Infrastructure Funding Getting Fresh Look in Congress

February 14, 2019

Senate and House committees have begun to review legislation to provide additional transportation infrastructure.

Last week the House Transportation and Infrastructure Committee held its first hearing on infrastructure needs.

Among those testifying was Amtrak President Richard Anderson.

The Senate Commerce Committee convened a hearing this week with a similar focus.

Some believe that the need to extend the expiring Fixing America’s Surface Transportation Act will serve as an impetus to prod Congress into adopting an infrastructure program.

The law, which expires on Sept. 30, 2020, provides grants and loans for transportation programs.

Another sense of urgency is the condition of the Highway Trust Fund, which is flirting with insolvency.

Funded by the federal gas tax, that has been declining and Congress has diverted $144 billion from general funds since 2008 to keep the HTF going.

The Congressional Budget Office projects the HTF will exhaust its funds in 2021.

Congress has been split on how to infuse cash into the HTF. Some have favored an increase in the gas tax, which has not risen since 1993.

But others are calling for other measures, such as a tax on vehicle miles traveled.

The Trump administration last year suggested raising the gas tax by 25 cents, which might be an indication that the political pressure against raising it is abating.

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Virgin Cancels IPO Offering

February 14, 2019

Virgin Trains USA has abruptly canceled plans to make an initial public offering, opting instead for what it termed “alternative financing sources.”

Virgin had said it planned to sell 28.3 million shares of common stock, which was expected to go for between $17 and $19 per share.

The IPO was to have been launched the week of Feb. 11 and was expected to raise $510 million.

Money raised from the IPO was to be used for expand service into Orlando and Tampa.

Formerly known as Brightline, Virgin has for more than a year operated daily intercity rail passenger service between Miami and West Palm Beach, Florida.

In a statement, about the IPO cancellation, Virgin did not indicate if it would consider another IPO in the future.

Most of the stockholders of Virgin Rail are private equity funds affiliated with Fortress Investment Group.

A news media report quoted a follower of Virgin as saying that the IPO can scrubbed because the company “concluded that it could not achieve the valuation it sought in an IPO: ‘It was a combination of [investor] appetite and people saying they’d be interested if it was private.’”

Had the IPO been executed, those buying stock in Virgin would had no more than a 2 percent stack in the company.

Documents filed with the U.S. Securities and Exchange Commission show that Virgin Trains has had discussions about raising up to $2.3 billion in debt and its plans to expand are contingent on it having the funds to acquire certain land rights.

Virgin faces a June 2019 deadline to raise more than $1 billion in construction financing to avoid losing a deal with the Greater Orlando Aviation Authority, which operates Orlando International Airport.

The airport plans to provide land for a station, storage facilities and tracks. Virgin has said it will may seek an extension of that deadline.

Somewhere in North Carolina

February 12, 2019

Some memories that some photographs trigger tend to stay with you longer than others.

Such is the case with the image of Amtrak’s northbound Silver Star on Dec. 14, 1979.

I created this image from an open vestibule and have no idea where the train was at the time other than passing through North Carolina.

My sole purpose for riding this train was to ride the train. My mother had died two months earlier and I wanted to get away for a while.

I wasn’t traveling to visit family or friends, to go sightseeing, or to make a business trip. I was traveling just to travel.

I still had vacation time to use at work so I booked a long Amtrak journey that initially took me from east central Illinois aboard the Panama Limited to Chicago.

I then rode to New York on the Lake Shore Limited, my first experience aboard that train and my first experience in a Heritage fleet sleeper. From New York it was south to Washington on the Crescent, my first time riding that train, and a connection to the Silver Meteor to Miami. It was my first time aboard the Meteor.

After an overnight stay in a motel I was back aboard the train, taking the Silver Star to Washington. It was my first time aboard the Silver Star.

I stayed overnight in a motel in suburban Virginia and then took the Colonial to New York and a connection with the Lake Shore Limited back to Chicago.

The last segment was back home aboard the Panama Limited. During this trip I picked up a lot of new miles.

