Association of Transportation Law Professionals' Association Highlights Jan 8, 2007 JUST WHAT ARE UP'S INTENTIONS? By Frank Wilner (The following opinion article explores the political connections of Union Pacific Railroad and speculates on intentions of Union Pacific to acquire rail routes in Mexico as a prelude to merging with either CSX or Norfolk Southern as well as Canadian Pacific. The article was published Jan. 8 in a transportation law journal.) Is Union Pacific (UP) in the hunt for Mexico's largest and most prized railroad -- Kansas City Southern de Mexico (KCSM) --- now leased by Kansas City Southern Railway (KCS)? What UP possesses to make this a reality -- and which BNSF Railway, also in the hunt, may not possess -- are the political connections in Mexico. For sure, BNSF has the cash to make an unsolicited bid for stock control of KCS; but BNSF may not have enough political muscle to obtain Mexican government approval for control of KCSM. It is said that with the right political connections in Mexico, one might achieve most anything. And while UP may be short of cash, it is rich with political connections. Indeed, all it might take for UP to snatch control of KCSM is an unsolicited bid for KCS by a cash-rich private equity firm friendly to UP -- such as the Carlyle Group; followed by a break-up of KCS, with KCSM being transferred to UP with the help of politicos in Mexico. So important are those political connections south of the border that even were BNSF to make an unsolicited bid for KCS, the KCSM routes could still be transferred to UP. You see, it's highly unlikely the U.S. Justice Department, Federal Trade Commission or even Surface Transportation Board could assert any jurisdiction over UP's acquisition of a purely Mexican based railroad -- assuming those agencies, given UP's superior political connections north of the border, would even blink an eye. KCSM --- whose 50-year concession KCS acquired from Mexican conglomerate Grupo TMM - is Mexico's most coveted railroad, running from Mexico City to Laredo and serving vital Mexican ports, including the booming West Coast port of Lazaro Cardenas.  UP's acquisition of KCSM is the sort of transaction over which 19th century rail barons Jay Gould and Cornelius Vanderbilt would have salivated. With U.S. West Coast ports nearing capacity, and Lazaro Cardenas, on Mexico's west coast, poised to become a major North American  inbound container port, control by UP of KCSM would give UP domination over Asia-Pacific land-bridge traffic destined to teeming Mexico City, Atlanta, Chicago, Dallas, Houston and Kansas City; and set the stage for a merger between UP and either CSX or Norfolk Southern, creating the first Atlantic-to-Pacific transcontinental railroad. Likely to follow would be a BNSF merger with the remaining East Coast railroad, creating a transcontinental rail duopoly in the United States. A WHO'S WHO OF POLITICAL CONNECTIONS And before you predict a transcontinental rail marriage would not gain regulatory approval, recognize that the U.S. Surface Transportation Board is the sole arbiter of domestic rail mergers, and the STB and its predecessor Interstate Commerce Commission have been facilitators of numerous other major rail mergers, including the 1996 UP-Southern Pacific merger that was strongly opposed by the Justice Department and other federal agencies. For UP, the grab of KCSM would be equivalent to a month of Sundays. Is this merely pie in the sky? Well, let's look at the players -- all UP friends, who comprise a tangled web of well-connected rain makers and politicos. Begin with UP and its Washington, D.C. law firm, Covington & Burling. Add to the mix the Carlyle Group, a privately held $19 billion international investment firm with close ties to Bush presidents 41 (a former Carlyle adviser) and 43, as reported by Britain's Guardian newspaper and U.S. investigative reporter Jerome Corsi. Stir in other political allies of the Bush family, as well as Mexican politicos, and the tangled web takes on the look of carefully connected dots. Recall that Covington & Burling, in September 2003, hired Linda Morgan, former chairman of the Surface Transportation Board, who supported UP's 1996 merger with Southern Pacific, and who indicated to the Washington Post in 1997 that she favored a railroad duopoly in the U.S. Morgan went to Covington & Burling after Covington partner Mike Hemmer, who headed Covington's transportation practices group, departed in 2002 to become UP's chief legal officer. Morgan also sits on Canadian Pacific's board of directors, suggesting rather than a U.S. transcontinental rail dupoly, a North American transcontinental rail duopoly is on the horizon. Focus now on the Carlyle Group. Recall that in 2002, it purchased the International CSX Lines Division for $300 million, then unsuccessfully sought -- in a plan backed by the Bush administration -- to sell its port-terminal operations to a Middle East government-owned entity for some $1.2 billion. Among the Carlyle Group's U.S. principals are Richard Darman, the first president Bush's budget director, and Jim Baker, the first president Bush's secretary of state and a partner in the Baker Botts law firm that has a long-history of acquisition projects in Mexico. In November 2006, UP created a new board seat for Thomas "Mack" McLarty, president of Kissenger McLarty & Associates (we'll get to them) and a senior adviser to the Carlyle Group. Previously, McLarty was President Clinton's chief of staff and later Clinton's special envoy to Latin America And just four months before McLarty  went to the UP board, Andy Card, with ties to Carlyle Group principals, was elected to the UP board. Card was the first president Bush's transportation secretary -- a job he acquired with assistance from former UP chairman Drew Lewis, also a former transportation secretary -- and was the second President Bush's first chief-of-staff. Also, let's not forget that Vice President Dick Cheney is a former UP board member. Moreover, the Carlyle Group is no stranger to KCSM. In 2003, the Carlyle Group itself unsuccessfully sought to acquire a 51 percent interest in KCSM (then known as TFM). KCS won the bidding war. In fact, Carlyle even inspected the lines of KCSM as part of what was termed, "due diligence." There's more. THE MEXICAN POLITICOS Back in October 2003 --  just weeks after Morgan went from the STB to Covington & Burling --  Kissinger McLarty & Associates entered a global strategic alliance with Covington & Burling. The Kissinger is Henry, the former Nixon administration globe-trotting secretary of state. This was about the time that Kissinger McLarty & Associates -- specifically, Mack McLarty -- was advising BNSF on strategic transportation issues in Mexico. Apparently, McLarty jumped ship to UP, leaving, according to a source, BNSF Chairman Matt Rose in a snit. Now comes the Nov. 21 appointment of Luis Tellez, former head of the Carlyle Group's Mexico operation, as Mexico's secretary of transportation, with regulatory oversight of Mexican rail operations. Tellez is a former chief of staff to Mexican President (1994-2000) Ernesto Zedillo, who previously served on UP's board of directors. As for Tellez, he previously was on the board of directors of Grupo Mexico, which controls a smaller Mexican railroad, FerroMex, that just happens to be 27 percent owned by UP. Interestingly, Tellez joined the Carlyle Group in Mexico as an adviser just prior to Carlyle's unsuccessful 2003 attempt to acquire control of KCSM. KCSM AND LAZARO CARDENAS Here is why KCSM is so coveted a prize: *  KCSM controls all tracks into and out of the Port of Lazaro Cardenas. *  The Port Lazaro Cardenas is blessed with a deepwater channel sufficient to handle the largest of container ships; *  KCSM already has acquired land adjacent to the port under a zero-price, long-term agreement; *  Port operator Hutchinson Wampoa is investing in a 10-fold port-capacity expansion; *  Wal-Mart, whose second biggest market is Mexico, has it's eyes on Lazara Cardenas as a crucial North American port of entry. *  Analysts at UBS project KCSM revenue from Lazaro Cardenas rail traffic will soar from some $30 million in 2007 to almost $100 million by 2015, and $255 million by 2025; *  In terms of lifts, UBS projects an almost two-million 20-foot equivalent container throughput by 2025, compared with some nine million currently at Long Beach/Los Angeles, 1.8 million at Seattle, and some 1.5 million at Oakland. The U.S. West Coast ports, meanwhile, already are operating at near capacity with little room for expansion; *  The rail route from Lazaro Cardenas to Chicago or Kansas City is roughly equivalent in length to the rail routes from congested Long Beach; is 600 miles shorter to Houston and closer to Atlanta. The port also is the closest to the population-dense Mexico City; *  CP Ships, NYK Lines, Maersk and APL already serve the port; and, *  Lazaro Cardenas enjoys a substantial labor-cost advantage -- its per-lift costs being some 30 percent cheaper than at U.S. West Coast ports. Indeed, KCSM, with its sole rail access to the Port of Lazaro Cardenas, is a modern-day Hope diamond; but prying it loose from KCS may be equivalent to freeing Excalibur. And that is why UP's superior political connections are essential BNSF remains interested; but UP, while not awash in cash as is BNSF, has something more valuable --  its new-found cash-rich Carlyle Group and Carlyle's similarly extraordinary political connections. No wonder BNSF's Matt Rose is so irritated. Who said railroads had become a mature and financially boring industry? (The preceding opinion article was published in Association Highlights, a publication of the Association of Transportation Law Professionals. The article does not necessarily express the opinion of the association.)

