UTU News Digest - Tuesday, September 21, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Tuesday, September 21, 1999

NEW YORK: CSX, NS restore service in NY-NJ area

NEW YORK -- CSX Transportation and Norfolk Southern resumed rail service into the New York-New Jersey metropolitan area Monday, but delays and congestion continued on four key rail lines flooded by rains from Hurricane Floyd, the Journal of Commerce and Associated Press reported.

The resumption of service enabled both carriers to begin working off a backlog of intermodal freight that was developing as international shipments continued to move through the Port of New York-New Jersey.

A spokesman for the Port Authority of New York & New Jersey said a backlog of at least 1,000 import containers that would have moved by rail would be worked off by Tuesday or Wednesday.

In the South, flooding continued to disable rail and truck routes in eastern North Carolina, including the CSX main line in the Rocky Mount, N.C., area. Transportation and distribution operations were normal elsewhere. CSX restored service Saturday on its River Line, which runs between northern New Jersey and the Albany, N.Y., area on the West Side of the Hudson River. At least three washouts had blocked the route, CSX's busiest line in the region.

Service also was restored through the central New Jersey community of Bound Brook, where the Raritan River flooded tracks at a major junction used by both carriers.

NS and CSX trains were running through the area at 10 miles an hour Monday by using a siding. The main-line tracks were expected to be operational Tuesday.

The NS main line into the New York-New Jersey runs through Bound Brook from Pittsburgh and Allentown, Pa.

But operations will be slowed through the area for the next 10 days while signals downed by the storm are repaired. NS trains began running again on the former Erie Railroad main line between Jersey City, N.J., and upstate New York points such as Binghamton, N.Y., and Buffalo. It had been blocked by a washout near Port Jervis, N.Y., about 80 miles west of New York.

CSX said its intermodal facilities were open Monday and receiving freight, though the company was experiencing delays and congestion at those facilities.

Flooding in Bound Brook had blocked CSX's access to the region from Philadelphia and points south.

CSX spokeswoman Jane Covington said the railroad hoped to restore service through Rocky Mount by midday Wednesday. The water that remained over the tracks there on Monday was disrupting service between Richmond, Va., and Savannah, Ga.

An NS spokesman said that the railroad hoped to restore 90% of service in eastern North Carolina by Wednesday. There was four feet of water on portions of the NS line between Selma and Goldsboro, N.C.

NS service also was halted in parts of Virginia, where flooding disrupted operations between Suffolk and Lawrenceville, Va.

Highway problems also continued in waterlogged eastern North Carolina.

Nearly 300 roads, including parts of Interstates 95 and 40, remained closed. Truckers were moving over a detour route that took them west through Raleigh and north over local roads before rejoining I-95, the East Coast's primary trucking route, in southern Virginia.

NORTH CAROLINA: Lost bridge to cause major problems

ROCKY MOUNT -- CSXT’s Tar River Bridge, located one mile north of Rocky Mount, NC is now reportedly out of service. Maintenance crews monitoring the damage in North Carolina confirm that the bridge is missing.

While there was one estimate that CSXT could replace the bridge in 3 days, that prediction does not take into account the current weather prognostications that the Tar River will not crest until Sunday.

The bridge is located on the busy north-south route that Amtrak also uses to run the Florida Service trains. The route will be closed for several days, if not weeks, to all traffic, including CSXT freight. At this point, it is unknown what route traffic will take to head north out of Rocky Mount, NC. Discussions are under way to route traffic over Norfolk Southern's Shenandoah Line to Lynchburg, VA.

Another possibility is that CSXT traffic could be routed to the Blue Ridge Sub to the former Clinchfield, then north. This route would not allow double-stack traffic. The Carolinian and all Florida service will probably begin operations with major detours and re-routes.

Apparently the "A" Line also has numerous other washouts and flood damaged areas. The exact date of its re-opening is not yet known. Preliminary discussions between Amtrak, NS, and CSXT on re-routes and associated operations are underway, but final decisions have not yet been made. Florida service is likely to detour via NS from Washington, DC to Charlotte, NC to Columbia, SC then over CSXT Columbia, SC to Florida points. Rerouted Florida service trains could begin operating as early as tonight.

