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Canadian National:

Canadian National Railway July 25 reported an 8 percent increase in profit for the second quarter 2011 versus the second quarter 2010, citing a 10 percent increase in intermodal loadings (trailers and containers on flat cars) and a 14 percent increase in intermodal revenue.

CN’s second quarter 2011 operating ratio of 62.3 percent showed little change from the 61.2 percent for the second quarter 2010. Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability.

CN is primarily a Canadian railroad. Its U.S. holdings include what were formerly Detroit, Toledo & Ironton; Elgin, Joliet & Eastern; Grand Trunk Western; Illinois Central; and Wisconsin Central.

Canadian Pacific:

Canadian Pacific Railway’s second quarter 2011 profit fell by 23 percent versus second quarter 2010, owing to widespread and prolonged flood disruptions, said the carrier.

CP’s second quarter 2011 operating ratio of 88.8 was four percentage points higher than the operating ratio for the second quarter 2010. Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability.

Canadian Pacific is primarily a Canadian railroad. Its U.S. holdings include Class I Soo Line and regional railroad Delaware & Hudson.

CSX:

CSX July 19 reported a 22 percent increase in profit for the second quarter 2011 versus the second quarter 2010, much of it the result of higher freight rates as traffic volume slowed.

CSX said the improved profits will allow $2.2 billion in spending to make improvements to its tracks, yards and signals, and purchase additional locomotives and freight cars. The railroad also said it will increase employment by 4 percent in 2011, double its proposed headcount increase announced earlier in the year.

CSX’s second quarter 2011 operating ratio declined to 69.3, versus 7.2 for the second quarter 2010. Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability.

CSX operates some 21,000 route miles in 23 states and the District of Columbia

Kansas City Southern:

Kansas City Southern July 21 reported a 19 percent improvement in profits for the second quarter 2011 versus second quarter 2010, driven by improved auto, intermodal and coal traffic as it established records for the number of carloads handled.

Its operating ratio of 71.7 was almost a full percentage point better than its operating ratio in the second quarter 2010. Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability.

KCS operates some 3,500 route miles in 10 states in the Central and South-Central U.S., as well as Kansas City Southern de Mexico, a primary Mexican rail line.

Norfolk Southern:

Norfolk Southern July 26 reported a record second-quarter profit – a 42 percent improvement for second quarter 2011 versus second quarter 2010. The railroad cited increased intermodal traffic (trailers and containers on flat cars) and coal loadings as significant contributors to the improved earnings.

The NS second quarter 2011 operating ratio of 69.5 percent was slightly improved from the 69.9 percent for second quarter 2010. Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability.

NS operates some 20,000 route miles in 22 states and the District of Columbia.

Union Pacific:

Union Pacific July 21 reported a 10 percent increase in profits for the second quarter 2011 versus second quarter 2010, citing prices increases and an 11 percent increase in chemicals and agricultural carloads. The railroad said it was the best-ever quarterly earnings.

UP’s operating ratio of 71.3, however, was 1.9 percent higher than second quarter 2010. Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability.

UP said it plans to hire some 4,500 new workers by the end of 2011 – 3,000 to replace those retiring and 1,500 to new positions.

Union Pacific operates some 32,000 route miles in 23 states in the western two-thirds of the U.S.

 As BNSF is now privately held, it does not report quarterly earnings.

ORLANDO, Fla. — House Transportation & Infrastructure Committee Chairman John Mica (R-Fla.) wants to privatize Amtrak’s Northeast Corridor, which is seen by critics as a first step toward destroying Amtrak.

In his home state, Mica opposed using state funds for a now-mothballed high-speed rail project to link Tampa and Orlando.

Yet Mica is actively supporting state financing for construction of a $1.2 billion, 61-mile Orlando commuter rail project – SunRail — that, according to The New York Times, is ranked by the federal government “as one of the least cost-effective mass transit efforts in the nation.” Florida taxpayers could pay some $640 million of the project’s costs, says The New York Times.

