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AAR President Tells Congress Record Private Freight Rail Investments Help Fuel America’s Economic Growth

Balanced Regulations Key to Continued Private Infrastructure Investments, So Taxpayers Don’t Have To

WASHINGTON, D.C. – March 5, 2013 – Association of American Railroad (AAR) President and CEO Edward R. Hamberger today told the House Transportation railroads, pipelines and hazardous materials subcommittee that the country’s freight railroads are making record private investments in the America’s nationwide network, and plan to spend $24.5 billion in 2013. Hamberger said today’s private freight rail investments are paving the way for moving more people and goods by rail as America’s economy continues to grow.

“We invest in our infrastructure so that taxpayers don’t have to,” said Hamberger. “And we are investing billions in safety technology, new intermodal terminals, and new equipment so that we can continue to meet the demands of the changing marketplace.”

In recent years, despite the recession, America’s freight railroads have been reinvesting more than ever before back into the U.S. rail network. The $24.5 billion the industry expects to invest in 2013 surpasses the record $23 billion the industry invested in 2012.

Hamberger noted that railroads are capital intensive and must constantly maintain, upgrade and improve their networks to ensure they can serve American businesses and consumers. While the average U.S. manufacturer spends about 3 percent of its revenue on capital expenditures, U.S. freight railroads spend around 17 percent. The freight rail industry is unique among American freight transportation because the network is primarily privately funded and does not rely on taxpayer dollars.

In addition to their physical infrastructure networks, railroads are investing in their employees too. More than 175,000 freight railroad employees are among America’s most highly compensated workers, Hamberger said. In 2011, the average freight railroad employee earned wages of $74,900 and benefits of $34,000, for total average compensation of $108,900.

“Nothing is more important to railroads than safety, and America’s railroads are safer today than ever before,” said Hamberger.

Overall, 2012 set a new record for railroad safety, breaking the previous record set in 2011, which in turn broke the record set the previous year. According to the Federal Railroad Administration (FRA) data, from 1980 to 2012 the U.S. train accident rate fell 80 percent and the U.S. rail employee injury rate fell 85 percent. Since 2000, the declines have been 45 percent and 52 percent, respectively.

“We don’t rest on our laurels, but constantly look to improve upon our safety practices and processes,” Hamberger said. “We are constantly looking to implement the latest safety enhancing technologies and find new ways to advance rail safety.”

Statement by the Association of American Railroads On NITL’s Proposal for Mandatory Switching

WASHINGTON – March 1, 2013 – The Association of American Railroads releases the following statement by AAR President and CEO Edward R. Hamberger today in response to National Industrial Transportation League’s proposal on mandatory switching, which would harm all rail network users. Hamberger said:

“America’s freight railroads have invested more than $525 billion dollars over the past 30 years making this country’s rail network the safest, most reliable and efficient system in the world. As a result, the services provided to large and small customers are second to none.

“The National Industrial Transportation League’s (NITL) proposal will trigger serious service failures on today’s nationwide rail system and wipe out the efficiencies U.S. businesses have come to expect and rely on if they are to survive in today’s competitive global marketplace. Those failures will be caused by a substantial and unnecessary increase in the handling of loaded and empty freight rail cars, if the NITL proposal were to be enacted.

“At a time when American businesses are just beginning to turn the corner, NITL is ignoring the needs of the vast majority of U.S. shippers.”

AAR Responds to Flawed Report From Chemical Shipper Group on Rail Rates

WASHINGTON, D.C. – February 27,2013 - The Association of American Railroads has responded to a flawed report on rail rates prepared for the American Chemistry Council (ACC), which represents some of the world’s largest and most profitable chemical companies. The report disregards basic legal and economic facts to bolster erroneous claims made by chemical companies that they are somehow disadvantaged by rail rates. See AAR’s analysis below

A Recent Study by the American Chemistry Council
Analyzing How Rail Rates Affect Chemical Shippers is Flawed and
Disregards Legal and Economic Facts

- The American Chemistry Council (ACC) – which represents some of the world’s largest and most profitable chemical companies – recently released a study that disregards basic legal and economic facts to bolster erroneous claims that its members are disadvantaged by rail rates.

- The ACC study – “Analysis of Freight Rail Rates for Chemical Shippers” – is fundamentally flawed and its primary conclusion is meaningless. Today, the vast majority of U.S. rail rates are set by the market, just like chemical companies’ prices are set by the market. But the study wrongly claims that a rail rate for a shipper should automatically be considered excessive, and the shipper would be paying a “premium,” if the rate exceeds a certain percentage markup over the costs a railroad incurs in serving that shipper. The study also claims that constraining rail rates in this fashion is consistent with the Staggers Rail Act of 1980. That’s just not true. No statute or Surface Transportation Board (STB) regulation states, or even implies, that rail rates should be capped in this way. Chemical companies would never accept this kind of cost-based pricing for themselves, but they want it for railroads.

