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STB Implements Reauthorization Act

February 5th, 2016

Surface Transportation Board (STB) Chairman Daniel R. Elliott announced that the STB will be posting monthly status reports of its implementation of the STB Reauthorization Act of 2015, which was enacted into law on December 18, 2015.

The Reauthorization Act establishes the STB as a wholly independent federal agency, no longer administratively aligned with the U.S. Department of Transportation. The Act also expands the STB’s membership from three to five Board Members, and allows a majority of STB Board Members to meet in private to discuss agency matters.

Elliott announced that he intends to have the first of such Board Member meetings in U.S. Rail Service Issues—Performance Data Reporting. The Board will proceed with proposing to establish new regulations requiring the reporting of certain railroad service performance metrics on a permanent basis.

“Rail industry stakeholders have waited 20 years for the Board to be reauthorized,” remarked Elliott. “There is no doubt that freight rail transportation will benefit from the thoughtful provisions of this law. Behind this reauthorization is a message of transparency and increased efficiency. That is what I will deliver to the public.”

The STB now has authority to investigate issues of national or regional significance and is required to establish regulations governing such investigations. The Act directs the STB to modify its voluntary arbitration process, including increases in the maximum damage awards.

The Act also requires shortening of timelines in large rate case proceedings,including limits on the time allowed for discovery and the time allowed for development of the evidentiary record. The STB must also produce a report on rate case methodology and assess procedures used to expedite litigation in the courts.

Siemens Opening Sacramento Rail Services Plant

February 5th, 2016
Siemens Maintenance Services. Photo: courtesy of Siemens.

Siemens Maintenance Services. Photo: courtesy of Siemens.

Siemens will open a new 60,000 square-foot plant in Sacramento, Calif., which will be dedicated to its growing rail service, maintenance and repair operations. The facility will be the U.S. headquarters for Siemens Mobility Customer Services and the West Coast logistics hub. The company will begin operations at the new facility in early February.

“We’re thrilled to expand our already significant footprint in the Sacramento region with the opening of this new rail service facility,” said Chris Maynard, head of Customer Service for Siemens Mobility. “This expansion signals our dedication to servicing and modernizing rail systems across North America while continuing to deliver industry-leading manufacturing expertise, ensuring that our customers can continue to make the most of their rail systems.”

The new site, located in McClellan Park, will house the company’s rail refurbishment operations, rail bogie service center, accident repair, spare parts delivery, and administrative offices.

“We worked aggressively to assure that the facilities at McClellan Park could be redesigned and built to accommodate Siemens specialized requirements,” said Ken Giannotti, senior vice president of McClellan Business Park LLC. “We are looking forward to a long term relationship with the Siemens organization at McClellan Park.”

One of the first projects at the new facility will be a $21 million contract to modernize 32 SD160 light rail vehicles for Calgary Transit in Alberta. The project includes upgrading passenger information systems, improved wheel-set systems, updated flooring and seating, and modernizations to the operators’ cab interior and dash. The improvements will provide a similar look and feel to the 63 new S200 light rail vehicles for Calgary currently being manufactured by Siemens Rolling Stock in Sacramento.

The Customer Services business is also partnering with Sacramento Regional Transit (RT) to complete the refurbishment of 21 light rail vehicles for the RT system, adding approximately 15 years of additional life to the vehicles. Refurbished light rail vehicles are currently in operation on the Blue Line to Cosumnes River College extension.

The new rail service facility will complement Siemens existing rail manufacturing operations in Sacramento.

Metrolink’s First Tier 4 Locomotive Complete

February 5th, 2016
Metrolink's first Tier 4 locomotive. Photo: courtesy of Metrolink.

Metrolink's first Tier 4 locomotive. Photo: courtesy of Metrolink.

Metrolink, Southern California’s regional commuter rail service, has announced that its first Tier 4 locomotive is complete. The Electro-Motive Diesel (EMD) F125 locomotives, compliant with the latest U.S. Environmental Protection Agency Tier 4 emissions standards, are being produced at the EMD plant in Muncie, Ind. The first of the locomotives are expected to begin operating on Metrolink’s system in late 2016, with the remainder arriving in 2017.

The locomotives will reduce particulate matter and nitrogen oxide emissions by up to 85 percent and will have up to 57 percent more horsepower.

