UTU News Digest - Wednesday, June 23, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Wednesday, June 23, 1999

NEW YORK: CSX executives buy railroad's stock, NS officials don’t

NEW YORK -- Corporate insiders at two of the nation's largest railroad companies have taken trains in two directions when it comes to their stock-trading habits, the Wall Street Journal reported.

Executives at CSX Corp. bought stock, while executives at Norfolk Southern Corp. sold.

Insiders at the two rail operators decided to alter their portfolios just as the stock of each company reached its peak in May. From the start of the year to May, CSX rose 28%, while Norfolk was up 14%.

Interestingly enough, the insider activity came one month before CSX and Norfolk decided on June 1 to finally split up the former Conrail rail system, which the two agreed to buy in March 1997.

Since the split, the two railroad operators have encountered glitches and have been plagued by delays on their new rail lines in the Northeast.

"The CSX insiders are acting like now is the time to buy, but the action at Norfolk Southern says it's a better selling opportunity," says Bob Gabele, research director at First Call/Thomson Financial, which tracks insider buying and selling. "The action of CSX insiders would imply that any merger complications would be short-term, but it's hard to get that indication from the Norfolk Southern insiders."

Three insiders at CSX bought more than 500,000 shares valued at over $25 million from May 3 to May 11, according to First Call/Thomson Financial.

Chairman John Snow spent $13 million to buy 257,000 shares at $49.73 to $52.99 each. President and Chief Executive Alvin Carpenter scooped up 150,000 shares at $49.72 to $52.43, and Executive Ronald Conway bought 100,000 shares at $49.73 to $49.88 apiece. Shares of the Richmond, Va., company closed Tuesday at $45.4375, up 18.75 cents, in New York Stock Exchange composite trading.

To be sure, CSX requires executives to own a certain amount of stock and also offers loans to executives to buy the stock. Messrs. Snow and Carpenter had already satisfied their stock ownership requirements and company loans didn't fund these purchases, according to First Call/Thomson Financial.

Scott Flower, a transportation analyst with PaineWebber, says the problems CSX is experiencing after the rail division are "normal teething pains." He says the purchases made by Mr. Snow and other executives at the company reflect management's confidence in the company.

The same can't be said about the insider activity at Norfolk Southern.

A total of 14 executives at the Norfolk, Va., company sold roughly 130,000 shares at $32.44 to $35.94 apiece.

On the Big Board Tuesday, Norfolk closed at $31.25, down 31.25 cents.

So far this year, insiders at Norfolk Southern have sold a total of 134,217 shares. The sales this year already exceed the total number of shares sold for all of 1998 and for the past five years.

Vice President Donald Mayberry was the top seller in this latest round, disposing of 69,516 shares at $33.63 to $36 each. Vice President Jon Manetta sold 11,000 shares at $34; Vice President John Fox Jr. sold 9,429 shares at $32.44 to $35.06 and John Corcoran sold 6,000 shares at $35.75 apiece. All of the sales followed the exercise of options, 70% of which weren't set to expire until after 2000, according to First Call/Thomson Financial.

A Norfolk Southern spokesman said most of the options exercised were granted in 1990 and therefore set to expire soon. He adds that executives only have four opportunities a year when they can trade company stock and the latest sales took place during one of those times.

The insider selling at Norfolk Southern doesn't concern Mr. Flower, the PaineWebber analyst. The sales have mostly been in small blocks and don't make as "a big a statement" as the large purchases by CSX's Mr. Snow.

WASHINGTON: Shippers advised to avoid rail delays

WASHINGTON -- Some third parties who manage intermodal shipments continue to advise shippers to divert high-priority freight from delay-riddled Eastern rail lines operated by CSX and Norfolk Southern, the Journal of Commerce reported today.

"We have recommended to our customers that they use truck for time-sensitive freight," said Jeff Brashares, president of Rail-Van Multimodal Inc. of Worthington, Ohio.

Brashares said service is better for intermodal than for carload business, where NS and CSX have overcome problems with misrouted cars. But he said shipments are still being slowed while problems are addressed.

Rail-Van and a handful of other major marketing and logistics firms manage several million domestic intermodal loads annually.

Other intermodal marketing companies say service is improving after the June 1 takeover of Conrail by CSX and Norfolk Southern. But it isn't normal.

