jstagl

Power conversion converters

Jeff Stagl — Mon, 17 Sep 2012 14:37:00 GMT

As many U.S. railroads continue to implement positive train control, upgrade infrastructure to keep pace with increased traffic demands or improve electrified systems, they're relying on power conversion systems to help in those areas. And a number of technological advances are occurring in the power conversion system realm. To gain a better understanding of those advances, and learn why suppliers are trying to develop or modify their systems to meet railroads' reliability, adaptability and durability demands, follow this link to read "Power conversion converters" from our September issue.

A little 'team work' at CSX

Jeff Stagl — Tue, 11 Sep 2012 20:22:00 GMT

Before I rode a Florida East Coast Railway train from Jacksonville to Miami in late May, I spent some time at CSX Corp.'s Jax headquarters meeting with several senior executives, including new CFO Oscar Munoz and new CFO Fredrik Eliasson. We talked about their individual roles, as well as their contributions to the slightly revamped and reinvigorated senior team, and how they planned to help CSX reach its growth goals. I had an opportunity to discuss the same things with CEO Michael Ward by phone in June. Suffice it to say that some "team work" by senior executives to tackle certain key objectives — such as employee engagement/development and traffic growth — is helping to build teamwork company-wide and prompt performance results. For more insight into those efforts, read my cover story for the September issue ("Team Work" — surprised?) that's already posted on our web site and is coming soon in printed form.

The 'real upside' of investing in Class Is

Jeff Stagl — Mon, 23 Jan 2012 20:02:00 GMT

On CNBC’s “Fast Money” program, several analysts weighed in on two Class Is’ investment-worthiness as part of a feature called “Take Your Positions.” Trader Mike Murphy touted CSX Corp. stock as a “buy” and Fast Money’s Brian Kelly agreed. But options trader Peter Najarian said: “If you want a real upside, go to KCS instead of CSX.” Kansas City Southern reports its fourth-quarter financial results at 4 pm CST today and CSX does likewise at 7:30 am tomorrow. If their results are anything like Union Pacific Corp.’s announced on Jan. 19 — which UP senior execs characterized as “outstanding,” while touting 2011 as the most profitable year in the Class I’s history — KCS and CSX figure to attract more investors. The other Class Is that haven't reported yet just might, too. Stay tuned tomorrow for the rail industry’s version of “Super Tuesday,” when CSX, CN and Norfolk Southern Corp. report their 4Q results.

UP has better handle on productivity, resource usage — and the economy

Jeff Stagl — Fri, 22 Oct 2010 20:47:00 GMT

Union Pacific Corp.’s third-quarter earnings conference on Oct. 20 included a newbie: Lance Fritz. He became executive vice president of operations on Sept. 1 to succeed long-time operations guru Dennis Duffy.

During his first stab at an operational overview within the confines of a quarterly conference, Fritz provided interesting commentary on productivity and resources — and some data that suggests the economy just might be on an upward swing.

In terms of productivity, total first crew starts increased only 8 percent in the third quarter despite a 14 percent jump in carloads, he said. The primary reasons: more gross ton-miles per employee and longer trains.

In addition, freight-car utilization remained strong in the quarter despite a nearly 3 percent increase in length of haul.

“A prudent use of our working resources enables us to leverage volume,” said Fritz.

As for resources, UP had 1,100 train and engine-service workers on furlough as of Sept. 30 compared with 2,700 at the end of the second quarter and 3,000 at the end of the first quarter.

“While recall rates have averaged better than 80 percent this year, the current furlough pool has been out of work since late 2008. So we expect only about half of these to return to service,” said Fritz. “Because of this, we are ramping up our hiring efforts system-wide for 2011.”

UP already did some hiring in 2010 and will end the year with about 1,700 new hires, added Chairman, President and CEO Jim Young during the conference’s Q&A session.