“On behalf of the Metrolink Board of Directors, we thank our state and federal legislative delegation, along with local community, business and environmental stakeholders for their leadership and support in this effort,” said Metrolink Board of Directors Chair Shawn Nelson, who is also an Orange County supervisor. “Upgrading our fleet with Tier 4 locomotives has taken a great deal of support and collaboration. We could not have done this alone and we look forward to full implementation of the entire 40 locomotive fleet.”

California State Senate President pro tempore Kevin de León stated, “Completion of Metrolink’s first Tier 4 locomotive is an important milestone in the effort to improve California’s air quality. The emissions reductions promised by these state-of-the-art locomotives will lead to cleaner air and a healthier environment for the people of Los Angeles and Southern California.”

Funding for the new locomotives was received through the South Coast Air Quality Management District’s (SCAQMD) Carl Moyer Program, which has provided Metrolink with $74.85 million in the last three years and is considering an additional $36 million in future requests.

Funding for the locomotives was also received from the State of California’s Transit and Intercity Rail Capital Program (TIRCP), which provided $41.2 million. The remaining budget will be accounted for through a combination of Metrolink member agency contributions and other subsidies.

“Transitioning to cleaner locomotives is vital to achieving our clean air goals for Southern California,” said SCAQMD Chairman William A. Burke, Ed.D. “We are pleased that Metrolink is participating in this transition which will benefit the health of the 17 million residents in our region.”

Metrolink became the first commuter rail agency in the country to purchase Tier 4 locomotives in 2013. The long-term Metrolink fleet plan calls for up to 40 new Tier 4 locomotives expected to cost approximately $280 million.

U.S. Rail Traffic Drops 7.3 Percent in January

February 4th, 2016

The Association of American Railroads (AAR) has reported that U.S. rail traffic for the month of January 2016 when compared with January 2015 was down 7.3 percent or 158,224 carloads and intermodal units. Total U.S. rail traffic for the month was 2,007,663 carloads and intermodal units.

January 2016 U.S. carload originations totaled 968,042, a drop of 16.6 percent, or 192,747 carloads, compared to January of last year. Excluding coal, carloads for the month were down 5.9 percent or 42,089 carloads compared to January 2015.

Intermodal traffic for January reached a total of 1,039,621 containers and trailers, up 34,523 units, or 3.4 percent, compared to last January.

Four of the 20 commodity categories tracked by the AAR each month saw increases last month compared with January of 2015. Commodities showing the largest increases included miscellaneous carloads, up 45.2 percent, or 7,409 carloads; motor vehicles and parts, up 3.9 percent, or 2,435 carloads; and chemicals, up 2.1 percent, or 2,615 carloads.

Coal showed the largest decrease in the commodity groups, with a drop of 33.3 percent, or 150,658 carloads, and petroleum and petroleum products were down 19.4 percent, or 12,037 carloads. Crushed stone, gravel, and sand declined by 10.3 percent, or 8,475 carloads.

“Intermodal was solid in January, but carload volumes weren’t what railroads were hoping for,” said AAR Senior Vice President of Policy and Economics John T. Gray. “By all accounts, rail service right now is excellent, but volume just isn’t there. At some point, the problems currently plaguing the energy and manufacturing sectors — low oil prices, a strong dollar, uncertainties in emerging ​markets — will sort themselves out. When that happens, railroads will be positioned to provide safe, reliable service.”

For the week ending January 30, 2016, a decrease of 6.5 percent was reported in total U.S. rail traffic compared with the same week in 2015. Carloads and intermodal units totaled 512,746.

For the week, there were 248,961 carloads, down 16.6 percent compared with the same week in 2015, while U.S. weekly intermodal volume was 263,785 containers and trailers, up 5.5 percent compared to 2015.

Three of the 10 carload commodity groups that are tracked by the AAR posted increases compared with the same week in 2015. Miscellaneous carloads had the highest increase, up 45.9 percent, with a total 10,019 carloads; followed by motor vehicles and parts, up 5.8 percent, with a total of 18,556 carloads; and chemicals, up 2.8 percent to 31,981 carloads.

Coal reported the largest decrease for the week compared to the same time period in 2015, with a total of 77,416 carloads, a drop of 33.8 percent. Petroleum and petroleum products were down by 24.9 percent to 11,626 carloads, and metallic ores and metals decreased by 19.1 percent to 19,826 carloads.

North American rail volume for the week ending January 30, 2016, on 13 reporting U.S., Canadian and Mexican railroads totaled 672,625 carloads and intermodal units, down 6.3 percent compared with the same week last year. Carloads totaled 335,717 for the week, a drop of 15 percent, and intermodal units totaled 336,908 units, an increase of 4.3 percent compared to last year.

