Railway Age May 2018 by Railway Age

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AILWAY GE S e r v i n g t h e r a i lway i n d u s t r y s i n c e 1 8 5 6

Union Pacific

Riding The

Upswing BIG DATA FOR M/W

Developing analytic capabilities

PTC PERSPECTIVES

Progress, analytics, and disaster recovery

RAILINC 2018 LOCOMOTIVE REPORT railwayage.com

Growth in high-horsepower August 2017 // Railway Age 1

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MAY 2018

14 FEATURES

Class I Focus: UP

C&S Focus: PTC

24 26 30 34

Riding the upswing

Industry progress report

PTC and the IIoT Configuration management

PTC + DR/BCP = ? Ready for disaster recovery?

Locomotive Fleet Stats Railinc’s annual assessment M/W Focus: Big Data Insights from statistical analysis

DEPARTMENTS 4 6 8 38 38 38 40 41 43 43

Industry Indicators Industry Outlook Market People 100 Years Ago Meetings

NEWS/COLUMNS 2 10 13 44

From the Editor Update Watching Washington Financial Edge

Products Advertising Index Professional Directory Classified

On the Cover: Union Pacific strives to meet surging economic demands. Photo: Bruce Kelly

Railway Age, USPS 449-130, is published monthly by the Simmons-Boardman Publishing Corporation, 55 Broad St., 26th Fl., New York, NY 10004. Tel. (212) 620-7200; FAX (212) 633-1863. Vol. 219, 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© 2016 Simmons-Boardman Publishing Corporation. All rights reserved. Contents may not be reproduced without permission. For reprint information contact PARS International Corp., 102 W. 38th Street, 6th floor, New York, N.Y. 10018, Tel.: 212-221-9595; Fax: 212-2219195. 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, P.O. Box 1172, Skokie, IL 60076-8172, Or call toll free (800) 895-4389, or (402) 346-4740. Printed at Cummings Printing, Hooksett, N.H. ISSN 0033-8826 (print); 2161-511X (digital).

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May 2018 // Railway Age 1

FROM THE EDITOR

AILWAY GE Subscriptions: 800-895-4389

Railroad Euphemisms

egendary comedian and cynic George Carlin didn’t like “words that hide the truth” and “conceal reality,” which he called “euphemisms, euphemistic language.” “American English is loaded with euphemisms, because Americans have a lot of trouble dealing with reality,” Carlin said. “Americans have trouble facing the truth, so they’ve invented a soft language to protect themselves from it, and it gets worse with every generation. “Sneakers became running shoes. False teeth became dental appliances. Used cars became previously owned transportation. Room service became guest room dining. As a child, if I got sick, I saw a doctor. Now, I go to a health maintenance organization or wellness center to consult with a healthcare delivery professional. “Poor people used to live in slums. Now, the economically disadvantaged occupy substandard housing in the inner cities. They’re not broke; they have a negative cash flow position. Many were fired—you know, fired! Management wanted to curtail redundancies in the human resources area, so many people are no longer viable members of the workforce.” The railroad industry is not immune to euphemistic language, or as Contributing Editor Frank Wilner calls it, “the corporate non-speak that, once upon a time, would have invited a rap across the knuckles by ruler-wielding English teacher Sister Mary

Francis, whose tolerance for poor grammar and language mangling was quite limited.” Try this boilerplate copy on for size the next time you’re writing a press release: “We’re executing best-in-class service, and we’re extremely confident that substantial opportunities exist to leverage our service product offering, capture growth and deliver superior financial returns. Our 360-degree view, which incorporates, where appropriate, rationalized right-sizing and/or downsizing initiatives, is focused on strategically deploying disciplined capital investments. “We are working aggressively to implement a remarkable rate of positive organizational change, developing and implementing customer-centric operating strategies by engaging and communicating proactively through frequent interactions with both our internal and external stakeholders about our processes for tighter procedural coordination. “In a challenging environment filled with persistent headwinds, we are fully committed to deploying the streamlined resources necessary to address our capacity constraints, while raising the bar on our customer service metrics. Safety is our top priority, followed closely by our commitment to enhancing shareholder value.” I think I’ll copyright this ...

WILLIAM C. VANTUONO Editor-in-Chief

Railway Age, descended from the American Rail-Road Journal (1832) and the Western Railroad Gazette (1856) and published under its present name since 1876, is indexed by the Business Periodicals Index and the Engineering Index Service. Name registered in U.S. Patent Office and Trade Mark Office in Canada. Now indexed in ABI/Inform. Change of address should reach us six weeks in advance of next issue date. Send both old and new addresses with address label to Subscription Department, Railway Age, PO Box 3135, Northbrook, IL 60062-2620, or call toll free (800) 895-4389, or (402) 346-4740. Post Office will not forward copies unless you provide extra postage. Photocopy rights: Where necessary, permission is granted by the copyright owner for the libraries and others registered with the Copyright Clearance Center (CCC) to photocopy articles herein for the flat fee of $2.00 per copy of each article. Payment should be sent directly to CCC. Copying for other than personal or internal reference use without the express permission of Simmons-Boardman Publishing Corp. is prohibited. Address requests for permission on bulk orders to the Circulation Director. Railway Age welcomes the submission of unsolicited manuscripts and photographs. However, the publishers will not be responsible for safekeeping or return of such material. Member of:

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Editorial and Executive Offices Simmons-Boardman Publishing Corp. 55 Broad Street, 26th Fl. New York, NY 10004 212-620-7200; Fax: 212-633-1863 Website: www.railwayage.com ARTHUR J. McGINNIS, Jr. President and Chairman JONATHAN CHALON Publisher jchalon@sbpub.com WILLIAM C. VANTUONO Editor-in-Chief wvantuono@sbpub.com STUART CHIRLS Senior Editor schirls@sbpub.com Contributing Editors: Roy H. Blanchard, Jim Blaze, Alfred E. Fazio, Bruce E. Kelly, Ron Lindsey, Ryan McWilliams, David Nahass, Jason H. Seidl, David Thomas, John Thompson, Frank N. Wilner Art Director: Nicole Cassano Graphic Designer: Aleza Leinwand Corporate Production Director: Mary Conyers Digital Ad Operations Associate: Kevin Fuhrmann Production Director: Eduardo Castaner Marketing Director: Erica Hayes Conference Director: Michelle Zolkos Circulation Director: Maureen Cooney Western Offices 20 South Clark Street, Suite 1910, Chicago, IL 60603 312-683-0130; Fax: 312-683-0131 Engineering Editor: Mischa Wanek-Libman mischa@sbpub.com Assistant Editor: Kyra Senese ksenese@sbpub.com International Offices 46 Killigrew Street, Falmouth, Cornwall TR11 3PP, United Kingdom Telephone: 011-44-1326-313945 Fax: 011-44-1326-211576 International Editors: David Briginshaw, db@railjournal.co.uk Keith Barrow, kb@railjournal.co.uk Kevin Smith, ks@railjournal.co.uk Dan Templeton, dt@railjournal.co.uk Customer Service: 800-895-4389 Reprints: PARS International Corp. 253 West 35th Street 7th Floor New York, NY 10001 212-221-9595; fax 212-221-9195 curt.ciesinski@parsintl.com

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Industry Indicators Railroads Face the Hard Truth: There’s Freight to Haul It was notable over the past 12 months or so that while Class I management was doing the Wall Street Two-Step, shippers were treated like wallflowers at the big dance. No longer, although it took regulatory pressure in the U.S. (and Parliamentary action in Canada to get grain moving) for some railroads to make a concerted effort to better serve their customers. And while comparisons to 2017 volumes may be easy, the uptick in March U.S. carloads was driven by the two largest categories, chemicals and coal, along with a generous assist from intermodal traffic.

Railroad employment, Class I linehaul carriers, MARCH 2018 (% change from MARCH 2017)

TRAFFIC ORIGINATED CARLOADS

MAJOR U.S. RAILROADS by Commodity

Total employees: 145,105 % change from MARCH 2017: -2.82%

Transportation (train and engine) 60,297 (1.87%) Executives, Officials, and Staff Assistants 8,292 (-8.46%) Professional and Administrative 11,938 (-9.59%)

FOUR WEEKS ENDING APRIL 6, 2018

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

MARCH ’18

MARCH’17

% CHANGE

94,249 3,321 38,042 24,369 133,793 39,282 339,723 4,249 14,236 22,266 18,352 16,042 39,526 16,376 68,441 96,187 14,707 30,394 13,797 23,301

94,001 3,628 36,125 25,229 126,301 39,656 314,856 4,996 13,764 21,827 15,453 17,465 37,571 16,517 70,698 89,063 18,270 30,154 14,338 24,584

0.6% 0.3% 5.3% -3.4% 5.9% -0.9% 7.9% -15.0% 3.4% 2.0% 18.8% -8.1% 5.2% -0.9% -3.2% 8.0% -19.5% 0.8% -3.8% -5.2%

1,050,653

1,014,496

3.6%

323,854

319,630

-5.2%

1,374,507

1,334,126

-1.4%

CANADIAN RAILROADS total carloads

COMBINED U.S./CANADA RR

Maintenance-of-Way and Structures 32,237 (-4.89%) Maintenance of Equipment and Stores 28,589 (-4.79%)

Intermodal

FIVE WEEKS ENDING APRIL 6, 2018

Transportation (other than train & engine) 5,556 (-4.93)

MAJOR U.S. RAILROADS by Commodity

MARCH ’18

MARCH ’17

% CHANGE

Source: Surface Transportation Board

Trailers Containers TOTAL UNITS

100,969 981,270 1,082,239

83,989 932,099 1,016,088

20.2% 5.3% 6.5%

4,156 273,932 278,088

4,143 239,882 244,025

0.3% 14.2% 14.0%

Trailers Containers

105,125 1,255,202

88,132 1,171,981

19.3% 7.1%

TOTAL COMBINED UNITS

1,360,327

1,260,113

8.0%

Employment tipping point? While it’s true Class I railroads have spent the past year slashing payroll, recent evidence shows the worm may be turning. Even though year-overyear comparisons still depict significant job cuts in some categories, more recent comparisons to March 2018 show a moderating trend, with losses of less than 1% in four of seven categories, and an overall increase, however modest, of 0.20%. In fact, Union Pacific and BNSF are offering signing bonuses up to $25,000 to attract new job applicants. Why? Unemployment across the U.S. has fallen to new lows, particularly in rural areas where the railroads are hiring.