MARYLAND: Amtrak, freight train collide injuring 37 people

CUMBERLAND -- An Amtrak passenger train rear-ended a freight train Monday in a rail yard, injuring 37 people, at least one seriously.

"First there was screeching, shaking and then a solid impact, which threw me to the floor and into the seat in front of me," passenger James Reed of Olathe, Kan., said.

The impact buckled the lead Amtrak locomotive and the rear freight car. All cars remained upright, though some had their wheels off the tracks.

Amtrak spokeswoman Debbie Hare said 141 people were on board the train at the time, including 125 passengers and 16 crew members. She said some of the Amtrak train's crew were among the injured.

The Capitol Limited, which included six passenger cars, was headed from Chicago to Washington, D.C., when it collided with the CSX train shortly before noon.

The freight train was pulling into the company's yard at the time, CSX spokeswoman Kathy Burns said. She said no CSX crew members were injured. Amtrak chartered buses to carry passengers the remaining 136 miles to Washington.

The National Transportation Safety Board sent two investigators to look for the cause of the crash.

MEXICO: UP to transport large amounts of Mexican sulfuric acid to U.S.

MEXICO CITY -- Union Pacific Railroad expects to move large volumes of Mexican-made sulfuric acid to U.S. markets now that a border-area short line has been acquired by its Mexican railroad partner, Grupo Mexico.

The Nacozari-Nogales line across from Nogales, Ariz., was purchased by mining giant Grupo Mexico in July for $2.2 million. Grupo Mexico is the 74% majority partner of Ferrocarril Mexicano (Ferromex), with UP holding the remainder.

The short line was acquired independently of the joint venture, but it will be operated by Ferromex. Both UP and its Mexican partner expect to benefit from a recent boom in demand for sulfuric acid in the U.S. market.

"We're looking at a potential of 1,000 cars per month," said Tony Chacon, assistant vice president for Mexico at UP. Chacon said the growth could increase UP's cross-border business through Nogales, Ariz., by 20% to 30%.

The demand for sulfuric acid in the United States was spurred by the recent closure of sulfuric acid plants in Arizona and Texas.

Ferromex has the most expansive rail network in Mexico, primarily serving the northwest region of the country.

CALIFORNIA: Light rail line from Pasadena is a tough challenge

LOS ANGELES -- It is the biggest challenge that Rick Thorpe has ever undertaken. After building light rail transit systems in San Diego and Salt Lake City, Thorpe soon will be responsible for transforming dreams of a modern streetcar line between Union Station and Pasadena into reality.

As he peered out the window of a Pasadena police helicopter recently, the magnitude of the job came into sharp focus.

From the front seat of the Bell Jet Ranger, Thorpe saw for the first time the winding route the rail line will follow as it leaves the high-rises of downtown Los Angeles behind and climbs toward the San Gabriel Valley.

Suddenly, the challenge before him became much more daunting. "It's enormous," Thorpe said. "It's overwhelming right now."

On Oct. 1, Thorpe will become chief executive officer of the region's newest transportation agency, the Pasadena Metro Blue Line Construction Authority. His mission: to finish the light rail line that the Metropolitan Transportation Authority stopped building after spending upward of a quarter of a billion dollars.

With a much tighter budget and a tough schedule, Thorpe must deliver on the Pasadena rail authority's promise to complete the 13.7-mile rail line for another $434 million. If he can deliver the entire project on time and on budget, it will be a first in the troubled history of Los Angeles rail projects.

After financial problems forced the MTA to halt work last year on the Pasadena line and subway extensions to the Eastside and Mid-City areas, state lawmakers stripped Los Angeles County's transit agency of responsibility for the Pasadena project. The Pasadena authority was created to build the rail line. The MTA will run the trains after the line is built.