North American rail volume for the first 4 weeks of 2016 was 2,630,780 carloads and intermodal units, down 6.8 percent compared with 2015.

Sound Transit Awards Contract for Expanded Layover Facility

February 4th, 2016

The Sound Transit Board of Directors has awarded a contract to Shimmick Construction to design and build a $13.2 million expansion of the agency’s Sounder layover facilities in Lakewood. The improvements will add a third track to the existing yard, allowing Sound Transit to store more Sounder train cars for its Lakewood-to-Seattle service as the agency prepares to add three round-trip trains to meet demand.

“Sounder commuter rail is more popular than ever,” said Sound Transit Board Chair and King County Executive Dow Constantine. “This fall we’re adding another weekday round trip between Lakewood, Tacoma, South King County and Seattle, and two more in 2017.”

The existing layover facility is at capacity and must be expanded to allow for storage of additional equipment. Nine new Sounder train cars will begin arriving late this fall. When complete in 2017, the expanded layover facility will have the capacity to store up to seven eight-car train sets. When additional Sounder service starts this fall, crews will operate seven seven-car trains. The third track will be finished by December to accommodate storage for new passenger cars being delivered in 2016 and 2017.

Other elements of the expansion include permanent office space and parking for crew members, and new fencing, guard booths and surveillance systems for added yard security. Enhanced wayside power, air, water, fire protection and upgraded yard lighting will reduce energy use and support night-time train cleaning.

Sounder ridership continues to experience double-digit growth. During the third quarter last year, average weekday ridership between Lakewood and Seattle increased 15 percent compared to the same period last year. Ten round-trip trains now operate on the south line. Two peak-service round-trip trains will roll out next year.

Kelso Renews M1003 Manufacturing Status

February 4th, 2016

Kelso Technologies Inc., a railway equipment supplier, has renewed its M1003 manufacturing status under the Association of American Railroads (AAR) policies and guidelines.

Earlier this year, the AAR conducted a full manufacturing audit of Kelso’s Bonham, Texas, facility in accordance with the M1003 regulations. No adverse findings were reported, and the lead auditor recommended continuation of the company’s M1003 approval.

“Kelso continues to achieve and maintain the highest standards of design engineering and production capabilities,” said Chief Executive Officer James R. Bond. “Our primary objectives are to surpass regulatory compliance guidelines in order to produce the “best available safety technology” products designed to better protect the lives of first responders and all in harms way.”

This audit, which is required by all tank car valve manufacturers, is required to maintain M1003 certification. Kelso’s M1003 system also has been audited by some key customers who have approved the company’s M1003 program as compliant with their own M1003 requirements.

“We are pleased that Kelso has maintained the highest production standards recognized by the industry. We remain optimistic that our product strategies and our abilities to produce them will eventually lead to enhanced financial performance when economic conditions improve,” added Bond.

Greenbrier Promotes Rittenbaum and Tekorius

February 3rd, 2016

The Greenbrier Companies, Inc. has promoted Mark J. Rittenbaum, chief financial officer, to the newly created position of executive vice president, commercial, leasing and finance. The company also promoted Lorie L. Tekorius, senior vice president and treasurer, to senior vice president, chief financial officer and treasurer. Rittenbaum and Tekorius will report to Chairman and Chief Executive Officer William A. Furman.

“Greenbrier is fortunate to have incredible depth of talent on its executive bench. I am pleased to recognize the many contributions made by Mark and Lorie and to increase their roles in senior management of Greenbrier,” said Furman. “I am proud of our entire management team and see these changes as an opportunity to put our seasoned executive expertise to even greater use in a fluctuating environment.”

Rittenbaum will now focus on commercial activities, with particular emphasis on new railcar sales, leasing and integration/enhancement of customer service design. Senior Commercial Officer William Glenn, Senior Commercial Officer Brian Comstock, and Greenbrier Leasing and Management Services President Jim Sharp will report to Rittenbaum.

“Greenbrier has built a tremendous ‘go to market strategy’ that serves its integrated business model and expanded world-wide activities. In the process, we have grown a very successful asset-light leasing and asset management business,” said Furman. “We continue to add value solutions for our customers and shareholders, as our business becomes larger and adjusts to a changing environment. It is time to further integrate our commercial and leasing functions to better serve our goals of cost-efficient growth and service to our customers.”

Rittenbaum will chair a newly created executive committee reporting to Furman. The committee will be responsible for helping to frame policy over a wide range of business, administrative, financial and strategic areas. In addition, it will be responsible for streamlining service design and achieving service and cost synergies across the company.