“I would expect our fourth-quarter employment levels probably to be up a little bit from where we were,” he said. “Next year, our attrition numbers are going to run around 3,500 to 4,000.”

Fritz also addressed locomotives in storage, which fell to 876 as of Sept. 30 vs. 1,320 on June 30 and 1,360 on March 31.

“Our locomotive resources are still in good supply although the average age of the remaining surplus fleet is about 26 years and we have fully deployed our DPU locomotives,” said Fritz.

Freight cars in storage dropped to 30,000 compared with 37,000 on June 30 and 38,000 on March 31. Demand has strengthened for covered hoppers to support export grain demand, said Fritz.

“Although it's normal for us to have stored cars as a result of seasonality, we would expect the more normal storage number to be around 10,000 to 20,000,” he said.

As part of its $2.6 billion capital spending budget for 2010, UP plans to acquire 625 new covered hoppers. The railroad also might purchase as many as 100 new locomotives next year.

Faint, but perhaps good signals about a strengthening economy, no?

CSX tries to stay the fluid-railroad, sub-70 OR course

Jeff Stagl — Wed, 13 Oct 2010 19:10:00 GMT

I listened in on CSX’s third-quarter earnings conference this morning and got a pretty good handle on the drivers for the Class I’s stellar financial performance, as well as the few hindrances to growth. Follow this link to read an article I wrote today on the railroad’s quarterly financials for our daily online news.

One thing I didn’t share in that article is an operational performance review provided by EVP and COO David Brown. Productivity gains contributed to CSX’s record financial results, including the all-time-best quarterly operating ratio of 69.1, he said. In addition, the railroad continued to make strides with safety performance and key service metrics.

The third-quarter FRA personal injury rate decreased 8 percent to 1.06 — the sixth consecutive quarter CSX registered a year-over-year improvement, said Brown. In terms of train accidents, the third-quarter frequency rate improved 13 percent to 2.25.

Third-quarter service metrics on a year-over-year basis show on-time originations fell from 82 percent to 77 percent; on-time arrivals dropped from 79 percent to 69 percent; average train velocity inched down from 21.8 mph to 21.1 mph; and average terminal dwell time increased from 24 hours to 24.8 hours.

On-time originations and arrivals still remained within ranges from the past several years and continued to support efficient and reliable train operations, said Brown. And although train velocity fell slightly and dwell time increased modestly, the network remained stable as volumes continued to build in the quarter, he said.

Brown also reviewed resource utilization data, which shows road crew starts rose 8 percent to 122,087, local crew starts increased 4 percent to 35,972, yard crew starts went up 3 percent to 69,048 and total crew starts rose 6 percent to 227,107. Active train and engine-service headcount increased from 11,107 in third-quarter 2009 to 11,324 and the number of active locomotives rose year over year from 3,295 to 3,598 — both well below the peak levels of 2006, said Brown.

Road, local and yard crew starts increased at a rate below the 10 percent year-over-year volume increase in the quarter, he said.

“When feasible, incremental volume was added to existing trains using available capacity and we avoided additional crew starts,” said Brown. “This operating leverage was particularly evident in our intermodal road starts. A 19 percent year-over-year increase in volume was handled with just a 10 percent increase in crew starts.”

Also during the conference, EVP and CFO Oscar Munoz provided a little more detail on the $100 million increase in 2010 capex from $1.7 billion to $1.8 billion. The additional capital will be targeted at projects that support capacity, fluidity and productivity.

“This new capital is focused on strategic investment with the support of our strong growth in our intermodal business and investment in our rolling stock which helped further drive productivity,” said Munoz.

In terms of intermodal investments, the extra capital will serve as a broad-based investment from facilities to yard expansions to technology to containers, he said. However, CSX won’t purchase any new locomotives this year and instead will buy about 50 next year.

Munoz also fielded a question about the Class I’s ability to maintain a sub-70 operating ratio.