Pasadena City Councilman Paul Little, chairman of the rail authority, said much more is at stake than merely the Pasadena line. "If this project fails," Little said, "there will be no other large-scale transit project in Los Angeles."

On his aerial tour, Thorpe saw why the pressure is on. For instance, it takes a keen imagination to trace where the elevated tracks will run from Union Station to an above-ground station in Chinatown.

The route becomes much more obvious after it leaves Chinatown and crosses the Los Angeles River on a newly constructed bridge. From there, the tracks will follow an old Atchison Topeka and Santa Fe right-of-way through an industrial area a few blocks below the Pasadena Freeway.

Beyond the freeway, the landscape quickly changes as the tracks pass through crowded residential neighborhoods below the Southwest Museum and behind the commercial district of Huntington Park.

The line crosses high above the Pasadena Freeway on the reconstructed Arroyo Seco bridge and enters South Pasadena. The former freight line briefly disappears from view as it passes close to homes in a tree-lined residential area. Emerging a short distance later, the tracks run through tricky intersections, traverse old neighborhoods and skirt a commercial district.

The old railroad route enters Pasadena near the city's power plant and runs near office buildings, Huntington Memorial Hospital and cavernous warehouses where Rose Parade floats are built and decorated.

A few blocks up from Pasadena's historic train station, construction will be more difficult. A subterranean trench must be dug for the rail line under several major streets, including Colorado Boulevard, and in a narrow passage through Old Pasadena.

Beyond the historic district, the route runs directly under a new housing development before entering a curving tunnel that leads to the middle of the congested Foothill Freeway. Once there, the line follows the freeway to the last three Pasadena stations.

While Sierra Madre Villa Avenue in East Pasadena marks the end of the line, it is only temporary for those with long-range vision. As the helicopter heads to the east, John Dyer, one of the Pasadena project's interim chief executives, shows Thorpe the route to extend the rail line all the way to Claremont.

For now, though, the goal is to finish the line between Los Angeles and Pasadena by the summer of 2003. "It's all on your shoulders now," Dyer said with a smile.

"It's going to be a pretty straightforward project," Thorpe replies. "We just need to get going on it."

After immersing himself in the details of the project, the 50-year-old civil engineer said he has a greater understanding of what lies ahead.

During his long career in San Diego, Thorpe was the director of engineering and construction for the Metropolitan Transit Development Board, which built that city's popular trolley system. The light rail project became a model for construction of a cost-effective mass transit system.

In 1995, Thorpe joined the engineering firm of Parsons-Brinckerhoff and moved to Salt Lake City to become project manager for a light rail line due to open in December. The project is months ahead of schedule and millions of dollars under budget.

Exhilarated by his success in Utah, Thorpe sought the Pasadena job. "It's an opportunity for me to lead the charge, to get a project that is long overdue underway in the shortest possible time."

He is determined to avoid the pitfalls that have led to construction problems and cost overruns on the Los Angeles subway project. "We have a very limited budget, a budget with some deficits," he said. "We have to minimize changes. We can't have a lot of issues pop up after we're under construction."

Until recently, Los Angeles architect William Dahl was the MTA's representative on the Pasadena rail authority board. Dahl brought construction experience to the table after being appointed by Los Angeles Mayor Richard Riordan while he was chairman of the MTA.

Last week, the MTA's new chairwoman, County Supervisor Yvonne Brathwaite Burke, appointed veteran Eastside activist Vivien Bonzo to take Dahl's place.

"The problem they are going to be confronted with is the significant lack of experience of the board members in construction," Dahl said. "They don't have it. I don't know where they are going to get it."

Dahl said the project needs someone "who says no to the changes, a tightfisted son of a bitch. I don't know if Thorpe is the guy."

Thorpe said he has no problem saying no to contractors. In some professional circles, Thorpe said, he's been "accused of giving the industry a bad name by doing it too cheaply."

Dahl was one of two board members who did not support Thorpe for the top job. Having been chosen on a narrow 3-2 vote, Thorpe insisted on a series of protections in his long-term contract through the end of 2003.