Executive Vice President and Chief Strategic Officer Victoria McManus and Senior Vice President, General Counsel and Chief Compliance Officer Martin Baker will be on the committee.

“The Executive Committee will free up a substantial portion of my time to focus more on longer term strategies for Greenbrier, and to operate the Company,” said Furman. “Global Manufacturing, the Wheels and Parts business, and GBW Railcar Services, a repair joint venture with Watco Companies, will continue to report to me.”

Tekorius has been employed by Greenbrier for more than 20 years, working in various financial capacities, most recently as senior vice president and treasurer since 2012. She began her career at Coopers & Lyrband. Tekorius is a Certified Public Accountant and earned a bachelor’s in accounting from Texas A&M University.

“Mark and Lorie have done an excellent job at the financial helm of Greenbrier and have worked closely together for years. I’m confident we will continue our solid financial footing, and be well positioned for growth and change,” said Furman.

“Lorie also has the discipline and Company knowledge to help review, manage and adjust our General and Administrative expense profile to appropriate levels during changing market environments. She has chaired our strategic and budget process for several years and will continue to work with Victoria McManus and me in that important function. Adrian Downes, Greenbrier’s Senior Vice President and Chief Accounting Officer, will report to Lorie. Adrian has done a great job with our IT, accounting and tax organization, and will continue to play a strong role on our senior management team,” concluded Furman.

Siemens to Supply Locomotives to Lokomotion GmbH

February 3rd, 2016

The private railway company Lokomotion GmbH has ordered eight Vectron type multi-system locomotives from Siemens for operation in Germany, Austria and Italy. Delivery of the vehicles is scheduled to start in spring 2017.

“With this order our Vectron platform has reached two significant milestones at the same time,” said Jochen Eickholt, CEO of the Siemens Mobility Division. “Firstly, Lokomotion is the 20th customer who has decided in favor of our locomotive. And, secondly, this order also marks the 300th Vectron we have sold.”

The Vectron type locomotives have a maximum power output of 6,400 KW and a top speed of 200 km/h. The locomotives are to be equipped with the European Train Control System (ETCS) in addition to the train protection systems required for the three countries. They are to be deployed in cross-border traffic between Germany and Italy.

MTA Approves Final Major Contract for East Side Access

February 3rd, 2016

The Metropolitan Transportation Authority (MTA) Board has awarded the final major contract for the East Side Access project to Tutor Perini Corp., which will build four platforms and eight tracks for the new Long Island Rail Road (LIRR) terminal below Grand Central Terminal in Manhattan.

Last month, the contract for a tunnel approach and a rebuilt bridge in Sunnyside, Queens, was also awarded to Tutor Perini Corp. The total value of both contracts is nearly three-quarters of a billion dollars. The upgrades will enable LIRR trains to access Grand Central Terminal.

MTA Chairman and CEO Thomas F. Prendergast said, “These are a significant milestones for East Side Access and will turn raw underground caverns into the modern station that LIRR customers will use when they head directly to and from the East Side of Manhattan. And the Sunnyside contract will make it possible for trains to reach Grand Central Terminal.”

“East Side Access will save Long Island and Queens customers up to 40 minutes a day in travel time, demonstrating why transit expansion is a key element of our 2015-19 Capital Program,” added Prendergast.

The Manhattan contract covers the construction of a terminal station from two 1,143-foot-long caverns carved out of solid rock and more than 12 miles of track work from Queens to Manhattan, including eight tracks and four platforms in the station; elevators, escalators and staircases; and all architectural finishes through the caverns. The 3½-year caverns project has a contract value of $663 million.

“With the award of these contracts, the eventual completion of East Side Access is starting to come into view,” said Dr. Michael Horodniceanu, President of MTA Capital Construction, which is building the project. “This is the next chapter in the long history of Grand Central Terminal and the growth and development of New York City.”

The contractors work in Sunnyside includes excavation and construction of an approach structure that will allow the LIRR’s existing tracks to connect to one of the four rail tunnels below Sunnyside Yard. This will complete the physical connection that will run from the tunnels under Grand Central all the way to Sunnyside. Approaches to the other tunnels will be built separately through other contracts.

Workers will also replace of one of the five bridges that carry tracks over 48th Street. Other work being performed under this contract includes switch installation, retaining wall construction, installation of electrical utilities and overhead wire support structures, and demolition of an electrical substation.

