefining problems, creating innovative solutions, analyzing solutions through rationality, refining, and converging are all part of Design Thinking. Futures Thinking is a multi-disciplinary approach to thinking about the future, typically 10 to 20+ years out, in a structured and intentional manner. By identifying the possible dynamics that are creating the future, a broad range of scenarios of possible future worlds are determined. This is useful for spotting opportunities, adapting faster, and becoming better prepared for benefiting from the inevitable changes that lie ahead. In our experience, Design Thinking forces re-thinking of the status quo and stretches designers to deliver even greater possibilities. Futures Thinking provides the context for making decisions that enable the consideration of various architecture options. In the end, coupling Design Thinking with Futures Thinking helps design products, services, and solutions that are future-proof, while being responsive in navigating the many vectors of change that organizations continuously face. It 32 Railway Age // May 2021

spurs an organization’s offensive and defensive effectiveness for keeping an eye on customer needs as well as the evolving market so organizations can pivot and be where their customer needs them to be.

of railroading and transportation are game changers that drive innovation and competitive advantage for adopters in a changing industry. She holds engineering degrees from the University of Waterloo (BMath) and the University of Toronto (MASc) and is a certified Lean Six Sigma Master Black Belt. Sonia, a 2020 Railway Age Women in Rail Awards Honorable Mention and can be

RELENTLESS FOCUS ON OPTIONS DRIVEN BY ARCHITECTURAL EXCELLENCE The urgency for railroading to embrace agility and digitalization is on an escalating trajectory. The unexpected 2020 global disruption continues to change the pace and trends that were expected from the future of digital. Stakes are higher than ever, whether they are threats or opportunities. Railroads and their partners are under increasing pressure to operate in a hyper-accelerated digital world. Navigating through digitalization requires a new and different way of organizing and working. Support from respected experts in digitalization and complex transformations is essential to reliably and effectively build up capability maturity. In our experience, digital disruption catapults the value of architecture, going beyond the ability to meet operational and functional requirements. By systematically understanding the impact of changes and providing options across the time horizons, organizations can intelligently and swiftly utilize offensive or defensive strategies as they maneuver through their digitalization efforts. Architectural convergence for business, process, and enterprise technology is no longer optional; this is table-stakes in digitalization.

reached at sdbot@botgroupinc.com. Sheppard Narkier, a CTO and

Senior

Architect,

Enterprise routinely

tasked with complex, difficult transformation projects in a range of industries including

demanding

Capital Markets environ-

Sheppard Narkier

ments.

Recruited

into

eleven unique roles including Chief Technical Archi-

tect at a Global Investment Bank, CTO of a global consultancy, and Chief Scientist at a startup. Has defined the architecture and rules systems for several application and infrastructure design platforms resulting in seven awarded patents. As a facilitator of change has driven the organizational transformations aligning systems development structures, processes, and data repositories with their strategic goals. A pioneer in cloud strategy, developed IP in several companies to guide enterprises towards staged migration to hybrid multicloud across a range of horizonal and vertical scenarios. Has also employed multi-disciplinary Design Thinking in recent engagements. Sheppard has two BA degrees (Mathematics and Anthropology). Sheppard can be reached at shep. narkier@candlewall-llc.com. railwayage.com

SUSTAINABILITY SUSTAINABILITY

CLEAR ROAD TO

CARBON NEUTRALITY North American rail is on the beginning edge of a secular change in its approach to carbon emissions.

William C. Vantuono

BY DAVID I. SCOTT, PRESIDENT, AND PEDRO T. SANTOS, CHIEF TECHNOLOGY OFFICER, CNGMOTIVE, INC.

ocomotive power, going back into the very early 19th century at the origin of the first coal-fired steam engine, has relied primarily on fossil fuels as a method of generating energy, of generating horsepower, of generating power to move freight across the vast

railwayage.com

landscape of North America. That period of reliance is ready to change. Moving freight by rail is already the most energy efficient and least polluting method of transporting goods. According to the AAR, U.S. railroads are estimated to produce less than 0.6% of global CO2 emissions. The AAR estimates that U.S.

Class I railroads produce 40MM metric tons of CO2 annually. That is down from the peak of more 46 million metric tons in 2006 and is a fractional amount of the CO2 emitted by the trucking industry, which accounts for 6.4% of global CO2 emissions. Today, the path toward carbon neutrality remains unclear. BNSF, in conjunction May 2021 // Railway Age 33

SUSTAINABILITY

with Wabtec (and the backing of grants from the state of California) has built a batterypowered locomotive to use in a hybrid locomotive consist with supplemental diesel engines. In December 2020, Canadian Pacific announced an initiative to build a hydrogenbased fuel cell locomotive. In January 2021, Kansas City Southern made a commitment to lower greenhouse emissions. These initiatives suggest a sea change in the corner-office thinking of the Class I railroads. However, they indicate a lack of strategy to put forward a clear and pragmatic carbon neutral strategy for all of North America. Battery hybrids will require a charging network on an already stressed electric grid (hello, Texas!) and lack the capability of providing consistent power for longer hauls (Railway Age, “Batteries as an Alternative Fuel?” September 2018). Hydrogen as fuel is expensive—as much as $4.00 per diesel gallon equivalent—and that is 34 Railway Age // May 2021

before compression and fueling stations. The net result: Each of these ideas has curb appeal and drive-by attractiveness. However, they suffer from fatal flaws of cost and reality. Electrification? At the risk of being glib, the more than $11.5 billion spent by the Class I railroads on updating the North American rail network for PTC will look like coupon money vs. the cost and time of reengineering and reoutfitting the more than 180,000 miles of freight track in North America and building more than 24,000 new locomotives. The interchange system and its fluidity function at a kind of operational expertise because of the fungible nature of the assets. Run-through power between two Class I railroads or a Belt railroad requiring refueling? No problem—all you need to do is follow the diesel sign and fill up that thirsty locomotive. But if one railroad is running battery hybrids and one needs

a hydrogen fueling station—big problem! Each railroad is left running assets unique to its closed system. Interchange becomes intrachange faster than you can charge a Tesla Semi. The interest in carbon neutrality is high. One solution, and in many ways the only solution, is one that is not yet in the foreground of the minds of the railroad community. A clear and straightforward pathway to carbon neutrality is using P2G (Power-To-Gas) technology that converts unavoidable CO2 emissions and combines them with hydrogen to synthesize renewable methane. This is technology that is in operation today and suitable for use across the interchange system. P2G: A PRIMER Start with some basic facts: First, natural gas is typically 95% methane. Second, natural gas, in compressed form, burned railwayage.com

William C. Vantuono

CNGmotive, Inc. compressed natural gas fuel tender.