SunRail would link suburban communities, requiring riders to use a bus at origin and destination.

Says The New York Times, “[S]keptics question whether Mr. Mica’s real goal is to give a taxpayer-financed gift to CSX, the freight rail giant and a generous Mica campaign donor, which would get $432 million for its tracks and for upgrades to tracks it owns elsewhere in the state.”

The newspaper quotes Republican FlorIda State Senator Paula Dockery that Mica’s “dedication to SunRail is not for mass transit — it is for helping CSX to get government funds for its private freight lines.”

Florida’s Republican governor, Rick Scott, froze state four contracts involving SunRail, says The New York Times.

MINERAL SPRINGS, N.C. — CSX conductor Phillip E. Crawford Jr., 33, and locomotive engineer James Gregory Hadden, 36, were killed early May 24 in a rear-end collision here involving two CSX freight trains, according to news reports. Mineral Springs is some 30 miles south of Charlotte.

Crawford was a member of UTU Local 970, Abbeville, S.C. He signed on with CSX in October 2005.

Two crew members on the lead train, which was hit from the rear, suffered minor injuries, reported the Charlotte Observer.

The National Transportation Safety Board and the Federal Railroad Administration are investigating the North Carolina train collision, and a member of the UTU Transportation Safety Team is assisting the NTSB.

A CSX spokesperson told the Associated Press that the rear-end collision occurred on northbound tracks and involved one train enroute to Hamlet, N.C., from New Orleans, and another enroute to Charlotte from southern Georgia. Each train was pulled by two locomotives; one pulling nine freight cars, and the other 12, said CSX.

In Ft. Worth, a BNSF switch foreman and UTU Local 564 member, Paul Young, 28, with almost seven years’ service, lost both legs and an arm after being hit by a train in BNSF’s Alliance Terminal of May 23. Young, a resident of Haslet, Texas, reportedly was performing a gravity switch at an ethanol plant at the time of the accident.

Most major North American freight railroads reported strong earnings for the first quarter 2011 versus first quarter 2010.

Following is a wrap-up for the quarterly earnings reported by the railroads to the investment community.

Not included is BNSF, which is privately held and does not report its financial results to the investment community.

Mention is made of each railroad’s operating ratio. Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability. The lower the operating ratio, the higher is profit.

Canadian National

Canadian National reported a 31 percent increase in first quarter 2011 profit versus first quarter 2010. This comes following a 19 percent increase in CN profit for calendar year 2010.

CN’s operating ratio for the first quarter 2011 was 69 percent, slightly better than the 69.3 percent reported for first quarter 2010. The railroad’s fourth-quarter 2010 operating ratio was 63.6.

CN is primarily a Canadian railroad. Its U.S. holdings include what were formerly Detroit, Toledo & Ironton; Elgin, Joliet & Eastern; Grand Trunk Western; Illinois Central; and Wisconsin Central.

Canadian Pacific

Canadian Pacific Railway was the only major North American rail system reporting a drop in profit for the first quarter 2011 compared with first quarter 2010. CP cited severe winter weather as the cause of its profit decline.

CP’s calendar-year 2010 profit increased by 39 percent.

The railroad’s first quarter 2011 operating ratio soared to 90.6 compared with 82.3 in the first quarter 2010. CP’s fourth quarter 2010 operating ratio was 77.6.

CP said its 15,143 employee count increased by 613 during the quarter, but gave no indication of whether it would add employees the remainder of 2011.

First quarter 2011 train speeds fell by almost 14 percent and the number of train accidents soared by 57 percent — both attributed to a dramatic increase in the number of avalanches in the Canadian Rockies and winter-long blowing snow throughout CP’s North American rail network.

Canadian Pacific is primarily a Canadian railroad. Its U.S. holdings include Class I Soo Line and regional railroad Delaware & Hudson.