New ultrasonic technology could help prevent train derailments
UCSD Press Release
August 21, 2006
Researchers have developed a new technique they said is better able than currently used technology to find defects in steel railroad tracks.
Researchers at the University of California, San Diego have developed a new technique they said is better able than currently used technology to find defects in steel railroad tracks, including hard-to-find internal cracks that can break under the weight of passing trains. Track defects account for about one-third of the 2,200 annual train derailments in the U.S., according to the Federal Railroad Administration (FRA), the federal agency charged with enforcing rail safety regulations.

A team led by UCSD structural engineering professor Francesco Lanza di Scalea describes in the Aug. 22 issue of the Journal of Sound and Vibration a defect-detection technique that uses laser beam pulses to gently "tap" on steel rails. Each laser tap sends ultrasonic waves traveling 1,800 miles per second along the steel rails. Downward facing microphones are positioned a few inches above the rail and 12 inches from the downward pointed laser beam. As the prototype vehicle rolls down the test track delivering laser beams taps at one-foot intervals, the microphones detect any telltale reductions in the strength of the ultrasonic signals, pinpointing surface cuts, internal cracks, and other defects.

In March 2006, Lanza di Scalea, project scientist Piervincenzo Rizzo and doctoral students Stefano Coccia and Ivan Bartoli tested a prototype vehicle equipped with the UCSD technology at a test track in Gettysburg, PA. The researchers detected 76.9 to 100 percent of internal defects and 61.5 to 90 percent of surface cuts in dry and wet conditions, respectively.

The UCSD team was supported by ENSCO, Inc., an engineering and technology company headquartered in Falls Church, VA, that develops inspection technologies for the Department of Transportation and other government agencies.

Lanza di Scalea and his team will test an improved design of their technology this fall in Gettysburg as part of an ongoing study funded by the FRA.

