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Shares of railroad industry stocks continued to show gains in the third quarter of this year, lifted by an improving economy.
All of the stocks in the Pocket List of Railroad Officials’ Market Watch Index ended the three-month period in positive territory. Among the Class I railroads, CSX, CN and Norfolk Southern were standouts, with CSX posting a 12-percent increase in the quarter, NS delivering a 7.7-percent increase and CN a 4.9-percent gain. Among railroad suppliers, FreightCar America, Trinity and Wabtec were the quarterly standouts. FCA’s shares were up 24 percent while Trinity’s and Wabtec’s shares were up 20 and 18 percent, respectively.
The share price for short line giant Genesee & Wyoming was up 10 percent for the quarter. Jack Hellmann, president and CEO of G&W commented, “The third quarter of 2013 was the third reporting period in which G&W’s consolidated results included the former RailAmerica railroads. The combined business continued to perform well with combined company adjusted operating revenues up 11 percent, corporate overhead cost synergies now fully achieved, and G&W’s adjusted diluted earnings per share up 49 percent in the third quarter.”
He noted that during the third quarter, G&W began hiring and training new crews at several of the former RailAmerica railroads to support its traffic growth, which was up 6.8 percent in the third quarter on a combined company basis. “As we enter the fourth quarter, our business remains strong and we are actively working on new business development opportunities in both North America and Australia,” Hellmann said. “In addition, the acquisition market is active in multiple geographies and we will continue to pursue the right opportunities at the appropriate valuations.”
The Pocket List Index was up more than 5 percent for the quarter while the Dow Jones Transportation Average was up 6.9 percent and the Dow Jones Industrial Average was up only 1.45 percent. Through three quarters of the year, U.S. railroads reported cumulative volume of 10,940,538 carloads, down 0.9 percent from the same point last year, and 9,547,764 intermodal units, up 3.7 percent from last year. Total U.S. traffic for the first 39 weeks of 2013 was 20,488,302 carloads and intermodal units, up 1.2 percent from last year, according to the Association of American Railroads.
Excluding coal and grain, U.S. carloads were up 4.9 percent, or 29,116 carloads, in September. “Those who follow the rail industry know that carloads of grain and coal can rise or fall by substantial amounts for reasons that have little or nothing to do with the state of the economy,” said AAR Senior Vice President John T. Gray. “Not so with most other rail traffic categories, however. The fact that rail carloads excluding coal and grain were up 4.9 percent in September — the biggest year-over-year monthly gain since last December — is a hopeful sign.”
Amtrak carried more than 31.2 million passengers in fiscal year 2012, ending Sept. 30, 2013, the highest annual ridership total in the passenger rail service’s history and a 3.5 percent increase year-over-year.
Notably, annual ridership on the Northeast Corridor was up 4.8 percent compared with the previous year, reaching a record 11.4 million passengers. Ridership on state-supported and other short distance routes improved 2.1 percent to a record 15.1 million passengers, and ridership on long-distance services increased 4.7 percent, resulting in their best combined numbers in 19 years. Overall, fiscal year 2012 established new ridership records for 25 of 44 Amtrak services.
In addition, ticket revenue for the year jumped 6.8 percent to an all-time high of $2.02 billion, and Amtrak’s on-time performance increased to 83 percent, compared with 78.1 percent last year, marking its highest level in 12 years.
“People are riding Amtrak trains in record numbers across the country because there is an undeniable demand to travel by rail,” said Joe Boardman, president and CEO, in a written statement. “Ridership will continue to grow because of key investments made by Amtrak and our federal and state partners to improve on-time performance, reliability, capacity and train speeds.”
Boardman noted that ridership numbers for fiscal year 2013 will get an early boost this fall when the extension of Downeaster service to Freeport and Brunswick, Maine, begins Nov. 1, and Amtrak Virginia Northeast Regional service is extended to Norfolk, Va., starting Dec.12.
Since fiscal year 2000, Amtrak ridership has risen 49 percent. Amtrak attributed this long-term ridership growth to improved passenger services such as wi-fi and e-ticketing, high gasoline prices, continued growth in business travel on the Northeast Corridor, the increased appeal and popularity of rail travel, dissatisfaction with congested highways and air travel and effective marketing campaigns.
Thousands of railroaders, suppliers, contractors, shippers and consultants turned out this week in Indianapolis for Railway Interchange at the Indiana Convention Center.
