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.”
BNSF Railway Company (BNSF) announced that its 2016 capital expenditure plan will focus on operating a safe and reliable network. The plan is expected to be $4.3 billion, with $2.8 billion allocated on projects to keep the infrastructure in top condition, including replacing and upgrading rail, rail ties and ballast.
The 2016 capital program reflects the company’s success in adding capacity to support customer demand while bringing investment more in line with current volumes. Keeping the railroad well maintained helps trains run safely and limits the need for unscheduled service outages, which can slow down the rail network and reduce capacity.
“Our railroad is in the best shape it has ever been,” said Carl Ice, BNSF president and CEO. “Each year, our capital plan works to balance our near term need to regularly maintain a vast network that is always in motion with the longer term demand outlook of our customers.”
“While our customers’ demand outlook has softened in a number of sectors, regular maintenance of our network continues to drive the majority of our annual investments and helps ensure we continuously operate a safe and reliable network,” added Ice.
The 2015 plan is $1.5 billion less than what BNSF spent in 2015, but it includes more than $300 million for continued implementation of positive train control and more than $600 million for locomotives, freight cars and other equipment acquisitions.
Approximately $500 million of this year’s capital plan is for expansion and includes continuing projects started in 2015, such as the installation of a new bridge and second track to cross the Pecos River and the installation of double track near Fort Sumner, N.M.
This year’s projects also include other double track work and additional Centralized Traffic Control signaling that will add capacity and improve efficiency in constrained parts of the network.
Sound Transit has announced the 3.1-mile University Link light rail extension will open for passenger service on March 19. The extension is opening six months ahead of schedule and more than $150 million under budget.
Sound Transit Board Chair and King County Executive Dow Constantine said, “University Link opens March 19th, changing forever how we move around Seattle. With fast, frequent trains bypassing some of the region’s worst traffic, thousands of people will now be able to get to work, school and appointments on time, every time.”
The 3.1-mile extension of the current light rail line includes stations on Capitol Hill and at the University of Washington near Husky Stadium. The trip from University of Washington to downtown Seattle will take eight minutes.
U.S. Senator Patty Murray, a senior member of the Senate Transportation, Housing and Urban Development Appropriations Subcommittee, and other congressional leaders helped to secure an $813 million federal grant for the $1.8 billion project.
“As the Puget Sound region continues to grow, we need to make transportation investments that make our communities more livable, create jobs, improve access to education centers, and support our local small businesses,” said Senator Murray. “That’s why I am so thrilled to see Sound Transit reach this milestone on this important project for commuters and communities, and it’s why I am going to keep fighting for local investments like these that help our economy grow from the middle out.”
Further information on the opening day of the extension can be found on the new online clearinghouse website.
Later this fall, Sound Transit will open the 1.6-mile light rail extension from SeaTac/Airport Station to the new Angle Lake Station near South 200th Street in SeaTac.
The University Link extension is expected to add up to 12 million more annual riders on the light rail system by 2020.
Canadian National Railway (CN) has reported increases in net income in both the 2015 fourth quarter and the 2015 full year. Fourth quarter net income increased 11 percent to C$941 million, or C$1.18 per adjusted diluted share, compared with the 2014 fourth quarter net income of C$844 million, or C$1.03 per adjusted diluted share. Net income for the 2015 full year increased 12 percent to C$3.5 billion, or C$4.44 per adjusted diluted share, compared with the 2014 net income of C$3.2 billion, or C$3.76 per adjusted diluted share.
“CN generated strong fourth-quarter and full-year 2015 results despite the weak volume environment,” said CN President and CEO Claude Mongeau. “Our solid performance is testament to the strength of CN’s franchise and diversified portfolio of businesses. I am particularly proud that CN’s team of railroaders quickly recalibrated resources to respond to weaker volumes, while protecting customer service.”