"Some of the worst derailments in this country have occurred on tracks recently inspected by the current generation of technology, which often doesn't detect interior cracks in rails that happen to lie under areas of superficial cracking," said Lanza di Scalea. "Our technique is much better able to find such defects, and it can work under varying weather conditions while the inspection vehicle is zipping along a track at speeds of up to 70 mph."

Rail carriers moved 42 percent of America's total coal, chemicals, minerals, food and other goods shipped in 2005, according to the U.S. Department of Transportation. Track-related damage from derailments and other incidents doubled from $55 million in 1993 to $111 million in 2000, and the trend toward longer trains pulling heavier cars at higher speeds creates the potential for even greater losses.

The current generation of track-inspection technologies relies on a variety of techniques, including water-filled wheels or sleds that move over track surfaces at roughly 30 mph while sending ultrasonic pulses downward into the track. The inaudible ultrasonic pulses reflect back as echoes when they encounter cracks. Unfortunately, the signals are routinely blocked by superficial surface cracks from detecting more dangerous internal cracks.

Surface cracking does not interfere with the movement of ultrasonic pulses in the UCSD technology. "The ultrasonic sound we use doesn't come from the top of the rail, but instead travels along the rail," said Lanza di Scalea. "Our pulsed-laser technique, combined with ultrasonic microphones positioned a few inches above the rails and sophisticated software that filters out noise and other sources of variability is potentially very effective at finding internal rail defects."

Misaligned switch caused Norfolk Southern collision in Alabama Trains
 

January 23, 2006

LINCOLN, Ala. - A collision involving an Atlanta-bound Norfolk Southern freight train carrying sodium cyanide about 4:20 p.m. last Wednesday was caused by a misaligned track switch that directed it onto a siding, where it rear-ended another Atlanta-bound freight train that had moved into the siding to allow it to pass, said federal officials in a story in the Montgomery (Ala.) Advertiser.

National Transportation Safety Board investigator Richard Hipskind said it was too soon to tell why the switch, controlled by an NS dispatcher in Atlanta, was misaligned. NS spokeswoman Susan Terpay said Friday the NTSB findings were preliminary. She declined further comment.

Some of the hazardous chemical spilled out of containers during the cleanup process Thursday, but not in a form where it could leak "into air, soil or water," Jerome Hand, a spokesman for the state environmental agency, said Friday. Three crewmembers received minor injuries in the collision.

The fire burned itself out Thursday and evacuees began returning to their homes. Initially an estimated 500 homes were under an evacuation order, but no hazardous chemicals were detected in the air. About 30 people who were unable to flee, because the only route out was over the tracks, were advised to seal their homes and stay inside until it was safe to emerge.

Health officials say sodium cyanide can form flammable gas on contact with water or damp air and can give off irritating or toxic gases in a fire.

Hipskind said a data recording device on the second train indicated it was traveling 53 mph at the time of impact. The speed limit on that section of track is 55 mph.

The first train, which was bound from New Orleans to Atlanta, had two locomotives and 81 cars. The second train, which came from Los Angeles, had three locomotives and 23 cars.

=========================================================================================

Bush reappoints Hall, Sosa to Amtrak board during congressional recess

Progressive Railroading

January 6, 2006

Yesterday, President Bush renamed Floyd Hall and Enrique Sosa to AmtrakÕs board through recess appointments. The Constitution allows the president to fill vacancies that occur during a congressional recess.

In 2003, the president nominated the two men to the board, but their nominations werenÕt confirmed by Congress. Bush recess appointed Hall and Sosa to the Amtrak board in 2004 and their terms ended when the Senate adjourned at the end of its 2005 session. HallÕs and SosaÕs current appointments will expire at the end of the SenateÕs 2006 session.

ÒTheir nominations have been before Congress for almost two years, and as there has been no action on either of them, the president has moved to ensure AmtrakÕs board has enough members needed to establish a quorum,Ó said U.S. Transportation Secretary Norman Mineta in a prepared statement.

Hall is a retired chairman and chief executive officer of Kmart Corp.; Sosa is a retired CEO of BP Amoco Chemicals.

OCEANSIDE December 17, 2005

=========================================================================================

The North County Transit District on Tuesday agreed to end its 10-year relationship with Amtrak, the company that has operated and maintained the San Diego-to-Oceanside Coaster rail service since it started in 1995.

The district's governing board unanimously approved a $45 million, five-year contract with TransAmerica Inc., a smaller company that will run and maintain the Coaster starting in July. In 2007, the company will begin maintaining the lines for the future Oceanside-to-Escondido Sprinter railways, under the agreement.

TransAmerica, a subsidiary of the Missouri-based Herzog Transit Services Inc., has contracts with nine railways in the United States, including three in California. Its regional corporate office is in Oceanside.

The company outbid two other companies for the North County contract. Amtrak would have charged the district $53 million over five years, and Connex, another transit service, would have charged $62 million, according to a report by Lane Fernandes, NCTD manager for commuter rail services.

Fernandes said the three companies were evaluated on such criteria as effectiveness, experience, and customer service before their bids came in. TransAmerica scored higher on the criteria, according to Fernandes. It also happened to offer the lowest bid, making it the "most advantageous offer," he said

But an Amtrak official who spoke during the meeting said she wasn't so sure.

Adrienne Taylor, a senior principal for Amtrak, said TransAmerica's cost for operating in the second year, when it is to maintain the Sprinter, is too low to get the job done.

She said TransAmerica lacks the experience to know how much it will cost to maintain a new rail line. The job, she said, includes operating railroad crossings.

