UTU News Digest - Friday, October 29, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Friday, October 29, 1999

NEBRASKA: Is it the end of the line for U.P.’s famous calendar?

OMAHA -- Union Pacific Railroad's commemorative 2000 calendar is a rail fanatic's dream, crammed with vintage photos and topped by a "Big Boy" steam locomotive chugging through Utah's Echo Canyon, a classic symbol of the industry's strength, the Omaha World-Herald reported.

But after more than 80 years of sending out calendars to customers, shareholders, employees and pensioners - and in recent years, offering calendars for sale to the public - Union Pacific may drop the project. Ever cost-conscious, U.P. executives are considering whether to continue publishing what they believe to be the nation's oldest railroad calendar.

"That's not for certain," said Dick Davidson, chairman and chief executive of Omaha-based Union Pacific Corp., the railroad's parent company. "It certainly does create quite a lot of goodwill."

Before making such a momentous decision, he said, company executives will have to determine whether the calendar is still as important to Union Pacific as it used to be. It is, after all, an expense, and all expenses are subject to review.

The company prints more than 400,000 copies of its calendar each year. It printed an extra 50,000 this year because of the year 2000 and the special theme of the new calendar.

It's sent free to shareholders, employees, retires and customers and sold to others who want one.

"It's an advertising tool," said John Bromley, the public relations man at Union Pacific who has been responsible for the calendar over the past decade. "We've got our name up on the wall year-round. Hopefully, we produce something that people want to have on their walls."

The calendar has survived budget scrutiny before, but Bromley knows it will have to continue being justified financially each year.

"We look at that every year pretty hard, as a matter of fact," he said. "We look at it and make a decision each year. I don't know what we're going to do for 2001. I'm proceeding ahead on the assumption that we'll have one."

Union Pacific started the multi- -page color calendar in 1940 to promote the scenery of the American West so people would want to ride passenger trains along U.P. routes. Before that, the calendars used a single picture and tear-off sheets for each month. The oldest known sample dates back to 1913, but Bromley believes there are older versions as well.

Las Vegas, Bromley said, was partially a creation of Union Pacific, which needed destinations for its passenger trains. Sun City, Idaho, was built specifically as a rail resort, with Union Pacific buses meeting trains and ferrying passengers into the mountains.

Railroad photographers supplied the pictures, adding more trains to the scenic shots over the years until the railroad closed its photo department in 1989. Since then, railroad fans, employees and other photographers have supplied the photos.

To save on printing costs, the railroad two years ago reshaped the calendar to a folded, horizontal 10 by 14 inches rather than the long, single sheets that few printers could reproduce. The change brought objections from people who had bought special frames to hold the calendars.

To commemorate a century of railroad history, Bromley and others last January began searching through Union Pacific's photo archives and came up with 12 historic montages, each with a theme. February shows the railroad's role during wartime, for instance. March shows movie stars who traveled by rail and hopped off for publicity shots at each stop.

It's the calendar's popularity that makes it a valuable advertising for the railroad, Bromley said. "You could hardly go into anybody's office and not see one of these on the back wall," he said.

The first 2000 calendars were mailed out a few weeks ago. The $10 price, up from $5 last year, reflects the increased cost of producing the calendar and is intended to help the project break even, Bromley said.

He admits to a personal interest in the calendar. As a youngster growing up in Boulder City, Colo., he and his father used to go down to the train station each winter and ask the stationmaster for a calendar. The crusty U.P. man would complain that nonemployees weren't supposed to get one, but in the end, he'd give in, and the Bromley household would have a railroad calendar for the coming year.

"Little did I dream that one day I'd be in charge of it," he said.

WASHINGTON: US senators propose $10B for high-speed trains

WASHINGTON (AP)--U.S. Senate railroad advocates proposed a plan Thursday to raise $10 billion over 10 years to help Amtrak introduce high-speed trains throughout the country, the Associated Press reported.

Sen. Frank Lautenberg, D-N.J., said his legislation would begin to address historic imbalances between money spent on highways and money spent on rail travel.

"Even when everything goes as planned, air travel is now uncomfortable at best," Lautenberg said. "High-speed rail offers a better way. It's comfortable, it's reliable, and it's getting faster and faster."

Though railroads have long been considered a pet project of Northeast states, the high-speed rail initiative is designed to attract wide support by proposing fast trains for the Midwest, West and South.

"What has always been described as 'Northeast crowding' has now become a Southeast problem, and a Georgia problem, and certainly an Atlanta problem," said Sen. Max Cleland, D-Ga., a co-sponsor of the bill.

Another advocate is Amtrak Chairman Tommy Thompson, the Republican governor of Wisconsin. He said other industrialized countries have left the U.S. behind on rail travel.

Work is under way on the first high-speed corridor, the current Metroliner route between Washington and Boston. Traveling at speeds up to 160 mph, new "Acela" trains will cut Boston-New York travel time to three hours and New York-Washington travel time to two hours, 45 minutes. Amtrak has pushed back the start of Acela service from this year to next spring.

