UTU News Digest - Thursday, February 4,1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Thursday, February 4, 1999

Amtrak Express to resurrect perishables on rail

DETROIT -- Bob Walker and Frank Unger are trying to resurrect a business the nation's railroads lost to trucks many years ago.

They have formed a Detroit-based rail company, ExpressTrak LLC, to ship food and other perishables across the nation in temperature-controlled train cars.

But instead of using slow freight trains, the entrepreneurs will hook the cars to the rear of Amtrak passenger trains.

Starting May 1, ExpressTrak cars full of Sunkist fruit will travel from Los Angeles to Philadelphia in four days -- the same number of days it takes a truck to make the trip.

But Walker and Unger say ExpressTrak will charge 10 to 15 percent less than trucks.

"We're taking on the highway carrier," Unger said. "The railroads lost this market some decades ago when the interstate highway came into being."

In a pilot program, Amtrak will have Greenbriar Industries of Eugene, Ore., convert eight rail cars to temperature-controlled cars at a cost of $110,000 each, Unger and Amtrak said.

The cars will be able to maintain temperatures of minus 20 degrees to 86 degrees. The range will allow the cars to transport frozen foods, such as ice cream, as well as perishables, such as fruit, that must be kept warm in freezing weather.

If the pilot program succeeds, Amtrak could buy 300 to 360 temperature-controlled cars. The national railroad passenger corporation would own the fleet and lease the cars to ExpressTrak.

The ExpressTrak partners bring some serious railroad experience to their effort.

Unger, who lives in Grosse Pointe Park, is former marketing director at Grand Trunk Western, the Detroit-based subsidiary of Canadian National Railway. Walker, a former Grosse Pointe Park resident who now lives in Hilton Head, S.C., was vice president-corporate for Canadian National's U.S. operations.

They have a silent partner, Tony Soave, chief executive officer of Soave Enterprises LLC, a Detroit-based real estate, transportation and scrap metal company. Soave is financing privately held ExpressTrak.

The eight prototype cars initially will carry perishables from Los Angeles and Bakersfield, Calif., to Philadelphia and Jacksonville, Fla. Sunkist Growers Inc. has signed an agreement to use five cars to ship lemons, oranges and other citrus.

The Sherman Oaks, Calif.-based grower uses trucks to carry most of the 60 million cartons of fruit it ships each year because freight trains need 10 to 14 days to reach some cities, too long for perishable items.

But the trucking industry is facing increasing government regulation and market pressures such as shortages of drivers and fluctuating fuel prices, said Bob Smith, Sunkist's transportation manager.

Unger and Walker declined to discuss ExpressTrak's revenue projections. But Amtrak could get up to $100 million in annual revenue if ExpressTrak operates a fleet of 360 cars, Unger said.

Rail terminal bought in Mobile

MOBILE, Ala. -- Mobile's City Council voted to buy the historic Gulf, Mobile, and Ohio railroad terminal with an eye toward restoring it and turning it into a active terminus for motor traffic.

Congress appropriated $10.5 million dollars for the major renovation. It is all part of a long-range federal plan to encourage the use of mass transportation by creating traffic "hubs" where buses, trains, Interstates, and city shuttles converge.

Sabotage may have caused derailment

LINTON -- FBI agents investigating a freight train derailment near Linton this week say it appears that the train was deliberately sabotaged.

Agents say 26 cars of the Indiana Railroad coal train appear to have been deliberately uncoupled and the brakes may also have been tampered with. The FBI says it has no motive or suspects, but agents are looking for a dark blue car that was seen in the area.

Railroads to hold customer service symposium in Chicago

WASHINGTON -- The freight railroad industry will hold a one-day customer service symposium focusing on communications issues in Chicago on March 9, the Association of American Railroads (AAR) announced Wednesday.

Surface Transportation Board Chairman Linda Morgan, who attended all five of the customer outreach meetings sponsored by the railroads last year, will address the symposium, which will be held at the Westin O'Hare. It will last from 9:00 a.m. to 4:00 p.m.

"In keeping with our commitment to provide efficient service to our customers at reasonable rates, this symposium will build on the very successful series of customer outreach meetings we held last year," said AAR President and CEO Edward R. Hamberger. "Those meetings already have resulted in railroads becoming the first industry to publish weekly performance measures on the Internet.

"The meetings also identified a number of issues related to the customer service communication cycle between railroads and customers that needed further exploration, and those will be the focus of this symposium," he added.

The communication cycle begins when the customer requests a price or orders a car. It includes order processing, release, switching and waybilling, and ends with the delivery of the shipment at the destination as well as problem resolution throughout the cycle.