Spending days at a time riding trains just to ride trains was something that I did back during that time of my life. Today, it is something that I rarely do.

There is much to see here that can’t be seen anymore, starting with the two SDP40F units (Nos. 647 and 645) wearing the Phase I livery.

None of the streamliner era passenger cars visible here are still on the Amtrak roster. Note that one of those cars appears to be a former Southern Railway car that Amtrak acquired when it took over the Southern Crescent on Feb. 1, 1979.

I still have a number of memories of this trip. They include milling about the platform in Miami to get photos of the train, a sunset over a lake as the Star cruised through Florida, the process of joining the Miami and St. Petersburg sections at Aurbundale, trying to sleep sprawled across two coach seats and disembarking at Richmond to make more photographs.

I recall at one point during the night feeling the train stop and seeing light from the station platform lights illuminating the inside of my coach. But I didn’t bother to raise up to look out the window to see where we were.

To this day still wonder where that was. Probably it was in South Carolina.

Thus far this has turned out to be the last time that I’ve ridden either the Silver Meteor or Silver Star.

Maybe some day I’ll get back aboard one or both of those trains. If so, it will be a nice ride, but it can’t be the same as it was on this day.

Winston-Salem Hopes to See Amtrak Some Day

February 12, 2019

Winston-Salem, North Carolina, has a restored railroad station that is ready to accommodate Amtrak if the state can be persuaded to extend its service there.

The closest that Amtrak comes to Winston-Salem is Greensboro, which is 30 miles to the east.

Greensboro is severed by the state-funded Piedmonts and Carolinian, as well as the New York-New Orleans Crescent.

There has been some discussion to extend the state-funded service to Winston-Salem in order to serve Wake Forest University, Winston-Salem State University, and the North Carolina School of the Arts.

In the meantime the city is poised to celebrate the completion of an $11 million restoration of the Union Station that was built in 1926 to serve the Southern Railway, Norfolk & Western, and the Winston-Salem Southbound.

The station once served 20 trains a day, but last saw scheduled passenger service on June 15.

For 37 years the station was the home of an auto repair shop. However, much of the station’s interior remained intact during that time, including the flooring survived intact and several lighting fixtures.

The city purchased the former station in 2012 and plans to use some of it for its own offices. There are plans to lease space to tenants on the main level and make the large waiting room available for banquets and other events.

An open-window balcony overlooking the former concourse will serve as a railfan viewing area of Norfolk Southern tracks.

NS Eyes 60% OR, Cutting 500 Locomotives From Roster

February 12, 2019

Norfolk Southern kicked off an investor’s conference in Atlanta on Monday by announcing an ambitious goal to lower its operating ratio to 60 percent by 2021.

To do that the carrier is moving toward the precision scheduled railroading operating model as well as pursuing other ways to increase productivity, efficiency and growth.

“As we implement precision scheduled railroading, our initiatives are focused on five key principles: serving our customers, managing our assets, controlling our costs, working safely and developing our people,” NS CEO James Squires said in a statement.

In 2018, NS posted an operating ratio of 65.4 percent. An operating ratio measures what percent of a company’s revenue is devoted to operating expenses.

NS officials also said their goals include capital expenditures totaling between 16 percent and 18 percent of annual revenue through 2021 and a dividend payout ratio of 33 percent.

The carrier will continue to repurchase shares of its stock using free cash flow and borrowed money.

For NS to meet its operation ratio goal would mean an improvement of at least 100 basis points from the 2018.

Just as its chief competitor CSX did, NS plans to do that in part by paring its workforce. It expects to eliminate 500 jobs this year and will have cut 3,000 jobs by the end of 2021 or 11 percent of its current workforce.

However, the NS version of PSR will differ from that implemented by CSX in that it will seek shipper views before redesigning local service.

NS also said it will continue to talk with shippers after it implements its new local service plan in a process it is calling “clean sheeting.”

Also unlike CSX, NS plans to increase and not reduce frequency of local service to daily, which is an increase from three or five days per week.