"In the last few days, freight visibility has improved significantly," said Brian Avery, an assistant vice president of the Hub Group in Lombard, Ill., referring to the railroads' ability to tell customers where their cargo is.

Both NS and CSX have problems providing shipment locations. The information void has special meaning for intermodal marketing companies such as Hub, which must coordinate truck delivery with rail service.

"We have it on pretty good authority that in five to seven days we will be at pretty much normal service," Avery said. "The improvement should be gradual. They are cleaning out the logjam on both the operational and informational side."

Ron MacDonald, senior vice president of marketing at Cornerstone Systems Inc., Memphis, said "service overall has been very good. Both NS and CSX have slowed down compared with Conrail. There is major congestion in Chicago, but we are seeing each railroad address the issues and try to straighten them out."

He said fewer than one of every 100 Cornerstone loads had to be diverted due to Conrail-area service problems.

"Some of our customers can't understand why the delays happened after all the publicity that it would be so smooth," MacDonald said. "If they keep addressing the issues and keep stopping the bottlenecks, we should be in good shape. For a major rail merger transition, it has gone well."

Other intermodal marketing officials also reported continued problems at Chicago, where intermodal equipment was not flowing smoothly between Eastern and Western railroads.

Les Passa, president of CSX Intermodal, said service "clearly is not where we want to be. We think we are through a lot of the shakedown stuff," such as data quality and waybilling issues.

"There was a learning curve. We looked at our network and in very short order made some operational changes to eliminate some complexity, especially around Cleveland."

"As the operating plan normalizes and people learn the habits of running the new network, I think we are on the right track," Passa said. "Service is not where we expect it to be, but reliability is improving."

"Everything is relative," said Tom Finkbiner, NS vice president of intermodal. "Trends have been improving."

Don Orris, president of Pacer International Inc., which operates intermodal marketing companies and recently acquired APL Ltd.'s stack-train service, said some recent accounts are exaggerated.

Orris is among those who says his company hasn't diverted freight from intermodal, and believes an eight-to-10-hour delay isn't enough to force a switch to trucks. "Nobody is going to jump off a cliff because of that," he said.

"We are experiencing the same issues that others are in the Northeast," he said. "Some of the press they are getting is a bit overdone."

Orris said the decision by United Parcel Service to divert 50% of its Northeast intermodal service to the highways "has caused everyone to take notice."

KENTUCKY: Hunt for serial railroad killer intensifies

LEXINGTON -- Authorities from Texas to Wisconsin to Kentucky were on the lookout Tuesday for a suspected serial killer who is charged with two brutal murders and suspected in more than 14 others.

Suspect Rafael Resendez-Ramirez has used more than two dozen aliases as he crisscrossed the country, catching rides on passing freight trains. FBI profilers said Resendez-Ramirez is likely to strike again soon, finding his human prey along the tracks.

Police in Columbus, Ohio, stopped a 75-car freight train Tuesday and searched it and the surrounding neighborhood. The newest suspect on the FBI's Ten Most Wanted List was not found, said Columbus Police Lt. Fred Bowitch, who said the dragnet was initiated after a witness offered "a very good description of a male Hispanic."

In Kentucky, one police official said all reasonable tips are being taken seriously.

"Those are being followed up on," said Sgt. Mark Barnard of the Lexington Police Department. "That's the way Rafael Ramirez is going to be caught -- probably by a local police agency, probably by someone near the tracks or in a small community that gets a tip like that and follows up."

Resendez-Ramirez, a 39-year-old drifter, is a suspect in the 1997 murder of Christopher Maier, a 21-year-old junior at the University of Kentucky, who was killed as he and his girlfriend were taking a shortcut to a party. The two were walking along railroad tracks when they were assaulted.

Barnard said Resendez-Ramirez has "family members and ties to Lexington" and investigators are tracking down all those leads.

Although he's been linked to eight vicious killings in three states, Resendez- Ramirez has only been charged with two murders, the June 15 deaths of George Morber Sr. and his daughter, Carolyn Frederick, in Gorham, Illinois, said Jackson County, Illinois, State's Attorney Mike Wepseic.

Authorities in Joe Daviess County, Illinois, said late Tuesday afternoon they had ruled Resendez-Ramirez out as a suspect in a double killing in Apple River after arresting another man. And Pontiac, Illinois, police downplayed any possible connection between Resendez-Ramirez and a death in that town.