The 2015 fourth quarter operating income increased seven percent to C$1,354 million, and the operating ratio improved by 3.5 points to 57.2 percent from the 2014 fourth quarter. Carloadings declined by 8 percent in the quarter to 1,325 thousand and operating expenses dropped by 7 percent to C$1,812 million.
Revenues for the fourth quarter of 2015 dropped 1 percent to C$3,166 million. Revenues increased 13 percent for automotive, 12 percent for forest products, 5 percent for intermodal and 1 percent for grain and fertilizers. Revenues dropped 21 percent for metals and minerals, 16 percent for coal, and 4 percent for petroleum and chemicals.
For the 2015 full year, operating income increased 14 percent to C$5,266 million, and the operating ratio improved by 3.7 points to 58.2 percent from 2014. Carloadings declined by 2 percent to 5,485 thousand and operating expenses dropped by 2 percent to C$7,345 million.
Revenues for 2015 increased 4 percent to C$12,611 million. Revenues increased 16 percent for automotive, 13 percent for forest products, 5 percent for intermodal, 4 percent for grain and fertilizers and 4 percent for petroleum and chemicals. Revenues decreased 17 percent for coal and 3 percent for metals and minerals.
“Although the economic environment remains challenging, CN will continue to leverage its franchise strength and industry-leading efficiency,” said Mongeau. “For 2016, the Company expects to deliver mid-single digit EPS growth over adjusted diluted 2015 EPS of C$4.44. CN will continue to invest in the safety and efficiency of its network, with a 2016 capital investment program of approximately C$2.9 billion, including the negative impact of foreign exchange and increased spending for Positive Train Control technology.”
“Given CN’s strong balance sheet and solid financial prospects, I am pleased to announce that the Company’s Board of Directors today approved a 20 percent increase in CN’s 2016 quarterly common-share dividend. CN has increased its dividend per share by 17 percent per year on average since its privatization in 1995 and continues to move towards a target payout ratio of 35 percent,” Mongeau concluded.
On February 18 and 19, Amtrak and the Southern Rail Commission (SRC) will conduct an Inspection Train tour from New Orleans to Jacksonville, Fla., to examine perspective on reintroducing intercity passenger rail along the Gulf Coast. The Inspection Train, hosted by Amtrak President and CEO Joe Boardman, will carry elected officials, industry representatives, community leaders and federal stakeholders, with the goal of examining the existing CSX railroad infrastructure and to better understand rail’s opportunities.
“We want to work with community leaders and CSX,” Boardman said. “Additional regional economic development can come from shared infrastructure investments on a timeline to better connect the region to the rest of the country and more than 500 other Amtrak destinations.”
Connecting the cities and towns along the Gulf Coast with passenger rail is one of the top priority projects for the SRC, which recently released a study by Amtrak detailing the range of feasible service options accompanied by an analysis of ridership levels, projected revenues, and associated costs for passenger trains between New Orleans and Orlando. The models project better connections and financial performance, with higher ridership and lower costs, than Amtrak services previously considered or operated in the region.
“The Southern Rail Commission is committed to working with local and federal partners, and Amtrak to make this service a reality in the near future,” stated SRC Chairman Greg White. “We are continuing to align the necessary support for the project.”
Further details on the Inspection Train can be found on the SRC website.
The Railway Supply Institute (RSI) is accepting applications for the 2016/2017 school year for their annual Scholarship Program. A minimum of five scholarships in the amount of $5,000 will be awarded to children of employees throughout the rail supply industry. Additional scholarships may be given at lesser amounts depending on the number of scholarship donations.
Applications are due by June 5, 2016, and winners will be announced in July. Application and eligibility requirements can be found on the RSI website.
To be eligible, applicants must be the child or dependent of a current employee whose company is a member of the Railway Supply Institute or one of the Coordinated Mechanical Associations (CMA). The CMA includes the Air Brake Association, Inc. (ABA), the International Association of Railway Operating Officers (IAROO), the League of Railway Industry Women (LRIW), Mechanical Association Railcar Technical Services (MARTS), and Locomotive Maintenance Officers Association (LMOA).