Although NS executives said at the conference they are optimistic about retaining overall traffic volume they also expect to get rid of lower-margin merchandise and intermodal traffic.

This year’s operating ratio is expected to be about 64.4 percent.

Coal traffic is expected to continue to decline this year while NS expects to see increases in intermodal and merchandise traffic.

The carrier is also eyeing reducing its locomotive fleet by 500 units.

The NS PSR plan is expected to be implemented beginning July 1 this year by mixing intermodal, automotive, merchandise and bulk commodities into individual trains.

This is expected to increase average train length but also cut terminal dwell times and creating track capacity.

Like CSX did NS plans to operate the same number of trains in each direction every day. It also expects to close or downgrade some yards although no details about that were provided.

NS also expects to differ from CSX in that it doesn’t  expect to sell lower-density routes to short line carriers.

The new operating plan, known as TOP21, calls for heavier trains with increased used of distributed power.

The motive power reduction plans envisions continuation of the DC-to-AC conversion program but reduce the size of the switching fleet.

NS also wants to increase locomotive productivity by 30 percent by 2021, based on gross ton-miles per unit, and boost train length by 12 percent, to an average of 7,130 tons.

Officials said a smaller fleet will be able to handle more tonnage because it will have higher tractive effort due to the near doubling of the percentage of AC-traction locomotives on the active service locomotive roster.

Since 2016, NS has converted 190 locomotives to AC power and expects to have converted 527 of its 1,200 DC-traction Dash 9 units to AC power by 2021.

However, NS also expects to buy some new locomotives.

New Congress, Old Priorities for Rail Industry

February 12, 2019

It may be a new Congress, but the railroad industry is continuing to push old priorities in Washington.

An analysis by Progressive Railroading magazine said among the priorities are a permanent extension of the 45G short-line tax credit, keeping existing truck size and weight restrictions, and approval of an infrastructure package that includes funding priority for freight and passenger rail.

How much the industry is able to get done is an open question given that the House is controlled by Democrats and the Senate by Republicans.

Some railroad industry lobbyists say an environment of hyper partisanship combined with hard feelings lingering from the recent 35-day federal government shutdown will make it a challenge to create agreement on transportation policy.

Yet some are optimistic that an infrastructure plan might be a rare example of bi-partisan agreement, in part by trying to portray it as good for urban and rural communities.

The Rail Passengers Association is seeking to prod Congress into address the on-time woes of Amtrak trains by creating a a charter for a Shared-Use Corridor Advisory Committee to develop new “mutually satisfactory solutions” on Amtrak’s shared use of rail routes with its host railroads.

The committee would be similar to the Railroad Safety Advisory Committee and use a collaborative approach to find mutually agreeable solutions to safety regulatory issues.

Although most of industry’s legislative priorities have been around awhile, some new matters the industry is overseeing include discussing the potential regulation of precision scheduled railroading and automation.

“A huge amount of education is needed,” said Chuck Baker, the new president of the American Short Line and Regional Railroad Association.

“A lot of these new members are interested in infrastructure, so we think we’ll have a friendly playing field,” he said.

The Association of American Railroads expects the trucking industry to again seek to get Congress to increase the weight and size limit of trucks.

AAR is calling for what it termed “reasonable” limits on truck size on interstate highways of 80,000 pounds in weight and no more than two 28-foot trailers in total length.

The trucking industry has been seeking to increase these limits through the use of pilot programs to test larger trucks.

The rail industry fears that these programs could lead to higher limits being made permanent at the national level.

An infrastructure program, though, lies at the top of legislative priorities.

Railroad interests are hoping for an infrastructure package coupled with reauthorization of the

Fixing America’s Surface Transportation Act of 2015, which is set to expire in September 2020.

The reauthorization is expected to include funding for Amtrak and the Gateway/Hudson River tunnel projects in New York.

Lawmakers are also expected to debate funding of the Highway Trust Fund and its Mass Transit Account with those discussions focused in part on whether to increase the federal tax on gasoline that motorists pay at the pump.