Morber, 80, was shot in the head with a shotgun in his mobile home yards from a Union Pacific rail line. Investigators say they believe Resendez- Ramirez used the gun to fatally beat Frederick, 52, in the head.

Morber's truck was found Wednesday in a school parking lot in Cairo, Illinois, about 60 miles south of Gorham. Wepseic said fingerprints connect Resendez-Ramirez to the two southern Illinois slayings.

The killings have resulted in unusual measures for Gorham, a sleepy farm community of some 400 people about 110 miles southeast of St. Louis. Residents said they are locking their doors and being more cautious for the first time.

"Our community has just been stunned by this senseless act," said Morber's son, Bill Morber. "Everyone is scared; they're on edge, and I think they will be until this Ramirez is caught."

Linda Meade, who said she grew up with Frederick, said residents of the close-knit community of farmers and prison workers were particularly angry that the killings robbed Frederick's three grown children of their mother and Morber's ailing wife of her primary caretakers.

"She was a good mother. He was a good man," she said. "Ramirez, he deserves to be blown away."

In most of the killings in which Resendez-Ramirez is suspected, the victims were beaten.

"He's demonstrated he can use almost any kind of object to take a human life in a very violent manner, and we've got to try and catch him," said Don K. Clark, the special agent in charge of the FBI's Houston office and the leader of a nationwide task force searching for the suspect. As for a motive, Clark said: "I wish I could tell you."

The task force has more than 200 investigators working the case.

"This is a very violent individual -- an individual that clearly has no mercy in his killing," said Clark.

Locks, alarms, knives and guns are selling at a brisk pace in Weimar, Texas, a small farming community midway between Houston and San Antonio, where 30 freight trains pass through each day.

Police believe Resendez-Ramirez rode one of those trains into Weimar last month and bludgeoned Church of Christ minister Skip Sirnic and his wife, Karen, with a sledgehammer as they slept in their parsonage, which borders the railroad tracks.

"We've been selling handguns to folks who've never owned a firearm in their life -- but they're scared," said Larry Wick of M. & G. Farm Service Center.

Authorities say Resendez-Ramirez, a native of Puebla, Mexico, has used numerous aliases and changes his appearance by altering his hairstyle and wearing glasses. He has scars on his right ring finger, left wrist and forehead, a snake tattoo on his left arm and may have a flower tattoo on his left wrist.

He also has a criminal record in California, Florida and New Mexico on weapons and burglary charges, FBI officials said.

WASHINGTON: Amtrak Computer Counts Passengers

WASHINGTON -- Amtrak has developed a handheld computer that will allow it to maintain an up-to-the-moment passenger count aboard its trains, a concern after this year's crash in Bourbonnais, Ill.

The computer, built by the Illinois-based Motorola Inc., will be unveiled today during a news conference in Washington. The system will go into use later this year when Amtrak's high-speed "Acela'' service begins between Boston, New York and Washington. It will spread to the rest of the national railroad's trains by the fall of 2000.

The handheld unit was created to let conductors collect fares and issue seat checks more easily on board a train. As a conductor passes through a car, a passenger count in the computer will be updated with each passenger marked off or seat check issued. The system will also allow Amtrak to list the names of the passengers on board its many reserved trains.

Under the current system, conductors collect paper tickets and issue paper receipts on board. The railroad doesn't have an accurate count of the passengers or a list of their names until a trip is completed and the stubs are reconciled with a computerized reservation system.

In the immediate aftermath of the March 15 collision between an Amtrak passenger train and a steel-hauling truck in Bourbonnais, the National Transportation Safety Board questioned whether it had a current count or list of the passengers on board.

Eleven people were killed and more than 100 injured in the crash of the City of New Orleans train, which was traveling from Chicago to New Orleans.

The new $24 million system has been under development since May 1998.

FLORIDA: Orlando’s proposed light-rail system clears a CSX hurdle

ORLANDO – This city’s transit agency has reached a deal with CSX Transportation that would eliminate a big hurdle to the agency's proposed light-rail system.

According to sources close to the situation, the deal -- signed Monday -- allows the light-rail system to elevate its tracks in order to use the railroad company's downtown corridor.

The deal is crucial to the Lynx Lyne system's viability because the line needs to run through the heart of downtown. But for safety reasons, CSX didn't want the light trains running on the ground next to its tracks.