“Well, we're always trying to build on our great results, and in this quarter, it's certainly consistent with that,” he said. “In the near term, we'll continue to focus on the fundamentals that have been driving us. Longer-term, this railroad can and will operate below 70 percent on a consistent basis.”

TCU: World's oldest man a retired railroader

Jeff Stagl — Wed, 18 Aug 2010 14:54:00 GMT

Here’s a human interest story that should interest long-time railroaders. The world’s oldest man is a former career rail worker, according to the Transportation Communications Union (TCU).

The Guinness Book of World Records recently recognized 113-year-old Walter Breuning of Great Falls, Mont., as the planet’s oldest living man. He was a BNSF clerk who signed on with TCU in 1919, according to the union.

Breuning’s current daily activities include upper-body calisthenics for 10 minutes each morning, listening to radio news and “entertaining a continuous stream of visitors,” a news item on TCU’s website states. He’s usually in bed by 8 p.m.

“The way I feel, I'll be here a long time yet,” said Breuning.

This and that from CN's, UP's 2Q earnings presentations

Jeff Stagl — Fri, 23 Jul 2010 19:20:00 GMT

I listened in on CN’s and UP’s second-quarter earnings conferences on July 22, and I thought I’d share a few tidbits that I found interesting.

During CN’s presentation, President and CEO Claude (that’s “Clode” for those who don’t know) Mongeau dispelled concerns that velocity and fluidity might suffer as volume is added to the railroad, and stressed how the Class I instead is improving velocity and fluidity while at the same time improving service metrics for customers.

“Our focus is on the first mile and last mile, and understanding our customers business,” he said. “We call it deeper customer engagement or supply chain innovation. At the end of the day, it's about finding ways to work hand in hand with your customers so that we can help them grow, and as they grow, help us bring the volume.”

Also, EVP and COO Keith Creel discussed how distributed power continues to pay dividends for CN.

“Approximately 35 percent of our road fleet is now DP-equipped, and that number will move to about 50 percent by the time we finish our 2010 and 2010 locomotive plans,” he said.

Creel also shared a few service metric highlights, such as a 9 percent year-over-year gain in cars per yard switching hour from 36.0 to 39.4, 4 percent gain in mainline gross ton miles (GTMs) per available horsepower from 308 to 321 and one-hour drop in average terminal dwell time from 17.5 to 16.5 hours.

GTMs per available horsepower continue to show record improvement, said Creel.

“This is a reflection of the increase in trainloads … and our culture of continuously matching our locomotive fleet inventory to the workload at hand,” he said.

Likewise, UP Vice Chairman-Operations Dennis Duffy highlighted a few service metrics during his executive team’s presentation. From the first quarter to the second, UP’s service delivery index increased from 88.9 to 92.1, car connection performance improved from 89.4 percent to 91.3 percent, train velocity rose from 26.2 mph to 26.4 mph and industry spot and pull improved from 90.4 percent to a record 93.2 percent.

Industry spot and pull “is one of the most visible measures for our customers as it represents their first and last events of each car cycle,” said Duffy. “Car connection performance, which measures whether we put the right cars on the right train, was maintained at very high level.”

Wrapping up the exec team’s formal presentation, Chairman, President and CEO Jim Young said UP’s service metrics reflect best-ever results,

“[Yet] we still have significant upside. Our network infrastructure is built to handle 190,000 to 200,000 weekly carloads,” he said. “And we have the working resources needed to efficiently provide great customer service as volumes return.”

CSX in 2Q: Winds of reporting change and a few service headwinds

Jeff Stagl — Tue, 13 Jul 2010 18:30:00 GMT

CSX Corp.’s second-quarter earnings conference included the usual breakdowns of traffic volume, revenue generation and income. But the webcast and teleconference held the morning of July 13 also provided some atypical morsels of information.