4 Railway Age // May 2018

CANADIAN RAILROADS Trailers Containers TOTAL UNITS

COMBINED U.S./CANADA RR

Source: Monthly Railroad Traffic, Association of American Railroads

railwayage.com

TOTAL U.S./CANADIAN CARLOADS, MARCH 2018 VS. MARCH 2017

1,374,507 MARCH 2018

AILWAY GE

1,334,126 MARCH 2017

Short Line And Regional Traffic Index CARLOADS

by Commodity

ORIGINATED MARCH ’18

ORIGINATED MARCH ’17

% CHANGE

48,312 22,999 29,437 11,701 28,853 6,722 10,635 3,465 15,254 9,388 2,348 2,322 18,795 38,737 10,500 83,852

39,603 25,759 22,857 11,956 27,007 6,853 10,237 3,541 15,270 10,132 2,030 2,279 16,748 56,266 9,862 81,702

14.6% -10.7% 28.8% -12.1% 6.8% -1.9% 3.9% -2.1% -0.1% -7.3% 15.7% 1.9% 12.2% -31.2% 6.5% 2.0%

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

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

ARE YOU A RAILROAD OR SUPPLIER SEARCHING FOR JOB CANDIDATES?

280,000 270,000

2018 2017

260,000

250,000 240,000 2016

230,000 220,000

Visit http://bit.ly/railjobs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Data are average weekly originations for each month, are not seasonally adjusted, do not include intermodal, and do not include the U.S. operations of CN and CP. Source: AAR

To place a job posting, contact: Jeanine Acquart 212-620-7211 jacquart@sbpub.com

May 2018 // Railway Age 5

railwayage.com RA_JobBoard_1/3Vertical.indd 1

8/17/17 10:59 AM

Industry Outlook NY RPA Calls for One System

CN Boxcar Fleet Buildup CN is acquiring 350 boxcars to meet growing demand among industrial customers across its North American network. The leased 50-foot, high-capacity plate F cars, equipped with 12-foot plug doors, are expected to be delivered beginning in late summer, with all the cars in service by the end of 2018. “These additional boxcars, combined with our new locomotives, hundreds of new train crew members and track expansion investments, will help give us the capacity and network resiliency we need for pulp, paper and metals customers,” said Doug MacDonald, Vice President of Bulk at CN, headquartered in Montreal. As part of CN’s C$3.4 billion ($2.65 billion) capital program in 2018, the company is investing in new “trade-enabling infrastructure” this spring and summer, building new track and yard capacity to handle increased traffic more efficiently across its West Coast to Chicago corridor. The C$200-million increase in capital spending to expand capacity was announced as CN reported disappointing financial results in the first quarter. Revenues for the largest Canadian railroad totaled C$3.194 billion ($2.49 billion), off C$12 million from a year ago. This was 6 Railway Age // May 2018

based upon on revenue ton-miles (RTMs) that were weaker by 4% and carloadings that were 3% higher. Net income for CN fell by 16% to C$741 million, while earnings slowed by 14% to C$1 per share. “CN has turned the corner on a difficult quarter and winter,” said JJ Ruest, Interim President and Chief Executive Officer. “Our metrics are showing sustained, sequential improvement, and that momentum will build as we continue to expand track capacity, add crews and bring on new locomotives. (CN recently placed an order with GE for 200 new units.)” “We’ve increased our capital program to C$3.4 billion, with approximately C$400 million being invested in new track infrastructure, particularly in Western Canada, to build capacity and improve resiliency,” noted Ruest. “With the people, equipment and infrastructure in place, and with a solid pipeline of growth opportunities ahead of us, we are confident in our ability to bring long-term value creation to our customers and shareholders.” After adding approximately 400 conductors to the field so far this year, CN said it continues to hire, with a particular focus on crews in Western Canada.

A new report from the Regional Plan Association (RPA) calls for the merging of New York Metropolitan Area commuter railroads MTA MetroNorth Railroad, MTA Long Island Rail Road and New Jersey Transit into a single, integrated network called T-REX, for Trans-Regional Express. RPA says the $71 billion overhaul to integrate the three legacy systems would be implemented in three phases over several decades. “The New York-New JerseyConnecticut region has an opportunity to support sustainable and equitable economic growth for future generations by building on a unique asset —the region’s extensive commuter rail network. This network, if optimized, can boost job and population growth both in the region’s core and in major centers throughout the region that have both the capacity and need for growth,” states the T-REX report’s executive summary. The report, part of RPA’s Fourth Regional Plan, points to the commuter rail network’s “age and inadequate configuration” as potential pitfalls to harnessing its full economic development potential. The report lays out how strategic investments can improve mobility throughout the region. The phased approach includes: • Phase 1: The Crosstown Line, which builds on the Gateway Program and would build new tunnels under the East River to provide through service between New Jersey and Long Island. • Phase 2: New Trans-Hudson and East Side Service, which would build additional rail tunnels from Union City, N.J. to 57th Street in Midtown. • Phase 3: This final phase would complete the uptown portion of what the RPA calls the Manhattan Spine to connect to the Bronx, Westchester, the Hudson Valley and Connecticut. The report recognizes that in order to fund and govern the program, a “vast change” will be needed from the current approach. railwayage.com

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Market Edmonton Valley Line LRV Revealed TransEd Partners, the consortium building the first phase of Edmonton’s light rail Valley Line, released images of the first Bombardier Flexity Freedom LRV for the project. Bombardier is building 26 Flexity Freedoms for the Valley Line at its plant in Kingston, Ont. The first vehicle is due to arrive in Edmonton in July and testing will begin on a (1.7-km (1.1-mile) section of the route in September. The consortium of Bechtel, Bombardier, EllisDon and Fengate Capital Management was awarded a 35-year public private partnership contract in February 2016 to design, build, operate, maintain and finance the 13.1-km (8.1mile) Valley Line Southeast.

WORLDWIDE

NORTH AMERICA

ITALY: The European Commission has approved the acquisition of open-access high-speed operator ITALO-NTV by U.S.based GLOBAL INFRASTRUCTURE PARTNERS III equity fund for 1.94 billion euros ($2.37 billion). Nuovo Trasporto Viaggiatori is Europe’s first private open-access operator of 300-kph high-speed trains. GIP owns the Port of Melbourne and Australian rail freight operator Pacific National.

CANADA: The federal government is committing C$18.4 million ($14.6 million) to the PORT OF MONTREAL for a rail project aimed at “keeping the maritime gateway competitive in a changing global supply chain.”

8 Railway Age // May 2018

GOTRIANGLE has chosen the GANNETT FLEMING/WSP Joint Venture as the construction management consultant for Durham and Orange counties’ light rail project. The 17.7-mile LRT will feature 18 stations operating between UNC Hospitals in Chapel Hill and North Carolina Central University in Durham, officials said. The line includes more than 10 miles of at-grade ballasted track, about 4 miles of which will be on an elevated structure, as well as about 3.5 miles of at-grade embedded track. The project, which is expected to provide commuters with 26,000 daily trips, is set to link three universities, three medical facilities and three of the state’s top 10 employers. Between 2018 and 2057, GoTriangle estimates that the project could bring in $3.2 billion in property values and $1.4 billion in tax revenue. The joint venture is expected to supply a variety of services, including constructability

reviews, estimating, contract packaging and design, as well as specification reviews during the project’s first phase and full construction management services during phase two. LOS ANGELES: The City Council voted unanimously to approve a 30-year contract worth $4.9 billion with LAX INTEGRATED EXPRESS SOLUTIONS to design, build, finance, operate and maintain the Automated People Mover system at Los Angeles International Airport. The development is the largest contract to be awarded in the city’s history. METROLINX and Infrastructure Ontario have selected MOSAIC TRANSIT GROUP as the preferred proponent for the Finch West Light Rail Transit project in Toronto. Mosaic includes AECON, ACS INFRASTRUCTURE CANADA and CRH CANADA GROUP. Each member of the consortium is an equal partner in the equity and construction of the project. ONTARIO’S provincial government has committed an initial investment of more than C$11 billion ($8.6 billion) to open high-speed rail service between Toronto and Windsor. railwayage.com

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Update

NEC Commission:

he Northeast Corridor Commission’s Fiscal Year 2017 Annual Report on Operations and Infrastructure spotlights a capacity-strained passenger rail corridor in need of major investment for state-of-good repair as well as numerous expansion and improvement programs.

The report, a requirement of the FAST (Fixing America’s Surface Transportation Act), summarizes ridership, train performance and capital investment, including improvements on the NEC, during the past federal fiscal year. Highlights: • Delays on the Northeast Corridor increased in Fiscal Year 2017, with Northeast Corridor trains experiencing around 1.2 million minutes of delay, a 16% increase over FY16. In addition, there was a 92% increase in severe-delay days (where one out of five trains is delayed or terminated). Much of the large increase can be linked to the track failures at New York Penn Station in March and April 2017. The track failures caused Amtrak to launch the Infrastructure Renewal Program at New York Penn Station. This accelerated work program required coordination from Amtrak, NJ Transit and the Long Island Rail Road. 10 Railway Age // May 2018

• An increasing number of train delay minutes were engineering-related (infrastructure failure, maintenance outages and speed restrictions), with a 45% jump in Fiscal Year 2017 over Fiscal Year 2016. The Northeast Corridor is an aging asset, with dozens of bridges and tunnels that are more than a century old, and key parts of the electrical and signal systems dating back to the 1930s and the Pennsylvania Railroad’s electrification program. Therefore, it is not surprising that more than half of these engineering-related delays (expressed in terms of minutes of delay) are caused by infrastructure failure. Such delays add an urgency to the need to put additional investment into the aging Northeast Corridor to maintain basic infrastructure and begin to tackle the $38 billion state-ofgood-repair backlog to improve reliability and reduce delays for riders. • Northeast Corridor stakeholders invested $1.5 billion in corridor infrastructure in FY17, including more than $927 million in special projects and $568 million in capital renewal. Most capital renewal activity was funded by states, transit agencies and Amtrak through an historic commitment to share more than $1 billion in annual operating and capital costs

through the Commission’s Cost Allocation Policy, adopted in 2015. The Cost Allocation Policy requested the federal government match the increased contributions from the Northeast Corridor’s user railroads (Amtrak, New Jersey Transit, New York Metropolitan Transportation Authority, Massachusetts Bay Transportation Authority, Southeastern Pennsylvania Transportation Authority, Connecticut Department of Transportation, Maryland Transit Administration). In the FY18 omnibus appropriations bill, Congress provided $250 million to a FederalState Partnership for State of Good Repair

The CORRIDOR’S state-of-goodrepair backlog is $38 billion.” railwayage.com

Federal Railroad Administration

Show us the money

Update program and $650 million for Amtrak’s Northeast Corridor account. Executives at Amtrak, NJ Transit and ConnDOT weighed in on the report: • Scot Naparstek, Chief Operating Officer, Amtrak: “Amtrak took the problems experienced at Penn Station very seriously. Though our 2017 renewal program replaced critical infrastructure and was delivered successfully, we have only addressed the tip of the iceberg when it comes to state of good repair at Penn Station New York, much less the entire Northeast Corridor.” • Kevin Corbett, Executive Director, NJ Transit. “The track problems at Penn Station New York last year were devastating to our services and a significant source of stress and inconvenience for our passengers. These incidents highlight the fragility of our aging infrastructure and the urgent need for all parties to pull together and prioritize the modernization of this critical rail infrastructure. Years from now, we may view last year’s incidents as the canary in the coal mine. Given the Northeast Corridor’s importance to our regional and national economy, the time to act is now.” • Jim Redeker, Commissioner, Connecticut Department of Transportation: “We are only just beginning to confront the state-of-goodrepair challenges we face. Improving service reliability and ensuring a vibrant future for the most economically productive region in the United States will require many years of increased federal and state investment to replace assets built for us generations ago.”