Railway Interchange made its debut two years ago in Minneapolis. This year marked the second North American event combining the technical conferences of the American Railway Engineering and Maintenance-of-Way Association (AREMA) and Coordinated Mechanical Associations (CMA) and the exhibits of Railway Supply Institute(RSI), Railway Engineering-Maintenance Suppliers Association (REMSA) and Railway Systems Suppliers, Inc. (RSSI).
According to preliminary registration numbers, the event drew more than 7,000 attendees, and 640 companies and organizations exhibited during the event. The exhibit showcased the latest technology and products in the mechanical, C&S and maintenance-of-way segments of the industry.
The educational program included more than 60 technical sessions, presentation of the League of Railway Industry Women’s Woman of the Year award, an industry update from Tony Hatch, and a luncheon speech by Charles W. “Wick” Moorman, chairman and CEO of Norfolk Southern Corp.
Union Pacific has introduced Arrowedge, a new technology for double-stack intermodal trains that aims to reduce fuel and locomotive emissions.
The 48-foot Arrowedge, which is positioned on top of the first freight container in a double-stack train, has a tapered body that allows air to flow more easily around the train’s top front-most containers, thereby reducing aerodynamic drag. In turn, drag reductions decrease the amount of locomotive power required to propel the train.
“The Arrowedge represents Union Pacific’s focus on pioneering technology for operational and environmentally sustainable gains that ultimately result in enhanced customer service and community stewardship,” said Mike Iden, UP’s general director of car and locomotive engineering, in a written statement. “We are excited to see the results of this innovation in action and how it can springboard further research and development.”
The Class I railroad holds two U.S. patents for the Arrowedge, with additional U.S. and Canadian patents pending. The company expects to introduce the technology into double-stack train service between Joliet, Ill., and Long Beach, Calif., in September.
The Aberdeen Carolina & Western Railway has formed a new subsidiary, ACWR Shops, to repair and retrofit locomotives, as well as passenger and freight cars.
The company has acquired and has begun retrofitting the former Commodore Homes building in Candor, N.C., to house the new subsidiary.
“Our vice president of mechanical, Dale Parks, has been building the locomotive, freight railcar and passenger car repair part of our business for over five years,” said Rob Menzies, president and CEO of ACWR, in a written statement.
The company plans to invest $3.3 million over the next five years in the facility. ACWR has already begun the first phase of retrofitting the 91,000 square foot warehouse to turn it into a locomotive repair shop facility that will include 4,600 feet of new track and a locomotive pit. The building will primarily be occupied by the new subsidiary, but will also house ACWR corporate headquarters when the second phase of retrofitting is complete.
The longer-term goal for the Candor location is to develop the rest of the 78 acre rail-served industrial site, said Russ Smitley, vice president of marketing.
The project was made possible in part by North Carolina Department of Transportation funding through the North Carolina Legislature. This funding will be applied towards the necessary 4,600 feet of new track infrastructure.
Phoenix’s Valley Metro light rail transit system has installed Whiting car hoists in its operations and maintenance center in order to continue providing service during the maintenance and repair operations of its rail cars.
The Whiting car hoists, manufactured by rail equipment company Whiting Corp., are the central component of a deep-pit “pass thru” system, which allows a disengaged rail car truck to pass under a truck that has not been removed.
The Valley Metro rail cars, weighing more than 50 tons, are married-pair-type cars with three trucks per car. With the Whiting “pass thru” system, workers can remove one truck and push that truck underneath another truck.
“We have two of Whiting’s car hoists in our shop, with one used at least four times a week for preventive maintenance work,” said Ken Raghunandan, light rail vehicle maintenance superintendent at Valley Metro Rail’s operations and maintenance center, in a written statement. “The other car hoist is not used quite as much, mainly for corrective maintenance work when the other car hoist is being utilized.”“When the trucks on the rail cars are being replaced, the cars can be raised on the car hoists for up to 16 hours,” he explained. “However, we also do a significant amount of other work at those times, such as flushing and bleeding the brakes or changing brake fluid.”
Raghunandan noted that there are around 45 personnel in the maintenance department, including technicians, inspectors, supervisors and car cleaners.
Canadian Pacific reported its net income in the second quarter of 2013 was C$252 million (approximately US$245 million), jumping 145 percent from C$103 million in the second quarter of 2012.
Quarterly diluted earnings per share were C$1.43, spiking 138 percent from C$0.60 per diluted share in the same period last year.
Total revenue in the second quarter was C$1.50 billion, compared with C$1.37 billion in the second quarter of the previous year. The operating ratio was 71.9 percent, a 1,060 basis-point improvement and an all-time quarterly record.