Other funding alternatives for the HTF that are expected to be discussed include a general sales tax, a vehicle miles traveled fee and a per-barrel tax on crude oil.

Jim Mathews, president of RPA, said his group wants Congress to look at a variety of funding options, including a passenger-rail trust fund. “We think it’s about time that we had a predictable, dedicated source of funding for passenger rail,” he said.

Getting Lucky

February 10, 2019

Photographer Edward Ribinskas describes this photograph of Amtrak’s eastbound Lake Shore Limited as getting lucky.

Luck was with him in a couple of ways. It started with No. 48 leaving Chicago several hours late in the middle of the night.

Had No. 48 left on time or nearly on time it would have passed through Northeast Ohio in darkness. Of course those aboard the Lake Shore didn’t consider its tardy departure from Chicago as being lucky.

The other luck that with Ed was that an eastbound Norfolk Southern train with Union Pacific motive power came along at the same time as Amtrak, but not too far ahead to block it.

The image was made on Feb. 9 at Davis Road just east of Perry, Ohio.

Anderson Urges Funding for NEC Infrastructure

February 10, 2019

Amtrak President Richard Anderson doesn’t like to give interviews to news reporters or make many speeches in which he illustrates his vision of Amtrak.

He gave, though a glimpse of that last week during a congressional hearing infrastructure.

Anderson told the House Transportation and Infrastructure Committee “there are changes we need to make in our network and the way we do business to modernize from a ‘70s railroad to a railroad that will meet the demand of Millennials today.”

Anderson said that means meeting the demand that “is clearly there for additional short corridor service throughout the U.S, [including] both additional frequencies for existing routes and establishing new routes between city pairs.”

Anderson also addressed the future of Amtrak’s Beech Grove shops near Indianapolis.

After saying the carrier had no plans to close the facility or reduce its workforce, Anderson said, “but as we go down that process we have to be very mindful of its impact on our people.”

Anderson said Amtrak maintains equipment at several facilities, some of which it is in the process of rebuilding.

This includes facilities in Seattle; Oakland, California; New York (Sunnyside Yard); and Washington (Ivy City Engine Terminal).

“Over time, we have to re-fleet the Amtrak rolling stock,” Anderson said, “ . . . and over the longer term we have to figure out where we are going to do our maintenance work.

“I think the footprint is going to change over time because we’re moving to more modern equipment.”

Much of Anderson’s testimony focused on the need to rebuild bridges and tunnels in the Northeast Corridor.

Anderson warned that the failure of this infrastructure near New York “would effectively shut down economic activity in Manhattan” and “cut off (rail travel) from Maine to North Carolina and down to Florida.”

Saying the federal government has never had “an appetite to invest in the infrastructure up and down the Northeast Corridor,” Anderson said the Baltimore tunnels were dedicated by President Ulysses S. Grant in 1873.

“That’s typical of what we see in the Corridor, the spine of the Northeast,” Anderson said.

Amtrak has plans in place for such projects as replacement of the Portal Bridge in New Jersey and the North River tunnels under the Hudson River.

“There’s an inevitability that this is going to get built,” Anderson said. “So why [do] we spend all this time gyrating around? It’s not a Republican or Democratic issue, it’s an American issue, and what we ought to do is just fund it.”

The purpose of the hearing at which Anderson spoke was described by Committee Chairman Peter DeFazio of Oregon as an opportunity to sound “the alarm bells” for why investing in the nation’s transportation infrastructure can’t wait.

Passenger rail was not the only infrastructure need discussed. Committee members also called for investment in highways, waterways, ports, and airports.

Berkshire Flyer Eyes May 2020 Launch

February 10, 2019

An effort to build another generation of visitors to the Berkshire mountains is behind an effort by Massachusetts officials to launch a pilot Amtrak service to western Massachusetts in 2020.

The plan is to have one of Amtrak’s Empire Service trains that now terminates at the Albany-Rensselaer, New York, station continue operating to Pittsfield, Massachusetts.