- The Staggers Rail Act of 1980, which introduced market competition to the freight rail industry, and which the ACC study mischaracterizes, mandates a reasonable and balanced system of rate regulation in the freight rail industry. The Staggers Act allows a railroad to set rates based upon the market when the railroad is facing effective competition. However, where there is no effective competition, the rail rate is subject to STB maximum rate regulation to protect chemical companies (and other rail customers as well). Since this balanced regulatory approach was instituted in 1980, freight rail volume has nearly doubled, average rail rates are down by nearly half and freight railroads have invested more than $525 billion of their own money growing and maintaining our nationwide rail network.

- The ACC study derived its conclusions by employing a methodology that bears no resemblance to the real world. The methodology employed by the study is based on the fallacy that all rail rates should be comparable to the most competitive rail rates. In other words, there can be no mix of low-margin and high-margin rail traffic: all shipments have to be low margin. It’s akin to a shopper going to a grocery store and demanding all items be marked half price, a model that no grocery store could survive. Likewise, no railroad could survive what the ACC proposes.

- The ACC study proposals would undercut the freight rail industry’s ability to earn what is required to maintain the safety, reliability and efficiency of the country’s nationwide rail network. If rail rates were capped in the manner suggested by the ACC study, rail revenue would decline by billions of dollars, ensuring that our privately owned freight railroads could not sustain themselves or continue making record private investments that do not burden U.S. taxpayers. To maintain our world-best freight rail system without the industry’s private investments would require enormous government subsidization.

- Railroads – just like chemical companies – price their services based on the market, not costs, and set rates pursuant to the value provided to the customer. This value-added approach mirrors that of the chemical firms, as evidenced by various comments of chemical industry executives:

- “Pricing … is tied to the value they provide to our customers rather than to our cost.” The Dow Chemical Company Q4 2007 Earnings Conference Call, January 29, 2008.

- “We will extract maximum return for our investments…And we'll ensure the return on those investments by being paid for the value that the products will bring into the marketplace.” DuPont at the Goldman Sachs Global Industrials Conference, Nov. 5, 2009.

- “We continue to implement value pricing across the entire portfolio to insure that we're getting paid for the value our products bring to our customers’ businesses.” Cabot Corp. at the Q2 2011 Cabot Corp. Earnings Conference Call, April 27, 2011.

Nation’s Freight Railroads Committed to Safely Implementing Positive Train Control

Railroads Tell NTSB Partial, Not Full, Implementation Possible by 2015 Deadline

WASHINGTON – Feb. 26, 2013 – Representatives from the nation’s major freight railroads tomorrow will tell the National Transportation Safety Board (NTSB) that despite an unrelenting commitment to safely implementing fully interoperable positive train control (PTC), doing so across all of more than 60,000 route miles required before the congressionally mandated 2015 deadline is still not possible.

“Freight railroads are determined to safely implement PTC, and have been putting vast resources and energy behind efforts to do so,” said AAR President and CEO Edward R. Hamberger. “But the fact is, it’s simply impossible to safely install a reliable, fully interoperable PTC system everywhere it is required by the 2015 deadline. There may be segments of track across the country that will be PTC operable by the 2015 deadline, but completely implementing PTC on the more than 60,000 route miles required by the mandate is still not possible by 2015.”

Since Congress mandated PTC in 2008, freight railroads have spent more than $2.7 billion on implementation, including the design, development and testing of completely new communications technology, on-board computers, radios and back-office train dispatching software that allows each railroad’s PTC system to work together safely.

While much remains to be done before PTC implementation is complete, significant progress has been made. For example, through the end of 2012 railroads have:

- partially equipped 6,072 locomotives with PTC onboard equipment out of a total 18,100 locomotives involved in full implementation;

- equipped 8,504 wayside locations with PTC wayside interface units out of 37,512 needed, and

- acquired 2,775 220MHz base, wayside and locomotive radios out of the 56,035 that will be needed.

Hamberger also noted that freight railroads are continuing the process of mapping more than 475,000 critical features of the rail system into a computerized track database and much remains to be completed. Railroads also will have to conduct specialized PTC-related training for approximately three quarters of all employees in the railroad industry workforce once the technology is deployed in their service territory.

Major commuter railroads and the Federal Railroad Administration (FRA) also have told Congress that technological challenges and a scarcity of necessary funds make meeting the 2015 implementation deadline extremely unlikely.