CSX

CSX profit jumped 30 percent during the first quarter 2011 versus the first quarter 2010, the railroad reported April 19. This comes on the heels of a 35 percent improvement in operating profit for calendar year 2010.

The CSX employee headcount rose in March to 30,464 employees, up 3 percent from March 2010, the railroad said.

The CSX operating ratio for the first quarter 2011 was a record low 72.5 for any first quarter. The fourth quarter 2010 CSX operating ratio was 71.1.

CSX operates some 21,000 route miles in 23 states and the District of Columbia.

Kansas City Southern

Kansas City Southern’s first-quarter 2011 profit was almost double that of the first quarter 2010. This followed an 82 percent increase in profit for calendar-year 2010.

The employee headcount remained constant at 6,080. The railroad did not indicate whether it would be increasing its headcount in 2011.

The KCS first quarter operating ratio declined significantly, from 75.2 percent the first quarter 2010 to 73.8 for the first quarter 2011. The railroad’s fourth-quarter 2010 operating ratio was 73.2.

KCS operates some 3,500 route miles in 10 states in the Central and South-Central U.S., as well as Kansas City Southern de Mexico, a primary Mexican rail line.

Norfolk Southern

Norfolk Southern reported a 26 percent increase in profit for first quarter 2011 versus first quarter 2010. This follows a 45 jump in NS profit for calendar-year 2010.

NS said it would add some 1,100 new workers during 2011, returning employment to the same level as in 2008.

NS operating ratio for first quarter 2011 was 77.1 percent, higher than the 75.2 percent in the first quarter 2010, owing, in part, to severe winter weather. The fourth-quarter 2010 NS operating ratio was 71.9 percent.

NS operates some 20,000 route miles in 22 states and the District of Columbia.

Union Pacific

Union Pacific profit rose 24 percent in first quarter 2011 compared with first quarter 2010, This follows a 47 percent jump in Union Pacific profit for calendar-year 2010.

UP said the railroad would increase its 43,000 employee headcount by about 4,500 in 2011.

The railroad reported a best-ever first quarter operating ratio of 74.7 percent — one of the more difficult for railroads because of winter weather. The fourth quarter 2010 UP operating ratio was 73.2.

Union Pacific operates some 32,000 route miles in 23 states in the western two-thirds of the U.S.

CSX profit jumped 30 percent during the first quarter 2011 versus the first quarter 2010, the railroad reported April 19. This comes on the heels of a 35 percent improvement in operating profit for calendar year 2010.

The CSX employee headcount rose in March to 30,464 employees, up 3 percent from March 2010, the railroad said.

More positive financial news is expected from other major railroads as they report first quarter results in the days ahead. Union Pacific will report its first quarter results April 20.

The CSX operating ratio for the first quarter 2011 — one of the more difficult for railroads because of winter weather — was a record low 72.5 for any first quarter. The fourth quarter 2010 CSX operating ratio was 71.1, and the railroad predicted its operating ratio could fall to a record-low 65 this year.

Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability. The lower the operating ratio, the higher is profit.

“Shipments across all major markets — merchandise, intermodal and coal — increased as the economy continued to grow,” the railroad told financial analysts.

CSX operates some 21,000 route miles in 23 states and the District of Columbia.

Shortline holding company Watco is seeking regulatory approval to acquire 43.6 miles of track from Norfolk Southern in Alabama between Maplesville and Autauga Creek, and 10.1 miles of track between Autauga Creek and Montgomery for creation of a new shortline railroad.

The new shortline would be named Autauga Northern Railroad.

Watco currently controls 22 shortline railroads in 18 states.

How did major railroads perform in 2010?

Reviewing their calendar-year and fourth-quarter profit statements, one wouldn’t know they were operating in the midst of a nationwide recession.

Profits soared, stock dividends were raised and operating ratios improved. (Operating ratio — a railroad’s operating expenses expressed as a percentage of operating revenue — is considered by economists to be the basic measure of carrier profitability.)