SUSTAINABILITY as a fuel in a locomotive, can immediately bring emissions to EPA Tier III levels and reduce GHG (green-house gas) emissions 20%-plus. Third, once the move from diesel to natural gas begins, the move from natural gas to renewable methane and carbon neutrality is an easy, successful and economic results-oriented pathway for the North American rail system. P2G uses the method discovered by Paul Sabatier in the late 19th and early 20th centuries for converting CO2 and hydrogen (with a catalyst such as nickel) to methane and water. Sabatier won the Nobel Prize in 1912 for his discovery. The Sabatier Reaction (or Sabatier Process) is being used commercially right now. MAN SE (a subsidiary of Volkswagen/Audi) built and continues to operate a P2G facility in Werlte, Germany. The offtake from this facility is being used as a synthetic carbon-neutral fuel for Audi customers. The same process is the basis for the P2G strategy. CNGmotive, Inc. has a three-step plan for bringing sustainability and carbon neutrality to North American rail. Step One: CNG (compressed natural gas) replaces diesel as the fuel of choice. CNG offers immediate savings on the cost of fueling locomotives and a high return on invested capital to the railroads along with safety and ease of use. CNGmotive’s Chil Fill® technology fills a 5,000-gallon diesel-equivalent tender in 45 minutes or less. This leads to virtually seamless refueling in train operations and direct-to-tender filling. The results: A 20% -25% internal rate of return for a railroad, a 70% reduction in the unit cost of fuel vs. current diesel prices, and a 20% -25% reduction in GHG emissions. These valuations are based on reasonable assumptions for the price of diesel to a Class I railroad and conservative estimates for the price of natural gas based upon the publicly available Henry Hub natural gas price. These estimates include all capital budget items associated with the installation of a CNG system. The economic benefits to a railroad using CNG increase (1) if the cost of diesel increases, (2) if the cost of natural gas decreases, and most important, (3) as a railroad phases in a larger percentage of locomotives using CNG as railwayage.com

a replacement fuel. The economic benefit to the railroad increases on a multiple scale as a larger proportion of diesel fuel is replaced by CNG. Replacing main line diesel used on a Class I railroad with natural gas would reduce total fuel expense by 50%. The technology to do this exists right now, and is proven to work. CNGmotive, Inc. is the company that has a patented filling system and the world’s first and only CNG tender designed to exceed the AAR’s stringent safety standards as expressed in AAR M-1004.

P2G (Power To Gas) technology converts carbon dioxide emissions, combining them with hydrogen to produce renewable methane. The CNGmotive, Inc. solution uses existing long- and short-haul locomotives with a modest conversion cost. It allows for seamless operational service by using decades-proven diesel dual-fuel natural gas locomotives while the infrastructure buildout for ubiquitous CNG refueling is under way. It saves money on fuel, starting with the first trip. The CNG movement, led by the eponymously named CNGmotive, Inc., is engaged in making possible and profitable the migration of North America’s railroads to the use of CNG as a locomotive fuel. Step Two: The P2G process is the Sabatier Reaction, which works this way: 1. CO2 is sourced from any one of an abundance of locations (steel mills, breweries, cement plants, landfills) that will generate CO2 in their

regular operations. 2. Hydrogen (H 2) is made using electrolysis with renewable power at locations optimal for solar and wind. 3. CO2 and H 2 are put together with electricity and nickel as a catalyst at very high efficiencies (>80%). 4. The result: Renewable methane and water (remember, natural gas is 95% methane) are the chemical output of the system. CO2 is removed from the atmosphere and turned into renewable methane to fuel locomotives throughout North America. Locomotive fueling moves from natural gas to renewable methane seamlessly. The P2G transition evolves smoothly from Step One to Step Two without incremental railroad investment, and with improved environmental dynamics. Step Three: Renewable methane gets compressed perfectly into the CNGmotive tender and supports locomotive operation. CNGmotive has run the economics: The cost for a diesel-gallon-equivalent of renewable methane will be cheaper than the price of diesel. It will be less expensive than hydrogen for fuel cells, less expensive than battery-powered locomotives and less expensive than biofuels, all while using proven locomotive power. Renewable methane produced as outlined here can be distributed using the North American natural gas pipeline system. The natural gas system was originally meant to move gas from the South and Southwest. Oftentimes, the pipeline moves gas in the opposite direction (for example, from the Marcellus region in Pennsylvania to points in the Midwest). This is why the pipeline system makes the perfect conduit for moving renewable gas around the U.S. This system can accept gas from a P2G plant (or almost any conceivable number of plants) and deliver it as the economics dictate. The renewable methane system can be market-based with P2G plants put in place to provide feedstock to offtake partners such as the railroads. For example, one could envision a CO2 harvesting facility at the Anheuser Bush Brewery (AHB) in St. Louis. A commercial electrolyzer (for making hydrogen) is put in place in close proximity to AHB and near a source for renewable energy, like a Midwest Wind May 2021 // Railway Age 35

SUSTAINABILITY Energy wind farm. The methanization occurs in the facility where CO2 and hydrogen are brought together appropriately. Offtake agreements to consume the renewable methane are put in place. This methane either gets supplied directly to local customers (remember all seven Class I railroads interchange in St. Louis) or is “wheeled” (directed to the offtake partners using the natural gas pipeline system) to customers. The renewable methane gets put it in the distribution system and is paid for by the user. What are the results? The methane is sold to the consumer (a railroad) who receives carbon neutrality credits for using renewable methane. AHB is putting less CO2 into the atmosphere. The cost of distributing the renewable methane once it is put in the distribution system is paid for by the user, and in most cases these costs are very low since the installation costs for the gas pipeline system were paid by the utility system. The user gets the bill and the credit for the use of the gas. The actual

36 Railway Age // May 2021

molecule of methane gets used at the point of sale. The whole bubble of the atmosphere is in balance. ROAD TO CARBON NEUTRALITY BEGINS NOW There is a three-step pathway to carbon neutrality. It begins by moving from diesel to CNG and establishing an infrastructure that can be universal for the interchange system. Making CNG a ubiquitous fuel in North American rail will initiate the process. Commonplace usage of CNG and CNG tenders will allow for smoother implementation of a carbon-neutral solution. Beginning this process requires recognizing a few basic facts: • CNG is a safe and economical fuel. • CNGmotive has designed a safe and economical tender that meets AAR M-1004 standards. • CNG will be easily integrated into the operation of railroads across North America.

• Huge fuel cost savings will be realized, and carbon footprints will be significantly improved with each diesel gallon displaced by CNG (Tier III emissions for all CNG burned). • The path to locomotive carbon neutrality will be clear and assured, and will be at the discretion and under the control of the railroads at a fuel cost below diesel, with very little, if any, marginal investment. Key to this strategy is that it starts with a change that can occur now. There are reductions in emissions and cost. The additional opportunity for carbon neutrality that is made available provides vision for the future path to railroad sustainability. This systemwide opportunity is the most straightforward, costeffective and immediately available strategy. No other approach to carbon neutrality can utilize the percentage of existing assets, work within the exiting North American rail system and allow for a smooth systemwide transition.

railwayage.com

CYBERSECURITY AND LOCOMOTIVE HEALTH

SMARTER, SAFER RAILROADING

Shift5, an advanced-technology company that sprung from the United States Department of Defense, has established a firm foothold in the U.S. railway industry.

BY WILLIAM C. VANTUONO, EDITOR-IN-CHIEF

hift5 says its mission “is to make the world’s fleets smarter and safer. Shift5 is a product company that deploys hardware and software onto civilian and military platforms—from

railwayage.com

rail and aircraft to maritime, space and weapons systems. U.S. railways are turning to Shift5’s freight and transit security solution for continuous monitoring of railway vulnerabilities, a rules engine that generates alerts automatically, and work packages that

enable rail cybersecurity analysts to address threats immediately. Detection and responsive management of cyber health results in long-term savings.” Shift5 CEO and Co-Founder Josh Lospinoso and President, Chief Growth May 2021 // Railway Age 37