“Doing what is right and safe must steer this process, not a subjective deadline. We are up against significant hurdles every day and they must be overcome before PTC is launched across every major railroad’s network,” Hamberger said.

Finally, Hamberger also shared a concern that the FRA must rely on its team of PTC specialists to review and certify railroad PTC plans prior to the 2015 deadline. “This is a tremendous burden to achieve in such a short period of time with a limited but highly specialized staff,” he said.

“This is one of the most significant technological undertakings in transportation history,” Hamberger said. “Safely implementing interoperable PTC cannot be rushed – we must get it right to ensure rail continues to be the safest way to move both people and goods.”

Statement of the Association of American Railroads on the ‘American Energy and Infrastructure Jobs Act’

WASHINGTON, D.C. Feb. 9, 2012 - The Association of American Railroads (AAR) commends the House Committee on Transportation and Infrastructure for advancing H.R. 7, the “American Energy and Infrastructure Jobs Act.” The long-term reauthorization of our nation’s critical surface transportation programs is necessary and long overdue.

AAR is particularly pleased that the Committee approved a bipartisan provision calling for a study of longer and heavier trucks. The provision will ensure that transportation professionals evaluate – in advance – the impact that such trucks could have on public safety, on tens of thousands of structurally deficient bridges, on pavement wear and tear, and on the possible diversion of cargo traffic away from the freight railroads and onto our overcrowded highways.

The study results should help inform policy makers about the magnitude of additional funding that longer and heavier trucks would need to contribute to highway and bridge maintenance in order to avoid further cross subsidization from other highway users and the general taxpayer.

AAR is also pleased that the Committee chose to continue dedicated funding for the critical Section 130 highway-railroad grade crossing program, and that the Committee modified certain requirements associated with the installation of positive train control.

As the leaders of the Committee prepare for floor consideration of H.R. 7, AAR requests that all members support these important provisions as reported from the Committee without change. Further, AAR recommends House passage of H.R. 7 so that differences with the Senate, such as mass transit funding, can be reconciled and a long-term, fully funded surface transportation bill can be enacted.

Updates from Committees

The Spring 2013 Schedule of AAR Committee Meetings has been posted to the members’ area on the AAR website. To access this schedule, login from www.aar.org and click on the “Associate & Affiliate Members” section. The link to the schedule is at the top of the page.

You can view the latest reports from key AAR committees submitted by your associate member representatives by logging in to the members’ area, clicking on “Associate & Affiliate Members,” and then clicking on “Committee Reports and Descriptions.”

The following committees submitted new reports in the month of February. These reports will be posted to the website as soon as they are available:

  • Car Repair Billing Committee
  • Coupling Systems & Truck Castings Committee
  • Equipment Assets Committee
  • Intermodal Operations Committee
  • Technical Services Working Committee

Associate News

AECOM Appoints Andrew D. Peters as Senior Vice President, Chief Safety Officer

Alstom and its Russian partner TMH are successfully testing the 2ES5 freight electric locomotive

Brescia Today Inaugurates New Metro System with Driverless Technology By Ansaldo STS

ARINC Conducts Border Security Workshops Focusing on Issues Impacting National Security and Immigration Control

GATX Corporation To Present At Raymond James 34th Annual Institutional Investors Conference

Greenbrier Exits Wheelset Roller Bearing Reconditioning Business

Hanson’s Moll Receives Outstanding Engineer Award

HDR to Receive 2012 EBJ Business Achievement Award

HNTB’s Conrad Felice Co-Authors Underground Engineering Report for the National Academy of Sciences

Shell to Develop Two Additional Natural Gas for Transport Corridors in North America

Darlene Todd, CEO of T-Solutions, Inc., Announces Two Appointments at T-Solutions

Westport Strengthens Board of Directors with Appointment of Nancy Gougarty and Expands Industry Knowledge Base with Formation of Advisory Board

Westport Announces Co-Marketing Agreement with ENN Group, A Global Energy Provider and One of China’s Largest Private Companies

Monthly Traffic Report

AAR Reports Mixed Rail Traffic for February, Gains for Week Ending March 2

WASHINGTON, D.C. – March 7, 2013 – The Association of American Railroads (AAR) today reported that U.S. monthly rail traffic showed mixed results in February, and gains in both carloads and intermodal traffic for the week ending March 2, 2013.

Intermodal traffic in February 2013 totaled 983,078 containers and trailers, up 10.5 percent (93,231 units) compared with February 2012. That percentage increase represents the biggest year-over-year monthly gain since December 2010. The weekly average of 245,770 intermodal units in February was the highest weekly average for any February in history.