Wall Street analyst Ed Wolfe reports the level of freight car and intermodal loadings for the year registered “the best” year-over-year growth in more than 50 years.

Wolfe and other analysts also point to the railroads’ pricing strength — the ability to raise rates on shippers with limited effective alternatives to railroad transportation. Many long-term contracts for hauling coal are expiring, and substantial rate increases on that traffic already are reflected in new contracts.

Indeed, railroad CEOs are predicting another strongly profitable year in 2011, which was reflected in year-end railroad stock prices, which were flirting with record highs.

Following are profit reports from the major railroads:

 Canadian National:

  • Fourth-quarter profit increased 19 percent.
  • Calendar-year 2010 profit increased 13.5 percent.
  • Operating ratio improved four percentage points to 63.6.
  • The stock dividend was raised 20 percent.
  • The year-end stock price was up 38 percent. Analysts predict CN’s stock price will rise another 4 percent in 2011.

 Canadian Pacific:

  • Fourth-quarter profit increased 34 percent.
  • Calendar-year 2010 profit increased 39 percent.
  • Operating ratio improved four percentage points to 77.6.
  • The stock dividend was raised 9 percent.
  • The year-end stock price was up 45 percent. Analysts predict CP’s stock price will rise another 8 percent in 2011.

 CSX:

  • Fourth-quarter profit increased 46 percent.
  • Calendar-year 2010 profit increased 35 percent.
  • Operating ratio improved four percentage points to 71.1.
  • The stock dividend was raised 26 percent.
  • The year-end stock price was up 62 percent. Analysts predict CSX’s stock price will rise another 6 percent in 2011.

 Kansas City Southern:

  • Fourth-quarter profit increased 47 percent.
  • Calendar-year 2010 profit increased 82 percent.
  • Operating ratio improved 8.8 percentage points to 73.2.
  • The year-end stock price was up 74 percent. Analysts predict KCS’s stock price will rise another 7 percent in 2011.

 Norfolk Southern:

  • Fourth-quarter profit increased 31 percent.
  • Calendar-year 2010 profit increased 45 percent.
  • Operating ratio improved 5 percentage points to 71.9.
  • The stock dividend was raised 11 percent.
  • The year-end stock price was up 41 percent. Analysts predict NS’s stock price will rise another 8 percent in 2011.

 Union Pacific:

  • Fourth-quarter profit increased 31 percent.
  • Calendar-year 2010 profit increased 47 percent. UP Chairman Jim Young said 2010 was the “most profitable year in Union Pacific’s nearly 150-year history.”
  • Operating ratio improved 5.5 percentage points to 70.6.
  • The stock dividend was raised 40 percent.
  • The year-end stock price was up 60 percent. Analysts predict UP’s stock price will rise another 8 percent in 2011.

 BNSF:

As BNSF is now privately held, it no longer reports detailed financial data.

WASHINGTON — The Supreme Court will hear an argument by CSX in 2011 challenging standards for rail workers bringing lawsuits under the Federal Employers’ Liability Act (FELA), reports Bloomberg.

The decision could affect future FELA cases.

The specific case to be heard, reports Bloomberg, involves a CSX engineer who won a $184,250 FELA award for a hand injury suffered while on duty.

Said Bloomberg, “The case centers on the test for determining whether a railroad’s negligence was the cause of an employee’s injury.”

The federal judge hearing that case, reports Bloomberg, told the jury “that the railroad was responsible for negligence if its negligence ‘played a part — no matter how small — in bringing about the injury.'”

CSX, according to Bloomberg, contends that injured rail workers should meet a more demanding standard, as is required in other types of personal-injury lawsuits not covered by the FELA, which applies only to railroads and their workers.

The more demanding standard would require the employer’s action to be the “primary cause” of the injury, known as “proximate cause” in legal jargon.