• Stephen Gardner, Chief Commercial Officer, Amtrak: “The funding committed by states and rail agencies through the Commission’s Cost Allocation Policy provides a needed level of consistency and dependable funding. We are pleased that Congress chose to provide funding to Amtrak, Northeast Corridor commuter agencies and the states for improving the Corridor’s aging infrastructure in FY18. We are united in our goal of partnering with the federal government to improve rail service across the Corridor.” Congress authorized the Northeast Corridor Infrastructure and Operations Advisory Commission in 2008 under 49 C.F.R. Section 212 of Public Law 110-432, PRIIA (Passenger Rail Investment and Improvement Act of 2008), and amended Section 24905 (Northeast Corridor Commission-Safety Committee), to “promote mutual cooperation and planning among owners and operators on the Northeast Corridor rail line and to advise the U.S. Congress on Corridor policy and investment needs ... The Commission shall develop and periodically update a statement of goals concerning the future of the Northeast Corridor based on achieving expanded and improved intercity, commuter, and freight rail services.” The Commission is comprised of one member from each of the Northeast Corridor states (the transportation departments of Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania,

Delaware and Maryland) and the District of Columbia Transportation Department; four members from Amtrak; and five members from the U.S. Department of Transportation (Office of the Secretary of Transportation, Federal Railroad Administration and Federal Transit Administration). The Commission also includes nonvoting representatives from Northeast Corridor freight railroads (Norfolk Southern, CSX, Conrail Shared Assets, Providence & Worcester), states with feeder corridors (such as Virginia and New Hampshire), and commuter authorities not directly represented by a Commission member. The Northeast Corridor, the busiest passenger rail corridor in the U.S., is a 457-mile electrified rail line linking Boston, Providence, New York, Newark, Philadelphia, Wilmington, Baltimore and Washington D.C., serving four of the nation’s ten largest metropolitan areas. The Northeast Corridor supports more than 800,000 trips daily on eight commuter railroads and more than 40,000 trips on Amtrak’s intercity services, on approximately 2,000 daily trains. Almost two-thirds of all commuter rail riders in the Northeast Corridor region rely on the Corridor for some or all of their trip. A 2014 Commission study found that a loss of Northeast Corridor services for one day could cost the U.S. economy $100 million in lost productivity, congestion on regional highway and aviation networks, and other transportation-related costs.

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May 2018 // Railway Age 11

Update

The U.S. Department of Transportation is retiring the Transportation Investment Generating Economic Recovery (TIGER) grant program name. It will now award the $1.5 billion available in discretionary grant funding as Better Utilizing Investments to

Leverage Development (BUILD) Transportation Discretionary Grants. “The BUILD grant program has three times more in available money as recent TIGER programs and will continue to award projects on a competitive basis that have a

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Federal Railroad Administration

TIGER Put to Sleep. Will BUILD Fill the Bill?

significant local or regional impact,” USDOT said. “BUILD funding can support roads, bridges, transit, rail, ports or intermodal transportation. The program will have an added emphasis on projects located in rural areas. At least 30% of funds must be awarded to projects located in rural areas.” USDOT says BUILD grants will be evaluated “based on merit criteria that include safety, economic competitiveness, quality of life, environmental protection, state of good repair, innovation, partnership and additional non-federal revenue for future transportation infrastructure investments.” However, one program constraint is that a single state cannot be awarded more than $150 million, and a single project will not be awarded more than $25 million. USDOT Secretary Elaine Chao said BUILD “will help communities revitalize their surface transportation systems while increasing support for rural areas.” The application deadline for the FY 2018 BUILD Transportation Discretionary Grants program is July 19, 2018.

Watching Washington

A Tutorial for New STB Members

ailroads, as do all for-profit undertakings, earn their crust by selling at a price-multiple above production costs. Otherwise, they become revenue inadequate, meaning they lose investors, cease renewing assets, hollow out service and fail. Decades of smothering economic regulation stuffed railroads into such a trick bag until congressionally ordered partial economic deregulation in 1980 permitted them to chew their way out in pursuit of revenue adequacy. The shipper-supported railroad renaissance has been, in a word, remarkable. Since lifting of the regulator’s heavy hand, the rail industry’s rate of return on net investment (ROI) has climbed from 4% to more than 10%, with BNSF, CSX, Norfolk Southern and Union Pacific posting ROI that meets or exceeds the industry’s cost of capital (a measure of revenue adequacy). This financial recovery encouraged and allowed a 300% increase in new capital investment for service-enhancing asset renewal and expansion. With the Surface Transportation Board (STB) poised this year to rule on several shipper proposals that could profoundly affect market-based ratemaking that directly impacts ROI and each railroad’s willingness and ability to renew infrastructure, we offer an ageless tutorial especially appropriate for new STB members. It is a product of the late William J. Cunningham, once an official of the Boston & Maine Railroad and, from 1915 to 1946, the James J. Hill Professor of Transportation

Since 1980, when partial deregulation under the Staggers Rail Act was passed by Congress, railroad capex has soared

300% railwayage.com

at Harvard University. Cunningham perennially recounted to his students the 1917 oral testimony of fellow New Englander William A. Graustein as delivered before STB predecessor Interstate Commerce Commission (ICC). Professor Cunningham termed Mr. Graustein “a gentleman farmer and member of a family noted for brilliant scientific achievement.” Following is Professor Cunningham’s recollection of Mr. Graustein’s protest of a proposed rate increase by the Boston & Maine Railroad for the movement of milk south to a Boston distributor. Graustein: “There is no reason for this increase, as the Boston & Maine incurs no expense in moving my milk to Boston. You see, it is like this. I hitch up my horse to the wagon, load the cans of milk and drive down to the station. I get there at a quiet moment of the day. The agent who is on duty and not doing anything helps me unload the milk onto the platform. No cost there. “Pretty soon, the train comes along. It is a regularly scheduled train that is running anyhow. It always carries a baggage car with a baggageman in charge. He doesn’t get any more money because of my cans of milk being on the train, and there is plenty of room in the baggage car. “Well, the train stops, and the baggageman opens the door. The agent and I help him load the cans of milk into the car. The train then runs along to Boston, just as it always does. “All of this doesn’t cost any more because of my milk being on the train than it would if it wasn’t. “After a while, the train pulls into the North Station in Boston and the baggage master, with his hand truck, comes out to get the trunks, other baggage and my milk off the train, and he takes it to the platform. He comes out every day. He is there anyhow, regardless of whether I have any milk on the train or not. “Pretty soon, my consignee comes along, and with the help of the baggage master, who is still on duty, loads the milk onto his wagon and takes it away. So, you see, nothing has cost the Boston & Maine a penny that they haven’t spent anyhow.

The shipper-supported railroad renaissance has been remarkable.” “Of course, on the other hand, I really have probably helped the Boston & Maine some, too. My milk is packed in ice with a little salt in it. “As the train goes along to Boston, the ice melts and the brine runs out on the floor of the baggage car. After a while, it goes down through the weep holes in the floor and drips along the track where it kills some of the weeds that the railroad would have to pay a man to pull up if my salt didn’t kill them. “So, you see, there isn’t any reason why the charges I pay should be increased; and, actually, I ought to get some credit for the weeds.” Professor Cunningham concluded his lecture by telling students: “If there is a railroad problem today, I fear that an appreciable part of it lies in the fact that too many of today’s railroad patrons are, at least philosophically, relatives of Mr. Graustein.” Fiction? On June 21, 1917, the ICC (Graustein v. Boston & Maine, reported at 45 I.C.C. 393) awarded reparations to Ida S. Graustein, represented by William A. Graustein, following a complaint over joint rates and services for shipments of milk from points in Vermont to Boston.

FRANK N. WILNER Contributing Editor May 2018 // Railway Age 13

Union Pacific

Riding The

Upswing Income and carloads gain as Union Pacific strives to meet the demands of a surging economy.

By Bruce E. Kelly, Contributing Editor 14 Railway Age // May 2018

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Union Pacific

Bruce Kelly (all photos)

railroad must be doing something right when a prominent business journal ranks it among global commerce giants like Amazon, Apple, Boeing, Microsoft, Toyota, and Walmart, to name just a few. For the eighth year in a row, Union Pacific has been named in Fortune magazine’s list of The World’s Most Admired Companies, this year taking the number one spot in the Trucking, Transportation and Logistics category. Fortune recognized UP’s success in areas including (but not limited to) innovation, financial soundness, long-term investment, and quality of products and services. In a February 2018 statement to shareholders, UP Chairman, President and Chief Executive Lance Fritz said, “Looking back at 2017, I can report we made progress building long-term value for our four key stakeholders—shareholders, communities, customers and employees. After two consecutive years of overall volume declines, UP experienced a 2% increase in volume. This increase in volume, coupled with positive pricing and continued productivity improvement, generated reported earnings of $13.36 per share. After adjusting for the impact of corporate tax reform that was passed prior to year-end 2017, our adjusted earnings were a record $5.79 per share. This result is a 14% improvement compared to last year’s $5.07 per share.” By most numbers, UP has been on a positive trajectory. Its reported net income for 2017 was $10.7 billion, compared to $4.2 billion in 2016. (UP attributes $5.9 billion of that increase to a “non-cash reduction to income tax expense” made possible by the Tax Cuts and Jobs Act of December 2017.) Operating revenue increased 7% to more than $21 billion, outpacing a 4% rise in operating expenses that was mostly attributed to higher prices for diesel fuel. Freight revenue increased an average 7% across all major commodity groups. UP’s operating ratio, which had been as high as 66.1% in 2013, dropped to 58.7% in Q4 2017, averaging 62.0% for the year.