CYBERSECURITY AND LOCOMOTIVE HEALTH Officer and Co-Founder Michael Weigand discussed the company’s applications for freight and passenger rail in the areas of mechanical reliability and cybersecurity with MidRail LLC Chairman Gil Lamphere and Railway Age Editor-in-Chief William C. Vantuono. “We came out of the Department of Defense, where Josh, our Co-Founder James Correnti (Chief Technology Officer and Vice President of Engineering) and I all served as cyber officers,” says Weigand. “The company was originally formed to help the DOD defend weapons platforms from cyberattack. Over time, we quickly learned that ground combat vehicles and transportation systems like railroads have a lot in common, when you peel back the skin and you look under the hood at the control systems. We realized that there was applicability for our data acquisition edge computing and cyber monitoring solutions to solve safety and security problems in the commercial transportation market. We could do this efficiently and bring additional value to customers by leveraging data in ways that we’re still exploring and expanding with our rail customers today.” “We realized that many of the systems that underpin modern society—critical infrastructure, commercial airplanes, locomotives, heavy equipment—have been around for a long time,” adds Lospinoso. “Over time, there have been incremental advances. One of the most important has been replacing analog components with digital components because it makes economic sense. Heavy assets, like a locomotive or a military weapons system, are networks of computers, though they may not look like it at first blush. We started looking at these things through a couple of lenses. One of them is the cybersecurity properties. Then, there’s the push toward autonomous operation of these assets.” The objective is using data to solve operational and mechanical problems as well as provide protection from cyberattacks. “There’s a real frontier here for the locomotive industry, as well as other industries, to be able to leverage this data to be smarter and safer,” notes Lospinoso. CYBERSECURITY Cybersecurity, says Gil Lamphere, “has risen to be number one on the ESG 38 Railway Age // May 2021

(Environmental and Social Governance) list of corporate governance. You have to have military-grade cybersecurity and sensibilities about protecting your own cyber software and hardware. That has been a sore point in the data industry. Mobility is next; it’s Cyber 2.1, if you will. But back in 1987, we realized that mechanical was the critical component to reliable service. It was the S in PSR. It was the scheduling and the service reliability that would enable railroads to grow. Now, we’ve come full circle where mechanical again is going to be critical. And that’s where next-generation technology in this area is going to provide us with mechanical data we need to deliver reliable service. That’s the future of railroading. There’s opportunity with the cybersecurity issues, but also on the operational issues.

Shift5 uses data to solve operational and mechanical problems and also provide critical cybersecurity. We’re talking about billions of dollars of market value for the industry based on the savings and on the reliability factors that can be achieved through preventive maintenance, which the Shift5 electronics unlock.” “When Shift5 talks about cybersecurity, we consider cybersecurity of operational technology, of the assets that are actually out in the field—locomotives, powered cars,” says Weigand. “Those are the things we think have been overlooked by the security community when it comes to cyber conversation within the rail industry and other commercial industries. Candidly, the impacts that can be wrought by a motivated and sophisticated attacker against our operational technology assets are devastating. We think about the control systems and the fact that they are tightly coupled with things like acceleration. In some cases, electronic braking is computer

controlled on locomotives. Prime-movers are entirely computer controlled. What used to be mechanical overspeed governors are controlled by onboard firmware that can be manipulated. If an attacker were to somehow change that onboard configuration, they could, for example, overspeed a prime-mover. Most mechanical people can envision that because a lot of them with enough experience have seen it—rods blowing off, a fire in the engine compartment. “Today, the likelihood and the accessibility are significantly higher and growing every day. And that’s the message that we bring from our DOD experience. We see that as the industry has continued to leverage telematics, to instrument and build connectivity as our global supply chain has become increasingly complex and interdependent, there are easier access factors that now enable a relatively small but motivated adversary to mess with the onboard software and firmware across entire fleets.” Taking that to the train control level with PTC, there is the possibility of hacking into a PTC system and disrupting how it operates, even though it’s supposed to fail safely. “Cyberattack vulnerabilities are derived from those systems on a locomotive or powered car, which are software-controlled,” says Lospinoso. “If an attacker is able to run code or give instructions to one of these systems that’s electronically controlled, that’s where the concern comes in.” PTC, says Lospinoso, “is a tremendous system that has a lot of potential, not only for solving really critical safety problems, but also for supporting a wide range of possible use cases. But PTC is underpinned by software, and its components communicate over digital data buses. An attacker could potentially inject malicious traffic into a PTC communications channel and take over a component. From there, it’s really just the limits of their imagination. They have control of the system. Could they tell the operator that everything’s fine when it’s really not, and then create some sort of really unsafe condition? Could you erroneously cause PTC to stop a locomotive in a tunnel and create a dangerous environment for the crew, or passengers?” REAL-TIME STATUS MONITORING Modern locomotives today have been railwayage.com

CYBERSECURITY AND LOCOMOTIVE HEALTH instrumented with telematics that can provide real-time health status with tracking. “These are provided by a number of OEMs and third parties,” says Weigand. “They communicate from the locomotives through a variety of communications channels. That’s an area for research, and a conversation that operators need to have with suppliers. Traction motor controllers, engine control units, man-machine interfaces, cab display units: All have a role in making the vehicle do what it’s supposed to do and operate in a safe manner. Ancillary systems as well play a key role: AESS systems, HEP. All these ancillary devices can be used to degrade, deny, or in some cases disable the ability for a locomotive to accomplish its assigned task. “There’s a common theme, which is that operators and owners of these locomotive assets have an observability problem,” adds Lospiniso. “These digital components are generating so much data, but we’re just not collecting it. We’re not looking at that data and using it for operational efficiencies to make maintenance smarter so that we can live up to the tenants of PSR, or in the new frontier of cybersecurity, looking at that data and seeing if there is attacker. Is somebody mucking with these systems so that they’re trying to degrade or destroy or deny that system from use? All of these problems are part of one broader class, which is observability. You need to get on these systems with full-take data recorders that tap into the nervous systems on locomotives and powered cars and pull it all back so you can make sense of it. You can run smarter, and you can run safer.” For PSR, locomotive availability and reliability are key. Lamphere stresses that locomotives cannot run to failure because the whole system breaks down. “Right now in PSR, we are matching the horsepower of the locomotives in the consist with grade and other considerations to the weight that’s trailing it,” he says. “And we’ve got those pretty well matched up now for fuel reasons, crew reasons. And we run those things on a balance-continuous basis. Everything’s in continual motion. When you have a unplanned locomotive failure, the train consist has to limp into a siding and cut the cars, cut the locomotive, and then continue on its way. Meanwhile, you’ve backed up, in a dense area, maybe 25 trains. railwayage.com

You hope there’s a siding there because the trains have to pass each other. And when you combine it with flooding, snowstorms, freezing, a derailment or any sort of calamity—or just the pickup of economic demand and the railroads throwing more assets into a congested system—you’ve got a real problem with PSR. “Somewhere along the line, somebody said, ‘Hey, I can save a lot of money by running the locomotives to failure because I don’t have to pick up the extra insurance policy bringing them in early and making sure they don’t go out with a part that is not reasonably likely to make it to the next 90-day inspection period. And I’m not going to self-insure on that one.’ That person is probably right. You save money—except your entire PSR system breaks down. I’ve