For starters, CFO Oscar Munoz said that beginning with the second quarter, intermodal no longer will be treated as a separate business segment. The change is a result of a strategic business review, certain management realignments and alterations in CSX’s intermodal service associated with the start of the UMAX domestic interline container program with Union Pacific Railroad in March. Last month, CSX merged CSX Transportation and CSX Intermodal, combining the subsidiaries’ sales forces and related support activities.

The Class I now views intermodal similarly to merchandise and coal, said Munoz. Intermodal revenue will continue to be a separate revenue group, but CSX no longer will provide a separate income statement and operating ratio for intermodal.

During the conference, COO David Brown also stated that the Class I is adding resources because of a volume upturn, but at a lower rate than traffic growth. In 2Q, CSX employed 11,225 T&E workers and operated 3,559 locomotives vs. 10,758 and 3,323, respectively, in second-quarter 2009.

Although volume increased 13 percent overall, total crew starts rose only 6 percent to 230,548, said Brown. Road crew starts increased 9 percent to 124,976, local crew starts inched up 2 percent to 35,475 and yard crew starts rose 4 percent to 70,097.

In terms of service performance, the traffic uptick had a slight impact on metrics. From last year’s to this year’s 2Q, on-time originations dropped from 83 percent to 78 percent, on-time arrivals fell from 81 percent to 71 percent and velocity declined from 21.7 mph to 20.9 mph. Average terminal dwell time improved from 24.1 hours to 23.7 hours.

“Overall, we are pleased with our network performance in the second quarter,” said Brown. “All measures rebounded from the first quarter and the network remained fluid as volume increased.”

I’ll be interested to see if the other Class Is share similar service metrics, or other tasty tidbits, when they report 2Q financial data later this month. Or if the other large roads will register as strong a quarter — replete with income and operating ratio records, and high earnings — as CSX.

For those keeping score, Union Pacific and CN report on July 22; Norfolk Southern and Kansas City Southern report on July 27; and Canadian Pacific reports on July 28. As most of the world knows, BNSF Railway no longer publicly discloses its financial results because it’s owned by Warren Buffett and his beloved Berkshire Hathaway.

U.S. trade gap grows wider, but recovery signs are rampant in intermodal sector

Jeff Stagl — Wed, 19 May 2010 17:59:00 GMT

In March, the U.S. trade gap widened to $40.4 billion from February's $39.4 billion, according to an IHS Global Insight international trade balance report. Sounds like bad news, right? Not necessarily.

March export volumes rose 3.4 percent and value increased 3.2 percent, while import volumes climbed 3.5 percent and value went up 3.1 percent.

“This was a positive report for the U.S. and global growth outlook,” the IHS Global report states. “It showed sharp increases in both export and import volumes, indicating that the world trade recovery still has plenty of momentum.”

Global trade recovery signs are rampant in the intermodal sector. In the first quarter, total North American intermodal volume surged 8.4 percent and international container volume climbed 7.8 percent — jumping 18 percent in March alone — compared with the same 2009 periods, according to the Intermodal Association of North America. In addition, international intermodal shipments grew faster than overall long-haul truck moves in Q1, according to FTR Associates.

“The stars are aligning for what could be an acceleration in intermodal share growth,” said Lawrence Gross, a FTR senior consultant, in a recent report. “Active truck capacity is coming into balance with demand, and even a modest increase in freight demand could lead to shortages of truck drivers and, hence, truck capacity, resulting in more opportunity for intermodal. Increases in fuel prices and the continued rebound in international shipments will also aid share growth.”

After a dismal 2009, international intermodal traffic could stand a serious boost in 2010. That the tealeaves and Tarot cards suggest it’ll happen has to be big-time encouraging for the rail industry’s biggest intermodal players.