"That's where they are coming up cheaper," she said, adding that in 2007, the transit district could suffer poor quality.

Herzog's vice president for corporate development, Raymond Lanman, who acts as an adviser to TransAmerica, said Amtrak is not aware of the specifics of the contract with NCTD.

If TransAmerica finds that it bid too low, the company and not the transit district would have to absorb the additional costs to maintain the Sprinter, he said.

As for Coaster riders, the switch from Amtrak to TransAmerica will be "seamless," according to Fernandes, who added that TransAmerica was appealing because it had crafted a good changeover plan.

Employees who operate the Coaster, however, will see the difference. They will have to apply for jobs with TransAmerica. Fernandes said these employees will get priority hiring, in accordance with federal labor laws created to protect jobs when such contracts change.

Coaster employees will receive information from TransAmerica regarding job opportunities, Fernandes said.

=========================================================================================

Norfolk Southern Announces New Train Technology

WAVY-TV (Portsmouth, Va.)

December 6, 2005

AP) - Norfolk Southern says is teaming up with another company to start deploying a locomotive computer system to improve fuel efficiency and safe handling of trains.

The system known as LEADER (Locomotive Engineer Assist Display and Event Recorder) is developed by New York Air Brake. It provides engineers with real-time information about a train's operation conditions. The on-board computer calculates and displays optimum speed based on a variety of conditions.

Norfolk Southern tested the system in a 2003 pilot program. The two-year program involved 15 locomotives running coal trains between Winston-Salem, North Carolina and Roanoke, Virginia.

The Norfolk-based company will be begin installing the systems in 2006.

=========================================================================================

Editorial: Tracks could be moved without displacing homes

The Sun Herald (Gulfport, Miss)

October 31, 2005

MICHAEL C. BAREFIELD

As we are looking to improve the Gulf Coast in the rebuilding process, there seems to be a desire by many people, including me, to move the CSX tracks north to free up valuable green space and/or create another east-west traffic corridor, but the exorbitant cost of relocation is an issue.

I like the idea of replacing the current railroad right-of-way with a linear park and trolley line. The linear park concept worked well with the Long Leaf Trace bike/walking/equestrian trail between Hattiesburg and Prentiss, stretching 42 miles. Alternately, the right-of-way could be used for a trolley and a boulevard stretching across the entire Coast.

I believe a good idea to resolve the cost and safety issue is for the federal government to allow CSX to place its rails along the Interstate 10 right-of-way (along the median, for the most part, perhaps with it crossing overhead or underground to the south of I-10 along the industrial seaway to service the tenants of the industrial park). It would not cost the federal government a dime to allow CSX to re-locate there, and CSX could save millions in costs by not having to acquire right-of-way.

Other benefits would result from this relocation, as well. CSX along the Coast would not be shut down the next time a Camille or Katrina strikes, since no long bridges over the bays would be involved. If CSX was along the interstate, it would avoid any crossings with streets and roads (no crossings at underpasses, and short bridges could be built at overpasses between the interstate bridges). The trains could cross Mississippi without ever blowing a whistle or reducing speed for crossings. It would be much safer than any other plan I've heard discussed.

Relocation of CSX to the median of I-10 is a win-win situation that addresses the cost issue, the safety issue, avoids delays of commerce, and should result in no complaints from residents who don't wish to live next to the tracks or be awakened by the whistles.

=========================================================================================

Amtrak Breakup Advances

By MATTHEW L. WALD

October 13, 2005

WASHINGTON, Oct. 12 - The Amtrak board has approved an essential step in the Bush administration plan to break up the railroad, voting to carve out the Northeast Corridor, the tracks between Boston and Washington, as a separate division.

The board, made up entirely of Mr. Bush's appointees, voted in a meeting on Sept. 22 to create a new subsidiary to own and manage the corridor, which includes nearly all the track that Amtrak owns.

The vote was not announced. It was reported on Wednesday in the newsletter of the United Rail Passenger Alliance of Jacksonville, Fla., an organization that has been highly critical of Amtrak management.

The plan, which would require action by Congress, is to transfer the corridor to a consortium including the federal government and the governments of the states in the region that would share the costs to maintain it.

That would relieve Amtrak from spending billions of dollars to build and rebuild bridges, rails and electrical systems, but still let the company run its trains.

The plan would also remove Amtrak from control of that sector, a condition that the railroad's senior executives say would doom high-speed long-distance service. Managers say they have to be able to give their trains priority over local traffic if they have any hope of keeping their schedules.

A large majority of trains in the corridor are shorter-distance commuter trains operated by state agencies in metropolitan regions, although Amtrak trains accrue a majority of the miles traveled.

The four-member board has shown ambivalence to some aspects of the administration's proposal.

On April 21, the chairman, David M. Laney, testified before a Senate committee, "We have concluded for now that the complexities and risks associated with such a split outweigh any benefits."

In a telephone interview on Wednesday, Mr. Laney denied that the vote to make the corridor a separate operating division was a precursor to separating it from Amtrak entirely.

He said it was a way to make the costs clear, for the Northeast corridor, other corridors around the country and for long-distance and transcontinental trains. Such clarity is needed, Mr. Laney said, so Amtrak could ask states for subsidies for operating costs or capital costs, without the states' believing that their money was going to pay for operations in other regions.

"The combination of federal and state support for intercity passenger rail is the only way it's going to be revitalized, in our judgment," Mr. Laney said. "But we've got to be able to deliver numbers to Congress, to the corridor states and the other states where we have operations."

