UTU News Digest - Monday, January 24, 2000

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Monday, January 24, 2000

WASHINGTON: Amtrak releases upbeat financial news

WASHINGTON -- One day before the release of an independent report on its finances, Amtrak on Sunday trumpeted strong quarterly revenues and announced a start date for its long-anticipated enhanced service between Boston and New York City, the Associated Press reported.

We are keeping our commitment to Congress and the American people to run Amtrak like a business and we continue to achieve solid financial improvement," said Gov. Tommy Thompson, Amtrak's chairman of the board.

Amtrak said its new Acela Regional service will begin Jan. 31 with a celebration at Boston's South Station. The Boston-New York City trip, now about five hours, will drop to just under four.

Amtrak reported that its revenue in the quarter ending Dec. 31, 1999 was 8 percent higher than in the same quarter a year earlier.

It also boasted of significant growth in ridership on its Chicago-to-Los Angeles "Texas Eagle'' route and its Oakland-to-Sacramento "Capitols'' route.

Amtrak officials announced the financial results the day before the first annual report on its finances is to be released by the Amtrak Reform Council, an independent oversight commission.

Amtrak supporters and critics expect the report to be skeptical about the railway's chances of becoming financially self-sufficient.

Congress has given Amtrak until the end of the 2003 fiscal year to wean itself from government operating subsidies. It created the reform council to keep close track of Amtrak's efforts toward that goal.

Amtrak has been at odds with the council over how to measure its progress, and that disagreement will likely be reflected in the council's report.

The General Accounting Office, the investigative arm of Congress, applied a standard corporate measurement - overall revenue minus overall expenses - to come up with a $907 million operating loss in 1999 for Amtrak.

Amtrak officials say standard accounting rules do not apply in this case because Congress does not require the railway to cover the cost of equipment depreciation. Excluding depreciation, Amtrak concluded it was $484 million short of self-sufficiency in 1999.

Reform council Chairman Gil Carmichael said Jan. 10 that the council's first report "is not intended to reach conclusions or make recommendations about Amtrak's long-term future,'' but that it "raises questions, concerns and issues that the council believes should be addressed in its future efforts and, ultimately, by Congress.''

WASHINGTON: Lawmakers hail STB on merger terms

WASHINGTON -- Two senior congressmen who sit on a key committee that oversees railroads say they support the Surface Transportation Board's decision to broaden the issues to be considered in the proposed merger of Canadian National Railway Inc. and Burlington Northern Santa Fe Corp, the Journal of Commerce reported.

Rep. Bud Shuster, R-Pa., and Jim Oberstar, D-Minn., told STB Chairman Linda Morgan that "we share your concerns about the potential effects of such a transaction and encourage you to proceed cautiously in reviewing this proposal."

Shuster is chairman of the Transportation and Infrastructure Committee. Oberstar is the panel's ranking member.

"In this regard," Shuster and Oberstar wrote, "we heartily approve the board's looking at the downstream effects of the proposed transaction.

"We urge you to promptly explore all options to ensure an early and vigorous debate on whether those effects are in the public interest."

The Transportation and Infrastructure Committee has jurisdiction over the STB's reauthorization, which has been pending without action for more than a year.

Congressional sources said the letter was sent because various parties were clamoring for the House committee to get involved.

Four major railroads -- Union Pacific, Canadian Pacific, Norfolk Southern and CSX Transportation -- launched a campaign earlier this month to encourage rail shippers and other parties to seek a delay in approval of the BNSF-CN merger. That campaign includes lobbying on Capitol Hill.

MICHIGAN: Train car fire finally burns out

FLINT -- A fire inside a propane-filled train car burned out Saturday, ending a tense 24 hours in which scores of homes were evacuated, two schools were closed and an interstate was shut down, the Associated Press reported.

No injuries were reported.

Flames were spotted spewing from a valve in the tanker at the CSX rail yard Friday morning.

Fire officials, fearing it would ignite a half-million gallons of propane in 54 other cars or explode, ordered 600 people from their homes and shut down nearby Interstate 475.

Early Saturday, firefighters started a "vent and burn'' procedure - explosives were used to blow holes in the top and bottom of the car to release pressure and gas - that allowed the fire to burn out more rapidly, Fire Chief Theron Wiggins said.

Residents were allowed back into neighborhoods near the rail yard at about 2:30 a.m.

WASHINGTON: Major chemical makers oppose rail deal

WASHINGTON -- The Chemical Manufacturers Association said its membership has authorized it to oppose the proposed merger of Burlington Northern Santa Fe Corp. and Canadian National Railway Inc., the Journal of Commerce reported.