On the road to coal heaven with the Indiana Rail Road

Jeff Stagl — Wed, 12 May 2010 18:33:00 GMT

On May 11, I had the rare opportunity to see the largest stretch of new track built in Indiana since World War II. Indiana Rail Road Co. (INRD) President and CEO Tom Hoback was kind enough to invite me aboard the “President’s Special” train, which provided a tour of a 5.2-mile industrial spur and loop track the regional recently completed for Peabody Energy’s new Bear Run coal mine in Sullivan County, Ind., which is expected to become the largest surface coal mine east of the Mississippi River.

Early morning thunderstorms gave way to partly sunny skies by the time the train pulled away from INRD’s Jasonville yard, providing a clear view of the pristine track — continuous-welded rail, wood ties and limestone ballast all purchased in Indiana — and the rural countryside, including cattle farms. Cattle even played into the project. Along the way, me and my 20 or so fellow President’s Special invitees, including other INRD executives, several elected officials and an Indiana DOT representative, observed a large drainage structure INRD constructed under the spur to enable cattle to cross the right of way (unfortunately, the farmer who requested the cow walk died before it was completed). Also, we saw a high-arching earthen and gravel bridge built as a walkway for another farmer’s cattle.

However, it was the $17 million, privately financed spur — which links Peabody’s coal load-out facility to an east-west INRD line — that was the star attraction. The spur will exclusively serve the Bear Run mine, with the first of what Hoback hopes are many 135-car trains scheduled to make the maiden run on May 26.

“As good as any Class I mainline,” Hoback said proudly while observing the spur from the back of a vintage car on the President’s Special.

The mine plans to produce 8 million tons of coal annually, then perhaps ramp up production to 10 million tons in several years. INRD will move about 3.5 million tons this year, 6 million tons in 2011 and 8 million tons beginning in 2012, said Hoback. The regional has obtained contracts from Peabody, Duke Energy and Hoosier Energy, and the coal predominantly will be used by Indiana power plants, he said. However, there’s a possibility southeastern Indiana coal could be consumed by a power plant far outside the state for the first time.

“There’s talk of this coal going to Florida,” said Hoback, adding that INRD would work with CSX Transportation on such a move.

Before that happens, INRD needs to complete some rail welding, rail clip and minor ballast work on the spur, and Peabody has to cap off its coal processing and handling facilities adjacent to the loop track. Peabody is spending between $350 million and $400 million to develop the Bear Run mine.

Ultimately, the additional Peabody business will boost INRD’s coal volumes by 30 percent, said Hoback. The regional will spend about $5 million this year and next to improve other infrastructure to accommodate the traffic increase.

Thank you, Tom, for inviting me aboard the President’s Special and for showing me what a regional is capable of doing to boost business — namely, inking the coal contracts, landing the spur financing and having the wherewithal to tackle the largest project in INRD’s 24-year history.

Class I traffic, PTC hot short-line show topics in blazing hot Orlando

Jeff Stagl — Wed, 05 May 2010 20:31:00 GMT

I just got back from Orlando, Fla., where the American Short Line and Regional Railroad Association (ASLRRA) held its 97th annual convention May 1-4. Good thing the event was held indoors because it was 90-plus degrees outdoors with stifling humidity each day of the conference.

It also was a very good thing that event organizers had BNSF Railway Co. CEO Matt Rose deliver the keynote address Monday morning during the ASLRRA's general session. The “rock star” — as he was referred to several times by speakers — didn’t disappoint, either with his material or drawing power (there weren’t many seats unoccupied among the well more than 1,000 available, something that hadn’t happened in the previous eight annual conferences I had attended).

Rose said Class I traffic increased 6.3 percent in the first quarter after falling to 1998 levels in 2009 (BNSF’s dropped to 2002 levels). However, it likely will take another couple of years to get traffic back to the peak levels experienced in 2007 — meaning Class Is will lose five years in total trying to return to where they were just three years ago, he said.

“I’m still concerned about 2011 and 2012,” said Rose. “At the rate we’re at, we won’t get back to peak levels until 2012. Inventory restocking is key.”