By UTU International President Mike Futhey

The recent tragic, senseless and violent murder in New Orleans of CSX conductor Fred Gibbs, and wounding of the train’s engineer (a potential witness whose name is being withheld), accelerates an already urgent need for better workplace safety and security measures for rail, transit and motor coach facilities and operations.

Gibbs and the engineer were shot by a lone gunman (a suspect is in police custody) inside the cab of their intermodal train parked on a dark and isolated stretch of track as it awaited dispatcher clearance to enter a yard in New Orleans. The motive appears to have been robbery of the crew, but the train could have contained a cargo of chlorine gas or other deadly hazmat, and the shooter could have been a terrorist or delusional individual with knowledge of locomotive operations.

Indeed, prior to 9/11, few, if any, envisioned terrorists capable of hijacking and piloting multiple sophisticated passenger aircraft and flying them into high-profile targets; or of terrorists in Madrid, Spain, who coordinated four separate rush-hour bombings aboard packed commuter trains in March 2004.

Many of our members noted immediately after the New Orleans shooting that federal regulations do not require bullet-proof glass in locomotives, tamper-proof and functioning locomotive door locks, “keyed” or electronic safeguards that limit locomotive operation to licensed train and engine workers, or train scheduling and dispatching that restricts the stopping of trains to well-lighted and protected areas.

Certainly these are logical responses to the New Orleans shooting.

But without more expert study and collaboration among experts at the Federal Railroad Administration, Federal Transit Administration, Federal Motor Carrier Safety Administration, Transportation Security Administration, the National Transportation Safety Board, law enforcement agencies, carriers and labor organizations representing rail, transit and bus employees, we could be overlooking other effective safeguards.

Transportation labor long has been ahead of the curve in calling for greater collaboration among stakeholders, which includes front-line employee training to recognize threats and learn how best to report concerns to dispatchers and law enforcement.

In fact, Amtrak and the UTU recently agreed to a joint project that, in cooperation with the Transportation Security Administration, directs almost $300,000 in federal funding to the UTU to devise and implement a training program for conductors, assistant conductors, engineers, on-board service personnel and yard employees to enhance their abilities to recognize behavioral traits of individuals intending to engage in terrorist-like activity.

The UTU is now reaching out to build on this program to effectuate workplace safety as it pertains to terrorist and delusional activities.

We are seeking collaboration among other concerned labor organizations, federal safety and homeland security agencies, and carriers to create an incubator for effective ideas on a comprehensive security action plan, including employee training, that can be presented to Congress for fast-track federal funding.

We are heartened by word from CSX that it has begun a cooperative security venture with other carriers and law enforcement agencies to increase security around interchanges and loops in New Orleans.

The potential threat, however, is nationwide; and as train and engine employees, and bus drivers, are constantly in the cross-hairs of danger as well as being the eyes and ears best and first able to recognize threats, it is essential that transportation labor organizations be an integral part of any effort to improve rail, transit and bus security.

Historically, transportation labor and the carriers have been most successful in achieving policy goals when they act in concert. Where carriers or labor act separately — and often at odds with each other — success often is elusive or falls short of goals.

For any action plan to be effective, all parties with accountability and responsibility must collaborate in the creation and implementation of that plan.

We will be reporting more on this effort in the near future.

By Assistant President Arty Martin and
GS&T Kim Thompson

Among the most difficult challenges facing us in 2009 arrives in November, when we exchange Railway Labor Act Section 6 notices with the carriers — the list of each side’s demands for the next collective bargaining round.

Our national rail contract is open for renewal on Jan. 1, 2010, and this upcoming bargaining round will be among our toughest ever given the deteriorating state of the national economy, the advance of technology and Wall Street pressure on railroads to deliver increased profits.

While the national rail contract affects members on only BNSF, CSX, Kansas City Southern, Norfolk Southern and Union Pacific, these national contracts tend to be a trend setter for bargaining on other freight railroads and Amtrak, and are frequently referred to by commuter railroads.