Eight other corridors are being eyed for high-speed rail service: upstate New York; from San Diego to Oakland and Sacramento in California; Oregon to Washington; Harrisburg to Philadelphia in Pennsylvania; Washington, D.C., to Georgia and Jacksonville, Fla.; a Florida corridor linking Tampa, Orlando and Miami; a Gulf Coast corridor in Texas, Louisiana, Mississippi and Alabama; and a Midwest corridor linking Chicago, Cincinnati, Detroit, Milwaukee, Minneapolis-St. Paul and St. Louis.

Lautenberg's plan would authorize Amtrak to raise $10 billion over 10 years by selling high-speed rail bonds. Rather than Amtrak paying interest to bondholders, the federal government would provide tax credits. States would have to match at least 20% of Amtrak's share.

It would cost the federal treasury about $3 billion over 10 years, Lautenberg aides said.

The bill's backers say it has a chance thanks to support from Thompson and Republican co-sponsor Sen. Jim Jeffords of Vermont.

Amtrak reported this week that it achieved record revenue in the past year. It lost $476 million overall in fiscal year 1999 but had expected to lose more, and officials say the railway is on track to wean itself from government subsidies by 2003. Congress has declared Amtrak will get no more operating subsidies after 2002.

WASHINGTON: NS works to deliver backlog of coal shipments

WASHINGTON -- Norfolk Southern officials, blaming congestion and stockpiling by utilities ahead of the new millennium, said they deferred a large amount of coal shipments until the fourth quarter.

The officials said during their quarterly earnings meeting with stock analysts on Wednesday that they had made big gains in hauling coal for domestic utilities compared with a year ago.

That was partly as utilities built up coal fuel stockpiles at power plants that had drawn down their supplies as they coped with a heat wave in the eastern United States, but also as plants called for more coal to build stockpiles in case of any supply problems related to the "Millennium Bug."

Although utilities, mines and major railroads have taken pains to reassure customers and the public that they are ready for the Y2K computer-date change and expect no significant interruptions, many are taking precautions anyway.

NS officials said they had to divert thousands of railcar loads during the third quarter because of problems on their system.

Most of the diversions went to trucks, about a third to other rail carriers and a tiny amount to air shipments or barges.

But with coal -- the largest single commodity that railroads carry -- congestion usually just causes delays in hauling.

The railroad executives said they would be capturing $32 million in postponed revenue from coal tonnages delayed from their third-quarter schedules.

That includes some of the largest NS utility customers, especially in the Southeast.

The company continued to suffer from reduced coal demand overseas, but officials repeatedly noted that Japan has been increasing its estimates for steel production in 2000, which would increase Japan's demand for coal.

In addition, they said that South Korea's steel production also is rising as that region digs out of its slump.

In another sign of improving economies overseas, NS grain shipments rose 13% above the 1998 quarter. Various railroads have been reporting that export grain demand has surged this year.

The company posted third-quarter earnings of $19 million, or 5 cents a share, an 88% decline from $158 million, or 42 cents a share, in the same quarter last year.

This year's results included a $31 million onetime charge for incentive payments to workers who remain on the job during the summer, when the company started to integrate Conrail operations.

NEW YORK: CSX reports loss for 3rd Q, blaming charge, rail jams

NEW YORK – CSX Corp. reported a third-quarter loss, reflecting a large one-time charge for write-down of assets, freight congestion from its takeover of part of Conrail Inc. and disruption caused by Hurricane Floyd, the Wall Street Journal reported.

The railroad and ocean freight holding company had a loss of $113 million, or 54 cents a share, compared with net income of $187 million, or 88 cents a diluted share, a year earlier. Net for the 1998 third quarter included a gain of 42 cents a share from the sale of a barge company and a nine-cent-a-share restructuring credit.

The report follows by a day an announcement from rival Norfolk Southern Corp. that its third-quarter earnings fell by 88%, due largely to problems with its acquisition of part of Conrail.

For CSX, the loss in the latest quarter included a one-time pretax asset writedown of $315 million related to the pending sale of the international operations of its Sea-Land container-shipping unit to A.P. Moller Group, Copenhagen.

Excluding the special charge, CSX had earnings of $123 million, or 58 cents a share, in the latest quarter, beating a First Call/Thomson Financial consensus analysts' estimate of 44 cents.

A CSX spokesman said operating profit at the company's Sea-Land unit more than doubled in the third quarter, reflecting substantial rate increases in trade lanes from Asia to the U.S. and Europe.

CSX said revenue rose by 20% to $2.91 billion from $2.43 billion, reflecting CSX's operation of 42% of Conrail. CSX, Richmond, Va., and Norfolk Southern, Norfolk, Va., carved up Conrail's rail network in the Northeast and Midwest on June 1.