Rose also addressed positive train control (PTC), which the Class Is will spend about $700 million on this year, followed by $1.2 billion to $1.5 billion in 2011. PTC will “squeeze out” other capital investments, although the Class Is in total will spend about $9.3 billion on capex in 2011, an amount similar to 2010, said Rose.

“What we’re doing is uncharted. On a one-to-10 scale, it’s an 8 or 9,” he said. “This is the law of unintended consequences. Capital will flow and be dispersed. But it won’t be smooth to implementation. We need every dollar to be spent wisely in this industry.”

During his speech following Rose and STB Chairman Daniel Elliott III, Federal Railroad Administrator Joe Szabo also addressed PTC. Szabo is "pleased with the caliber" of implementation plans submitted by railroads last month and “feels good” the FRA is properly staffed to handle the PTC mandate, he said.

“We will hit all of our marks to get it done and done right,” said Szabo.

In addition, the FRA will ensure that PTC is not implemented at “the cost of other safety initiatives,” he said.

Szabo also provided an update on the national rail plan. The FRA plans to issue a final plan in September. A self-described “real railroader,” Szabo said the plan will provide a “multi-modal vision” that determines how rail ties in.

Inside 1Q performance at UP

Jeff Stagl — Fri, 23 Apr 2010 12:31:00 GMT

Here are a few tasty tidbits from Union Pacific Railroad’s first-quarter earnings conference that I listened to yesterday.

EVP of Marketing and Sales Jack Koraleski said the railroad no longer would have domestic intermodal legacy deals after replacing a CSX Intermodal legacy contract with the UMAX joint venture in the first quarter.

“This is significant because it allows us to work directly with the majority of our intermodal customers,” he said.

UP registered faster transit times in 60 intermodal lanes during the quarter because of “strategic investments and process improvements,” he said. Looking ahead, the intermodal franchise will get a boost in late summer when the new Joliet, Ill., terminal opens.

Koraleski also noted that UP’s customer satisfaction index was 87 in the first quarter, matching first-quarter 2009. The index stood at 81 in first-quarter 2008 and 79 in first-quarter 2007.

“We continue to offer a strong value proposition underpinned by excellent service and backed up with strategic investment from a strong customer relationship,” said Koraleski.

Later during the conference, Vice Chairman-Operations Dennis Duffy said UP’s average velocity fell to 26.2 mph in the quarter vs. 27.2 mph in first-quarter 2009 primarily because of severe weather challenges. However, despite a 13 percent traffic increase, gross tons miles increased only 9 percent, thru-train starts rose only 1 percent and yard/local train starts fell 7 percent.

“First quarter freight-car inventory declined 3 percent versus 2009,” said Duffy. “With this productivity improvement, we handled 235,000 more carloads in the first quarter with nearly 9,000 fewer cars versus the first quarter of 2009.”

UP also is notching up productivity by lengthening trains, he said.

“For example, in the first quarter we achieved a 15 percent increase in our intermodal train size, saving roughly 900 intermodal train starts,” said Duffy.

Meanwhile, gross ton miles (GTMs) per employee increased 16 percent to 5.3 million. GTMs per horsepower per day rose from 115.1 in the year-ago period to 121.7, and freight-car utilization fell from 9.1 cycle days to 8.8 cycle days.

Duffy also mentioned that T&E worker furloughs stood at 2,800 vs. a peak of 5,300 last year — with 1,600 employees recalled so far in 2010 — while stored locomotives totaled 1,330 vs. 2,100 at 2009's peak and stored cars totaled 38,000 vs. 71,000 at peak.

Inside CSX's 1Q results

Jeff Stagl — Wed, 14 Apr 2010 19:18:00 GMT

CSX Corp. beat the Street’s expectations for first-quarter earnings and revenue growth. During a Webcast and teleconference the morning of April 14, CSX senior execs provided color as to how.