Locomotives can’t be “run to failure” in a PSR operation because the whole system can break down. done some quick calculations of what the cost is of backing up the system and what it means, and it’s $3 billion or $4 billion of market value to a single railroad, not to mention what it means in terms of customer reliability, not being able to market new, reliable service to the customer. “What Shift5 is talking about is when you bring them in for repair, you know what’s going on with those mechanical parts. You know exactly what to tackle when that locomotive comes in. And when the locomotive goes out, because you’ve had that precision, hopefully the availability index is met at 93% or whatever the target is for the railroad, but it’s going out with a quality assurance label put on it. We’ve done some preliminary numbers about the savings that would occur in productivity and overtime. If you can bring up the reliability index, we’re talking $1.5 billion to $2 billion of

market value to a typical railroad that might have 5,000 locomotives. It’s a huge number, and it doesn’t count the costs of having unplanned line-of-road maintenance failures. Those can add up to another couple billion dollars. We can talk concepts all we want, but people need to understand that you can translate cost savings of avoiding unplanned failures into the multi-billiondollar range of market value. The CEOs and the boards of directors need to realize that this is an important area, one overlooked in PSR, and now it has come full circle. You’ve got to bring it to that level to get that attention, because otherwise it doesn’t move the needle. And you’ve just got to move the needle. DETERMINING NEEDS When Shift5 starts working with a railroad customer, “we sit down with all of the stakeholders: operations, maintenance, executive, all the way down to the line maintainers, the essential maintenance facilities. What are the problems they’re seeking to fix?” says Weigand. “We understand the security ones because we’re generally able to inform that situation, but we also seek to understand the operations and maintenance efficiencies that can be picked up and gained as we tailor where our solution taps into. Then we look at the locomotives and do a system decomposition, looking at all of the onboard electronics, anything that has any silicon in it. We also look at some of the older analog systems that interact with digitized systems, and we put them into several bins or classifications—PTC, telematics and control systems, which are typically safety critical, and ancillary systems. Then we step back and we ask ourselves, ‘How could an adversary pivot malware, whether its firmware, software or some type of hardware device that would be swapped out during a routine maintenance that would have some type of embedded code, maybe even a special chip, like an FPGA (fieldprogrammable gate array)? How could they get that onboard?’ “We like to separate things into those bins because we find that there are common cyber themes when it comes to the access factor. That is the way that an attacker gets malware on board. We use the DOD terminology—‘deny, degrade, disrupt, deceive, or destroy.’ Sometimes, manipulating May 2021 // Railway Age 39

CYBERSECURITY AND LOCOMOTIVE HEALTH systems is actually the most damaging, because you can have a manipulative cyberattack that is causing an operational impact that manifests itself as some type of transient condition that would be chalked up to environmental. The key problem in the rail industry right now is this inability to sense. We can’t always tell if anything is good. We have little ability to do configuration management, to sense that we have clean firmware and code on board.” “We know that a Class I locomotive has been hacked successfully,” says Lospinoso. “But for several thousand dollars, it takes us three hours and we can ensure cybersecurity on that locomotive. We can make sure that it’s cybersecure, and we know our cybersecurity algorithms are secure. Do the math: On 5,000 locomotives, you could hook that up for about $20 million. And remember, a locomotive costs $100,000 annually to maintain. This a one-time charge, $20 million for military-grade, state-of-the-art equipment, and it takes us three hours per locomotive. “For $80 million or thereabouts, you can

40 Railway Age // May 2021

fix the whole problem,” says Lamphere. “And you can fix it beginning tomorrow. My challenge to the industry is to say, ‘OK, Gil, I’m going to take your numbers at 10% productivity, and I’m going to take your numbers of reducing 15% overtime assumption. And I’m going to attack your assumptions on the ratio of parts, the labor, in a $100,000 per year for locomotive. And I’m going to look at improving availability by 2%. When I add it all up, I’m going to challenge your labor rate. I’m going to challenge your billion and a half value just on those, not to mention, say a couple hundred million dollars of cost savings because of the unplanned big breakdowns.’ When you tax adjust those, and when you multiply them by 27, I’m coming out with $5 billion for a single railroad. But you do the math and see if we aren’t in sort of the same ballpark— but you can be off by quite a number and still make this worthwhile. And you can do it for a relatively small amount of money.” “It’s worth considering where the railroads want to go,” says Weigand. “Take

some of the lessons learned from PTC, the incredible expense that came about from legislation following an awful accident. And it’s taken more than a decade for the industry to implement this technology. We still see some challenges of interoperability, of delays caused by the system malfunctioning. The railroads are looking to recover their PTC investment. And I’ve heard this described as PTC 2.0. We took a lot of this into consideration as we were building out, and continue to develop our commercial products because there’s some interesting parallels with the communications paths in the DOD, which spends a lot of money building some very sophisticated communications networks. Now, each of the major railroads has done the same, and they have to keep it operational for compliance and safety reasons. Let’s take advantage of PTC 2.0 and use that unused bandwidth to provide a cyber data monitor and enhance the locomotive interface gateway, and wring as much ROI out of that PTC investment while enhancing safety, and get out ahead of this before something happens that results in another major tax on the industry where everybody’s in a reactionary mode. “This is really core to Shift5’s thesis: Bring safety and security to the commercial industry, but leverage DOD investments to get ahead of the threat. Do so in a capital efficient manner where this isn’t just a tax, but an upside in cost savings and potential revenue-generating opportunities. We’re exploring those with our current customers.” “We’re really excited supporting the next generation of professionals that get into railroading,” says Lamphere. “Young folks with degrees in computer science and statistics come to work for a railroad, and they’re able to take rich, incredibly granular data and solve complicated problems because they work with the railroaders, the experts in the industry, the people who have decades of experience and know intuitively how locomotives operate. This can have a huge impact on the bottom line and on the customer experience. It’s not that we have to develop the technology. We don’t have to train a lot of people. We can do it now. Most things in railroading are complex and take a long time. We’ll hook up five of your locomotives and show you everything in the period of three or four months. This can happen today. And that runs my motor.” railwayage.com

RAILINC LOCOMOTIVE REVIEW 2021

MINOR ADJUSTMENTS —AND NOT MUCH NEW Fleet size is down a little as age sees a slight uptick. But brand-new units remain scarce.

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

ailinc’s analysis of the North American freight locomotive f leet reveals that the size of the total f leet decreased slightly in 2020. Detailed analysis reveals the railwayage.com

following trends: • At the end of 2020, the freight locomotive f leet totaled 38,453 units, down 672 units from 2019. • The average age increased 0.8 years, to 28.1 years, and the median age also

increased 0.8 years, to 23.8 years. This was the eleventh consecutive year the average and median ages increased. • Most new additions to the f leet since the mid-1990s have been six-axle locomotives with a horsepower rating May 2021 // Railway Age 41

RAILINC LOCOMOTIVE REVIEW 2021

FIGURE 1: NORTH AMERICAN LOCOMOTIVE FLEET COUNT AT THE END OF YEAR (ACTIVE LOCOMOTIVES IN UMLER)

FIGURE 2: NORTH AMERICAN LOCOMOTIVE FLEET NUMBER OF LOCOMOTIVES BY AGE (ACTIVE LOCOMOTIVES IN UMLER)

of 4,000 or higher. Locomotives with alternating current traction motors (AC units), which perform well at hauling heavy loads, account for the majority of new additions to the f leet in the past decade. Finally, locomotives with the highest fuel capacity—more than 4,500 gallons—make up the largest percentage of the f leet. 42 Railway Age // May 2021

When Railinc began reporting on locomotives in 2013, the size of the locomotive f leet was increasing each year. This paused in 2018, when the locomotive f leet decreased by three units and that decline accelerated slightly in 2020—amounting to a -1.7% growth rate. Overall in 2020, the number of locomotives decreased by 672 to 38,453 units. (see Figure 1).