At the outset, Thorpe will be paid $180,000 a year. He will receive bonuses and other financial incentives if he achieves specific goals during construction. The authority will provide relocation expenses, health and life insurance, retirement contributions and a four-wheel-drive vehicle.

Little said Thorpe was selected because of his qualifications, temperament, experience and outlook.

Transportation consultant Paul Taylor said he recommended Thorpe for the job because "he's the best project manager in the country."

Taylor, who was deputy director of the Los Angeles County Transportation Commission in the 1980s, said Thorpe was very helpful in those days offering advice on construction of the Los Angeles to Long Beach light rail line. He said Thorpe has shown "an ability to say, 'No, we don't need that. There's a cheaper way to do this.' " Taylor said the transportation industry will be monitoring his progress, because the Pasadena line is "the last opportunity we have to demonstrate that a rail line in Los Angeles can be done in a cost-effective way."

Thorpe is aware that the MTA spent heavily on engineering services and overhead while the Pasadena project was under its control.

"His eyes are wide open," Taylor said. "He understands why a quarter of a billion dollars has been spent on it."

Charles Stark, the MTA's chief of construction and a finalist for the job that Thorpe got, said the agency has spent $234.2 million on the Pasadena project so far and is holding another $17 million in reserve.

Stark said the biggest expense has been engineering for the Pasadena line, its stations and structures. MTA has paid $112 million to a consortium of engineering firms, and another $11.1 million is in dispute. Parsons-Brinckerhoff is part of the group, called Engineering Management Consultants.

In addition, MTA spent $37.1 million to build the new bridge across the Los Angeles River and to retrofit all but one of the other bridges along the line. The agency spent just under $30 million acquiring property and another $19.6 million to pay for overhead expenses on the project.

"The way we do business is going to be different," Thorpe said. Both he and members of the Pasadena authority's board are committed to doing things better, faster and cheaper than has been done before in Los Angeles.

"We're going to prove that it can be done in a cost-effective manner," he said. "I've done it in San Diego. We were able to pull it off in Salt Lake. The ultimate challenge is to try to pull it off in L.A. . . . It's in everyone's best interest to make this work."

CALIFORNIA: L.A. Times Editorial

LOS ANGELES -- A bill debated in the waning days of the California Legislature was all too typical of efforts to solve the San Fernando Valley's transportation problems: lots of talk, little agreement and, ultimately, no relief in sight for bus riders.

Valley Democrats and their labor allies squabbled with Valley Republicans and business leaders over legislation that would require any newly formed transit zone to honor the Metropolitan Transportation Authority's labor union contracts.

Republicans and their business allies argued that forcing union contracts on a new transit district would only propagate the MTA's unresponsive bureaucracy and stifle efforts to increase economic efficiency. For a while, they managed to deep-six the bill.

But Democrats and their union allies countered that not honoring union contracts meant cutting costs on the backs of bus drivers. When they won, pushing their bill through the Legislature and on to the governor's desk, they called it a victory for working families.

Never mind the working families who ride the buses. And never mind that a so-called San Fernando Valley transit zone and its hypothetical efficiencies don't even yet exist--and may not any time soon, what with the MTA's ongoing battle with a federal special master over spending hundreds of millions of dollars on new buses.

While politicians of both parties fiddle, bus riders get burned. Rather than arguing over a hypothetical system, why not look at simpler solutions, ones that can be put into place now?

Mayor Richard Riordan and County Supervisor Zev Yaroslavsky, for instance, are keen on a bus system they saw on a trip to Curitiba, Brazil. Curitiba, a city of 1.8 million, uses triple-length buses that carry as many as 270 people on routes made faster by timed traffic lights. The buses stop once a mile.

Riordan and Yaroslavsky have floated the idea of building such bus lanes here on a variety of broad streets and the Burbank-Chandler railroad corridor. Yaroslavsky predicted that the first such lanes tying the Valley together could be built within two years.

Of course, it would take some intense study to be sure that Curitiba-style buses would operate safely and well in Los Angeles. But could a Valley transit zone, with or without union contracts, be established, up and operating--actually doing something--in so short a time?