Presentations will focus on four elements of the communications process: the railroad service cycle, which will be presented by Rick Turner, vice president-customer service at Union Pacific; railroad transaction cycle by Tay Lyman, vice president-customer support at Burlington Northern Santa Fe; tracking, tracing and notification by Brock Winter, assistant vice president-customer service at Canadian Pacific Railway; and problem resolution by Larry Estep, assistant vice president-transportation customer service at Norfolk Southern. As with last year's meetings, professional meeting facilitators will conduct breakout sessions to give all participants ample opportunity to voice views on all four cycle elements.

A panel of railroad customer service representatives will answer questions from the floor and respond to reports on the breakout sessions from the facilitators.

Railroad customers interested in attending are asked to register by fax with John Carroll, senior assistant vice president-business services at the AAR. The fax number is 202-639-5546.

For those wishing to arrive the night before, a block of rooms has been reserved at the Westin at the rate of $149.00. To receive the special rate, request rooms reserved by the Association of American Railroads. Reservations should be made by February 8 and can be made either by calling toll-free 1 (800) WESTIN-1 or directly through the hotel's reservation office at (847) 698-6000.

Wisconsin Central reports year-end, 4^th quarter results

ROSEMONT, Ill. -- Wisconsin Central Transportation Corporation today reported net income for the fourth quarter of 1998 of $17.4 million, slightly less than the record fourth quarter of 1997. The fourth quarter 1998 results included record North American operating revenues and operating income, offset by disappointing results from the company's International operations. Earnings per diluted common share for the fourth quarter of 1998 were 34 cents, the same as the year-ago quarter.

North American Operations: The company's fourth quarter 1998 operating income generated from North American operations reached a fourth quarter record $25.5 million, an increase of $7.3 million or 40 percent from the year-ago quarter. The company's North American operating ratio (expenses divided by revenues), which is an industry-wide efficiency measure, improved 7.7 points to 70.5 percent in fourth quarter 1998 versus 78.2 percent for the year-ago quarter.

The company's fourth quarter 1998 North American operating revenues reached a fourth quarter record $86.3 million, up 4 percent or $3.2 million from the year-ago quarter while volume decreased 5 percent to 133,300 carloads. Increased volume in most commodities was offset by a decrease in metallic ore traffic and the conversion of 2,100 intermodal units handled in 1997 to a haulage arrangement which is not included in the company's 1998 carload volume. The fourth quarter 1998 includes $5.6 million of haulage revenue related to a new service which began during third quarter 1998.

The company's North American operating expenses for fourth quarter 1998 were $60.9 million, a decrease of $4.1 million, or 6 percent from the year-ago quarter. Contributing to the decrease were significantly lower casualty costs. The year ago quarter reflected a $2.7 million pretax charge for a train accident. In addition, the company benefited from lower diesel fuel prices, lower material costs and property taxes.

International Operations: The company's fourth quarter 1998 results include equity in net income of affiliates of $4.4 million or 9 cents per diluted common share, a decrease of

$4.7 million compared with the year-ago quarter. The fourth quarter 1998 amount consists of contributions from English Welsh & Scottish Railway Holdings Limited (EWS) of $3.0 million versus $7.0 million for the year-ago quarter, from Tranz Rail Holdings Limited (Tranz Rail) of $1.1 million versus $2.0 million for the year-ago quarter and from Australian Transport Network Limited (ATN) which began operations in November 1997 of $0.3 million.

EWS's operating revenues for the quarter decreased by 3 percent versus the year-ago quarter. This decrease is primarily the result of the reduction of certain freight rates to market levels and weakness in the steel market, partially offset by traffic resulting from the acquisition of Railfreight Distribution (RfD) in November 1997 and the acquisition of the National Power rail unit in March 1998. EWS's fourth quarter operating expenses increased by 6 percent over the year-ago quarter primarily due to the costs related to the operations of RfD.

The decrease in Tranz Rail's contribution for the quarter is largely the result of continued softness in the New Zealand and Asian economies and the corresponding decline in the value of the New Zealand dollar versus the U.S. dollar which was US$0.53 this year vs. US$0.62 in last year's quarter or a decline of 15 percent. As measured in New Zealand dollars, Tranz Rail's operating revenues decreased 2 percent primarily due to the soft economy, while Tranz Rail's operating expenses were up 3 percent over the year-ago quarter primarily related to redundancy costs and depreciation on capital expenditures made in the past year which also resulted in increased interest expense.

Annual 1998 Results: For the year ended December 31, 1998, WCTC reported net income of $76.3 million, or $1.49 per diluted common share, compared with $77.4 million, or $1.51 per diluted common share for the year ago period. Contributing to the

1998 results were record North American operating revenues and operating income, offset by reductions in the company's equity in net income of affiliates. Income before equity in net income of affiliates (or income from North American operations) increased by $10.3 million to $49.1 million or by 27 percent. The North American operating ratio for 1998 improved to 73.3 percent from 76.7 percent for 1997. The year ended December 31, 1998 includes equity in net income of affiliates of $27.2 million, compared to $38.6 million for the year-ago period, a decrease of 30 percent. The 1998 amount consists of contributions from EWS of $21.7 million versus $29.9 million for the year-ago period, from Tranz Rail of $4.9 million versus $8.7 million in 1997 and from ATN which began operations in November 1997 of $0.7 million.