NEW ADDITIONS TO FLEET REMAIN LOW About 44 new locomotives joined the North American f leet in 2020, down from 386 the previous year (see Figure 2). It was the fourth consecutive year that the f leet added fewer than 500 new units. Historically, the average age of the f leet and the number of locomotives added to the f leet mirror the economic environment. When the economy is strong—as in the mid-1990s and mid2000s—and there are more railcars in service, the average age is lower and the f leet tends to grow. During periods of recession, fewer new locomotives join the f leet. The decrease in 2020 ref lects both the economic impacts of the COVID19 pandemic and the excess supply of locomotives due to industry utilization improvements surrounding precision scheduled railroading. As new locomotives join the f leet each year, larger railroads move older units to less-demanding roles, sell them to regional and short line railroads, or make them available to be rebuilt or refurbished. A locomotive has a long service life and can be used in a variety of ways over that time. It can make long hauls during its first decades of service. Then, it can work on regional and short line railroads in middle age. Finally, it can perform lighter duty service—such as moving railcars in a yard—at 60 or 70 years old. AC UNITS CONTINUE GROWTH DC traction locomotives make up 63% of the North American f leet, down one percentage point from the previous year. The share of AC traction locomotives has increased 12 percentage points since 2010 as more AC units join the f leet (see Figure 3). Although DC diesel locomotives continue to make up close to two-thirds of the North American f leet, AC locomotives have dominated among additions in the past ten years. Only 21 DC units were added in the past two years, and in the past six years, about 87% of all new locomotives were AC units. railwayage.com

RAILINC LOCOMOTIVE REVIEW 2021 Locomotives with a horsepower rating of 4,000 or higher continue to make up the majority of the North American locomotive f leet. These locomotives comprised 57% of the f leet in 2020 (see Figure 4). As a percentage of the f leet, locomotives between 2,000 and 3,999 horsepower comprised 32% in 2020, down from 39% in 2010. The f leet does continue to add lowerhorsepower locomotives, though at generally decreasing rates. These lowerhorsepower additions to the f leet are made up of rebuilt locomotives and new units used as switcher locomotives. Locomotives with a horsepower rating of 4,000 or higher dominate among AC locomotives, which tend to be newer. Overall, there are about twice as many DC locomotives in the North American f leet than AC units. However, DC units are more evenly distributed by horsepower rating—and locomotives with horsepower ratings of less than 4,000 make up the largest share. Six-axle locomotives make up 68% of the North American locomotive f leet, the first time in a decade this share decreased. Six-axle locomotives distribute the weight of a locomotive to the rails across more wheels and deliver tractive effort through more wheels and traction motors. The majority of six-axle locomotives were built in the last 30 years. Locomotives with fuel capacity of more than 4,500 gallons make up 58% of the North American f leet. This share has grown in recent years, while the share of locomotives with fuel capacity between 3,500 and 4,500 gallons continues to decrease (down seven percentage points since 2010). This is consistent with the recent trend of the f leet adding new high-horsepower, six-axle locomotives, which have larger fuel tanks. ROAD UNITS AND SWITCHERS To distinguish locomotives used in road service from those used in switching service, Railinc has applied the following definitions: • A road unit is a locomotive with six railwayage.com

FIGURE 3: NORTH AMERICAN LOCOMOTIVE FLEET AC VS. DC POWER BY YEAR (ACTIVE LOCOMOTIVES IN UMLER)

FIGURE 4: NORTH AMERICAN LOCOMOTIVE FLEET HORSEPOWER BY YEAR (ACTIVE LOCOMOTIVES IN UMLER)

axles and a horsepower rating of 2,500 or higher. • A switcher is a locomotive with four axles and up to 2,500 horsepower. Road units make up 67% of the North American locomotive f leet, while switchers account for about 23% of the population. Locomotives with four axles and a horsepower rating higher than 2,500

make up 9% of the f leet. However, the industry shifted away from making this locomotive type in the mid-1990s, and most additions of this type are refurbished units. Railinc is a wholly-owned subsidiary of the Association of American Railroads. For more information, visit www. railinc.com. May 2021 // Railway Age 43

RAIL TRANSIT

REBIRTH OF THE

STREETCAR BY DAVID PETER ALAN, CONTRIBUTING EDITOR

wo centuries ago, before anyone had the idea of laying rails on the ground so wheels could run swiftly and smoothly over them, nobody could travel faster than they or a horse could walk, or a boat could sail. Then came trains and streetcars, and everybody’s world suddenly seemed smaller. Then, in the past century, came the decline of passenger trains and the near-extinction of streetcars in the United States and Canada. The past few decades have brought the rebirth of the streetcar, but not necessarily the way it was in its former Golden Age. It has become a genus, with several different species of vehicles that could be classified as “streetcars” or as the related species of “light rail” in all parts of the nation. There were elevated railroads in New York City and a few other places by the late 19th century, but even the “accommodation

44 Railway Age // May 2021

trains” that made plenty of local stops did not bring everybody within easy walking distance from their homes or offices. Then came inventors like Frank Julian Sprague and Granville T. Woods, who figured out how to propel a vehicle along rails by taking power from an overhead wire. The streetcar or “trolley car” (named after the wheel at the end of the trolley pole that comes in contact with the wire) was born. From their debut in Richmond, Va., in 1888, the cars were an instant success. Streetcars replaced cable cars everywhere except in San Francisco, and the horse barns that had previously pulled omnibuses became “car barns.” Cars were connecting every neighborhood in cities, and ran between cities and towns on interurban routes. Then came decline and near-extinction, largely driven by Alfred P. Sloan, Chair of the Board of General Motors. There is an apocryphal story that Sloan was watching hoards of Cleveland commuters

board streetcars to take them home from work in 1922. As the story goes, he decided that the only way to sell enough automobiles was to destroy the streetcars. Whether or not that was the start of Sloan’s own culture war, he succeeded brilliantly. By the mid-1960s, only eight North American cities (Boston, Newark, Philadelphia, Pittsburgh, Cleveland, New Orleans, San Francisco and Toronto) had at least one surviving line. Yet, during the past 40 years, the streetcar has rebounded from the precipice of the grave. Counting cities and towns that sport at least one line with vehicles that can be called “streetcars” under a broad definition, there were 41 in the U.S. and five in Canada last year. It was a remarkable comeback for a mode whose vehicles were once considered worthy only of being scrapped, and the idea behind it was disrespected as obsolete, even silly. That was not true everywhere, though. In 2010, I interviewed Justin T. Augustine III, railwayage.com

William C. Vantuono

Nearly wiped out decades ago, the lightest form of light rail has made a remarkable comeback.

RAIL TRANSIT then head of the New Orleans Regional Transit Authority (RTA), for a story about how transit in his city was faring five years after Hurricane Katrina had devastated it. He said: “If you want to involve the community, you have to involve the streetcar.” New Orleaneans have always been loyal to their streetcars, both the 1923-vintage Perley Thomas cars that still run on St. Charles Avenue and the 2000-vintage cars designed by local manager Elmer von Dullen, which run on the other lines. The von Dullen cars capture the flavor of the historic vehicles with wooden walkover seats and windows that can be opened, but they also have some modern features, including A/C. At one time, most streetcars looked like the ones that run in New Orleans today. There are also historic cars running in Dallas, Memphis and Boston, as well as in San Francisco, El Paso, and Kenosha, Wis. Before Sloan and his cohorts ended the Golden Age, they all ran on rails, collected power from an overhead wire through a trolley pole, and could be recognized easily, despite stylistic differences. Interurban cars, which usually ran on private rights-of-way through towns and between cities, were often larger and geared to run faster than their cousins who plied city streets, but these were only minor differences. Today, there are newly manufactured cars with a “heritage” look, “modern” streetcars of several descriptions (including those that replaced older cars on legacy systems or long, multi-section units with much larger capacity than traditional streetcars). There is also light rail, which can be considered a big cousin of the streetcar or a descendant of the interurban cars. Some LRVs stretch the definition of “streetcar” to its limit. New Jersey Transit’s RiverLINE between Trenton and Camden runs Stadler diesel LRVs with a passenger cabin at each end and the engine in a shorter section in the middle. They are much larger than historic streetcars. Still, the line includes some street-running track, in the “street railway” tradition. Even some vintage cars have been modified. Cars that historically ran in Melbourne, Australia now run in Memphis, Tenn., with pantographs; purportedly in preparation for a light rail line to the airport that was never built. Presidents’ Conference Committee (PCC) cars that once ran in El Paso returned to service there with pantographs. According to the line’s manager, Carl T. Jackson, railwayage.com