The trade group, which represents major chemical producers, said its board, meeting in Naples, Fla., had overwhelmingly supported the resolution to oppose the merger.

It said it will tell the Surface Transportation Board, which has the authority to approve or disallow the BNSF-CN transaction, that if the STB decides to approve the merger, it should only do so if it attaches a pro-competitive condition allowing so-called captive shippers the right to obtain service from a competing railroad.

The CMA says nearly two-thirds of chemical manufacturing facilities are captive and, as a result, pay 15% to 60% more for comparable rail service than other shippers.

Fred Webber, the CMA's president and chief executive, said the organization would send letters to Robert D. Krebs, chairman and chief executive of BNSF; Paul Tellier, CN's president and chief executive; members of Congress; and the three STB commissioners.

He said the group also would file as a participant in the merger case.

Whitson Sadler, chief executive of Houston-based Solvay America Inc. and chairman of the CMA executive committee, said, "Chemical companies are dependent on rail service for safe and efficient distribution of our raw materials and finished product."

He said chemical shippers pay $5 billion a year for rail transportation and that "recent mergers have caused severe disruption in rail service and did nothing to improve competitiveness."

Webber said that if the STB allows the merger, "the CMA recommendation would create competition for all captive shippers on the BNSF and CN railroads." A rejection of the CMA position, he said, "would again highlight the necessity of legislative change to bring about competition."

If the STB allows the merger, the CMA seeks a condition that allows rail customers served exclusively by BNSF or CN on Dec. 17, 1999 -- the last business day before the merger was announced -- the permanent right to obtain service from a competing railway, Webber said.

Competing service could include service through reciprocal switching, haulage or trackage rights to another railroad, or a provision ordering BNSF-CN to quote a rate to deliver freight to a point served by another railroad. Such rates are known as bottleneck rates, and the STB has ruled previously that railroads do not have to quote rates to interchange points.

Sadler said he is not against railroads gaining some benefits from mergers, but previous mergers have demonstrated that railroad service suffers, and that more customers become captive without competitive options.

"The STB seems to ignore pro-competitive provisions of the Staggers Act," the 1980 law that deregulated the railroad industry, he said.

Referring to the legislative option, Sadler pointed out that STB Chairman Linda Morgan has said that if shippers or members of Congress want the STB to change its interpretation, they will have to change the legislation. "We will be contacting Congress on this," he said. "This latest proposed merger should enhance our efforts to achieve pro-competitive language in legislation," Webber said.

Acknowledging that the BNSF-CN proposal is essentially an end-to-end merger, Webber said there are some overlapping customers that would lose competitive options they now have.

In a telephone news conference, the CMA spokesmen appeared to be more concerned by the potential fallout of a BNSF-CN merger than by that transaction alone.

Webber, citing an open letter to rail customers from Union Pacific, Canadian Pacific, Norfolk Southern and CSX Transportation that ran as full-page advertisements in newspapers, said the BNSF-CN merger inevitably would "lead to other mergers, which would have a terrible effect on competition."

PENNSYLVANIA: SEPTA’s deal with tabloid leads to newspapers’ suing it

PHILADELPHIA (AP) - A new newspaper prepared to greet commuters in the nation's fifth-largest city today even as competitors urged a federal judge to block the free Metro tabloid because of its ties to the Southeastern Pennsylvania Transportation Authority, the Associated Press reported.

Metro's publishers said it would give train and bus riders an abbreviated morning news alternative but its rivals questioned its relationship to the state government agency that runs trains, buses and subways for 350 million riders a year in the region.

"The first big crisis with SEPTA will tell what the reporters are allowed to do, what the editors are allowed to do,'' said Robert J. Rosenthal, editor and executive vice president of The Philadelphia Inquirer. "Are they going to have it on the front and cover it well?''

Attorneys were to resume arguments today in federal court over a lawsuit three news organizations – the Inquirer, New York Times, and USA Today -- filed late Friday against SEPTA. U.S. District Judge Robert Kelly refused to grant a temporary restraining order Friday pending today's hearing, and Metro agreed that at the outset, its newspaper would not be distributed in areas barred to other papers.

The publication is Metro International's first attempt to take a successful European concept and bring it to the United States. Launched six years ago in Sweden, the company now publishes free daily transit system newspapers in 13 European cities.

Relying solely on selling advertising space to make money, Metro holds costs down by keeping staffs small and outsourcing high-cost operations like printing. Distribution costs are kept low in many cities by just dropping bundles at subway stops and bus stations.

In Philadelphia, the tabloid will be distributed in green boxes labeled "Metro, Free Daily'' at 852 locations in and near train stations and bus stops in SEPTA's five-county coverage area. Eventually, racks for the paper may be installed on the doors of SEPTA's 1,200 buses, though that issue will be decided in the court battle.