A reasonable individual might have good reason to assume the upcoming bargaining round will be favorable to employees. After all, railroads are among today’s few solidly profitable industries in America, and Wall Street confirms they have unprecedented pricing power. Moreover, the carriers continue to improve productivity, and it is the workers — especially operating craft employees — who are most responsible.

Indeed, the railroads’ own figures, as published by the Association of American Railroads, show that revenue ton-miles per employee — the best benchmark for measuring productivity — has soared five-fold since 1980, from 2.1 million revenue ton-miles per employee to almost 11 million revenue ton-miles per employee today.

Accordingly, the railroads’ labor costs have declined by 43 percent — from 46.5 cents of every revenue dollar in 1980, to 26.4 cents of every revenue dollar today.

This is because the employee headcount has dropped from 532,000 in 1980 to 236,000 today — a 56 percent decline in workers, while productivity has soared. Among train and engine service employees, the head count fell from almost 136,000 in 1980 to fewer than 70,000 train and engine service employees today.

Unfortunately, none of this matters to the carriers at the bargaining table, because it is hot Wall Street dollars that set the tone of carrier Section 6 notices.

Perhaps you have noticed Wall Street investment funds have been buying up shares of the major railroads.

BNSF, for example, is 46 percent owned by Wall Street investment funds. At CSX, the figure is 35 percent; at Union Pacific, 34 percent; at Kansas City Southern, 33 percent; and at Norfolk Southern, 32 percent, according to Bloomberg News.

These investment funds, some of them based in foreign countries, have a narrow focus of increasing stock price and increasing dividend payouts — often without concern to an appropriate level of railroad maintenance, and certainly without concern for employees and their families.

For sure, investment funds are behind the anti-labor policies at Wal-Mart and policies that export good American jobs overseas.

What a labor union does is to fight back — and the UTU will be spending the months leading up to the exchange of Section 6 notices by building our case on behalf of our members.

Who Owns the Railroads

BNSF 
Berkshire Hathaway21.8%

Capital Research Global

5.6%

Barclays Global

3.3%

UBS Global

3.0%

Vanguard Group

2.8%

State Street Corp.

2.7%

Fidelity Mgt.

2.4%

Capital World Invest.

1.7%

JP Morgan Chase

1.2%

Barrow, Hanley

1.2%

Total

45.7%

  

 CSX

 

Citigroup

5.4%

Barclays Global

4.7%

Children’s Invest. Fund

4.5%

3G Capital

4.4%

Deutsche Bank

4.2%

State Street Corp.

3.6%

Vanguard Group

3.2%

Tiger Global

1.9%

Bank of N.Y.

1.6%

JP Morgan Chase1.3%

Total

34.8%

  

 KCS

 

Neuberger Berman

6.2%

Wellington Mgt.

5.7%

Marathon Asset Mgt.

4.1%

Barclays Global

3.6%

Vanguard Group

3.0%

Keeley Asset Mgt.

2.8%

Bank of America

2.4%

Prudential

1.9%

Munder Capital Mgt.

1.9%

AXA

1.8%

Total33.4%
  
Norfolk Southern 

Capital Research Global

5.0%

Marsico Capital Mgt.

4.8%

JP Morgan Chase

4.7%

Barclays Global

4.5%

State Street Corp.

3.2%

Vanguard Group

3.1%

 Fidelity Mgt.

 2.7%

Pioneer Investment

1.3%

Dimensional Fund

1.3%

Capital World Invest.

1.1%

Total

31.7%

  

Union Pacific

 

Marsico Capital Mgt.

6.6%

Children’s Invest. Fund

4.7%

Barclays Global

4.4%

Capital World Invest.

3.4%

State Street Corp.

3.2%

Vanguard Group

3.0%

AXA

2.9%

Fidelity Mgt.

2.5%

Bank of America

1.9%

Berkshire Hathaway

1.8%

Total

34.4%

Source: Bloomberg News