the change was made to facilitate operations. Trolley buffs consider running streetcars with pantographs instead of trolley poles to be sacrilegious, but riders inside the car can’t tell the difference, and it’s fun to ride the cars, however they collect their power. Maybe the secret to the rebirth of the streetcar is the diverse selection of vehicles running on the lines scattered throughout the United States and Canada. There are historic cars in New Orleans, Dallas, Memphis, Boston, San Francisco, and Kenosha. San Francisco is also the only city in the world that still has cable cars, a type of streetcar that moves by gripping a moving underground cable, rather than by taking power from a wire. There are heritagestyle cars, many made by the Gomaco Trolley Company in Ida Grove, Iowa. They have recently run in Tampa, Memphis, Little Rock, Charlotte, and other places. Gomaco cars come in Birney, Peter Witt, and other styles, including some battery-powered models that run in a mall in Glendale, Calif., and two places in Taiwan. Many enjoy riding vintage streetcars or those with a “heritage” style. Other cities have introduced cars with a modern look, and most of them are popular with riders, too. All of the legacy systems replaced their earlier cars with modern counterparts that are about the same size, except New Orleans, where the 20-year-old cars sport a traditional style. Newark is the other exception. New Jersey Transit replaced the historic PCC cars with larger light rail vehicles in 2001, and changed the line’s name from Newark City Subway to Newark Light Rail. Cities with new lines or systems have introduced longer streetcars, perhaps in keeping with the success that many light rail systems have enjoyed during the past few decades. Portland’s cars have three sections and are almost as long as the cars on the MAX light rail system. Seattle runs similar cars on its two disconnected lines, although there are plans to fill the gap someday. Two new lines use cars from Spanish company CAF. One runs in downtown Cincinnati and the historic neighborhood of Over-the-Rhine (OTR), an area dominated by mid-19th-century houses where German immigrants once lived. Before the streetcar came, OTR was blighted and dangerous. Today, it is one of the city’s most popular neighborhoods, due in large part to the streetcar. The other is the Kansas City Streetcar running north from Union Station toward the River Market area (photo, opposite

page). Business associations in Kansas City consider the line a major success, and there are now plans to extend it south of Union Station. Class I Kansas City Southern, headquartered in town, supports its extension. Then there is light rail, a species of transit descended from the streetcar and related to it. Some streetcars are catching up to light rail vehicles in size. Articulated fivesection Flexity cars have been the mainstays of Toronto’s nine-line system, the largest in North America, since 2014. The distinctions between long streetcars and light rail seem to be blurring, but almost every line running on rails is making its contribution toward bringing clean, electrically operated local transit back to city streets. There are new advances in streetcar technology—notably cars that can run off-wire for parts of their routes, when they get power from lithium ion batteries that are charged while the cars run under wire. We recently reported on the Brookville Equipment Corp. Liberty NXT cars with that capability. They are going to Valley Metro Rail in Phoenix for use on the future Tempe Streetcar line. Brookville’s Liberty vehicles are three-section articulated units, and they are in service in Dallas, Detroit, Milwaukee and Oklahoma City. The company is also building vehicles for Seattle and Portland. Adam Mohney, Marketing Specialist at Brookville, told Railway Age that the company’s Dallas cars were the first in the country to use the off-wire capability, and that the other lines Brookville has supplied also have off-wire segments, as will the new start in Tempe. Brookville began in 1918 as the Brookville Locomotive Works and still builds them at its Locomotive Division, including the BL20GH units now running on Metro-North. In addition to manufacturing the Liberty vehicles, Brookville’s Streetcar Division also restores historic streetcars. The company restored PCC cars for service in El Paso and for Muni in San Francisco, including Muni Car #1, which first ran in 1912 and which Brookville calls “America’s First Streetcar” because it was the first publicly owned car. Mohney sees an advantage for Brookville to combine experience with both modern and historic streetcars. He said it gives the company the ability to customize the cars they build for each order because every city is different, and “we expect to see pretty solid demand in both markets.” T.R. Hickey, a Senior Program Manager at May 2021 // Railway Age 45

RAIL TRANSIT Jacobs Engineering and Chair of the Standing Committee on Urban Rail Transit Systems at the Transportation Research Board (TRB) told Railway Age that he sees a trend away from historic or replica streetcars, toward modern models, as part of efforts by cities to promote “a modern downtown area.” Hickey noted that the battery and capacitor charging systems like Brookville uses can save on construction costs by eliminating the need for some of the wire and the poles that support it. He also pointed to streetcars in their roles as driving economic development in cities and providing the last-mile link for local riders. He noted that Tri-Met in Portland concentrated on building light rail lines, while the city built the streetcar lines. Today, both act together as an integrated transit system. Although the rebirth of the streetcar had been making steady progress since the 1980s, it has hit some restrictive indications lately. Two streetcar lines were discontinued before the virus hit. The Delmar Loop Trolley in St. Louis died at the end of 2019, after only 235 days of service. SEPTA eliminated the

#15 trolley route on Girard Avenue in Philadelphia on Jan. 23, 2020. The line had been operated with PCC cars rebuilt by Brookville in 2004 and called “PCC II” cars. The agency maintains that the cars will return someday, but local advocates do not believe that. We reported on both of those terminations, which may be manifestations of Hickey’s prediction coming true. He told Railway Age: “The modern streetcar is coming to the fore,” and the last replicas were built for Little Rock in 2004. A number of other streetcar lines have been suspended on account of the virus. The lines in Detroit, El Paso, Little Rock and Kenosha have not returned to service. There are plans to bring the Detroit cars back this summer, and the Kenosha line will come back on a limited schedule: eight hours of service, Wednesday through Sunday. The situation in San Francisco is even more severe. All rail transit on Muni was suspended one year ago: six light rail lines, the historic streetcars on Market Street and the Embarcadero, and the unique cable cars. Only the J Church and T

Third Street light rail lines have returned, and they run shortened routes with a shortened service day. Do the recent terminations and suspensions mean that the proliferation of streetcars is stalling and has flattened out? We don’t know yet, but despite these setbacks, it is difficult to believe that the Rebirth of the Streetcar has been halted permanently. Planners and elected officials now know that laying rails and stringing wires for transit constitutes an investment in the community that goes far beyond merely running a bus route. Tourists and locals alike prefer riding a streetcar, even if it’s called a “light rail” line, to riding a bus. Streetcars survived a concerted attack by Alfred P. Sloan and his anti-transit alliance for nearly a century, and they are coming back. It seems difficult to fathom that the virus has caused more than just temporary setbacks to that progress. It appears far more likely that indications will change as restrictions due to the virus are relaxed, and that the return of the streetcars will again see green signals or vertical bars along the right-of-way.

™

brookvillecorp.com • 814.849.2000 46 Railway Age // May 2021

railwayage.com

TTCI R&D RCF tread surface damage on a wheel removed from a car with disabled brakes.

