SMART Union
U.S. railroads have not hauled so much crude oil since the short period at the dawn of the petroleum age, when John D. Rockefeller relied on trains to build his Standard Oil empire.
But the long, black tanker trains are only the most visible way that the changing U.S. energy picture is transforming railroads. The fracking revolution has brought other business to railroads, from pipes to propane, and more change is underway.
Read the complete story at the Scientific American.
U.S. freight railroads plan to spend an estimated $29 billion on the nation’s rail network, and project to hire about 15,000 people in 2015, the Association of American Railroads (AAR) reported Feb. 2 in its 2015 Outlook. These high-paying jobs, and record private spending will further strengthen an essential transportation system that is today powering a U.S. economic comeback.
“By providing affordable, efficient and reliable transportation of goods, from lumber to oil to auto parts and grain, freight railroads continue to play a vital role in the positive economic trends rippling through the U.S. economy – including rising gross domestic product, improving employment statistics and plummeting gasoline and heating prices,” said AAR President and CEO Edward R. Hamberger.
The planned $29 billion in projected spending in 2015 – or approximately $79 million a day – brings the freight railroads’ private investments to $575 billion since 1980. The spending has covered upgraded track, new locomotives and freight cars needed to meet growing demand and make a safe network even safer.
“Unlike most other transportation modes, freight railroads rely on their own funds, not taxpayer dollars, to build and maintain their networks,” Hamberger said. “The result of spending more than half-a-trillion dollars of private funds over the last couple of decades makes this country’s freight rail system the envy of the world.”
The new rail hires, which an estimated 20 percent will be veterans, join the ranks of those with compensation, including benefits, among the highest of any industry, averaging $109,700 per year.
Sound public policy and today’s balanced economic regulations, Hamberger noted, make it possible to offer high-paying rail jobs and provide the affordable and efficient service American businesses need and expect if they are to compete in a global marketplace.
“The rail industry’s ability to move more of what our economy needs rests on its ability to earn the capital necessary to continue record private investments, while supporting jobs across the country,” Hamberger said. “With the right federal policies in place, the world’s best rail network is on track to be even better.”
According to The Washington Post, a $1.01 trillion spending bill that will keep most of the federal government funded through September retains Amtrak’s current funding of $1.39 billion, the same amount it currently receives.
It also provides $3 million to expand inspections along the roughly 14,000 miles of track used by trains hauling oil tankers.
To view the Post’s summary of the bill, click here.
Federal regulators who concluded that an engineer’s sleep apnea caused a deadly train derailment in New York adopted several recommendations Wednesday for better screening of such disorders, including a call for improved physician training.
The National Transportation Safety Board, meeting in Washington, approved all the conclusions and recommendations in a staff report that examined five Metro-North Railroad accidents in New York and Connecticut in 2013 and 2014.
Read the complete story at Television Station WTNH.
After CSX Corp. (CSX) raised rates for shipping specialty gas by 41 percent over three years, Diversified CPC International Inc. had to shutter a production line near Chicago.
The buyer of a custom-ordered Diversified gas didn’t want the expense from those freight bills, so it decided to bring the manufacturing in-house.
Read the complete story at Bloomberg News.
U.S. railroads hauled the highest number of carloads so far this year in the week that ended Saturday (Aug. 2), partly driven by low stockpiles at US utilities and pressure from producers to move more coal.
The Association of American Railroads said Thursday (Aug. 7) that weekly coal carloads originated on all U.S. railroads totaled 116,881, up 0.1 percent from the same week a year ago and 0.8 percent from the prior week. It was the highest number of carloads since 118,391 for the week that ended Sept. 14, 2013.
Read the complete article at Platts.
The insurance policies that most railroads have cannot cover the costs of many crashes or derailments involving oil trains, the Department of Transportation said.
New safety rules for oil trains proposed last week would not mandate higher insurance levels than the $25 million common to the industry.
But a DOT analysis released along with the rule found that the costs of oil train disaster average about $25 million, meaning many major incidents would exceed the threshold.
Read the complete story at The Hill.
America’s railroads today are handling more business more efficiently and safely and for better profits than ever before in their nearly 200 years of existence. They remain a growth industry.
The record $15 billion they invested in 2013 will no longer be a record in 2014, considering that two of the Class I’s alone will be spending close to $10 billion.
Read the complete story at Railway Age.
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:
Canadian Pacific:
CSX:
Kansas City Southern:
Norfolk Southern:
Union Pacific:
BNSF:
As BNSF is now privately held, it no longer reports detailed financial data.
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 Hathaway | 21.8% |
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 Chase | 1.3% |
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% |
| Total | 33.4% |
| 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