Amtrak supporters saw darker motives in the board's vote. Senator Frank R. Lautenberg, Democrat of New Jersey, one of four main sponsors of a bipartisan bill to shore up the railroad, said separating the corridor was intended to package it for a change in ownership.

"The Bush administration wants to hold a fire sale on Amtrak and dump its best asset, the Northeast Corridor," Mr. Lautenberg said in a statement. "Selling the Northeast corridor is the first step in President Bush's plan to destroy Amtrak and intercity rail service in America."

At the National Association of Railroad Passengers, which lobbies for more subsidies for Amtrak, the executive director, Ross B. Capon, said that separating the corridor into a distinct business entity was a step toward moving it out of Amtrak entirely, but that the move would also have a second effect, insulating the commuter operations in the Northeast from Amtrak troubles. That, Mr. Capon said, would give more leverage to the Transportation Department, which has been leading the charge to close Amtrak or break it up.

"Their dream is an Amtrak crisis where the commuter trains are unaffected and, therefore, the political power behind the protest is that much smaller, and they can go ahead and do whatever they want with or too Amtrak," he said.

A spokesman for the Transportation Department had no comment.

Although the administration has proposed phasing out Amtrak unless major changes are enacted, the House has approved an appropriation of nearly $1.2 billion for the fiscal year that began on Oct. 1, about the same level as the previous year. The Senate may take up the appropriations bill next week. The version passed in committee calls for $1.45 billion.

=========================================================================================

Federal Railroad Administration Urges Safer Shipments of Time-Sensitive Hazardous Materials by Rail DOT

October 05, 2006

(Washington, D.C.) Railroads, manufacturers, refiners, and businesses that ship or receive hazardous materials by rail should immediately improve procedures for tracking the movement of time-sensitive shipments, according to A Safety Advisory distributed by the Federal Railroad Administration (FRA) today.

"Anyone involved in shipping hazardous materials must take the necessary steps to ensure that time-sensitive products are properly tracked from origin to final destination," said FRA Administrator Joseph H. Boardman. "There is no margin for error when it comes to shipping hazardous materials. Everyone involved in this process has to get it right."

The Safety Advisory requests that all railroads conform to a recently updated railroad industry standard that identifies a list of 20-day and 30-day time-sensitive hazardous materials, and requires specific actions to speed up movement of such cars if they are delayed in transit. The advisory also emphasizes that all railroad employees who handle such shipments be aware of, and clearly understand, the procedures.

In addition, hazardous materials shippers and end users should closely monitor the products they order and/or transport by increasing communication between one another and the railroad as shipments are in-transit to ensure all parties are aware of their location and expected delivery date, the FRA said.

The Safety Advisory is a direct result of an incident that occurred in Cincinnati, Ohio this August, Boardman said. A tank car carrying the time-sensitive chemical styrene was not delivered to its final destination, and instead apparently sat on the same railroad for seven months. As a result, the stabilizing agent in the styrene expired causing a reaction that ultimately led to an unintended release of the product and a precautionary evacuation of the surrounding area. The FRA's investigation of this incident is ongoing, Boardman added.

There are more than 1.7 million shipments of hazardous materials by rail each year, and almost all arrive at their destination safely and without incident.

FRA said the Safety Advisory will further reduce the likelihood of an event similar to the Cincinnati incident.

=========================================================================================

Railroads can help reduce major U.S. cities’ highway congestion, study says
Progressive Railroading
September 19, 2005

Freight railroads can help reduce highway gridlock, according to a recent study of 47 major U.S. urban areas sponsored by the Association of American Railroads (AAR). If 25 percent of the nation’s freight is shifted from truck to rail by 2025, highway commuters could save an average of 41.9 hours in travel time annually, the study estimates.

The freight shift would reduce average congestion costs by $657 per commuter and cut gasoline consumption by 15.6 million gallons each year. The shift also would lower the nation’s air pollution an average of 792,100 tons annually.

“With gas prices soaring and freight volume expected to grow two-thirds by 2020, freight railroads are critical to reducing fuel consumption and easing congestion,” said Wendell Cox, a transportation expert and the study’s author, in a prepared statement. “However, to carry increasing freight volumes, railroads need more capacity.”

One freight train can move as much cargo as 500 trucks, and one intermodal train can carry the equivalent of 300 trucks, according to AAR estimates.

“The intermodal partnership between the rail and trucking industries combines the best abilities of the transportation modes and is an important solution in the battle against traffic congestion,” said AAR President and Chief Executive Officer Edward Hamberger.
=========================================================================================
 

Million Dollar Investment Expands Bulk Terminal in Pittsburgh
Articles / dBNews Pittsburgh
Date: Wednesday, September 14, 2005 07:51:30

PITTSBURGH -- Norfolk Southern Corporation (NYSE:NSC) today announced that Norfolk Southern Railway's Pittsburgh bulk transfer facility recently received more than a million dollars in upgrades to provide improved handling of various products, including food grade and plastics, as well as the ability to handle new products, such as lumber. The upgrade includes a capacity increase of approximately 50 additional railcar spots and enhancements to its service quality, security, and appearance.

"This continued investment in our Thoroughbred Bulk Transfer (TBT) network demonstrates to customers that Norfolk Southern is committed to our branded bulk terminal network and markets," said Mike Webb, Norfolk Southern's manager of distribution services.