EFFECTS OF BRAKING

ON WHEELS

BY SCOTT CUMMINGS, SENIOR SCIENTIST, TRANSPORTATION TECHNOLOGY CENTER, INC. AND SAWAN DUMBRE, SENIOR PRODUCT DEVELOPMENT ENGINEER, TTX COMPANY

Two photos: TTCI

s part of the Association of American Railroads’ (AAR) Strategic Research Initiatives program, Transportation Technology Center, Inc. (TTCI) investigated the effects of tread braking on wheel wear and tread surface damage by monitoring the performance of three articulated five-unit well cars and five coal hopper cars with disabled brakes operating in otherwise normal revenue service conditions. The Federal Railroad Administration (FRA) granted an enforcement discretion for these eight cars to operate with disabled brakes in revenue service between 2016 and 2020. Trains moving these cars were required to contain enough cars to maintain at least 95% operational brakes. This requirement provided sufficient safety precautions as evidenced by the fact that no accidents, incidents or injuries occurred due to operating these eight railwayage.com

cars with disabled brakes for more than three years in otherwise normal service. Wheel wear and tread surface damage have long been thought to be influenced by the abrasive contact and heat developed through tread braking. Thermal mechanical shelling is the acceleration of near-surface rolling contact fatigue (RCF) damage on wheel treads due to elevated wheel temperatures. These results provide important insight into the effects of tread braking for the particular service environments being evaluated, but the results do not cover the full range of operating environments in North American freight service. The air brakes on the D truck of the three well cars were disabled along with the entire air brake system of the five coal hoppers. The E truck of the well cars and five additional coal cars with normally functioning brakes were included in the test as control groups so the performance of the groups could be identified with and

without air braking. None of these changes affected the operation of the handbrakes. New wheelsets were used for both the test and control groups to eliminate the influence of pre-existing conditions. Researchers conducted periodic inspections of the test cars, including photo-documenting visible wheel tread damage and collecting wheel profile measurements for wear calculations. These inspections were easier to schedule on the coal cars traveling in a unit train compared with the well cars that did not travel together. Repair records were used to assess wheel longevity. In addition to the periodic inspections, detailed examinations were conducted on a total of four wheelsets removed due to high impact loads from one well car with disabled brakes and two coal cars with disabled brakes. These examinations included various combinations of ultrasonic testing, magnetic particle inspection, optical microscopy, and metallurgical analysis. All four wheelsets showed May 2021 // Railway Age 47

TTCI R&D characteristics consistent with typical RCF tread damage observed on wheels in normal revenue service operations. The figures show two examples of the tread damage found on wheels removed from cars with disabled brakes. The investigation indicated the damage was due to RCF alone with no indication of the wheels sliding on the rail. Upon examination of the locomotive event recorder files representing 1,200 miles from two eastbound trips with the loaded coal cars, it was discovered that the air brakes were applied 91 times at initial train speeds greater than 15 mph. Based on the reduction in brake pipe pressure and train speed, none of the applications were estimated to have generated wheel temperatures much in excess of 200°F. In conclusion, this testing demonstrates that typical wheel shelling from RCF can and does occur independent of heating from tread braking. Despite the application of the coal car brakes dozens of times per trip, it is not clear that the wheel temperatures were warm enough to influence wear or shelling. In fact, neither car type showed statistical differences

in wheelset survival based on the condition of the brakes. Although the effect of braking on the wear rates of the well car wheels was

Typical wheel shelling from RCF can and does occur independent of heating from tread braking.

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inconclusive due to the data scatter and small sample sizes, the coal car wheels did not show any wear penalty from tread braking.

Simpson

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“Here at last is a publication that addresses the technical side of diesel electric locomotives yet one that explains the many details of these marvelous electro-mechanical machines in language a lay person can understand. And all this written from the unique perspective of energy conservation, one of the true hallmarks of North American railroading.” –Don Graab, Retired Vice President-Mechanical, Norfolk Southern

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People KAREN HEDLUND

Surface Transportation Board HIGH PROFILE: President Joe Biden has nominated

Democrat Karen J. Hedlund, current Vice President and National Rail Strategy Advisor at WSP USA and former Federal Railroad Administration (FRA) Deputy Administrator, to replace Republican Ann Begeman on the Surface Transportation Board (STB). Begeman’s term expired Dec. 31, 2020, and by statute she could have remained up to 12 months in holdover status, until Dec. 31, 2021. She served two five-year terms at the STB, and was Acting Chair and Chair. She was replaced as Chair by President Biden with Democrat Marty Oberman on Jan. 21, 2021. In January 2015, following her tenure at FRA, Hedlund joined WSP USA (then Parsons Brinckerhoff). She has worked with federal, state and local transportation agencies as well as private companies to facilitate financing and development of transportation projects through P3s. She served as strategic advisor on a number of WSP rail projects across the U.S., including Amtrak’s Gateway Program, O’Hare Express Rail and the California High-Speed Rail Program, and is a leader of peer-topeer exchanges with state and local municipal officials through the Build America Transportation Investment Center Institute on various topics, including alternative delivery, P3s, and station area development and financing. Hedlund was appointed Deputy FRA Administrator in November 2011, after serving as the agency’s Chief Counsel from June 2010. During her tenure, she led the FRA’s $12 billion high speed rail grant program, including $3 billion of investments in the California High-Speed Rail Program, and $3 billion in improvements to Amtrak’s Northeast Corridor. She advised on FRA-funded multi-state locomotive and passenger equipment purchases, and on California High-Speed Rail and Amtrak next-generation trainset procurements, including consideration of Buy America waiver requests for non-domestic equipment manufacturers. Hedlund also oversaw the FRA’s Railroad Rehabilitation and Infrastructure Finance (RRIF) program, including review of loan requests to finance new passenger rail systems from Las Vegas to California and from Miami to Orlando, as well as implementation of Positive Train Control (PTC) systems for the Long Island Rail Road and Metro-North Railroad. Hedlund served as Chief Counsel of the Federal Highway Administration in 20092010, where she directed a legal staff in the implementation of American Recovery and Reinvestment Act grants to all 50 states. Before joining the federal government, she was a partner in the law firms Nossaman, LLP; Skadden Arps; and Mayer Brown. Hedlund led the legal advisory team on P3 projects, such as the Silver Line extension of the Washington, D.C., Metrorail system; the Port of Miami Tunnel; the TREX light rail in Denver; the Triangle Expressway in North Carolina; and HudsonBergen Light Rail in New Jersey. Hedlund served on the Board of Moynihan Station Development Corp. in New York City, which redeveloped the James A. Farley Post Office Building into a new rail station for Amtrak and a mixed-use development. She also previously served as a Board member of Union Station Development Corp. in Washington, D.C. She was also a member of the Credit Council of the U.S. Department of Transportation, which oversees the department’s credit programs. Hedlund received a law degree from Georgetown University Law Center and a bachelor’s degree from Harvard University. railwayage.com

orfolk Southern elevated Frank Voyack to Vice President Government Relations, succeeding Marque Ledoux, retired. Ledoux served NS for 18 years. Voyack, who joined NS in 2008, worked most recently as Assistant Vice President. He will now oversee federal, state and local government relations, educating lawmakers on NS’s role in supporting the overall economy, and guiding public policy initiatives and engagement. Nadine Lee will become the next President and CEO of Dallas Area Rapid Transit (DART) on July 12, succeeding David Leininger, who has served in an interim role since November 2020. Lee is Chief of Staff of the Los Angeles County Metropolitan Transportation Authority (Metro). With nearly 30 years of transportation experience, Lee has also served the Denver Regional Transportation District (RTD). In addition, she was appointed to the Leadership APTA Committee in 2019. A past Director of the WTS International Board, Lee was honored as WTS International Woman of the Year in 2019. Mohammed Nasim has joined NJ Transit as Chief of Construction Management. With more than 30 years of transportation project experience, he served most recently at Amtrak as Project Manager for the Gateway Program, including the Hudson River Tunnel and Portal North Bridge projects. Nasim is a professional engineer, certified construction manager and a project management professional. He holds a master’s degree in civil engineering from Cornell University. STV promoted Paul E. Bobby and Kevin Carmody to Vice President positions. At STV since 2004, Bobby has been serving as Deputy Program Manager for Project Implementation of Metra’s five-year, $2.5 billion capital program, and managing track design packages for the MBTA Green Line Light Rail Extension. In addition to his new role as Vice President, Bobby is also a Business Unit Leader and Director of Railroad Engineering for the firm’s National Freight Practice. Carmody, a 20-year STV veteran, is Engineering Director, National Railroads for the firm’s Transportation and Infrastructure Practice. In his new role, Carmody will serve as the primary client liaison with Amtrak in support of rolling stock efforts. May 2021 // Railway Age 49

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The Weekly RT&S Email Newsletter Subscribe at: www.rtands.com/RailBrief

50 Railway Age // May 2021

railwayage.com RTS_RailBriefAd_QuarterPage_Final.indd 1

1/9/18 12:20 PM

Ad Index Company

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BNSF

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brookville equipment corp

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csX coRpoRAtion

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gulf & ohio railways

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noRfolk soutHeRn

Okonite Co.