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Net Growth in Carloads, Intermodal In 2017, UP saw declines of 3% or less in revenue carloads of chemicals, automotive products and agricultural products, but those were offset by a 6% increase in coal loads and a 12% increase in industrial products (consumer goods, metals, minerals, lumber, paper and other products), for a net revenue carload increase of 2%. Ag products, intermodal and industrial products each amounted to roughly 20% of UP’s freight revenue. The balance was filled by chemicals (18%), coal (13%), and automotive products (10%). While intermodal has been surging to record levels in the overall U.S. rail freight scene, UP says its intermodal volume in 2017 “was flat vs. 2016, as a 1% growth in international shipments was muted by flat domestic shipments due to available truck capacity during most of 2017, offsetting a strong holiday shipping season in the fourth quarter.” Still, UP says its intermodal revenue increased in 2017 “due to higher fuel surcharge revenue and core pricing gains.” May 2018 // Railway Age 15

Union Pacific Union Pacific took aim at truck competition in early 2017 with its purchase of Railex LLC, creating an entirely in-house service, which UP calls Cold Connect. Over the past decade, Railex terminals in Wallula, Wash., and Delano, Calif., have been loading perishables onto unit trains of refrigerated boxcars destined for Midwest and East Coast markets, with UP providing expedited service to its connection with CSX. Brad Thrasher, UP Vice President and General Manager-Agricultural Products, said, “The integration of [Railex’s] highly efficient cross-dock facilities and logistics capabilities into Union Pacific’s broader Food Network allows us to offer our customers increased access to a wider range of capacity and service solutions in a rail-centric cold chain.” Raquel Espinoza, UP Corporate Communications Director, points out some specifics behind 2017’s traffic figures. “Minerals volume increased 71% driven by an increase in sand shipments due to improving well completions and increased proppant intensity per well. Specialized markets volume increased 20% in the quarter, driven by a 15% increase in waste shipments resulting from West Coast remediation projects and a 60% increase in military shipments due to increased deployments and rotations.” Looking to the year ahead, Espinoza told Railway Age in February, “As reported during our 4Q earnings call, we expect volumes in the first quarter and the full year to be up in the low-single-digit range in 2018.” Indeed, by late March 2018, total carloads were up 1% (some commodity groups by double-digits), and intermodal was up 2%, compared with the 2017 period.

16 Railway Age // May 2018

largest single-facility capital investment” in the company’s 155-year history. UP says, “Brazos Yard will help support expected volume growth from Southern Region customers and improve service by decreasing car handlings and car cycle times. It will be the most efficient hump yard in Union Pacific’s network, with the lowest operating costs. Construction is expected to cost approximately $550 million, with operations scheduled to begin in 2020.”

Expanded Capex for 2018 As of Dec. 31, 2017, UP’s locomotive fleet stood at 6,652 road, switching and other units, plus another 1,921 leased units. UP says it “acquired about 60 locomotives in 2017” and plans to purchase another 60 new locomotives in 2018. Current route mileage stands at 32,122; 6,080 miles of that involves trackage rights or leases on other carriers. Espinoza says, “Union Pacific invested about $3.1 billion in our 2017 capital program. Our capital investment in 2018 will be around $3.3 billion. Around 70% of our planned 2018 capital investment is replacement spending to harden our infrastructure, replace older assets and improve the safety and resiliency of our network.” In January, UP broke ground on its new Brazos Yard in Hearne, Tex. It will be “the

Tax Reform, Trade Wars, and Whatever’s Next Several major companies, from manufacturing to retail to financial, have announced—citing President Trump’s tax reform—their plans to re-invest in U.S. operations, expand facilities and offer employee bonuses or increased pay. Has tax reform prompted any changes or investments that UP will soon be making? Espinoza says, “As reported during 4Q earnings, Union Pacific will continue employing a balanced approach to capital expenditures, dividends and share repurchases. First and foremost, we will appropriately invest in the business with an eye on earning adequate returns on capital employed.” Lance Fritz says, “It is clear that the recently adopted tax-reform law will provide meaningful stimulus for the U.S. economy. I hear positive news from customers—a steel company that plans to build a new plant in America’s heartland to tens of billions of dollars being invested in the chemicals industry on the Gulf Coast to foreign manufacturers choosing the U.S. for their next major investment.” Fritz points to UP’s Brazos Yard: “We expect it to benefit

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Union Pacific from growth enabled by tax reform.” Meanwhile, another White House policy move has prompted a more concerned reaction. With direct connections to Canada and Mexico, UP has considerable business that could be impacted by Trump’s proposed exit from or re-negotiation of NAFTA. Fritz says, “Many executives excited about the economic benefits of the tax cuts are also facing equal, if not greater, economic losses if NAFTA is eliminated. Their companies compete where the demand is, and 95% of the world’s population lives outside the U.S.” Fritz notes that nearly 40% of UP’s shipments “have an international component—coming from or headed to Canada, Mexico, Asia, Europe and beyond.” Hitting potentially closer to home for UP, Trump signed orders on March 8 imposing tariffs on imported steel and aluminum, with likely exemptions for “friendly” trading partners such as Canada and Mexico. This could impact not just U.S. exports of metallurgical coal (which surged in both tonnage and market price during

18 RTandS-TRACK-AD-Full-page-horizontal-02-26-18-A.indd Railway Age // May 2018

2017), but even the very rails upon which UP and other railroads run their trains. Japan’s Nippon Steel & Sumitomo Metal Corp. has been a key source of continuous welded rail for UP. That partnership made headlines in 2015 when UP sought a supplier who could manufacture and deliver rail in 480-foot lengths. Nippon Steel responded, a new ship with sufficient cargo space was constructed, and a new offloading terminal was developed in California’s Port of Stockton. Growing and Adapting Just weeks into 2018, UP made a significant move at the executive level, hiring Cindy Sanborn as Regional Vice President Transportation-Western Region. Sanborn resigned (some say she was forced out by the late Hunter Harrison) from her position as Executive VP and COO at CSX in November 2017. Her 30 years of accomplishment at CSX did not go unnoticed. “Cindy is a rail pioneer with an excellent performance track record that aligns with UP’s focus on teamwork, high ethical standards and

passion for performance,” Fritz noted. The railroad informed shippers in February that “a pilot program” in the Pacific Northwest and northern California that focused on increasing train departure frequency had led to “some positive benefits for customers” but “was not beneficial in all respects.” Meanwhile, UP has implemented other initiatives in response to its sudden increase in business: re-activating numerous stored locomotives; hiring new crew members and recalling furloughed employees (1,950 crew members were added in 2017, 600 more were expected in first-quarter 2018); increasing train sizes, and identifying railcars with excessive dwell time and “prescribing an associated action with each.” Wall Street was on a rollercoaster ride during March and April amid fears of a growing U.S.-China trade war, but railroads—particularly in the West—were still coping with elevated levels of traffic. One of the areas hardest hit by a doubledigit increase in intermodal was Chicago,

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Union Pacific where UP’s Global 2 and Global 4 terminals were described as “heavily congested” and customers were asked to “assist by expediting the delivery of notified loads to clear

parking spaces for inbound shipments.” The long-term effects of new trade policies and various social or political issues upon the economy remain to be seen, but

three months into the year the rail industry had experienced no significantly negative impacts. So far, UP appears to be headed comfortably, if cautiously, into 2018.

Machine Vision’s Laser Focus

orporate Communications Director Raquel Espinoza explains to Railway Age how UP is advancing the modern management of railway operations. “Union Pacific is leveraging technology to find new ways to enhance safety, service and efficiency. A prime example is Machine Vision. Trains breezing through a technological runway of powerful lasers and high-performing cameras receive thousands of detailed scans at our Machine Vision inspection stations. Capturing several million points per second, the system’s robotic eyesight matches trains to proper safety specifications with incredible precision. If anything is amiss, we help time-crunched

rail shippers find substitute rail cars and facilitate repairs. “Machine Vision’s lasers, cameras and light arrays surround the train looking for anomalies that could derail a train such as loose connections, cracked brake beams or shifted loads. Machine Vision works in all weather conditions, day and night. Screenings also capture every railcar’s weight, temperature and vibrations. Bolts, wheels, pins and other components are crystal clear as remote inspectors analyze 3-D train replicas and determine if discrepancies should be addressed on the next side track, rail yard or the train’s final destination. (If necessary, Union Pacific will stop the

train on the spot.) “Inspectors in rail yards are able to see Machine Vision’s findings prior to train arrivals, allowing Union Pacific to focus on making repairs, replacing countless hours of inspecting thousands of railcars. The technology is the latest addition to their safety toolkit at their fingertips, regardless of weather conditions or time of day. Machine Vision images can be viewed across our system in nearly real-time as trains pass inspection sites in North Platte, Neb., Loveland, Iowa, and Stuttgart, Ark. The system automatically labels every image and thousands of measurements moments after the trains pass.”

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11:23 AM May 2018 // 2/26/18 Railway Age 19

Straight Up

Grandstanding politicians? Pay ’em no mind. Railroad PTC progress is real. By WILLIAM C. VANTUONO, EDITOR-IN-CHIEF

20 Railway Age // May 2018

n the three-ring circus that is Washington D.C., where the rings are colored red, blue and putrid green; where appearances and chestthumping take precedence over substance, and where truth be damned, the message is that railroads are putting the safety of American citizens in jeopardy. They’re ignoring a congressional mandate to implement Positive Train Control, an “amazing technology that will continue to improve the safety of our rails across the country,” in the words of one congressman, at a recent Capitol Hill hearing on PTC.

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Bruce Kelly

PTC,

I seriously doubt that Jeff Denham (R-Calif.), Chair of the House Railroad Subcommittee, believes his own disingenuous pronouncements about railroad malfeasance. “Denham is playing to a political audience,” says Railway Age Contributing Editor Frank Wilner. “That’s the way hearings go. It’s all choreographed. It’s political theater, and all the players understand.” Let’s turn up the house lights in this theater of the absurd, and shine a bright spotlight on the scores of railroaders, suppliers and consulting engineers working together to get this mostly unfunded mandate functional, keeping in mind that roughly 4% of railroad main line accidents are “PTC-preventable,” according to Association of American Railroads data. First, the Dec. 31, 2018 interim deadline: The statute says that, by this date, Class I freight railroads and Amtrak (on the lines it owns, not where it is a tenant operator) must have all PTC hardware installed, all radio spectrum acquired, more than 50% of PTC territory or route-miles implemented (out of about 60,000 miles that need to be equipped), and all required employee training completed. Passenger railroads (except Amtrak) are required to have at least one territory fully operational by year-end. Provided these requirements are met, the Class I’s will qualify for an extension to Dec. 31, 2020, for which they must file at least 90 days out (the end of September 2018). New Year’s Eve 2020 is the absolute final statutory deadline. Testing must be completed, and PTC must be fully implemented by that date. There is no talk of another extension. For Class I’s, PTC territory refers to main lines that see at least 5 MGT (million gross tons) per year and that transport TIH (toxic inhalation hazard) and/or passenger traffic. The requirements for Class II and III railroads are somewhat different, in that only the passenger traffic rule applies. “All the Class I’s are going to hit the four milestones to be granted an extension,” the AAR recently stated. As of year-end 2017, industry-wide, 93% of wayside units and 97% of radio towers had been installed, 78% of locomotives had been equipped, and 87% of employees had been trained. “In terms of where the Class I railroads are as an industry, 56% of the entire freight network that requires PTC implementation is already activated,” AAR spokesperson