“The second quarter was a significant test for our employees who worked tirelessly during extensive network outages, including more than 40 washouts over a four-day period of historic flooding in Calgary and Southern Alberta,” said E. Hunter Harrison, CEO of the Class I railroad, in a written statement. Harrison also noted that network interruptions during the quarter affected revenue growth by approximately C$25 million or 2 percent.
“The disciplined execution of our model allowed us to quickly recover from these challenges and restore service for our customers in a timely manner,” Harrison continued. “Moving forward, CP is well positioned to continue to build upon its strong first half and deliver record financial and operating results for 2013.”
In the first six months of 2013, profit was C$469 million, up from $245 million in the first half of 2012. Revenue from January to June was C$2.99 billion, versus C$2.74 billion.
CP said it still expects to generate high single-digit revenue growth and a low 70s operating ratio for the year.
The U.S. is relying more on railroads to move crude oil to refineries and storage centers, as its crude oil production is outpacing pipeline capacity, although that pace has slowed, according to the U.S. Energy Information Administration, based on data from Association of American Railroads.
AAR reported that the amount of crude oil and refined petroleum transported by U.S. railroads totaled nearly 356,000 carloads during the first half of 2013, jumping 48 percent compared with the same period last year. (Note that this figure excludes traffic carried by U.S. subsidiaries of Canadian railroads; those volumes are included in the Canadian traffic report.) In its latest Rail Time Indicators report, AAR noted that U.S. carloads of petroleum and petroleum products, including crude oil, in June were up 31.7 percent from the level in June 2012, the smallest year-over-year monthly increase for this commodity group in 16 months.
U.S. weekly carloadings of crude oil and petroleum products averaged nearly 13,700 rail tankers during the first six months of 2013. With one carload holding about 700 barrels, the amount of crude oil and petroleum products shipped by rail was equal to 1.37 million barrels per day during the first half of the year, compared with 927,000 barrels per day during the same period last year. Crude oil accounts for about half of those 2013 daily volumes, according to AAR.
Therefore, in 2013, rail moved about 700,000 barrels per day of imported and domestic crude oil, versus the 7.2 million barrels of crude oil the U.S. produces daily.
The U.S. Energy Information Administration said that the pace of rail moving crude oil and petroleum products has decreased from May to June, driven by a jump in crude oil production from North Dakota, which reduced the incentive to ship oil to coastal refineries, as well as a lack of railcars.
The data also follows a recent train disaster in Quebec that prompted a debate about the safety of shipping crude oil by rail or pipelines.
The Railway Supply Institute (RSI) has formed a new passenger rail committee to serve railway suppliers who provide equipment and services to high-speed and intercity passenger rail.
“RSI’s Passenger Rail Committee will operate with the goal of increasing supplier visibility in Washington, D.C., on intercity and high speed passenger rail issues as well as the future funding of rail infrastructure projects,” said RSI President Thomas Simpson in a written statement. “This committee’s work will be important, as demand for commuter and intercity passenger rail continues to grow,” he noted.
The committee will promote the use of passenger rail and represent the supply community on legislation and regulations affecting domestic suppliers and passenger rail systems, the organization said. It will meet four times per year, with the first meeting planned for July 11, 2013, in Washington, D.C. Additional activities will include a meeting with Jeff Morales, CEO of the California High Speed Rail Authority, and the annual RSI roundtable meeting with Amtrak President & CEO Joseph Boardman.
Canadian National Railway has ordered four liquefied natural gas tenders from Westport Innovations.
The first of the tenders, which will supply fuel to LNG-powered locomotives, is scheduled to be delivered in the fourth quarter of 2013.
“There is growing consensus around the enormous potential of using LNG as a fuel for locomotives and there is a clear path for the industry to achieve this shift to a cleaner, cheaper and domestically available fuel,” said Nicholas Sonntag, executive vice-president at Westport, in a written statement.
“These tenders will be used immediately with our dual fuel locomotives in mainline service, allowing CN to continue to explore this technology as a means to advance the company’s sustainability agenda and improve environmental emissions,” added Gerry Weber, CN’s vice-president of supply, fleet and fuel management.
Westport is collaborating with INOXCVA, a cryogenic transportation equipment manufacturer, on the tenders.
The alternative fuel solutions provider has also been collaborating with Caterpillar to develop natural gas technology for Caterpillar products, including locomotives.
Homepage photo by Westport Innovations. License: CC BY-ND 3.0.