The Pittsburgh TBT terminal also is served by the Ohio Central Railroad, and it will continue to be an "open" terminal for all qualified trucking companies.

Norfolk Southern's operator in Pittsburgh is Superior Bulk Logistics. Superior Bulk Logistics is headquartered in Oak Brook, Ill., and operates three other TBT facilities for NS. Superior Bulk Logistics owns Superior Carriers, Inc, the third largest chemical hauler in North America, and also owns Carry Transit, a food grade bulk trucking company.

TBT facilities handle the transfer of bulk products, such as plastic pellets, dry and liquid chemicals, construction materials and food products from one mode of transportation to another. Bulk transfer permits off-rail shippers and receivers of varied commodities to combine rail's long-haul efficiencies with truck's convenient door-to-door delivery.

Norfolk Southern's TBT facilities are located in Atlanta; Augusta, Ga.; Baltimore; Bethlehem, Pa.; Buffalo, N.Y.; Charlotte, N.C.; Chattanooga, Tenn.; Chicago; Cincinnati (2); Cleveland; Columbus, Ohio (2); Dalton, Ga.; Edgemoor, Del.; Elizabeth, N.J.; Fayetteville, N.C.; Greer, S.C.; Jacksonville, Fla.; Louisville, Ky.; Miami, Fla.; Mobile, Ala.; Paterson, N.J.; Petersburg, Va.; Pittsburgh; Spartanburg, S.C.; Whiting, Ind.; Willis, Mich.; and Winston- Salem, N.C.

Norfolk Southern Corporation is one of the nation's premier transportation companies. Its Norfolk Southern Railway subsidiary operates approximately 21,300 route miles in 22 states, the District of Columbia and Ontario, Canada, serving every major container port in the eastern United States and providing superior connections to western rail carriers. NS operates the most extensive intermodal network in the East and is North America's largest rail carrier of automotive parts and finished vehicles.
=========================================================================================

RailAmerica to acquire four short lines, lease 48-mile CSX branch line

Railway Age
September 9, 2005

On Sept. 30, RailAmerica will be home to another four short line operations. Alcoa, Inc., selected the holding company to acquire four railroads serving its aluminum manufacturing operations in Texas and New York, and a former specialty chemicals facility in Arkansas. As part of the deal, RailAmerica and Alcoa will enter into long-term service agreements.

The $77.5 million price for Point Comfort & Northern (Port Comfort, Texas), Rockdale, Sandow & Southern (Sandow, Texas), Massena Terminal (Massena, N.Y.,), and Bauxite & Northern (Bauxite, Ark.) is said to be based on RailAmerica assuming a targeted permanent working capital deficit. In addition, RailAmerica plans to fund substantially all the cash purchase price through a $75 million increase in the term loan portion of its existing senior secured credit facility.

"We look forward to providing quality rail service to the Alcoa facilities as well as other customers on the line," said Charles Swinburn, CEO of RailAmerica, during today's announcement.

Meanwhile, RailAmerica has signed a 25-year lease to operate CSX Transportation's 48-mile Fremont branch. The line runs from Fremont, Mich., to West Olive, Mich., and interchanges with RailAmerica's Michigan Shore Railroad and CSXT. RailAmerica will begin service here on Sept. 10.
=========================================================================================

SYSCO Chooses Site on CSXT Lines for New Redistribution Center

SYSCO, North America's largest food service marketer and distributor, announced on Aug. 16 its purchase of a site in Alachua, Fla., where it will construct a 500,000 square-foot redistribution center. The location is served directly by CSXT and is expected to be in operation in late 2006. It will include freezer and refrigeration space, dry storage and offices.

"The Alachua site was selected for a variety of reasons, including an available employee workforce, the quality of life the community affords to potential employees and the site's logistical accessibility to Interstate 75 and railroad networks," said Kenneth Spitler, SYSCO executive vice president and president of its North American Foodservice Operations in a press release.

This is the second of several new SYSCO redistribution centers planned or in the works. The first, in Virginia, began shipments in February 2005 to serve the company's Northeast region. The Florida location will serve its Southeast region, and a third is in the planning stages to cover the Midwest. SYSCO Account Manager Jim Borgers said in an e-mail to CSXT that theirs is a company that has "taken a long-term look at the transportation industry and is willing to make major changes in the way they do business to adapt to the current and future challenges in capacity, driver shortages and equipment availability that the trucking industry presents."

A cross-functional team helped to secure the location of the new center on CSXT lines. The team included John Milton, director-technical programs, Emerging Markets; Marco Turra, manager-Market Strategy and Development; Ned James, Market Manager-Industrial & Agricultural; Donna Cerwonka, director-Marketing, and Lou Piccione, director Sales, both in Food and Consumer Products.

=========================================================================================

Florida Times-Union on Friday, Aug. 12, 2005.

AT CSX, BUILDER BOB LOOSENS PURSE STRINGS

NEW YORK CITY -- CSX Inc. will invest an additional $300 million to $400 million in capital improvement projects in 2006 and 2007, company officials said Thursday (Aug. 11), laying the groundwork for the company to increase revenues and improve its operating ratio by 2010, according to this report by Timothy J. Gibbons published by the Florida Times-Union.

The Jacksonville-based railroad company revealed its strategic plans for the next five years during a conference of investors and financial analysts held at the New York Stock Exchange. It was the company's first such meeting in three years, and an upbeat one, with CSX coming off its sixth quarter of record earnings.