PTC Jessica Kahanek explained to Railway Age at a recent forum. “Put another way, 44% of route-miles or territory remain to be fully activated by 2020.” And now that the Federal Railroad Administration has a fully qualified railroader—Ron Batory—in charge, the slow, tortuous path to full PTC implementation is a bit faster, and a lot straighter. The scope of this roughly $15 billion undertaking (not including annual maintenance costs) is massive. The industry is working on outfitting more than 20,000 locomotives and 24,000 wayside locations, each with a unique address; geospatial mapping of thousands of track-miles with millions of network data points (roughly 2,000 data points per 100 track-miles); PTC back-office servers that aggregate and distribute train-specific data in real time; PTC communications servers that provide connectivity among all elements, and an entirely new interoperable wireless communications network consisting of more than 400,000 components, and fitted with cryptographic protective measures. Let’s take a look at two railroads’ progress: BNSF and Union Pacific. BNSF as of Dec. 31, 2017 completed installation on 100% of mandated PTC infrastructure, on all 88 required subdivisions, covering more than 11,500 route-miles and 80% of its freight volume. This includes more than 6,000 data radio towers. While continuing to test and reﬁne the system and resolve technological problems, BNSF has operated more than 1 million trains with PTC (several hundred per day), and 100% of its 5,000 locomotives are equipped with PTC. More than 21,000 BNSF employees are trained to operate and maintain PTC trains and equipment. BNSF says it’s “leading the North American rail industry with PTC interoperability. In cooperation with Metrolink, a PTCequipped train can now begin its journey on BNSF and seamlessly transition to Metrolink territory. Metrolink can do the same with BNSF—an important achievement since one of the primary purposes of PTC is to provide protection where railroads run freight and passenger service.” However, BNSF adds that it’s “unable to test interoperability on a wide scale until other railroads have also completed their infrastructure installation.” railwayage.com

Union Pacific in a recent statement said it anticipates making all required deadlines for installing PTC on its network. “As allowed by federal law, Union Pacific will continue to test and refine the immature technologies comprising the system in 2019-20,” the railroad said. “UP’s PTC footprint is the largest of all North American railroads, encompassing more than 17,000 route-miles.” Union Pacific’s first-quarter 2018 accomplishments included: • Preparing eight additional track segments for PTC operations, bringing the total number of track segments to 176, or 97% complete. “These track segments are equipped with wayside devices such as signals, switches and radios, and have defined GPS coordinates, which identify thousands of precise locations for system wide PTC coordination,” UP said. • Educating more than 3,300 additional employees on PTC operations, bringing the total number of employees trained to about 22,690, or 88%. “Training materials are tailored to a variety of employee roles, including engineer, conductor, dispatcher,

maintenance of way/engineering, mechanical, signal, telecom and information technologies,” UP noted. • Increasing by nearly 900 the number of installed PTC route-miles, bringing the total number of route-miles in PTC operations to 10,899, or 64%. The railroad plans to spend about $180 million on PTC in 2018 toward its current total estimated $2.9 billion cost. The above examples are factual. And yes, much needs to be done before the industry can collectively say, “We’re done.” What needs to happen next, once the basic PTC system is operational, is for “PTC Next-Gen” to get under way. This will be a system that provides real business benefits, and is truly “amazing technology.” BNSF, whose predecessor Burlington Northern laid a foundation for PTC with its ARES (Advanced Railroad Electronic System) program in the late 1980s and early 1990s, is already planning for it, according to Executive Chairman Matt Rose. Meanwhile, I strongly suggest ignoring, if you can, those time-wasting, totally irrelevant congressional PTC hearings.

BNSF has completed installation on 100% of mandated PTC infrastructure, on all 88 required subdivisions, covering more than 11,500 route-miles. May 2018 // Railway Age 21

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PTC/CONFIGURATION MANAGEMENT

PTC IIoT and the

Need to comply with PTC information management requirements? Consider a configuration management system ail and transit agencies struggle with a complex set of challenges, including: increased safety concerns and regulatory compliance; accelerating demands on a rapidly aging infrastructure; too many sources of data (or siloed systems); limited financial resources, and an overextended workforce. These challenges are occurring against the backdrop of immense technological advances. There is a nexus of old and new processes where digital transformation, the Industrial Internet of Things (IIoT), and the business of railroading all intersect. The federal

24 Railway Age // May 2018

mandate for Positive Train Control (PTC) perfectly encapsulates this new reality. If you are in the rail business, your organization has already allocated some level of investment in PTC, but how does that investment of financial and human capital fit into your overall business architecture? How are you going to ensure that you do not just implement another siloed system? As mandated by Congress, PTC must be designed to prevent train-to-train collisions, derailments caused by excessive speed, unauthorized incursions by trains onto sections of track where maintenance activities are occurring, and the movement

of a train through a track switch left in the wrong position. There are three main elements of a PTC system that are integrated by a wireless communications system: • Onboard or Locomotive System. • Wayside System. • Back-Office Server. This last element is where information management and configuration management occur. Configuration Management helps ensure information integrity. What exactly is configuration management? One description is that configuration management is railwayage.com

Association of American Railroads

By Meg Davis, Senior Product Marketing Manager, Bentley Systems

PTC/CONFIGURATION MANAGEMENT the systematic approach for identifying, documenting, and changing the characteristics of a site or product’s structures, systems, and components and ensuring that conformance is maintained between the design requirements, physical configuration, and site configuration information. The strategy utilized to implement PTC must satisfy the mandate as well as improve all operations. Configuration management ensures asset configurations conform to their requirements by identifying and retaining the context of information and its relationship to projects, processes, equipment, organizations, and users throughout their lifecycles. It maintains information integrity and consistency with configuration management best practices and closed-loop change management. And, in the context of PTC, sensor data, software, and geo-coordinates all become part of the configuration. Configuration management can help enable PTC deployment and provide best practice configuration management capabilities and information integrity in a changing environment. The PTC regulations identify specific elements for compliance that align with configuration management: Hardware, software, and firmware revisions must be documented in the operations and maintenance manual according to the railroad’s configuration management control plan. You must specifically and rigorously document each

variance, including the significance of each variance between the PTC system or attest that there are no variances between the PTC system and its applicable operating conditions. It is important to identify configuration and revision control measures in the Positive Train Control Safety Plan (PTCSP) that is designed to ensure safety-functional requirements and the safety-critical hazard mitigation processes are not compromised as a result of any change. A Use Case Bentley Systems’ configuration management and information management capabilities have been used by numerous organizations across a wide range of industries including rail, road, mining, and energy for over 15 years. One longterm configuration management use case is Crossrail, which needed to ensure that the railway could be operated and maintained efficiently and effectively over its life in accordance with good practice approaches to asset management. Crossrail’s motivation for using configuration management software was that being a large, complex, and highly integrated rail system presented many challenges and risks in terms of establishing and maintaining the integrity of information and the system configuration throughout the asset lifecycle. Crossrail faced issues including incomplete, inaccurate, and out-of-date

information that was not accessible or relevant to the role, or not related to physical assets and configurations. As a result, the impact of change was difficult to manage, making information obsolete. In 2009, Crossrail began creating and managing asset information using Bentley’s configuration management capabilities. Crossrail’s vital asset information is supported by a configuration management process for establishing and maintaining the consistency and integrity of configuration items and the relationships between these items. Crossrail is now able to manage over 1 million information assets throughout the lifecycle, ensure compliance to standards, reduce risk and costs, achieve operational readiness, and ensure customer satisfaction. Benefits An asset configuration information management system lets you know exactly what and where your assets are and how they have changed over time. In addition, it enables you to track the current state of all assets to optimize operational performance and leverage data from IIoT-enabled systems, including PTC sensor technology, to make the right decisions at the right time. Use configuration management to improve safety, ensure compliance with Federal Railroad Administration (FRA) requirements and regulations.-of-way assets.

PTC REGULATIONS

onfiguration management supports compliance with many PTC mandates. 236.1039 Operations and Maintenance Manual: Hardware, software, and firmware revisions must be documented in the Operations and Maintenance Manual according to the railroad’s configuration management control plan and any additional configuration/revision control measures specified in the PTCDP and PTCSP. 236.1015 PTC Safety Plan content requirements and PTC System Certification: (2)(i) Specifically and rigorously document each variance, including the significance of each variance between the PTC system; or (ii) Attest that there

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are no variances between the PTC system and its applicable operating conditions as described in the applicable PTCDP from that as described in the PTCSP; and (3) Attest that the system was otherwise built in accordance with the applicable PTCDP and PTCSP and achieves the level of safety represented. 236.1023 Errors and malfunctions: Identify configuration/revision control measures in its PTCSP that are designed to ensure the safety-functional requirements and the safety-critical hazard mitigation processes are not compromised as a result of any change and that such a change can be audited. 236.1037 Records retention: Each railroad with a PTC system required

to be installed under this subpart shall maintain at a designated office on the railroad: Adequate documentation to demonstrate that the PTCSP and PTCDP meet the safety requirements of this subpart, including the risk assessment;…[T]raining and testing records;… [R]esults of inspections and tests. Rail organizations can better understand the details and location of assets, including how they have changed, their current condition, and their remaining life, when investing in PTC and configuration management. The interrelated asset information and configuration management drive everything from safety to capital planning, compliance, and efficiency in the workforce.

May 2018 // Railway Age 25

PTC: Disaster Recovery

PTC + DR/BCP = ? PTC may render your disaster recovery procedures obsolete—if you have them in the first place.

he approaching deadline for Positive Train Control (PTC) implementation makes it imperative for railroads and related companies to update or prepare their Disaster Recovery and Business Continuity Plans (DR/BCP). In fact, PTC has significantly altered the architecture of railroad systems. Pre-PTC procedures and plans are no longer accurate and will not be sufficient to allow a railroad to recover from failures. The data requirements for PTC increase the potential impact of systems failures that were not previously considered mission-critical. When a PTC enforcement—train stoppage—occurs, it will result in major, quantifiable financial costs and negative publicity for the railroad. At railroads with DR/BCP based on legacy architecture, recovery time objectives and requirements must be reevaluated 26 Railway Age // May 2018

for PTC impact and plans updated to ensure appropriate response to failures of systems that provide input to PTC. If there has been insufficient focus on DR/BCP plan testing and maintenance, the recovery plans may be rendered out of date and useless at the very moment they are urgently needed. A national survey across industries showed that 40% or more of businesses lack a documented disaster recovery plan. Each of these businesses is taking a huge business risk—operational shutdown—every minute of every day. As an example of smart DR/BCP strategy, a CSX spokesperson said, “CSX is focused on a comprehensive approach to safety, business continuity and disaster recovery. Our system includes provisions for our customers, critical suppliers, and the communities in which we operate. Incorporating the people, processes, and technologies associated with PTC is a crucial part of

our effort.” At TTX, Bruce G. Schinelli, Vice President of Information Technology and CIO, said, “An effective and exercised DR plan is central to TTX’s risk mitigation strategy and allows us to deliver on our mission to provide low-cost, high-quality equipment to the rail industry, no matter the circumstances.” Planning for disasters is no different from planning for everyday issues and complications, and organizations can draw from established in-house expertise to build the needed plans. The goal is to achieve a robust understanding of the architecture and organization, where it might fail, and how to recover from those failures. This five-step process will help build DR/BCP materials at your organization: • Document Technical Architecture. The complete architecture of the organization must be understood for this process to railwayage.com

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ROUND-UP

RAILW

PTC: Disaster Recovery succeed, and the value of this step cannot be underestimated. Produce a thorough knowledge base of all technical details of the organization, including detailed architecture diagrams, server and communications configuration settings, etc. One risk during a disaster scenario is that the people most familiar with the system may not be available; this documentation must be detailed enough to allow someone else to step in. • Understand Potential Failure Scenarios. Detail all possible failure scenarios, from individual hardware failures up to regional disasters. Understand all the ways in which the system may fail, and how different failures relate to one another. This step should include a visualization tool that illustrates the various failure scenarios and the effect of each on the organization’s systems. • Build Risk and Recovery Requirements. Rigorously assess how the organization operates and the tolerance for failures. Walk through each core business process and each technical component to build an understanding of the risk 1tolerance the RA_Tunnel.ai 4/27/18and11:39

recovery requirements that must be met. • Construct Procedures and Plans. Build technical recovery procedures, starting with specific recovery procedures where possible and scaling up to develop procedures for larger scenarios. Construct Business Continuity Plans, including the impacts on labor and key business processes. • Plan for Maintenance and Testing. Develop a rigorous plan for the maintenance and testing of the plans and procedures. A plan that is not rigorously maintained will likely be of little help to the organization during a failure when it is needed. The main obstacle to DR/BCP preparation is paralysis due to the false perception of excessive complexity and cost, and the underestimating of actual risks to the organization. Simply stated, DR/BCP must be a top priority and the work must be done thoroughly to be useful. A robust plan that can be followed in the event of a disaster is critical to ensure the ongoing health and operation of your orgaAMnization. How prepared are you?