WASHINGTON: Rail merger failures out in the open

WASHINGTON -- Several recent studies have concluded that as many as 90% of mergers and acquisitions are short-term failures from the perspective of stockholders, employees and customers, a commentary in the Journal of Commerce says.

That comes as no surprise to the stockholders, employees and customers of railroads, which have gone through a consolidation wave that has taken the U.S. railroad industry down to six Class 1 carriers and a handful of publicly owned regional and short-line operators.

Some rail critics say the merged railroads, with annual revenue ranging from $6 billion to more than $10 billion, are simply too big to be managed effectively. That's ridiculous on the face of it. There are any number of network-type, capital-intensive industries that are considerably larger than railroads and that arguably are better managed. These include airlines and telecommunications giants. The issue isn't the size of the enterprise. It is the quality of the management.

If 90% of mergers fail, why is so much attention paid to the railroads? After all, the biggest rail mergers pale in size to recent mergers that are measured at upward of $50 billion each. Qwest Communications International, for example, is paying $57 billion in cash and stock for baby Bell US West. But few industries have the market concentration that the railroads do.

The biggest rail merger cost only $10 billion when Norfolk Southern Corp. and CSX Corp. jointly paid $10 billion in 1997 for Conrail Inc. Burlington Northern Inc. acquired Santa Fe Pacific Corp. in 1995 for $4 billion. Union Pacific Corp. paid $4.2 billion for Southern Pacific Rail Corp. in 1996. Canadian National Railway bought Illinois Central Corp. for $2.4 billion in cash and stock in 1998.

The difference appears to be that rail failures have a much wider impact on the economy than do failed mergers in other industries. The service collapse following Union Pacific's acquisition of Southern Pacific affected coal-burning utilities, grain traders and exporters, manufacturers of all types, and rail users beyond UP's own territory. Chemical companies were among the hardest hit as they saw their cost structures blown away when must-complete shipments were shifted from rail to more expensive trucks.

The service failures stemming from the June 1 division of Conrail between Norfolk Southern and CSX haven't been of the same magnitude as UP's crisis, but that is small consolation to customers that still cannot get their goods moved economically or efficiently. Failure isn't forever. After thousands of employees lose their jobs, stockholders see their investments collapse, and customers endure rotten service, the mergers eventually pay off in better service and improved earnings.

The payoff just takes longer than managements claimed when they were seeking Wall Street support and government approval of the mergers. And, who would expect management to offer anything but a bright future resulting from a proposed merger even if customers, stockholders, regulators and the managers themselves know it's pie-in-the-sky? After all, they want merger approval, not rejection.

Where rail mergers have failed, the reasons -- and there always are several -- include having to spend capital to bring the acquired property up to the standards of the acquirer and an insistence on imposing the culture of the acquirer on that of the acquired even if this leads to a disaffected work force.

Burlington Northern Santa Fe finally is operating well and lowering its ratio of operating expenses to revenue. Its on-time performance may be the best in the industry. For the first two years after the merger, however, BNSF was lucky that UP service was in crisis and attention was not focused on its own failures. BNSF also has nearly 4,000 miles of trackage rights on UP and UP's congestion became BNSF's congestion.

Union Pacific only recently returned its service to pre-merger levels, three years after it acquired Southern Pacific. In the meantime, it lost hundreds of millions of dollars, cut its dividend, increased debt and had to spend capital to make up for SP's capital starvation.

Only now is it spending the money to obtain the operating improvements it promised. It will be another couple of years before service reaches the levels promised in the merger application.

Now, we see NS and CSX struggling to integrate Conrail into their systems. All the more surprising, both companies had the benefit of watching the debacle in the West, benchmarked from the UP experience, and still were hoist by their own petard.

NS and CSX managements each took the challenge seriously, knowing that another service failure would give new life to customers seeking legislation that would inject more competition into the rail world. They delayed implementation of the Conrail acquisition for nearly a year in an effort to get it right and still failed. More on what happened in an upcoming column.