The jubilation shone most clearly at the end of the day, when Michael Ward, CSX's president, chairman and chief executive officer, rang the bell closing the trading day at the stock exchange. Around 20 company executives were on hand for the event.

For the hundred-plus member audience at the conference, many of whom were financial analysts, the highlight came earlier in the day, when Chief Financial Officer Oscar Munoz laid out the company's outlook for the next five years. During that period, he said, CSX should see its operating income jump 10 percent to 12 percent, while earnings per share will rise by 12 percent to 14 percent.

"What's impressive about these double digits is they're organic," said Munoz. "It's a growth company that's generating cash flow."

That cash flow will enable the company to lay more track and buy more locomotives, projects that will push the company's capital spending budget to $1.3 billion or $1.4 billion, Munoz said during the conference, held in a Tiffany glass-ceiling room where traders used to meet.

"As you earn the right to spend, you have the money," he said.

None of the CSX executives who spoke at the conference, which included half-a-dozen of the company's leaders, focused on 2006, although they said that growth should be steady next year.

"I wanted [the analysts] to have a picture of the company and its bright future. Putting it in context makes a difference, "CSX Chairman Michael Ward said Thursday in New York.

Instead, they focused on the long-range plans of the railroad, which Ward said has a geographic advantage as the country's demographics change. CSX tracks run throughout the East Coast and are particularly strong in the Southeast, which has seen, and is expected to continue to see, its population grow.

"It was appropriate to talk about the future," Ward said in an interview after the conference. "I wanted [the analysts] to have a picture of the company and its bright future. Putting it in context makes a difference."

Those on hand seemed to agree. "It was interesting to get a deeper look at the company," said Peter Bates, a T. Rowe price analyst. "For me it was helpful."

Few other analysts at the conference would agree to be quoted by name, either citing their employers' policies or saying they wished to review the figures first. Several, however, said they were pleased to see CSX looking toward the future.

That future does include some hurdles the company will have to overcome. Although it has seen its revenue grow and share price jump over the past several quarters, it still lags near the bottom of the country's major railroads when it comes to measurements like operating ratio, a standard industry measurement of fiscal health.

CSX's ratio of 81.9 percent is about six points worse than industry leader and CSX competitor Norfolk Southern Corp., which has a ratio of 76 percent, and behind Burlington Northern, which posts a ratio of 78.1 percent.

That will change, Munoz said. The company's prior goal of 80 percent "is no longer a goal or an option," he said. "We've got to get as good as the next guy."

In meeting that goal, the company's leaders think they'll be helped by increasing capacity on their tracks, particularly by building sidings, tracks laid next to main lines that allow trains to pass each other.

The company is also focusing on its commitment to scheduled service, in which each train is given a particular departure time, rather than being sent out as needed. Over the past 18 months, company leaders have impressed the importance of things like on-time departure and rigorous adherence to schedules, said Tony Ingram, CSX's chief operating officer.

"We cannot change the plan every day," he said. "We have to require our people to do the same thing every day."

Taken together, the executives told the conferences, those steps will propel the company forward over the next five years.

"The future of CSX," Ward said, "is as bright and promising as it has ever been in our history."

(The preceding report by Timothy J. Gibbons was published by the Florida Times-Union on Friday, Aug. 12, 2005.)

==========================================================================================

8/3/2005 Joint Class I Service

UP, CSXT to offer dedicated cross-country perishables service

Union Pacific Railroad and CSX Transportation are teaming up to provide a dedicated produce unit-train service between Washington state and New York. To launch in first-quarter 2006, the service will offer a 124-hour transit time with 55-car trains moving intact from origin to destination.

The unit trains will feature 64-foot refrigerated box cars, each designed to move perishables — including apples, pears, onions and potatoes — equal to four truckloads. The cars are equipped with enhanced insulation, energy-efficient cooling systems and Global Positioning System monitoring to control temperature.

Unit trains will originate in Wallula, Wash., and terminate in Albany, N.Y. UP and CSXT will interchange in Chicago. Railex L.L.C. will own and operate new loading and unloading centers, and manage product handling and distribution.

“We believe this new service will provide an alternative method to ship perishable produce from Washington to New York other than over-the-road transportation,” said John Philp, Union Pacific Railroad assistant vice president of food and refrigerated products, in a prepared statement.8/3/2005 Joint Class I Service
UP, CSXT to offer dedicated cross-country perishables service
Union Pacific Railroad and CSX Transportation are teaming up to provide a dedicated produce unit-train service between Washington state and New York. To launch in first-quarter 2006, the service will offer a 124-hour transit time with 55-car trains moving intact from origin to destination.

The unit trains will feature 64-foot refrigerated box cars, each designed to move perishables — including apples, pears, onions and potatoes — equal to four truckloads. The cars are equipped with enhanced insulation, energy-efficient cooling systems and Global Positioning System monitoring to control temperature.

Unit trains will originate in Wallula, Wash., and terminate in Albany, N.Y. UP and CSXT will interchange in Chicago. Railex L.L.C. will own and operate new loading and unloading centers, and manage product handling and distribution.

“We believe this new service will provide an alternative method to ship perishable produce from Washington to New York other than over-the-road transportation,” said John Philp, Union Pacific Railroad assistant vice president of food and refrigerated products, in a prepared statement.