First, EVP of Sales and Marketing Clarence Gooden said revenue per unit rose 5.9 percent to $1,676 after declining in the past four quarters. He then reviewed each segment that helped drive up revenue 11 percent to $2.5 billion.

Automotive revenue soared 79 percent to $170 million as North American light vehicle (NALV) production increased because dealers’ sales were driven up by customer incentives and an improved credit market. For the rest of 2010, NALV production is forecasted to increase 28 percent, said Gooden. In addition, a new Kia assembly plant in West Point, Ga., will ramp up production later this year, he said.

Intermodal revenue rose 20 percent to $323 million as margins and truck conversions increased, and international volumes rose because of inventory replenishments and higher export demand. Global trade and consumer demand will continue to drive international business, while more stable truck capacity and demand reduce pricing pressure, said Gooden. In addition, a UMAX intermodal service launched with Union Pacific Railroad in the second quarter — which offers a fleet of more than 20,000 53-foot dedicated containers and 600 service lanes — has “long-term upside potential,” he said.

Merchandise revenue increased 11 percent to $1.2 billion primarily because of higher metals, chemicals, ethanol and phosphates volume. Housing- and construction-related markets remained weak, said Gooden. However, excluding the housing-related sector, growth is anticipated in all markets, he said.

Coal revenue dropped 1 percent to $736 million primarily because of lower utility demand governed by above-normal stockpiles and milder weather. Increased export demand driven by China and higher industrial demand driven by strong steel production helped keep coal traffic afloat. CSX expects coal volume to increase for the full year because utilities’ inventory levels will moderate, natural gas prices remain low, and export and industrial markets will gain strength, said Gooden.

After Gooden’s presentation, EVP and COO David Brown reviewed CSX’s safety accomplishments and operational challenges in the first quarter. The Class I set a record FRA personal injury rate at 0.81, a 38 percent improvement compared with first-quarter 2009’s rate. In addition, the FRA train accident rate improved 14 percent to 3.13, said Brown.

Severe winter storms in the mid-Atlantic region impacted service performance, but the network still “was very fluid,” he said. Compared with first-quarter 2009 figures, on-time originations fell from 83 percent to 69 percent, on-time arrivals dropped from 79 percent to 67 percent, average train velocity decreased from 21.6 mph to 20.9 mph and average terminal dwell time rose from 24.1 hours to 25.8 hours.

But even as traffic volume increased 5 percent in the quarter amid weather challenges, total crew starts declined 2 percent to 221,457, said Brown. Road crew starts decreased 1 percent to 119,039, local crew starts fell 4 percent to 34,535 and yard crew starts dropped 3 percent to 67,883.

Brown also provided an update on T&E headcount and stored rolling stock. CSX currently has 1,093 T&E workers on furlough vs. 2,533 at peak in second-quarter 2009. The railroad is hiring workers to help in certain coal-moving locations, as well as to support growth and attrition, said Brown. CSX also has 272 locomotives stored vs. 707 units at last year’s peak and 12,321 rail cars stored vs. 30,533 units at the peak.

Next up, EVP and CFO Oscar Munoz, who reviewed financial data, mentioned this year’s capex budget of $1.7 billion and the effects of positive train control (PTC) on spending. CSX plans to spend $170 million on PTC this year. However, the Class I has revised its total PTC implementation cost estimate to $1.2 billion because of the FRA’s final rule and the railroad’s implementation plan that will be turned into the FRA at week’s end, said Munoz.

Surveying the MOW landscape at small railroads

Jeff Stagl — Tue, 06 Apr 2010 21:01:00 GMT

I spent the better part of March coaxing and collecting maintenance-of-way surveys from regionals and short lines for our 9th annual MOW poll. A record-setting 46 small railroads responded this year — I’m not sure why, perhaps my persuasive personality?

That number actually could have climbed to 50 or more based on the emails and phone calls I received from several short liners after the survey deadline who wanted to give me information but had run out of time. Unfortunately, my deadline didn’t have that much fudge room.