The target market for the service is primarily young couples ages 27 to 47 who live in the New York City metro area who don’t own cars and have a household income of more than $100,000.

“We’d love to see rail as an option for the next generation of Berkshire visitors,” said Jonathan Butler, co-chair of the Berkshire Flyer subcommittee and president and CEO of 1Berkshire, the economic development and tourism agency of Berkshire County.

Butler said another market for the train is older people who might already have a second home in the Berkshires.

The train would operate seasonally on weekends and officials hope to launch it by Memorial Day 2020.

The service would be funded by the State of Massachusetts.

A key to making the project work will be offering transportation for the “last mile” from the train to Berkshires resorts.

That could be anything from car-hailing services to rental cars to taxis and local buses.

The Berkshire Flyer is expected to leave New York City on Fridays at 2:20 p.m., arriving at 6:10 p.m. in Pittsfield.

Return trips would leave Pittsfield on Sundays at 2:45 p.m., arriving at Penn Station at 6:45 p.m.

The pilot program is projected to last 20 weeks and cost the state about $237,000.

Pittsfield is already a stop for Amtrak’s Lake Shore Limited between Chicago and Boston.

Another task force is looking at adding passenger rail service to Pittsfield from Boston. It is expected to meet in the spring to consider six possible alternatives for that service.

Amtrak OIG Critical of Private Car Practices

February 10, 2019

A report by Amtrak’s Office of Inspector General has found that the carrier has significant deficiencies in how it handles the financial accounting and policy making for its handling of private railroad passenger cars.

The IG report described it as a “longstanding management weaknesses in the company’s transport program for privately owned rail cars, including inadequate controls for cost and revenue management, a lack of standard operating procedures, and limited safety and parking guidelines.”

The report said additional steps are needed beyond those recently taken in order “to ensure the company can make sound business decisions about operating the program, covering its costs, and mitigating potential safety and liability risks.”

Between 2015 and 2017 Amtrak earned nearly $14 million for 1,144 private railcar movements and 315 long-term parking transactions,

However, Amtrak officials “did not know whether its billing and pricing model actually covered the costs of services provided to private rail car owners,” the IG report said.

Amtrak management told the IG it has not identified and accounted for costs associated with private rail car services because Amtrak has historically taken the position that it does not incur additional costs to move the cars on scheduled trains and that the program is relatively small compared to other activities the company must manage.

Amtrak officials also have provided at no cost some ancillary services as power, water and ice rather than deal with the administrative burden of tracking each time those services were provided.

The IG report also was critical of Amtrak for missing out on opportunities to generate additional revenue by not adjusting prices during periods of peak demand, such as during the annual New Orleans Jazz Festival or the Washington Cherry Blossom Festival.

Amtrak’s accounting practices have led to lost revenue because the carrier has not established standard operating procedures or guidelines to manage the handling of private cars.

The report said a review of 3 percent of transactions between 2015 and 2017 revealed that inconsistent billing practices—practices not previously established by operating procedures—led to a loss of $46,100 in revenue.

As the Office of Inspector General was undertaking its review, Amtrak “took steps to address these deficiencies, such as developing initial operating procedures for program staff, developing a safety manual to which private rail car owners must abide while in transit, establishing safety guidelines for private rail car owners parked in a Los Angeles rail yard, and establishing long-term parking permits requiring owners to adhere to company rules, regulations, and directives.”

However, the IG report concluded that these actions do not go far enough in addressing the weaknesses it found and recommended Amtrak better identify its program costs and factor them into decisions about the prices it charges private rail car owners for its services.

Another recommendation is that Amtrak “monitor the program’s financial and performance reporting, finalize and implement the program’s standard operating procedures, and implement guidelines and parking permits at all short- and long-term parking facilities.”

In an appendix, Amtrak said it agreed with all of the report’s recommendations.

Amtrak has hosted private railroad passenger cars since its 1971 inception, typically by carrying them on regularly scheduled trains.

The carrier has over the years charged various fees for such services as parking, switching, power, water and ice, septic pumping, and car washing.