==========================================================================================

Canadian Press
Friday, July 29, 2005

WASHINGTON (CP) -

Amtrak is restoring more of its high-speed Acela train service along the East Coast

Beginning Monday, Acela will run nine roundtrips between Washington and New York each weekday, Amtrak said Thursday. That is three more than the passenger railway is currently operating along that route, but it is down from the 15 weekday roundtrips Acela was making earlier this year between Washington's Union Station and New York's Penn Station.

Amtrak suspended Acela service on April 15 because of brake problems and has been bringing it back gradually as brakes are replaced.

Also starting Monday, Amtrak is increasing the number of Acela roundtrips between Washington and Boston from one to three each weekday. Additionally, Acela weekend service will be increased beginning this Saturday.

The passenger railway said the Acela schedule should expand further as more of the high-speed trains are put back on the tracks in coming months.

Montreal-based Bombardier, Inc., which makes the trains, has said its target date for equipping the entire Acela fleet with the new brakes, made from a different design, is September. Bombardier is still investigating what caused the millimetre-size cracks in 317 of the Acela's 1,440 disc brake rotors. The cracks were found on all 20 Acela trains

© The Canadian Press 2005Post on Wed, Jul. 27, 2005
==========================================================================================
Senators propose giving Amtrak $3.3 billion in operating funds over six years

DONNA DE LA CRUZ
Associated Press

WASHINGTON - Amtrak's operating subsidies would be cut but the railroad would receive more money for improvements to tracks and equipment, under a bipartisan proposal to be considered by a Senate committee Thursday.

The bill calls for reducing Amtrak's operating subsidy by 40 percent, leaving the railroad $3.3 billion in subsidies over six years. Those cuts would be absorbed through cost cutting, restructuring and reform.

The railroad, however, would receive $4.9 billion over six years for capital grants, and the bill would create a grant program giving states $1.4 billion for intercity passenger rail service.

Amtrak received a $1.2 billion subsidy for the current year. Another Senate measure would give Amtrak a $1.4 billion subsidy next year.

But the Bush administration and some lawmakers have pushed to eliminate Amtrak subsidies. An attempt by the House Appropriations Committee to cut the railroad's budget by more than half and cut off subsidies for every cross-country route was reversed by the full House in June.

The bipartisan bill - sponsored by Sens. Trent Lott, R-Miss.; Ted Stevens, R-Alaska; Frank Lautenberg, D-N.J.; and Daniel Inouye, D-Hawaii - was scheduled for consideration by the Commerce Committee, where Stevens is chairman, on Thursday.

"Amtrak as an organization must change culturally to think and run more like a business," said Lott, chairman of the Commerce surface transportation subcommittee. "That is why our bill requires Amtrak to develop much better financial systems and be held accountable for its use of federal funding."

Lautenberg said the bill provides needed funding to national passenger rail service, which he called a necessity, not a luxury.

Amtrak President David Gunn called the measure a positive first step. But Transportation Secretary Norman Y. Mineta said he was concerned that the bill does not "provide the fundamental changes Amtrak needs if it is to survive."

==========================================================================================

Norfolk Southern profit soars on gains, revenue rise

07/27/2005

By SUE LINDSEY  / Associated Press

Norfolk Southern Corp. said Wednesday it nearly doubled its profit in the second quarter, boosted by record railway operating revenue and the effects of tax legislation.

Shares of Norfolk Southern rose 90 cents, or 2.6 percent, to $35.43 in morning trading on the New York Stock Exchange.

The railroad earned $424 million, or $1.04 per share, in the quarter ended June 30, compared to $213 million, or 54 cents per share, in the year-ago quarter. The recent quarter included a $96 million gain related to Ohio phasing out its corporate franchise tax, as well as an extra $24 million for the settlements of two coal rate cases.

Excluding those items, net income still set a record for any quarter before accounting changes, at $304 million, or 75 cents per share. That figure exceeded estimates by analysts surveyed by Thomson Financial, who were looking for the company to post earnings of 65 cents per share in the quarter.

Operating revenue rose 19 percent to $2.15 billion in the quarter from $1.81 billion.

The company said general merchandise revenue rose 12 percent to a record $1.15 billion in the quarter. Coal revenue increased 36 percent to $578 million. Norfolk Southern handled 47.3 million tons of coal, coke and iron ore during the period, setting a second-quarter volume record.

Intermodal revenue rose 18 percent to $428 million in the second quarter.

A greater demand for coal and higher fuel prices increased the demand for traffic, said president Wick Moorman, and the railroad was able to meet it.

"If you don't offer the service the customers need, you're not going to get the business," he said.

Railway operating expenses grew 13 percent to $1.56 billion, due to higher diesel fuel prices and costs associated with increased traffic volume, including expenses related to hiring additional train and engine service employees and maintenance activities.

For the first six months, net income was a record $618 million, or $1.51 per share, up 67 percent from $371 million, or 94 cents a share, during the same period in 2004.

Operating revenue in the first half increased 17 percent to $4.1 billion from $3.5 billion in the year-earlier period.

"Norfolk Southern's exceptional second-quarter and first-half performance were driven by strong revenue improvement, a better operating ratio and sound rail operations," said David R. Goode, chairman and chief executive officer.

 January 16, 2004

CSX Transportation says it will cram 15 weeks of normal maintenance into five days during a maintenance blitz between Montgomery, Ala., and New Orleans, March 15-19. More than 800 employees working round-the-clock shifts will replace or refurbish 75,000 ties, 18.5 miles of rail, and embankment shoulders on more than 54 miles of main line. The railroad says it’s putting plans in place to mitigate, as much as possible, service disruptions for its customers.