Carloads originated in February totaled 1,113,843 carloads, down 1.1 percent (12,562 carloads) compared with the same month last year. However, carloads excluding coal and grain were up 4.5 percent (25,311 carloads) in February 2013 over February 2012.

Commodities with the biggest carload increases in February included petroleum and petroleum products, up 64.2 percent or 21,326 carloads; crushed stone, gravel and sand, up 17.2 percent or 10,759 carloads; motor vehicles and parts, up 2.6 percent or 1,722 carloads; and lumber and wood products, up 10.4 percent or 1,310 carloads. Commodities with carload declines last month included coal, down 4.8 percent or 22,583 carloads; grain, down 17.8 percent or 15,290 carloads; primary metal products, down 7.1 percent or 3,313 carloads; and iron and steel scrap, down 14.7 percent or 2,810 carloads.

“Rail intermodal traffic continues to grow. In February, year-over-year intermodal volume on U.S. railroads rose for the 39th straight week, and February saw the first double-digit year-over-year increase in two years,” said AAR Senior Vice President John T. Gray. “Shippers find intermodal appealing for a lot of reasons, including fuel savings, higher trucking costs, and service that has become much better in recent years.”

AAR today also reported gains in rail traffic for the week ending March 2, 2013. U.S. railroads originated 283,819 carloads last week, up 0.2 percent compared with the same week last year, while intermodal volume for the week totaled 249,238 units, up 9.7 percent compared with the same week last year. Total U.S. traffic for the week ending March 2 was 533,057 carloads and intermodal units, up 4.4 percent over the same week last year.

Five of the 10 carload commodity groups posted increases compared with the same week in 2012, led by petroleumproducts, up 69.5 percent. The groups showing a decrease in weekly traffic were led by grain, down 22.2 percent.

For the first nine weeks of 2013, U.S. railroads reported cumulative volume of 2,453,447 carloads, down 4 percent from the same point last year, and 2,151,708 intermodal units, up 7.6 percent from last year. Total U.S. traffic for the first nine weeks of 2013 was 4,605,155 carloads and intermodal units, up 1.1 percent from last year.

Canadian railroads reported 80,495 carloads for the week, up 5.3 percent compared with the same week last year, and 52,734 intermodal units, up 13.1 percent compared with 2012. For the first nine weeks of 2013, Canadian railroads reported cumulative volume of 690,157 carloads, up 2.2 percent from the same point last year, and 460,163 intermodal units, up 6.3 percent from last year.

Mexican railroads reported 15,603 carloads for the week, up 15.6 percent compared with the same week last year, and 10,628 intermodal units, up 33.2 percent. Cumulative volume on Mexican railroads for the first nine weeks of 2013 is 130,634 carloads, up 9.2 percent from the same point last year, and 84,540 intermodal units, up 3.4 percent from last year.

Combined North American rail volume for the nine weeks of 2013 on 13 reporting U.S., Canadian and Mexican railroads totaled 3,274,238 carloads, down 2.3 percent compared with the same point last year, and 2,696,411 trailers and containers, up 7.2 percent compared with last year.

WEEKLY RAIL TRAFFIC CHARTS (PDF)

Spotlight On

This month's spotlight is on our two newest members. Please join the AAR in welcoming new Silver Associate Member Kelso Technologies Inc. & returning Silver Associate Member Motive Power and Equipment Solutions.

Kelso Technologies Inc.
Neil Gambow
President & CEO
847-323-2878 - Phone
gambow@kelsotech.com

Kelso is a railroad equipment supplier that produces and sells proprietary tank car components used in the safe loading, unloading and containment of hazardous materials during transport. Products are specifically designed to provide economic and operational advantages while reducing the potential effects of human error and environmental harm during the transport of hazardous materials. Kelso products are Made In USA. For more information, please visit http://www.kelsotech.com/.

Motive Power and Equipment Solutions
Jennifer Savage
Purchasing
864-422-1128 – Phone
jsavage@mpes.us.com

Headquartered in Greenville, SC, Motive Power & Equipment Solutions and has been providing “GREEN” rail equipment solution’s, to many rail equipment users in both the domestic and international rail communities. Since its inception, MP&ES has been a leader in the locomotive industry delivering unparalleled services including parts, service, technical support, engineering services, specialized rail vehicles and a full line of new / remanufactured "GREEN" locomotive options. For more information, please visit http://www.railequipmentsolutions.com.

Upcoming Events

For the latest updates on upcoming events, please visit the AAR Website.

View a Railway Interchange Event Fact Sheet from the Railway Supply Institute