Leah Schanely is a Director at Princeton Consultants, which helps railroad executives improve and refine strategy, process, organization and technology. Leah can be reached via www.princeton.com/rail or by email at lschanely@princeton.com.

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Railinc

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ince Railinc began reporting on the North American locomotive market, the size of the locomotive fleet has increased each year. The

30 Railway Age // May 2018

fleet increased by 300 units in 2017—to 39,521 units—for a growth rate of 0.7%, about one percentage point lower than the previous year (Figure 1, opposite page). About 130 new locomotives joined

the North American fleet in 2017, down from about 750 the previous year (Figure 2, opposite page). This was the lowest number of new units added to the fleet in 50 years, and the first time since the railwayage.com

William Beecher

Railinc’s analysis of the North American locomotive fleet reveals that fleet size increased slightly in 2017, with growth coming from high-horsepower, six-axle AC-traction units.

Railinc

Figure 1. Fleet Count at End of Year (Active Locomotives in Umler)

BY DAVID HUMPHREY, PH.D., SENIOR DATA SCIENTIST, RAILINC CORP. Figure 2. Number of Locomotives by Age (Active Locomotives in Umler)

mid-1980s that the fleet grew by fewer than 200 new units. Historically, the average age of the fleet and the number of locomotives added mirror the economic environment. When the economy is strong—as in the mid-1990s and mid-2000s—and there are more railcars in service, the average age is lower and the fleet tends to grow. During periods of recession, fewer new locomotives join the fleet. However, the decrease in 2017 appears to reflect an excess supply of locomotives. As new locomotives join the fleet each year, larger railroads move older units to less demanding roles, sell them to regional and short line railroads, or make them railwayage.com

available to be rebuilt or refurbished. A locomotive has a long service life and can be used in a variety of ways during its lifespan. In its first decades of service, it most often is used for long hauls. Middle age can be spent working on regionals and short lines. Once locomotives reach the age of 60-70 years, they often enter lighter duty service, such as moving railcars in a hump yard. DC-traction locomotives make up 66% of the North American fleet, unchanged from the previous year. The share of AC -traction locomotives has increased eight percentage points since 2009 as more AC units join the fleet (Figure 3, p. 32).

Although DC locomotives continue to make up two-thirds of the North American fleet, AC locomotives have dominated among additions in the past 10 years. Only 32 DC units were added in the past two years. In the past six years, about 93% of all new locomotives were AC units. Virtually all new high-horsepower locomotives entering the fleet are AC locomotives. Locomotives with a horsepower rating of 4,000 or higher continue to make up the majority of the North American locomotive fleet—55% in 2017 (Figure 4, p. 33). As a percentage of the fleet, locomotives between 2,000 and 3,999 horsepower comprised 34% in 2017, down from 38% May 2018 // Railway Age 31

Railinc used as switcher locomotives.

Figure 3. AC vs. DC Power by Year (Active Locomotives in Umler)

in 2009. This reflects the trend of highhorsepower locomotives dominating among new additions to the fleet. The fleet does continue to add

lower-horsepower locomotives, though at generally decreasing rates. These lowerhorsepower additions to the fleet are made up of rebuilt locomotives and new units

Shift to higher horsepower Locomotives with a horsepower rating of 4,000 or higher dominate among AC units, which tend to be newer. There are about twice as many DC units than AC units in the North American fleet. However, DC units are more evenly distributed by horsepower rating, with locomotives with horsepower ratings of less than 4,000 making up the largest share. For the seventh consecutive year, sixaxle locomotives make up 69% of the North American fleet. Six-axle locomotives distribute locomotive weight 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 past 30 years. Fuel capacity increasing Locomotives with fuel capacity of more than 4,500 gallons make up 55% of the North American fleet. This share has grown

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Railinc in recent years, while the share of locomotives with fuel capacity between 3,500 and 4,500 gallons continues to decrease (down six percentage points since 2009). This is consistent with the recent trend of the North American fleet adding new highhorsepower, six-axle locomotives, which typically have larger fuel tanks than low- to medium-horsepower, four-axle units. 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 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 68% of the North American locomotive fleet, while switchers account for about 23%. Locomotives with four axles and a horsepower rating higher than 2,500 make up only 8% of the fleet. This is primarily because the industry shifted away from making this

Figure 4. Horsepower, by Year (Active Locomotives in Umler)

locomotive type in the mid-1990s. Most additions of this type are refurbished units. Located in Cary, N.C., Railinc is a

wholly-owned subsidiary of the Association of American Railroads. For more information, visit www. railinc.com.

Connecting You To More Siemens Rail Automation is providing a clear vision for Freight Railroads to make the most out of their assets. Siemens uses connectivity, asset monitoring, and data analytics to help bridge the gap between the railroad’s current operation and a more transparently efficient future. By investing in products and technology, Siemens has the end-to-end solutions to connect the railroad’s vision into more. usa.siemens.com/rail-automation

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May 2018 // Railway Age 33

TECHNOLOGY FOCUS – M/W

Better Railroading Through

BIG DATA

The emerging role of Data Science in railroad maintenance management.

s railroads develop and implement new generations of sophisticated inspection and monitoring systems, they find themselves collecting large volumes of data, at increased frequencies across a variety of interrelated systems. This large volume of data, often referred to as “Big Data,” generally refers to data sets that are that are so voluminous and complex that traditional data-processing application software are inadequate to deal with them. More recently, the term Big Data tends to refer to the use of predictive analytics, or other advanced data 34 Railway Age // May 2018

analytics methods that extract value from data. This is considered part of the newly emerging field of Data Science. Data Science is an interdisciplinary field using evolving analysis tools and techniques to extract knowledge or insights from data in various forms, structured or unstructured. Data Science provides the means to deal with and benefit from Big Data, to include ways to see patterns, discover relationships and develop predictive analytic capabilities, as well as make sense of varied images, data streams and information. In railway applications, Data Science can look at the full range of inspection

and management systems with the goal of obtaining new and useful insights into such phenomenon as track and equipment component degradation, interaction and failure. Data Science has all of the characteristics needed by railway engineering and maintenance personnel to address and handle the enormous amount of data generated by the various technology platforms currently in place. Railroads are starting to look at the predictive analytics tools within Data Science to help monitor infrastructure and equipment condition, optimize and plan maintenance and improve safety—all while railwayage.com

Harsco

By Allan M. Zarembski, Ph.D., P.E. FASME; Hon. Mbr. AREMA; Professor of Practice and Director, Railroad Engineering and Safety Program, Department of Civil and Environmental Engineering, University of Delaware

TECHNOLOGY FOCUS – M/W

From Data to Actionable Insights

DATA

PROCESSING

Text

ANALYTICS INSIGHTS ACTION

INFORMATION

Railroad Needs From Big Data - December 2017

Figure 1: Converting Large Volumes of Raw Data to Actionable Insights

2 Layer Attempt ( 7 and 5 neurons)

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with traditional surveying practices, with a significant savings in cost as well as time. Several presentations addressed the use of Big Data analytics in switch monitoring and maintenance prediction. Noting that a switch is a complex system with numerous failure types that can occur simultaneously, application of Data Analytics (k-Means Clustering, Statistical Process Control, Decision Tree analysis) has shown the ability to identify decaying asset status in an early stage, which in turn allows for

remaining (or future) data. Another presentation showed how a logistic regression model (with Sigmoid function) can be used to identify exact curve locations from track geometry car data, to a high degree of accuracy. This included identification of curve points for simple and compound curves. The resulting benefits (Figure 3) include the ability to automatically and accurately detect 8,000 curve points on 1,560 curves in a matter of hours rather than the months needed

7 59 26 5 47 83 68 68 398 .51 00 072 927293 585 02488 2.9 45 0 09 .3 12110.8.722138 6.5.8 7-8.23.1 .914917 31-4 21.4.0 41 .3639 -0 -4 -2 21 438.8 9.75

trying to keep track of exponential growth in the amount of data being collected. Thus, while traditional data analysis, particularly “threshold” based analysis, is still being used, there is a growing awareness and use of Data Science to provide new and innovative insights, and an improved understanding of maintenance and safety issues. As part of this increased focus on Big Data, the University of Delaware organizes an annual “Big Data in Railroad Maintenance Planning” conference, with the goal of bringing together railroad users, data science professionals, consultants, suppliers and academia to look at the latest trends in Data Science analytics and its application in the railroad industry. The 2017 conference focused on the railroads’ specific needs and practical applications to date of Big Data analytics. Information can be distilled from large volumes of raw data, expressed in petabytes, down to actionable insights (Figure 1). The conference brought together approximately 200 railroad and data analysis professionals to hear 32 technical presentations, led off by a keynote address by Wick Moorman, former Norfolk Southern chief executive. This was followed by a CIO session, where the Chief Information Officers of three railroads (Union Pacific, Amtrak and SEPTA) talked about the strategic importance of making use of the large volumes of data generated by railroad inspection and management systems. Among the key points made by the CIOs: • Sensors and data analytics continue to drive railroad innovations and growth. • Not all data will be actionable. • Analytics can serve as a guide to which actions would be most effective. Applications of Big Data analytics included track and equipment maintenance analysis, as well as forecasting and planning algorithms based on large volumes of collected data. In the case of track maintenance analysis and planning, one presentation looked at the application of deep neural network techniques applied to rail wear data. Using multi-layer models, such as the one consisting of 2 layers of 7 and 5 neurons (Figure 2), resulted in excellent agreement corresponding to an actual to predicated fit of 87.5%. Such an approach uses a data subset to train the forecasting model and then predict on

