There are multiple contrasting intermodal market outlooks for 2020. Intermodal volume growth is illusive in 2020. One thing is certain: Fewer new intermodal cars are needed.
The Federal Railroad Administration (FRA) recently released its Congressionally mandated quarterly report on 42 railroads’ progress implementing Positive Train Control (PTC). Missing from media coverage and other commentary on that report is an in-depth review of the challenges that stand in the way of passenger railroads meeting the Dec. 31, 2020 PTC deadline. These are challenges that have repeatedly been documented in assessments by the Governmental Accountability Office (GAO), and that neither the FRA nor—at this juncture—more financial resources can overcome.
Wide-scale spread of the COVID-19 virus (Coronavirus) is very real. Cases reported outside China recently exceeded new cases reported inside China, a possible tipping point. What could the implications be for North American freight railroads?
When we last reported to you about Amtrak’s Hudson River Tunnels, known officially as the “North River Tunnels” between New Jersey and Penn Station New York (Gateway: The Series, Part 8: The Existing Tunnels May Fail First, posted here on Dec. 30, 2019), we had discovered that Anthony R. Coscia, Chair of the Amtrak Board and Vice Chair of the Gateway Program Development Corp. Board, expressed his concern that the tunnels could fail within five years. That was a time frame far shorter than the ten years or more that it would take to build new tunnels before starting to repair the existing ones.
There is a great deal of confidence in the North American railway freight business model. This is because rail freight profitability is huge compared to the low returns in trucking. Rail enjoys margins close to 40% of gross revenues to operating income. While trucking unquestionably commands the largest modal freight business share, its operating profitability lags well behind railroading at a range of 8% to 12%.
As Canadian First Nations protesters disrupted the flow of freight and passengers across Canada, global mining giant Teck Resources jettisoned a C$20 billion project to squeeze more low-grade crude oil from the vast tar sands of northern Alberta.
The U.S. rail system is one of the safest in the world, but to achieve the vision of a system with zero incidents, the entire rail industry must work collaboratively to reduce risk.
After each major crude oil train or hazardous commodity freight train accident anywhere in Canada or the United States, there is a rush of safety-related outcries. Quite a bit of fear is expressed. The poster children for rail freight safety are hazardous materials like crude oil and liquefied natural gas (LNG), which has been proposed. Yet to those who examine the evidence, rail freight is unquestionably the safest mode to ship these materials.
This is about a railroad labor union committed to serving its dues paying members, and a rail industry losing its core revenue traffic—coal—and now facing off against omnipresent low-cost, non-union truckers for the trailers and containers comprising much of the railroads’ future traffic base. It’s about new technology—the product of knowledge that for centuries has transformed the nature, quality and quantity of work. In this instance, the technology is Positive Train Control (PTC), a safety overlay system substituting artificial intelligence for engineer inattention or distraction. PTC, as does most new technology, creates job redundancies.
True or false: Freight rail growth might require fewer cars in the future. As Class I railroads reported their 1Q2020 and full-year 2019 quarterly financial results, the expectation set by the individual railroads was that returning customers will help spur volume growth. Though 2020 is starting out slowly, most senior railroad executives and shipper logistics managers are talking about a possible recovery in the second half of the year. However, there is little statistical economic data published yet to support that optimistic outlook.
