UTU News Digest - Tuesday, December 22, 1998

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Tuesday, December 22, 1998

Amtrak’s new president says railway will thrive

WASHINGTON -- Amtrak's new president says the financially troubled national railway should not only survive but thrive.

"We can no longer exist only with a survivor mentality, focused on cost-cutting and being apologists for mediocrity," George Warrington said Monday after Amtrak's governing board named him president. "Instead our future depends upon growth -- identifying and attracting new customers."

A national search for a new president ended right at Amtrak headquarters, where Warrington had been acting president since last year. The 46-year-old New Jersey native will preside over a crucial period for the national passenger railroad as it tries to meet a congressional mandate of financial self-sufficiency by 2003.

"Simply put, we will not be satisfied with just reaching self-sufficiency," he said at a news conference at Washington's Union Station. "Our goal is to create a truly commercially driven service that will be the envy of all transportation providers."

STB lets Union Pacific keep its Houston area assets

WASHINGTON --Federal regulators declined Monday to order Union Pacific Railroad to divest itself of assets in the Houston-Gulf Coast area, dismaying customers and rivals alike of the nation's largest railroad.

The Surface Transportation Board (STB) ordered a handful of "efficiency-producing changes" in Texas, sidestepping requests for more far-reaching action from critics who contend Union Pacific's monopoly on rail assets in the region is damaging.

The board, which in 1996 approved the $5.4 billion merger of Union Pacific and Southern Pacific, said the permanent relief urged by a coalition comprising the state of Texas, shippers and rail rivals "would effectively undo the merger in the Houston area."

The decisions come as railroad customers are putting pressure on regulators and legislators to rein in the power of major railroads. The $35 billion-a-year railroad industry has consolidated rapidly in recent years to four giants from more than 40 big railroads in 1980.

Some major rail customers said they plan to look to legislative changes in Congress as a way to force the board to boost rail-to-rail competition. Next year, Congress plans to take up reauthorization of the three-year-old board, which replaced the old Interstate Commerce Commission.

"It's obvious we are getting nowhere with the STB," said William Gebo, manager of rail-services purchasing for Dow Chemical Co., based in Midland, Mich. "The next stop will have to be Congress."

In its order, the STB granted new authority to dispatch trains over rivals' track to facilitate movement of cars through the Houston Terminal. It also directed Union Pacific to consult with the Port of Houston and Greater Houston Partnership on how to carry out its infrastructure improvements.

Union Pacific executives, who had adamantly objected to proposals designed to lessen its grip on the Houston-Gulf Coast region, praised the STB decision.

The action is "a fitting tribute to the 53,000 Union Pacific employees who worked extremely hard to put the merger with Southern Pacific in place and to correct our serious service problems," said Dick Davidson, chairman of the railroad's Dallas-based parent.

Coalition partners had who pushed for an infusion of new competition in the Houston area by forcing Union Pacific to transfer some of its rail assets to competitors expressed dismay at the board's action.

"It is just an absolute abomination," said Maureen Healy of the Society of the Plastics Industry, which helped develop the consensus plan.

Kansas City Southern Railway, a unit of Kansas City Southern Industries Inc. (KSU), was "disappointed the board rejected the pleas of shippers and community leaders in the Houston-Gulf Coast area," said spokesman Bill Galligan. "We'd hoped to restore a level of rail competition to the pre-UP-SP merger level."

Texas Railroad Commissioner Charles Matthews, who has long been critical of the federal regulators, found little reason for satisfaction Monday.

"It's just amazing in this time, when we are talking about deregulation and have deregulated every major industry in the country, that we still have one regulatory body and one industry who believe monopolies are the right way to go," he said.

Matthews pointed to Union Pacific's serious service meltdown, which began in the congested Houston area in mid-1997, and said the conditions remain for future troubles.

"If there are missteps by the management ... that affect the way the railroad runs in Texas, a lot of people will be hurt again and we'll have no choice but to accept loss of service and high rates," Matthews said.

In declining to reopen the Union Pacific-Southern Pacific merger in the Houston area, the board said that Union Pacific's service failures weren't caused by its takeover of Southern Pacific but were an "operational crisis that has now been solved." The board added that Burlington Northern Santa Fe Corp. and a smaller railroad were competing with Union Pacific and that there wasn't any need to add restrictions.

At the same time, the board argued that it has limited power to boost rail competition except to fix the effects of specific mergers. The Houston shippers' plan went beyond what was needed to remedy the effects of the Union Pacific-Southern Pacific combination, so the board couldn't approve it without opening the nation's entire railroad system to more competition, the decision said.