0829 -9 41.3

Error: 0.139278 Steps: 16095

Figure 2: Deep Neural Network Application to Rail Wear Modeling

May 2018 // Railway Age 35

TECHNOLOGY FOCUS – M/W

Figure 3: Benefits of Big Data on Curve Condition Management

the optimization of maintenance intervals with associated reduction in failures and cost. By relating anomalies to known root causes, it is possible to improve repair time and save money by performing the right

maintenance action at the right time. It was noted that predicting that a failure will occur has limited value, if you can’t predict what failure mode it will be: For a maintenance crew, accurate and detailed

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information is needed. In the area of equipment and rolling stock maintenance, there has also been an evolution of maintenance management, as shown by the changing shape of analysis of onboard diagnostic data from rolling stock. This in turn translates into practical savings on the track (through prevention of road failures, optimization of asset performance and asset tracking to inform rail network planning), in the shop (through increased shop productivity, accurate repairs the first time to mitigate repeat repairs and decrease in total shop time) and in the yard (through decreased time needed to assemble trains, optimized allocation of locomotives and cars for missions, and full visibility of fleet inventory). Organizations such as Railinc, the AAR’s rail data and messaging subsidiary that services the North American freight railway industry, have on the order of 100 Terabytes of data currently in active data repositories. This order of magnitude of data was echoed by many of the presenters at the Big Data

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TECHNOLOGY FOCUS – M/W conference, including railroads, rolling stock service (and data) managers and other service providers. The common theme heard throughout the 2017 conference was that the potential use of this Big Data has only been scratched, and that as railways learn how to more effectively “mine” their data, the most actionable insights, systems and processes will be available to help optimize maintenance management across the entire spectrum of railway operations. The University of Delaware expects even more insightful information to be available in its 2018 Big Data conference. The 2018 Big Data in Railroad Maintenance Planning conference will be held on Dec. 13-14, 2018 at the University of Delaware’s Newark, Del., campus. For more information, contact Professor Allan M. Zarembski, @dramz@udel.edu. SOURCES • Zarembski, Allan M., “Using Data Science to Establish Relationships between

railwayage.com

Key Railroad Engineering Parameters and Behavior,” Trends Tech Sci. Res. 2018; 1(1): 555552. • Attoh-Okine, N., Big Data and Differential Privacy: Analysis Strategies for Railway Track, Wiley, May 2017. • Zarembski, A. M., “Big Data in Railroad Engineering,” IEEE Big Data Conference, Washington D.C., October 2014. • Zarembski, A. M. and Attoh-Okine, N., “Big Data in Railroad Engineering: The Challenge of Vast Amounts of Data,” Railway Track & Structures, November 2017, pp. 28-30. • Engel, Grant, “Building the Future: Railroad Needs from Big Data; A CIO’s Perspective,” Insights and Analytics Manager, SEPTA, 2017 Big Data in Railroad Maintenance Planning Conference. • Palese, Joseph, “Using Big Data to Develop Rail Wear Forecasting Model,” Senior Scientist, University of Delaware, 2017 Big Data in Railroad Maintenance Planning Conference. • Hosseinipour, Milad, “New Approaches

to Track Geometry Analysis,” Automated Track Inspection System Engineer, Amtrak, 2017 Big Data in Railroad Maintenance Planning Conference. • Tegelberg, Erland, “Data Collection and Predictive Maintenance in Health Monitoring of Switches,” CEO EurailScout/ Managing Consultant, Strukton Rail North America, 2017 Big Data in Railroad Maintenance Planning Conference. • Flix, Nicolas, “HealthHub, Shaped for Best and Easiest Control of Railways System Operations,” Maintenance Engineering Director, Alstom Transport, 2017 Big Data in Railroad Maintenance Planning Conference. • Holzer, Eric, “Update Rail Case Study,” Leader of Rail Solutions, Uptake, 2017 Big Data in Railroad Maintenance Planning Conference. • Herb, Cathy and Veerappan, Ramesh, “From Big Data Platform to Intelligent Data Platform: Hadoop Modernization,” Railinc Corp., 2017 Big Data in Railroad Maintenance Planning Conference.

May 2018 // Railway Age 37

People / 100 years / Events JUNE 5-6, 2018

PHILLIP ENG

Advanced Track Geometry

Long Island Rail Road High profile: The New York Metropolitan Transportation Au-

thority has appointed Phillip Eng as president of the Long Island Rail Road. Eng succeeds Patrick Nowakowski, who resigned in March after nearly four years in the position. Eng joined the MTA in March 2017 as Chief Operating Officer, where he led major initiatives with an emphasis on innovation, technology, safety and reliability. Eng also played an essential role in the delivery of MTA’s $29.5 billion capital program for 2015-19. From October 2017 to January 2018, Eng also held the title of Acting President of New York City Transit. Prior to joining MTA, Eng began his career in public service at the New York State Department of Transportation in 1983 as a junior engineer, eventually working his way up to the role of Executive Deputy Commissioner. An alumnus of Cooper Union, Eng received his Bachelor of Engineering degree and is a licensed professional engineer in New York.

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JUNE 10-13, 2018

2018 APTA Rail Conference

.J. Corman Railroad Group LLC appointed Paul Lauritzen as Vice President of Transportation, overseeing R.J. Corman Railroad Switching Company, LLC. Laura McNichol has been named Senior Vice President of Government and Industry Relations at Watco Companies. The Greenbrier Companies promoted Owen Whitehall to Executive Vice President of Global Manufacturing Organization-North American Operations and Global Sourcing, reporting to Alejandro Centurion, President, GMO. Martin Graham assumes the expanded role of Executive Vice President, GMO International Operations and Global Engineering, also reporting to Centurion. Also promoted were Alejandro Arias to Vice President of Mexican Operations and Zane Peterson to Vice President of Global Sourcing, both reporting to Whitehall. Oziel Salinas

joined the company as General Manager of Greenbrier’s Gunderson-GIMSA joint venture, serving in Arias’ previous role and reporting to him. Brian Comstock has been named Executive Vice President, Sales and Marketing, reporting to Mark Rittenbaum, Executive Vice President, Chief Commercial and Leasing Officer. Greenbrier’s Board of Directors also appointed Comstock a corporate executive officer. He will join Greenbrier’s Executive Committee. The South Florida Regional Transportation Authority has appointed veteran passenger and freight railroader Lois Pittman as Director of Operations & Maintenance (O&M) for the Tri-Rail regional/commuter rail system. Cambridge Systematics announced that Herbert Higginbotham has joined the firm as head of its Transit and Shared Mobility Practice.

100 years ago in railway age gazette MAY 1918

Make the Idle Laborer Work A letter by J.T. Foley, vice-president of the Illinois Central, observed that in spite of an acute shortage of labor, a recent trip over the southern lines of the system led him to believe that at least 10 percent of the labor supply of the South is idle at this time. This is a condition which adds force to the demand for the conscription of labor. Americans ... who fail to put their shoulders to the wheel are disloyal to their country in its time of need. If an aroused sentiment against idlers fails to drive these men to work, they should be conscripted. 38 Railway Age // May 2018

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June 20-22, 2018

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Products Zistos video safely inspects tank car interiors

Form Follows Function with Duo-Gard Bike Shelters the Charlotte (N.C.) Transit System turned to manufacturer Duo-Gard and artist Darren Goins to produce nine custom bike shelters for the city’s new 9.3-mile LYNX Blue Line extension, which opened March 16. From its extensive product line, DuoGard supplied a basic Oasis shelter, which features two large circles supporting a curved roof. This is constructed of an 8mm translucent polycarbonate batten system in a bronze tint, with a frame of galvanized steel.

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Sulzer Mixpac USA, Inc., a producer of two-component adhesive dispensing systems, offers the MIXPAC™ MixCoat™ cartridge-based system for a variety of railway applications, including stripe coating of railcar exteriors and

40 Railway Age // May 2018

application of 100% solid epoxy linings for tank cars. The MIXPAC™ MixCoat™ Manual model used for stripe coating features a lightweight design with a brush assembly on a manual dispenser, which greatly increases stripe coating productivity and speed. The MixCoat™ Manual system can be used with both aliphatic urethane and high solid epoxies. Also available is the MIXPAC™ MixCoat™ Spray model, a portable pneumatic dispense system, which is designed for small volume applications, touch-up and repairs.

he newly improved Zistos Truck/Rail Tanker Inspection System enables users to conduct a thorough and safe visual inspection from outside the confined space of a rail tank car or truck tanker. The Truck/Rail Tanker Inspection System uses a powerful, 40X optical zoom camera for increased video detail. It allows inspectors to access hard-to-reach and/or hazardous areas to visually assess them for residual heel, contaminants and corrosion, as well as delamination and structural issues. The Zistos system utilizes a selfilluminating, 40X zoom camera positioned on the end of a six-foot telescoping, hinged T-pole that can rotate 360 degrees. Images are viewed on a 5.6-inch LCD display with a built-in walkabout DVR that can record video or still images for documentation. Truck/Rail Tanker Inspection System cameras and poles are designed to be rugged and weatherproof. Inspection systems are modular and expandable, as needs arise. Zistos systems provide complete flexibility and compatibility. Tools designed from year to year work together and are backwardscompatible. This means that they will not become obsolete, and that systems can be expanded at any time. Optional components include wide-angle, thermal, infrared or submersible cameras; a two-foot flex-end baton; wireless options; battery pack; talk-back audio module kit; barcode scanner, and a valve inspection camera tool.

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

AILWAY GE May 2018 // Railway Age 41

The Railway Educational Bureau BOOKS - Railroad Resources -

Introduction to North American Railway Signaling by the Institution of Railway Signal Engineers Introduction to North American Railway Signaling covers the basics of signaling philosophy and techniques. This is the book to reach for if you need information pertaining to signaling systems used in the various rail transportation modes in North America: freight, main-line passenger service, commuter, light-rail, and heavy rail transit. It presents the underlying principles behind modern day signaling practices for the many systems integrated together to keep railroads running safely and efficiently. Softcover, 224 pgs.

BKINARS

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Development and Operation of New York's IRT and BMT

Safety on the Rails - The Union Switch & Signal Story by Joanne L. Harris From the dawn of the rail transportation to the futuristic driverless rail systems, Union Switch and Signal throughout history has been the leading switch, signal and dispatch company in the rail industry. This book covers every aspect of USS company from the founders to the signal and switch machinist and assembly to the switchboard operators and control centers and every employee in the process of making USS the company it is today.

BKSOTR

$39.99*

by Alfred E. Fazio, P.E. How would early 20th-Century experts such as William Parsons, Frank Sprague, Fred Lavis and Bion Arnold handled some of today’s challenges facing light rail operation? Read along as Fazio uncovers this premise by exploring the various issues and tactics used when the NYCTA assumed control of the BMT and IRT lines. This book concludes with a series of historical case studies concerning Hudson-Bergen Light Rail’s Bayonne Flyer and “three roads,” BART operations, and the Washington METRO’s capacity challenges. Hardcover, 350 pages.