Shares of Wisconsin Central Transportation Corporation are publicly traded on the NASDAQ National Market System under the symbol WCLX. WCTC's principal subsidiaries, Wisconsin Central Ltd., Fox Valley & Western Ltd., Algoma Central Railway Inc. and Sault Ste. Marie Bridge Company operate approximately 2,900 route miles of railway serving Wisconsin, Illinois, Minnesota, Michigan's Upper Peninsula, and Ontario, Canada. WCTC holds a 33 percent equity interest in English Welsh & Scottish Railway Holdings Limited which operates most of the freight railroad services in Great Britain. WCTC also holds a 24 percent equity interest in Tranz Rail Holdings Limited, which operates 2,400 route miles of railway nationwide in New Zealand. WCTC also holds a 33 percent equity interest in Australian Transport Network Limited which operates 460 route miles of railway statewide in Tasmania, Australia.

FedEx pilot union names negotiator as president

MEMPHIS -- Unionized pilots at Federal Express Corp. elected a member of their negotiating committee as their new president. The vote comes on the eve of the vote to ratify their first contract with the company.

Mike Weiland will assume the leadership of the Fedex Pilots Association Friday, the day after the result of the contract vote is expected.

He defeated Bryon Cobb, who had been vice president of the 3,000-member union, and David Webb, a supporter of the more hard-line Airline Pilots Association, which the FPA defeated in a representation election in 1997. Mr. Weiland got 1,367 votes to Mr. Cobb's 577 and Mr. Webb's 660.

The pilots are the only FedEx employees represented by the union. Rank-and-file pilots defeated two earlier tentative agreements with FedEx, one negotiated by the FPA, and an earlier one by ALPA.

STB announces 1999 User Fee Update Schedule

WASHINGTON -- Surface Transportation Board (Board) Chairman Linda J. Morgan announced today that the Board has adopted its 1999 User Fee Update Schedule (1999 Update) for the processing of various transportation financial transactions and other types of proceedings filed with the Board. The 1999 Update primarily is designed to offset the combined 1999 federal government-wide general and locality salary increase of 3.68% that became effective in January 1999. It also is designed to offset an increase of 12.7% in the Board's Federal Register publication costs, and to reflect decreases to the Board's overhead costs at all levels.

The 1999 Update maintains 113 of the 114 fee items or sub-fee items (items) contained in the Board's 1998 User Fee Update Schedule (1998 Update), and introduces no new items. Only 40 (35%) of these fees reflect increases over the Board's 1998 Update, ranging from a small increase of 10 cents for one item, and $1.00 for five other items, to a $27,500 increase for the processing of a formal complainant filed under the Board's railroad coal rate guidelines. The increase for coal rate cases is consistent with a recent Department of Transportation Inspector General report that included a recommendation to increase certain fees in accordance with schedules adopted previously. Of the items being increased, just under 68% (27 items) are being increased by $200 or less, while the remaining items are being increased by more than $200 each. There are 73 existing items that remain unchanged.

Fee increases involved in the 1999 Update generally were derived from the application of the update formula at section 1002.3(d) of Title 49, United States Code [49 CFR 1002.3(d)], adopted by the Board (following public notice and comment procedures) in the proceeding entitled Regulations Governing Fees for Services--1987 Update, 4 I.C.C.2d 137 (1987). The regulations at 49 CFR 1002 require the Board to conduct such a proceeding annually to update its user fee schedule to reflect the cost of services it provides. The 1999 Update is in accordance with the Congressional directive, included in fiscal year 1999 transportation appropriations legislation, that the Board raise $2.6 million in fees to cover a portion of its budget.

The Board made its 1999 Update in the proceeding entitled Regulations Governing Fees for Services Performed in Connection with Licensing and Related Services--1999 Update, STB Ex Parte No. 542 (Sub-No. 3). In adopting the 1999 Update, the Board reiterated that the regulations provide for the waiver of a fee for any entity demonstrating that payment of such a fee will present a financial hardship.

Copies of the Board's fee adoption decision in STB Ex Parte No. 542 (Sub-No. 3), issued to the public today, February 3, 1999, and scheduled to become effective on March 3, 1999, are available by writing:

DC News & Data, Inc.
Suite 210
Surface Transportation Board
1925 K Street, N.W.
Washington, DC 20423-0001
or by telephoning (202) 289-4357.