Despite rail-freight congestion and disruptions early in the quarter, CSX said it was making improvements in its Conrail operations by August and early September. But then a pickup of freight traffic toward the seasonal fall shipping peak strained the system. And Hurricane Floyd hit in mid-September, shutting down major rail lines, rerouting trains and backing up CSX's rail system. "It came at absolutely the worst time," said John Snow, chairman and chief executive of CSX.

CSX officials said they expect to have the rail system operating more smoothly later in the year, as freight volumes slow down and the company continues to streamline its business processes.

John W. Snow, chairman and chief executive officer, said in a company press release: "We are working hard to manage the complexities of developing a new rail system to take full advantage of sizeable growth and productivity opportunities. Our comprehensive planning, supporting infrastructure investments and strengthened management team give me great confidence that our railroad is strategically and competitively well positioned.

"Right now, however, we are managing our way through all the changes necessary for an effective integration, which is being complicated by the rapid seasonal build-up in rail volume," Snow added. "Traffic routings are different, train dispatching patterns are changed, crews are working at new locations and a new, decentralized organizational framework is being put in place. As we move up the learning curve and make necessary adjustments, we will see gradual improvements across the network that will bring service to the level shippers expect, producing more satisfying financial returns for our investors."

WASHINGTON: Shippers wary of world's largest shortline operator

WASHINGTON -- When RailAmerica Inc. closes on its purchase of RailTex Inc., it will own or control 51 domestic and foreign shortline railroads, making it the largest shortline operator in the world, Traffic World reported.

The deal, announced Oct. 14, is valued at $325 million, including the assumption of RailTex's long-term debt. RailTex shareholders will receive $13.50 in cash and two-thirds of a share of RailAmerica stock in exchange for each share of RailTex stock, which RailAmerica valued at $20 a share on Oct. 13.

A lot of superlatives and hefty numbers but customers want to know how the deal will affect service. "If RailAmerica is as customer-focused as RailTex used to be, I think it will be a good thing for shippers," said Jack Dail, a former RailTex sales and marketing director who now works in the same capacity for shortline company Rio Grande Pacific Corp.

MAINE: Agency rules Amtrak trains can hit 79mph on trip to Portland

PORTLAND -- A federal agency ruled that Amtrak trains can hit 79 mph over track between Portland and Boston, but what is underneath may actually determine if those speeds are ever attained, the Associated Press reported.

The owner of 78 miles of track between Portland and Plaistow, N.H., doesn't believe the crushed granite being installed under the tracks is deep enough to meet requirements for rail rigidity.

The Northern New England Passenger Rail Authority has agreed to study whether additional rock, or ballast, is necessary.

The latest challenge is a disappointment for rail advocates who thought Friday's ruling by the Surface Transportation Board was the final hurdle to restoring the rail service that ended in 1965.

At issue is the board's standard for ''modulus,'' a measure that represents the stiffness of the ties, ballast and subgrade. The board set a standard of 2,750 pounds per inches squared.

Michael Murray, executive director of the Northern New England Passenger Rail Authority, said he is negotiating with the track's owner, Guilford Rail Systems, to find a way to measure the modulus as work proceeds to make sure it meets the standard established by the board.

Otherwise, the only alternative would be to wait until the project is completed and then test the rail. A failure would slow the trains down to 59 mph, despite upgrades of nearly $60 million to the track.

At least one expert who testified before the Surface Transportation Board said he did not see any problems with the track meeting the standard without additional work.

Arnold Kerr, a civil engineering professor at the University of Delaware, said the upgrades should bring the rail between Portland and Plaistow into line with the rest of Amtrak's northeastern corridor.

Kerr said he believes existing ballast, along with ballast added this summer by workers, should be enough. But a Guilford executive maintained Thursday that much more ballast would be needed.

''I don't think anyone is going to want to stake their reputation on the fact the standard will be met when the project is over,'' said David Fink, Guilford's executive vice president.

Murray said he is reviewing the situation and hopes to have a decision on how to proceed within two weeks.

But Murray stressed that the project remains on track. ''The work isn't stopping. They're continuing to install ties, to install rail, to work on the signal system,'' he said.

Late 2000 is the latest estimate of when daily service will begin between Portland and Boston's North Station.

Stops will include Portland, Biddeford and Wells in Maine; Dover and Exeter in New Hampshire, and Haverhill, Mass. The trains also would make summer stops in Old Orchard Beach, Maine.

The 79-mph speed is important because rail advocates believe passengers will not choose the Amtrak service if the trains are slower than the cars and buses they already use.

The faster speed will allow trains from Portland to arrive in Boston 12 minutes sooner than they would at 59 mph. The one-way trip will take two-and-a-half hours, including all stops, Amtrak said.

Wayne Davis of TrainRiders Northeast, a rail advocacy group, said taxpayers are frustrated by the continued delays, and that he hopes the final details can be worked out swiftly.

''We hope that this will not lead to delays, that whatever can be done will be done quickly, so we can get on with this,'' he said.