All kidding aside, I truly appreciate the efforts of everyone at those 46 railroads who put in lots of time and effort to provide us with valuable MOW information. We will share the data — which runs the gamut from budget figures to quantities of rail, ties and ballast to bridge work — in our April issue and on our Web site. Check the site at week’s end and your mailbox come mid-month.

In addition to the data, I tried to provide some of the commentary that regionals and short lines included in their surveys. They talked about funding concerns, such as a tax credit extension and the availability of state grants, material costs and workforce issues, including the need to outsource.

One topic came up that I couldn’t squeeze into our coverage: weather. Several small railroads expressed concerns about Mother Nature’s effects on their MOW programs.

For example, the Twin Cites & Western, Red River Valley & Western and Minnesota Prairie Line, which are affiliated railroads, anticipated flooding in low-lying areas and on bridges because of huge piles of melting snow from North Dakota’s and Minnesota’s springtime thaw.

In addition, Copper Basin Railway expected to deal with El Niño weather and fires in the Arizonan desert, and Pioneer Railcorp was anxious about potential upcoming rainy weather in the Midwest and Southeast after heavy storms interfered with last year’s MOW work.

Concerns aside, the 46 survey respondents expect to spend more than $335 million on MOW this year and complete dozens of projects. Not too shabby given the recession and small railroads’ limited resources.

Class Is: The tide has turned

Jeff Stagl — Mon, 15 Mar 2010 20:31:00 GMT

On March 12, I had an enlightening and encouraging chat with CSX Corp. CEO Michael Ward, who was kind enough to come to his Jacksonville, Fla., office on his day off to visit with me — I am flattered and most appreciative Michael. The talk was enlightening because Ward’s take on current traffic trends provided me some new insights, and encouraging because the gist of his view is the economic tide has turned, although there’s a long way to go between the U-turn and all Class Is’ eventual traffic-building destination.

There isn’t any evidence to suggest a double-digit volume increase by year’s end, but traffic is increasing in every segment — including coal — so a mid-single-digit gain vs. 2009’s level is plausible, said Ward. Coal traffic is looking more favorable for CSX than it did in late 2009 and early 2010 because of cold winter weather in the East and natural gas prices that haven’t dipped as low as projected. In addition, CSX recently won a contract to move metallurgical coal that’s exported to China.

“In my 33 years here, we have not had export met coal to China,” he said. “China has swung from an exporter to importer the last few years.”

The key to an overall traffic surge, as usual, will be a boost in consumer confidence, said Ward. A healthier Wall Street, lower unemployment rate and shift in consumers’ mind-set would help, he believes.

“Peoples’ 401k is down, so they feel poor,” said Ward. “And they’ve been bombarded with ‘save, save, save.’”

Another Class I CEO shares Ward’s view. In a recent interview with The Associated Press, Union Pacific Railroad CEO Jim Young said consumer confidence is building. However, he believes it’s too early to tell if consumers have achieved sustained buying power. Several key commodities — including agricultural, automotive and intermodal — are showing signs of strength, yet volume is only about half of what it was before the recession.

“I’m not willing to say the challenges are over, but some areas are pretty strong,” said Young.

The real sign of a confidence boost in the economy will be evident when UP starts hiring again. The Class I has recalled some laid off workers, but about 3,500 remain furloughed, said Young.

Meanwhile, Kansas City Southern Executive VP and CFO Mike Upchurch recently addressed the J.P. Morgan Aviation, Transportation and Defense Conference in New York City by stating the Class I expects first-quarter revenue to be more than 20 percent higher than first-quarter 2009 and the road's operating ratio to fall below annual guidance of 77.8.

“The improvement to KCS’ results is due to the efforts of the employees in the U.S. and Mexico bringing new business and improving the efficiency of our operations,” he said.

All in all, some heartening statements — to say the least — from the Class I crowd.