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Pandrol USA, L.P

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port of new orleans

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railway educational bureau

402-346-4300

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shift5 inc

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watco companies

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

railwayage.com

May 2021 // Railway Age 51

Financial Edge The Target Is Actually the Hunter

he scuffle between CP and CN to acquire Kansas City Southern requires comment. In the 2021 Railroad Financial Desk Book, it was noted that KCS’s franchise value was above the $208 per share offered by Blackstone, and that the July 2020 rejection of the Blackstone offer by the KCS management team was financially astute and in the interest of shareholders. After CN’s most recent offer, KCS’s stock is now valued at $325 per share. (In March 2020, the stock traded at $108 a share.) CN or CP will be able to wade through the regulatory swamp and close this transaction. (STB has already blessed CP’s strategy.) There will be concessions to the other Class I’s to approve the acquisition (CN more than CP), but the deal will get done. The deal has enough worthwhile benefits: moving traffic north to south while bypassing Chicago, the opportunity to exploit near-shoring with south to north traffic, and the possible creation of a crude by rail pipeline for Canadian crude. Unfortunately for CP’s Keith Creel, unless he matches or improves upon CN’s offer, he will have made the same mistake as Blackstone (but with more serious consequences). In a frothy market, never risk embarrassment resulting from pride or cleverness. When making a play for a stock going from $108 to $275 in 13 months, commit to being the winner. Speaking of winners, kudos again to Pat Ottensmeyer and team KCS for its “West Coast Cool” approach in letting the market come to them. Results? A 56% increase over the Blackstone bid (200% increase since March 2020). RAIL EQUIPMENT FINANCE 2021 UPDATE The Rail Equipment Finance (REF) 2021 Conference (virtually on demand) provided an update on the current state of rail equipment, rail freight and a look forward to the coming year. REF 2021 started with a live presentation from Dr. Sergio Rebelo, MUFG (Mitsubishi UFJ Financial Group) Bank Distinguished Professor of International Finance at Northwestern University’s 52 Railway Age // May 2021

Kellogg School of Management. Dr. Rebelo’s presentation was covered by Railway Age Contributing Editor Jim Blaze: “Railroads operate in a broad economic environment, and the U.S. economy appears to be in pretty good shape, fundamentally. Consumer spending, Dr. Rebelo told attendees, may lead the U.S. recovery in 2021. Data shows that household savings has increased as the government has provided stimulus payments to citizens. “Corporate debt remains inexpensive. Lower debt costs and a corporate focus on resiliency over efficiency has the potential to encourage growth in near-shore manufacturing. Near-shoring is supported by a mix of factors made more important by the pandemic: lower energy costs, security of the supply chain, and the potential for automation.” Here is a rundown of the key takeaways from the other REF sessions: Dr. David Humphrey, Railinc, provided an update on the North American railcar and locomotive fleets. Key takeaways: While the railcar fleet is shrinking slightly (mostly coal), tank railcars continue to be the largest build segment. By capacity, the covered hopper and tank markets are increasing, while boxcars and coal are declining. On the locomotive fleet, the national fleet is declining slightly, as production over the past few years has been tepid (p. 41). Eric Starks, FTR Transportation Intelligence, talked about the role of North American rail in a post-Covid environment. The consumer-led recovery is slightly masking a slower recovery in general freight. Pressure to move goods is at an all-time high, elevating manufacturing output to preCovid levels. Rail loads are not expected to match 2018’s peak until after 2022. New car deliveries are not expected to approach higher levels until the end of 2021 and 2022. Increased scrapping will help. Graham Brisben, PLG Consulting, discussed the entire energy spectrum. Quick summary: Coal’s decline continues with another downward inflection in 2025. Sand continues to be oversupplied; Canadian CBR will experience growth and then get into pipelines. NGLs to Mexico have

remained strong. New plastics production is plateauing and will surge forward when the next demand cycle returns. Future trends to watch: renewable diesel, waste plastic conversion, and e-commerce warehouse expansion that can influence rail loadings growth. Matt Elkott and Jason Seidl, Cowen and Company, gave the analyst update on the rail industry. The big topic: Railcar freight volumes have been increasing but without some of the tenacious gains in some trucking markets. Intermodal freight has been strong with a consumer-led recovery. Both project continued strength for freight demand through 2021 and into 2022. As the industry enters the later stages of PSR, recovery in railcars orders and lease rates in 2021 and 2022 is projected. The railcar and locomotive appraisal panels highlighted surprisingly stable railcar and stable-to-lower locomotive values across almost all car and locomotive types (except sand and coal). On railcars, the panelists expect more scrapping of older cars with higher scrap rates as having a positive impact on values. They expressed some optimism but also lamented that, in some cases, leases rates do not support today’s valuations. On the locomotive side, survey results were split, with some smaller switcher units (such as the MP15) continuing to hold value, while some six-axle power values languish while Class I’s continue to store excess power. The REF virtual portal will open to the general public around June 1 for 30 days. Dr. Rebelo’s presentation will not be available. Email the address below if you wonder about REF and want to receive any emails announcing the viewing period. Got questions? Set them free at dnahass@ railfin.com.

DAVID NAHASS President Railroad Financial Corp. railwayage.com

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

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A combined reprint of the Federal Regulations that apply specifically to the Mechanical Department. Spiral bound. Part Title 210 Railroad Noise Emission Compliance Regulations Updated 4-15-19. 215 Freight Car Safety Standards Updated 1-11-21. 216 Emergency Order Procedures: Railroad Track, Locomotive and Equipment Updated 1-11-21. 217 Railroad Operating Rules Updated 1-11-21. 218 Railroad Operating Practices - Blue Flag Rule Updated 1-11-21. 221 Rear End Marking Device-passenger, commuter/freight trains Updated 1-11-21. 223 Safety Glazing Standards Updated 1-11-21. 224 Reflectorization of Rail Freight Rolling Stock Updated 1-11-21. 225 Railroad Accidents/Incidents Updated 1-11-21. 229 Locomotive Safety Standards Updated 1-11-21. 231 Safety Appliance Standards Updated 1-11-21. 232 Brake System Safety Standards Updated 1-11-21.

49 CFR Parts 219, 240 and 242, Qualification and Certification of Locomotive Engineers; Miscellaneous Revisions. FRA is revising its regulation governing the qualification and certification of locomotive engineers to make it consistent with its regulation for the qualification and certification of conductors. The changes include: Amending the program submission process; handling engineer and conductor petitions for review with a single FRA review board (Operating Crew Review Board or OCRB); and revising the filing requirements for petitions to the OCRB. To ensure consistency throughout its regulations, FRA is also making conforming amendments to its regulations governing the control of alcohol and drug use, and the qualification and certification of conductors. The changes would reduce regulatory burdens on the railroad industry while maintaining the existing level of safety. DATES: This final rule was effective January 14, 2021.

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Railway Age May 2021

Articles inside

Rebirth of the Streetcar

Railinc Locomotive Review

Extending Rail Life

Digital Transformation

Influential Railroaders

Watco and CDL Electric