The Sunnyside contract is expected to take 19 months and is valued at $53.3 million. If the MTA deems that the work is going well, the contract allows the authority to exercise options valued at approximately $26.5 million that would expand the scope of work to be undertaken and extend the duration of the contract to a total of 30 months. Construction for this contract is expected to start in late February.

The award of these contracts closely follows the completion of two other major contracts, one for a subsurface ventilation structure at 55th Street in Manhattan and one for major civil infrastructure work in Harold Interlocking in Queens.

The East Side Access project will increase the LIRR’s capacity into Manhattan, and dramatically shorten travel time for Long Island and eastern Queens commuters traveling to the east side of Manhattan.

Some benefits of the East Side Access project already have been realized, including a new entrance to Grand Central inside 245 Park Avenue that faces 47th Street between Park and Lexington avenues. The entrance is now the most direct way to access Grand Central’s platforms from points east of Lexington Avenue and north of 47th Street.

NS Reports Decreased Net Income for 2015

February 2nd, 2016

Norfolk Southern Corporation has reported financial results for the year 2015 and for the fourth quarter 2015. Yearly results included a net income of $1.6 billion, or $5.10 per diluted share, a decrease from 2014′s reported net income of $2 billion, or $6.39 per diluted share. Net income for the 2015 fourth quarter dropped to $361 million, or $1.20 per diluted share, compared to $511 million, or $1.64 per diluted share, in the fourth quarter of 2014.

These results included expenses related to restructuring the company’s Triple Crown Services subsidiary and closing its office in Roanoke, Va. The actions reduced both 2015 net income by $58 million, or $0.19 per diluted share, and fourth quarter net income by $31 million, or $0.10 per diluted share.

For the fourth quarter of 2015, operating revenues, at $2.5 billion, decreased 12 percent when compared to the fourth quarter of 2014. Total volume dropped 6 percent, due to lower coal volumes and the effects of low commodity prices.

Income from railway operations in the quarter decreased by 28 percent to $642 million, and the company reported a railway operating ratio of 74.5 percent compared to 69 percent in the fourth quarter of 2014. Triple Crown restructuring and Roanoke office closure expenses added 2.0 percentage points to the operating ratio.

In the fourth quarter, general merchandise revenues were down by 9 percent to $1.5 billion, and general merchandise traffic volume dropped 4 percent compared with the prior year. Intermodal revenues declined to $563 million, down 13 percent compared with the fourth quarter of 2014, and coal revenues dropped 20 percent to $433 million.

For the full year of 2015, Norfolk Southern reported railway operating revenues of $10.5 billion, down 10 percent over the full year of 2014, and traffic volume was down by 3 percent due to the drop in coal shipments.

Income from railway operations in 2015 was $2.9 billion, a 19 percent decrease compared to 2014. Operating ratio for the year was 72.6 percent, compared to 69.2 percent in 2014. The costs for the Triple Crown restructuring and Roanoke office closure added 0.9 percentage points to the operating ratio.

The company also reported a 6 percent decrease in general merchandise revenues, which totaled $6.3 billion for the 2015 full year, and traffic volume for general merchandise that remained about even compared to 2014. Intermodal revenues were $2.4 billion, a decrease of 6 percent, and intermodal traffic volume saw a slight increase over 2014. There was a drop of 23 percent in coal revenues due to a 16 percent decline in traffic volume. Coal revenues for 2015 were $1.8 billion.

Norfolk Southern has also provided details regarding its plan to streamline operations and drive profitability and growth, which includes cost reductions across the organization and improved operational efficiencies. As a result of this plan, the Company expects to achieve annual productivity savings of more than $650 million by 2020, with approximately $130 million to be realized in 2016, and an operating ratio below 65 percent by 2020.

“We are implementing a plan to reduce costs and enhance profitable growth,” said James A. Squires, Norfolk Southern’s chairman, president and CEO. “This plan will enable us to achieve significant annual expense savings beginning in 2016 without compromising the company’s ability to capitalize on volume and revenue growth opportunities. We are making progress despite a challenging operating environment, including successfully restoring our rail service to previous high levels, realigning resources, and completing strategic capacity investments to improve efficiency and productivity.

“Through these actions, we are positioning Norfolk Southern for improved performance and value creation in 2016 and beyond. We are confident in our ability to deliver superior shareholder value through our strategic plan, which is built on exceptional customer service, growth through pricing and new business, cost reduction and control, and increasing returns on capital. Our fourth-quarter results reflect current challenges in domestic and global markets.”