In an interview last week, Lynx spokesman Warren Wright said: "The CSX agreement is the final nail in the tracks, if you will. Without it, we don't have light rail."

Lynx and CSX officials declined to confirm the agreement. But a spokeswoman with the Federal Transit Administration in Washington says that local officials were meeting with FTA officials at the agency's Atlanta regional office to discuss whether the use of an elevated line would require a new environmental-impact study, which could lead to serious delays with the project. (The FTA, which has agreed to fund at least 55% of the project, previously had approved a ground-level line.)

"The last two miles are going to be elevated, as opposed to at surface," says the spokeswoman, Gail Taylor.

The initial segment of the Lynx Lyne is planned as a nearly 15-mile link running from downtown to the tourist resort areas of International Drive, Universal Studios Escape, Sea World Orlando and the Orange County Convention Center to the south of the city.

The line is expected to open by 2003 if construction begins on schedule. Eventually, plans call for the line to be extended into the northern suburbs, and to Orlando International Airport. There are also proposed links to commuter rail lines running to other suburban areas.

The deal calls for Lynx to pay CSX for the air rights above its corridor, as well as the right to build on small patches of land along its route; Lynx will build posts on those patches to hold the elevated tracks. The price is still to be worked out.

Jacksonville-based CSX Transportation had objected for safety reasons to a ground-level line running next to its freight trains, citing among its concerns the increased chance of pedestrians being hit by trains and the potential for disaster if a freight train derailed while a light-rail train was nearby.

Meanwhile, Lynx and city officials had worried that elevating the tracks through downtown would be too costly. But upon closer inspection, officials determined there wasn't going to be much of a cost difference, a source close to the situation says.

Lynx had previously offered $14.5 million for a portion of CSX's corridor on which it was to build its downtown line. While elevating the line would cost more, that would be offset by significant cost savings, including the need for far less land. The agency could also save money by reducing the number of downtown stations to two from three. (The agency hasn't worked out the final pricing yet.)

Still, light rail -- which has been under study since the early 1980s -- isn't out of the woods yet. There's still a $15 million funding gap that Lynx officials hope the federal government can cover somehow. Moreover, the FTA still must be persuaded to approve the deal -- and the agency has said it wants the major local agreements required to build the system made by Aug. 1, or the funding may be in peril.

Where do the deals stand? Universal Studios Escape has pledged $20 million to the project, and merchants in the International Drive tourist corridor have offered about $23 million.

Both pledges were contingent on a CSX deal -- but now some I-Drive businesses are raising concerns about the effect the light-rail project might have.

A group of the businesses are calling for a poll of business owners to be taken before a decision is made on whether to tax themselves for the light-rail system.

Lynx and other local officials say the other issues won't be too difficult to settle once they receive federal approval. Dick Batchelor, a former state legislator who now lobbies for the transit agency, says he questions the need for a survey at this late stage of the project. He believes it's a tool being used to delay or kill the rail project.

And while he believes some of the concerns of business-owners on International Drive are legitimate, he doesn't believe they are insurmountable. He still believes the project will survive. "Lynx is a cat, right? I don't know how many lives it's had, but I don't believe we're at nine lives yet."

ENGLAND: Train depot offers airport check-in

LONDON -- Check-in desks for Heathrow Airport opened Wednesday at Paddington train station, allowing air passengers to check their luggage and get their boarding passes before reaching the airport.

The new arrangement is connected to the station's Heathrow Express high-speed rail service connecting the city to the airport in 16 minutes.

Passengers flying with 19 airlines from Heathrow will now be able to check in and choose seats any time on the day of departure at the train station terminal, which will be open from 5 a.m. to 9 p.m.

Canada: Rail freight down 1.2% in week to June 7

OTTAWA -- Canadian rail freight volume, excluding intermodal traffic, totaled 4.7 million metric tons in the week ended June 7, down 1.2% from a year earlier, Statistics Canada said.

The number of rail cars loaded during the week increased 0.8% from a year earlier.

Intermodal (piggyback) volume totaled 367,000 tons in the week, up 6.1% from a year earlier.

Total traffic in the period, including carloadings of freight and intermodal traffic, declined 0.7% from a year earlier. For the year to date, traffic totaled 110.1 million tons, down 2.5% from a year earlier.