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General

Freight Car

Track

Guide to North American Diesel Locomotives • BKGNADL • $27.99*

Guide to Freight Car Air Brakes • BKFCAB • $74.50

Basic Principles of Track Maintenance • BKTMB • $140.00

Railway Age's Comprehensive Railroad Dictionary - Second Edition • BKRD • $35.95

Mechanical Department Regulations • (Parts 210, 215, 216, 217, 218, 221, 223, 225, 229, 231, & 232) • BKMFR • $29.95 Train Wreck: The Forensics of Rail Disasters • BKTW • $31.95*

Railway Geotechnics • BKGEOTECH• $195.00* My Life With Trains: Memoir of a Railroader • by Jim McClellan • BKLIFE• $45.00* Emergency Responder's Guide to Railroad Incidents • BKERGRAIL • $33.00* The Historical Guide to North American Railroads, Third Edition • BKHIST • 24.99* Operations Managing Railroad Transportation • BKMRT • 39.95* Railway Operations and Control - Third Edition • BKROC • $39.95* Railroad Operations and Railway Signaling • BKRORS • $28.00 * No bookseller discounts available. **Maps shipped internationally will have additional charges.

Guide to Freight Car Trucks • BKFCT • $89.95 The Basics of Railroad Wheels • BKWHEEL • $25.75

Guide to Freight Car Couplers and Draft Gear Systems • BKCDG • $67.75

Doorway to Safety With Boxcar Doors • BKBD • $23.50 Locomotive Guide to Locomotive Mechanical Maintenance - SD & GP Locomotives • BKGLMM • $37.50 Guide Locomotive Electrical Maintenances • BKGLEM • $46.75 Locomotive Engineer Question & Answer Study Guide • BKLEG • $16.25* Maps 2014 Railroads of Continental United States Wall Map (laminated) • MPWML14 • $44.95* ** 2007 Edition Railroads of Canada Map (laminated) • MPRRCAN • $99.00* ** Training Videos (DVD) 26L Airbrake Pre-departure Test 49 CFR 229 (DVD format) • DV26L • $250.00*

Rear End Marking Devices 49 CFR 221 (DVD format) • DVEND • $180.00*

The Art and Science of Rail Grinding • BKGRIND • $145.00 Frog Gauge • MSFROG • $40.00

Order 10 or more Frog Gauges and get a 20% discount.

Dictionary of Railway Track Terms • BKRTT • $35.00* Transit Chicago: America's Railroad Capital • BKCARC • $40.00*

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equipment Sale/Leasing

Employment

EMPLOYMENT OPPORTUNITY ANNOUNCEMENT Chief Real Estate & Development Officer NICTD intends to hire a pro-active, team-focused, and enthusiastic Chief Real Estate & Development Officer who will lead and supervise all aspects of the South Shore Line’s real estate and development functions primarily, but not limited to, NICTD’s Double Track NWI and West Lake Corridor Projects. Working in tandem with project managers, project staff, consultants, and other project stakeholders, this person will ensure that all facets of real estate acquisition and management for the Double Track NWI and West Lake Corridor Projects occur on schedule and within budget. Qualifications, job details, and application instructions are at: http://www.mysouthshoreline.com/about/job-opportunities.

WE START IT ALL

Salary and Benefits: Salary is projected between $80,000 to $110,000 based on education, skills, and work history. The benefit package includes full health benefits for the employee and family, vacation, compensatory time, supplemental pension, and other fringe benefits. The position is eligible for relocation benefits.

3324RR STARTS ENGINES UP TO 3500HP

Deadline to Apply: 5 p.m., June 29, 2018. Apply early; NICTD reserves the option to close this opportunity before the stated deadline.

214RR HEAVY USAGE STARTING 3370RR STARTS ENGINES UP TO 6000HP

Director of Safety & Regulatory Affairs In Washington D.C. Email leach@rsiweb.org by May 15, 2018.

FOR MORE INFORMATION VISIT

SEE FULL POSTING AT RAILWAYAGE.COM JOB BOARD

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

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EDNA A. RICE, EXECUTIVE RECRUITER, INC EDNA A. RICE, President

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PROFESSIONAL DIRECTORY

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

Kansas City Office (913) 661-2424 oPerAtioNs trAiNiNG & coNsULtiNG: www.tcsrailservices.com • engineer training & CertifiCation other services: • exCellent HiStory witH fra, ntSB • Staffing • interim management • meCHaniCal & part 238(Qmp) May 2018 // Railway Age 43

Financial Edge

GE’s Enterprising Thinking About Locomotives

eneral Electric’s (GE) announcement regarding the sale of GE Transportation has elicited some eyebrow raising and yawns from industry watchers. Expectations were that the GE Transportation business would be attractive to potential European or Asian purchasers, who have provided componentry (electronic systems and other parts) to the OEMs over a multi-decade period. However, since October 2017, GE still finds itself looking at the locomotive business and how best to monetize the value. According to reports coming out of GE, the GE Transportation business, with $4 billion in revenue in 2017 and an estimated enterprise value of $7 billion, was not attractive to potential buyers—Although GE did announce GE Transportation revenue growth of 46% in 1Q2018. There was speculation of a Chinese buyer, but the politics of that seem generally, at least at this point, to make such an option unlikely. Where’s the love? North American railroads operate 39,500 locomotives, according to David Humphrey’s (Railinc) 2018 Rail Equipment Finance presentation (p. 30), moving roughly 1.8 billion tons of freight per year in the U.S. (2015 Bureau of Transportation Statistics). However, new locomotive orders are weak as the Environmental Protection Agency continues to legislate reductions in emissions. The new-order book weakened following the implementation of Tier IV emissions standards in 2016. The main reason? Generally, emission reductions decrease fuel economy, making a locomotive more expensive to operate. How bad is it? Consider that GE Transportation received its largest North American order in the previous three years in fourth-quarter 2017 when CN agreed to purchase 200 new Tier IV locomotives. In March 2018, GETS announced an order to refurbish 225 older locomotives for Class I railroads. That was in addition to some previously committed orders. That does not equate to $4 billion in sales. GE Transportation and other North American locomotive OEMs now rely on orders from other countries to fill order books.

44 Railway Age // May 2018

For example, in 2015, GE Transportation was awarded a $2.6 billion order in India to build 1,000 locomotives, and recently signed a $1 billion contract with Ukraine for 30 EVO locomotives and a $900 million deal with Kazakhstan. That brings back the question: Why is no one interested at the GE price? GE has a history of setting a price for a business and waiting for the market to come to it. Leasing company veterans would be happy to regale willing ears with stories of pursuing GE Railcar Services multiple times before Wells Fargo Rail played Ahab to that white whale. Could GE, anxious to demonstrate steadfastness and rigor, have refused to accept a price lower than the suggested enterprise value? GE says it will spin off or “float” GE Transportation into a separate company to achieve a better result than a direct sale and will execute a GE Transportation divestiture in second-quarter 2018. That would make GE the only “pure” play locomotive investment opportunity in the public market. In the modern, tech-driven market, it seems unlikely that such a strategy would yield the investment valuation sought by GE. Matt Elkott of Cowen and Co. (Rail Equipment Finance 2018 participant and contributor to Railway Age) suggests that while the international transit portion of the GE Transportation business might be somewhat attractive, the cyclical nature of the market and the vagaries of municipal (transit) projects both domestically and globally (transit projects can take years to get approved and funded) may lead investors to discount the value of GE Transportation in incorporating those real risks. Elkott also feels that a private sale (such as the recent rumor regarding Wabtec) is likely to yield a sales price that is less than the street-identified enterprise value. The most consistent revenue stream for a locomotive OEM comes from parts and services. The trend toward refurbishing older locomotives may offer those revenue sources for investors domestically and on a global scale. As emissions requirements tighten, further advances in technology (such as converting diesel locomotives to natural

YES, locomotive manufacturing is a high-barrier-ofentry business.” gas) will come to the foreground. GE Transportation was an early backer of LNG (currently being used at Florida East Coast), and made efforts in battery hybridization. Neither is yielding long-term success. Locomotive manufacturing is a highbarrier-of-entry business. In the rail industry, these businesses (like railcar manufacturers) have attracted savvy investors with long-term investment horizons. Perhaps this indicates that corporate or marketplace evolution is required, and that ownership of GE Transportation might come with a need for sizeable investment in technology, near-term. It’s hard to determine if this is about GE Transportation or the North American market. As an indicator of optimism regarding rail, it’s difficult not to view this as a negative. In the current equity and mergers and acquisitions market, an inability to attract a competitive buyer probably doesn’t bode well for GE investors likely to receive a piece of the action as part of a divestiture. Certainly, investors are hoping that this is not a sad end to a new beginning. Got questions? Set them free at dnahass@ railfin.com.

DAVID NAHASS President Railroad Financial Corp. railwayage.com

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

Mechanical Department Regulations A combined reprint of the Federal Regulations that apply specifically to the Mechanical Department. Spiral bound. Part Title 210 Railroad Noise Emission Compliance Regulations 215 Freight Car Safety Standards Updated 4-3-17. 216 Emergency Order Procedures: Railroad Track, Locomotive and Equipment Updated 4-3-17. 217 Railroad Operating Rules Updated 4-3-17. 218 Railroad Operating Practices - Blue Flag Rule Updated 4-3-17. 221 Rear End Marking Device-passenger, commuter/freight trains

Updated 4-3-17.

Safety Glazing Standards Updated 4-3-17. Railroad Accidents/Incidents Updated 3-5-18. Locomotive Safety Standards Updated 4-3-17. Safety Appliance Standards Updated 4-3-17. Brake System Safety Standards Updated 4-3-17.

223 225 229 231 232

Mech. Dept. Regs.

BKMFR

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

Part 233, 234, 235, 236â&#x20AC;&#x201C;Rules & Regulations Governing Railroad Signal and Train Control Systems 49 CFR 233, 234, 235, and 236. Requirements for signal system reporting; maintenance standards; grade crossing signal system safety. Includes material modification of a signal system or relief from requirements plus instructions, standards, and rules governing the installation, inspection, maintenance, and repair of signal and train control systems. Spiral-bound. Softcover, 225 pages.

BKSTC Regs Governing RR Signal & Train Control Sys.

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Current FRA Regulations Item Code

FRA Part #

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

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4-3-17 7-20-09 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17

BKHORN 222 4-3-17 BKRFRS 224 4-3-17 BKHS BKLSS BKSLI BKSAS BKBRIDGE BKLER

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4-3-17 4-3-17 4-3-17 4-3-17 4-3-17 4-3-17

BKCONDC 242 4-3-17

BKBSS

BKCAD BKSTC

BKPSS

232 4-3-17 FRA Part #

40 219 233 234 235 236 238 239

Each

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

Brake System Safety Standards

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

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