The publishers of the Inquirer, the Philadelphia Daily News, USA Today and The New York Times contend Metro's deal with SEPTA is unconstitutional and creates an unfair advantage by distributing the paper free where other publications cannot be sold.

Metro is a color-splashed tabloid filled with graphics and photos and dozens of brief stories designed to be read in a 25-minute commute. The papers offer no editorials and contain mostly stories from other news organizations, including The Associated Press.

"We are very news-oriented and oriented to small, bite-sized news articles,'' said Jack Roberts, managing director and publisher of Metro's Philadelphia edition.

Metro International, which also is eyeing the New York, Boston, Chicago and San Francisco markets, chose Philadelphia, in part, because SEPTA was looking for a publication that could help it recover from public relations setbacks.

The transit agency has run extensive advertising campaigns to rebuild ridership after a 40-day strike in 1998. Most recently, it was hit with a $50 million judgment for a 1996 escalator accident involving a 4-year-old boy and a contempt citation for withholding key documents during the trial.

Troubling to Rosenthal and Zack Stalberg, editor of the Philadelphia Daily News, is Metro's five-year contract with SEPTA, which states that commuters will receive "an objective and nonpartisan newspaper'' and that "each issue should provide SEPTA with significant editorial coverage and must conform to SEPTA's editorial standards for content.''

Roberts and SEPTA officials maintain the editorial requirement will be met by providing the agency with its own full page for announcements and news items in each issue.

"We'll pick the contents of our page; they'll pick the contents of the rest of the paper,'' said SEPTA spokesman Jim Whitaker. "We will have no control over anything else that is published in the paper.''

TAIWAN: $10 billion loan to build high-speed rail

TAIPEI -- Some 30 Taiwanese banks have agreed to provide a loan of $10 billion - the largest ever in Taiwan - to build the island's first high-speed railroad, the Associated Press reported.

The loan agreement will be signed in two weeks, Yin Chi, chairman of the Taiwan High-Speed Rail Corp., told reporters on Saturday.

The agreement will remove the last stumbling block to the project, enabling construction to be in full swing by the end of the year, Yin said.

Taiwan High-Speed, a consortium of Taiwanese firms, had told the government it would call off the $13.9 billion project if it failed to obtain the loan by March.

The Economic Daily News quoted unidentified bank officials as saying the banks agreed to the loan after the government guaranteed it would buy back the railroad's operation rights if Taiwan High-Speed got into trouble.

The railroad will cover 207 miles and connect the island from north to south. Taiwan High-Speed will have the right to operate it for 30 years. The groundbreaking ceremony was held in March.

Last month, the company announced it had chosen the bullet-train technology provided by a Japanese group led by Mitsui and Co., which will supply the main hardware and communication systems for the project. A contract is expected to be signed this month.

Yin said a court injunction filed by the rival Eurotrain group did not hamper the company's negotiations with the Japanese group.

The group, led by Germany's Siemens AG and France's Alsthom, accused Taiwan High-Speed of violating a 1996 agreement to grant the rail contract to it.

VIRGINIA: Norfolk Southern announces capital spending for 2000

NORFOLK -- Norfolk Southern plans to spend $747.2 million for capital improvements to its railroad operations in 2000. In addition, NS will acquire 150 new six-axle high-adhesion locomotives in 2000 under a lease financing arrangement, the carrier announced.

"In order to meet customer needs and improve service levels, Norfolk Southern is moving as quickly as possible to complete capacity improvement projects and add the 150 new locomotives and other freight car equipment to its fleet," said David R. Goode, chairman, president and chief executive officer.

The anticipated spending includes $576 million in roadway spending and $143 million in equipment spending.

Roadway spending includes $284 million for rail, crosstie, ballast and bridge programs; more than $110 million for track capacity improvements such as construction of passing sidings and installation of double track on key routes; $75 million for new or expanded intermodal facilities; $32 million for marketing and industrial development initiatives; $30 million for signal and electrical projects; and $22 million for environmental projects and public improvements such as grade crossing separations and crossing signal upgrades.

Equipment spending includes $72 million for the upgrading of existing locomotives, the purchase of 255 multi-level automobile racks, the rebodying of coal and coke hoppers and the modification of open coil cars. Norfolk Southern also plans to lease 475 articulated bi-levels for automobile service. Additional equipment spending includes $23 million for computer-related projects and $35 million for maintenance equipment and highway vehicles.

"Our projected 2000 capital spending reflects our efforts to obtain more productivity from our existing assets while continuing to maintain the highest levels of safety and customer service," said Goode.