Since 1989, RSI has awarded more than 125 scholarships to college students pursuing degrees in a variety of fields.
The Association of American Railroads (AAR) has reported that U.S. rail traffic for the week ending January 23, 2016, totaled 490,324 carloads and intermodal units, a 10.5 percent decrease compared to the same week in 2015.
U.S. carloads, which totaled 237,190 for the week, were down by 19.5 percent compared to the same week last year. U.S. intermodal volume for the week totaled 253,134 units, a decrease of 0.1 percent compared to 2015.
One of the 10 carload commodity groups that are tracked by the AAR posted an increase for the week ending January 23, 2016, when compared with the same week in 2015. Miscellaneous carloads increased 15.3 percent to 9,018 carloads.
Coal showed the largest decrease in the commodity groups, with a drop of 35.8 percent to 74,128 carloads. Petroleum and petroleum products declined by 19 percent to 12,409 carloads, and metallic ores and metals dropped 16.2 percent to 19,418 carloads.
For the first 3 weeks of 2016, U.S. rail volume totaled 1,494,917 carloads and intermodal units, a decrease of 7.6 percent when compared to last year. Carloads, with a total of 719,081, were down by 16.6 percent, and intermodal, with a total of 775,836, was up by 2.7 percent.
On the 13 reporting U.S., Canadian and Mexican railroads, combined North American rail volume for the week ending January 23, 2016, was 647,156 carloads and intermodal units, down 9.6 percent.
For the first 3 weeks of 2015, North American rail volume was down 7 percent, with a total of 1,958,155 carloads and intermodal units.
The Southeastern Pennsylvania Transportation Authority (SEPTA) is acquiring an 8.75 megawatt (MW) battery storage network from Constellation, a subsidiary of Exelon Corporation. The battery storage unit will capture and reuse energy created by braking subway trains, helping reduce operating costs, ensure energy resiliency, and support the stability of the energy grid.
The network will use stored energy to power trains as they accelerate from stations and can provide emergency generation for trains in the event of a power outage. The network will be deployed at seven SEPTA substations.
“SEPTA’s Sustainability Program is all about finding and deploying cutting-edge innovations to reduce costs in addition to improving environmental performance,” said SEPTA General Manager Jeffrey D. Knueppel. “This project is right in that sustainability sweet spot, and we are pleased to partner with Constellation and Viridity in bringing it to market right here in the Philadelphia region, an emerging hub for innovative energy projects.”
Constellation will fund, own, and operate the 8.75 megawatt battery storage network. The project will be financed through a 20-year battery services agreement between SEPTA and Constellation. The network is among the first commercially deployed battery storage systems in a transit operation.
The new network, an expansion of SEPTA’s 1.8 MW battery storage pilot program completed in 2014, brings the agency’s total battery storage capacity to more than 10 MW. Construction is scheduled to begin in the second quarter of 2016 and commercial operation is estimated to start in late 2016.
Gary Fromer, senior vice president of distributed energy at Constellation, stated, “As a competitive energy supplier, we aim to provide our customers with the best long-term economic and business solutions for how their energy is produced and supplied. This battery storage network, along with $26 million in guaranteed savings from efficiency improvements Constellation is implementing for SEPTA, will help SEPTA deliver on its budget and energy resiliency goals.”
The stored energy will help to balance electric load on the PJM Interconnection, the regional transmission organization that manages movement of wholesale electricity in 13 states and the District of Columbia. Viridity Energy will provide energy market services for the project, bidding the batteries into the PJM market as frequency regulation resources to help match generation with demand and maintain the desired electrical frequency on the grid.
“Our ground-breaking regenerative braking pilot at SEPTA proved that energy storage can be used by transit systems to create substantial cost savings, generate revenue, and contribute to sustainability goals,” said Viridity Energy CEO Mack Treece. “By expanding the pilot to a full deployment, SEPTA will demonstrate to rail transit systems throughout the world that energy storage can be a core part of their overall energy and sustainability strategy when paired with the right technologies and market expertise.”