For the past year, rail customers have seized on Union Pacific's service problems in the Gulf Coast area to make their case that rail mergers have gone too far. The service failures, which started after Union Pacific acquired Southern Pacific, caused massive freight congestion, long shipping delays and sharply higher shipping costs for hundreds of rail customers.

Union Pacific has been able to untangle its shipping snarls by adding hundreds of locomotives and freight cars and putting in additional tracks. The railroad also has begun to decentralize its management, putting more authority in the field.

Norfolk Southern to spend $1 billion for capital improvements

NORFOLK, Va. -- Norfolk Southern Corp. plans to spend $1.07 billion for capital improvements to its railroad operations in 1999, up from $908 million in 1998.

In a press release Monday, the company said its 1999 capital spending includes $651 million for roadway projects and $387 million for equipment.

Norfolk Southern had railway-operating revenues of $4.22 billion in 1997.

"Our projected 1999 capital spending includes $651 million for roadway projects and $387 million for equipment," said Goode. "Included in those amounts is approximately $300 million of projected spending related to the Conrail lines to be operated by Norfolk Southern."

The $651 million of roadway projects includes funding for: 1) rail, crosstie and ballast programs; 2) bridge programs; 3) improved signaling and communications; 4) new and expanded intermodal facilities; and 5) track improvements such as double-tracking and passing sidings on portions of key routes on the new expanded Norfolk Southern system. "Our 1999 roadway spending continues to reflect our commitment at Norfolk Southern to the highest levels of safety, service and efficiency," added Goode.

Equipment spending totaling $387 million includes the purchase of: 1) 138 six-axle high-adhesion locomotives, and 2) new freight cars including multi-level automobile racks, high-cubic capacity 60-foot cars for automotive parts, and covered coil cars for steel. Also included in the equipment spending of $387 million is $87 million that will be spent to support ongoing programs to better utilize existing equipment. This includes the coal car rebody program, recertification of multi-level automobile racks, rebuilding high-cubic capacity boxcars and medium-cube covered hopper cars, and modifying open top coil cars.

Sound economy is filling New Jersey trains and buses

BERGEN, NJ -- If you've been on a NJ Transit bus or a train lately, you've probably already guessed you're far from alone. Now you know.

New figures show overall ridership is at an all-time high for the transit agency, jumping 6.7 percent on trains and 2 percent on buses from July through September compared with the same period last year.

"The big picture is that these are the highest numbers you've seen. It's greater than at any point in our history," said Jim Redeker, NJ Transit's acting assistant executive director for planning.

Although NJ Transit ridership has increased by these percentages before, the new riders come on top of previous gains. It means that there are now 353,700 daily riders on NJ Transit's buses and trains.

Transit officials largely attribute the gains to a good economy that has meant more jobs and low unemployment.

"The major cause for ridership is employment, and as you've watched the economy, it's been positive all along in terms of jobs in New York, the region, and Bergen County," Redeker said. "It's been a long-running trend. We have also not had a fare increase in eight years, and we're an attractive option for a lot of people."

The most impressive gains came on the Northeast Corridor Line, which attracted 2,000 more riders during the quarter, bringing its total to 37,600 daily riders. But the highest percentage increase was on the Pascack Valley Line in Bergen County, which grew by 11.4 percent.

There were 300 more daily riders on the Pascack Valley Line during the first quarter, for a total of 2,850 daily passengers -- the largest surge in ridership on the line since the late Eighties.

On the Pascack, Bergen-Main, and Boonton lines, the majority of trips are work commuters, Redeker said. The Pascack Line has the highest proportion of work-related trips, according to the agency.

Ridership increased by 8 percent for the quarter on the Main-Bergen Line, which took in an additional 650 riders, bringing the total weekday ridership to 9,100. Employment growth accounted for some of the increase, but there was also a whopping 20 percent increase in weekend sales of tickets from the same period of last year.

Passengers on the Boonton Line, which stretches into Morris and Passaic counties, increased by 5.8 percent for the quarter, bringing the daily rider total to 3,500.

To address the huge uptick in ridership during the first quarter of fiscal 1999, NJ Transit is taking a hard look at capacity. It's going to be a top priority of NJ Transit's new Acting Executive Director Stanley Rosenblum.

So far, the 6.7 percent increase in rail ridership has mirrored exactly what happened from July through September of 1997. But Redeker said there was no way to predict what may happen by the end of the fiscal year, in June.