ABB will provide engineering, procurement, construction and operations services to Constellation for the project. Saft will provide the lithium ion battery technology.
The Morristown & Erie Railway (M&E), a New Jersey-based short line railroad, has announced an increase of 8 percent for 2015 freight rail traffic compared to 2014. The 26-mile railroad has seen an overall 72 percent increase in freight traffic since 2010.
“Our customers remain our number one priority,” stated Marketing & Logistics Manager Rudy Garbely. “Several positive developments in 2015 helped the Morristown & Erie increase its business. We improved our efficiency, expanded and rebuilt our facilities, and acquired the equipment and tools necessary to improve service and expand growth possibilities for our customers.”
M&E also saw 2015 traffic gains at its Bayway Refinery switching operation located in Linden, N.J. The facility has seen carloads increase 29 percent compared to 2010. The refinery’s efficiency and output has increased since M&E has helped to coordinate service times between Class I rail carriers and the receivers within the refinery, providing more reliable service.
In 2015, construction was completed on M&E’s Troy Hills Road Bulk Transload Facility in Whippany, N.J. The facility features 13 railcar spots that will facilitate the continued expansion of M&E’s freight rail services. Vertical height clearances were also increased on the NJ Transit Morristown Line last year, allowing the railroad to interchange 15’6” height Plate C railcars with CSX Transportation in Kearny, N.J. This includes the majority of boxcars, all centerbeam lumber cars, and covered hopper cars.
The short line railroad is projecting similar traffic increases in 2016.
The Association of American Railroads (AAR) has released its initial “State of the Industry Report” spotlighting key challenges, accomplishments and innovations in the freight railroad industry. The reports are designed to inform lawmakers, the business community and the public about the freight railroad industry’s top priorities.
The initial report details the industry’s investments in new technology and innovation for enhancing rail safety. The association will issue several reports each year, including two more in 2016, with each report focusing on a certain aspect of the industry.
“Our industry maintains its leadership position through innovations designed to improve the performance of our employees, our equipment and even the rail itself,” stated AAR President and CEO Edward R. Hamberger. “This new report outlines how the railroad industry provides innovative, on-the-ground technologies and community programs that safeguard our customers’ cargo, the communities we serve and our employees.”
This report focuses on items such as safety investment, the role of “big data” in diagnosing and solving problems, the continued commitment by the rail industry to implement Positive Train Control (PTC) technology, and emerging technologies such as drones and community-based training and outreach.
Features of the report include contributions from experts such as John Tunna, director of the Federal Railroad Administration’s (FRA) Office of Research & Development, and Tony Sultana, a principal investigator at the Transportation Technology Center Inc. (TTCI).
Through input from these experts, as well as the Security and Emergency Response Training Center (SERTC), RailInc. and AskRail, AAR shows how the industry is continuing to address safety in an industry where the train accident rate has fallen 45 percent since 2000 and 80 percent since 1980.
“The exciting thing right now is that technology is moving into the transportation field at a rapid rate,” Tunna said in the report.
The report showcases new safety advancements that the industry is taking, including the development of an ultrasonic detection system that allows a better view into steel rail to locate track defects before they can cause problems. The industry is also investigating the use of drones for inspection of track, bridge and other freight rail infrastructure, as well as monitoring air quality.
Hamberger said the ultimate takeaway from AAR’s first State of the Industry Report is clear: an increased emphasis on rail network investments – $25 billion annually over the last five years on average – collaboration with customers and government and the development of new technologies combine to improve safety.
“The sweeping reduction in freight rail accidents and injuries over the last several decades is the result of stepped-up employee training as well as a dedicated team of safety experts who conduct rigorous research, examine problems in new ways, apply technological advances and novel changes to processes that ultimately make a safe system of transportation even safer,” said Hamberger.
“We are proud of the industry’s efforts, including those highlighted in this report, and look forward to promoting more developments in the future,” added Hamberger.