Archive for the ‘Railroad News’ Category

CSX Extends Board Nominee Deadline Again

February 24, 2017

CSX has again extended the deadline for nominations of candidates to its board of directors.

CSX logo 1The railroad has been in talks with hedge fund Mantle Ridge about installing E. Hunter Harrison as its CEO as well as the composition of the CSX board.

Mantle Ridge owns slightly less than 5 percent of CSX stock and acquired it with the goal of shaking up CSX management.

CSX earlier said it would hold a special meeting of stockholders to discuss and vote on the Mantle Ridge demands. A date for that meeting has not yet been announced.

Board candidate nominations will now be due on March 10.

Whether it chooses Harrison or someone else, the CSX board will need to find a new CEO because incumbent head Michael Ward said last week that he plans to retire on May 31.

Lake State to Mark 25th Anniversary

February 23, 2017

To celebrate its 25th anniversary this year, Michigan-based Lake State Railway is having a GP40-3 painted in an anniversary livery.

Lake StateThe unit will be given roster number 4325 in the same font used by the Detroit & Mackinac. LS uses former D&M tracks.

No. 4325 is expected to see service throughout the 300-mile Lake State system.

Commuter Rails 23% PTC Compliant

February 23, 2017

The American Public Transportation Association said this week that U.S. commuter railroads are on schedule to meet the December 2018 deadline for implementing positive train control systems.

APTAAPTA said that at the end of 2016 that PTC had been installed on 3,150 route miles (23 percent) of commuter-rail track.

Last November APTA said 22 percent of the nation’s commuter railroad track had PTC.

Thirty percent of the locomotive and cab cars of commuter railroads had received a PTC installation and 70 percent of the radio spectrum needed for PTC had been acquired.

In a news release, APTA said that funding remains a critical concern for commuter-rail agencies because PTC installations are expected to cost $3.5 billion.

APTA said that although Congress has authorized $199 million for PTC implementation it hasn’t appropriated the funds.

CSX CEO Ward to Retire on May 31

February 21, 2017

On Tuesday CSX Corp. announced that Chairman and Chief Executive Michael Ward and President Clarence Gooden will retire, effective May 31.

Fredrik Eliasson, a 22-year veteran of the company and current Chief Sales and Marketing

Michael Ward

Michael Ward

Officer, has been appointed as President effective Feb. 15.

The Jacksonville, Fla.-based railroad in a statement described the changes as an “orderly transition” of senior leadership, adding it is continuing discussions with Hunter Harrison and activist investor Mantle Ridge regarding Harrison becoming CEO at CSX.

CSX said that the elevation of Eliasson to the president’s post was not intended to affect the discussions with Harrison of Mantle Ridge, which owns less than 5 percent of CSX stock.

“On behalf of CSX’s Board of Directors, I want to thank Michael and Clarence for their many years of dedicated service and contributions to our company,” said Edward J. Kelly III, Presiding Director. “Michael has helped build CSX into one of the nation’s leading transportation and logistics companies, and Clarence has similarly provided valuable leadership across CSX’s sales, marketing and operations teams. We wish both the best in their retirements.”

Eliasson, 46, will maintain his current responsibilities in his new position. He has served as executive vice president and Chief Sales and Marketing Officer since September 2015, and prior to that was Chief Financial Officer from 2012-15. He joined CSX in 1995.

In an other development, Ward said today that 1,000 CSX management positions would be eliminated in a cost cutting move.

The job cuts will affect positions at CSX headquarters in Jacksonville, Florida, as well as various field offices.

Mantle Ridge Disputes CSX News Release

February 18, 2017

Hedge fund Mantle Ridge took issue with some facts contained in a CSX news release issued earlier this week on the subject of E. Hunter Harrison becoming the railroad’s CEO.

CSX logo 3Mantle Ridge head Paul Hilal said he wrote to the CSX Board of Directors to take issue with the news release, in particular the size of the compensation package for Harrison and Hilal’s demands for governance changes for the CSX board.

“We owe it to the shareholders to get a deal done promptly. Let’s do it,” Hilal wrote. “If you are willing, we are glad to meet in person and hammer this out this weekend, hopefully delivering good news to the shareholders early next week.”

In the meantime, Harrison told the Wall Street Journal that he was frustrated with what he described as “chest pounding” between his investment partner and CSX, which has resulted in a stalemate in the negotiations for him take over as CSX as its CEO.

The newspaper reported that CSX had offered the CEO post to Harrison, but that Hilal, a principle at Mantle Ridge, has refused to give in on compensation and governance demands. Hilal, who is representing Harrison, has conducted most of the discussions with CSX.

Mantle Ridge holds less than 5 percent of CSX stock but wants to name six directors to the railroad’s board of directors and reduce the number of directors to 12,

In the news release, CSX said it is reluctant to allow a shareholder with such a small share of its stock to dictate the composition of its board. CSX also has described the demands to give Harrison a $300 million compensation package as “extraordinary in scope.”

The Journal said that during a recent meeting with Mantle Ridge, some CSX shareholders objected to the number of seats on the board that Mantle Ridge wants.

Hilal reportedly said during the meeting he needs to control six seats so that Harrison “has control and can execute his plan.”

CSX reportedly is objecting to paying Harrison the $89 million he gave up by leaving early as Canadian Pacific’s CEO in return for receiving a limited waiver of a non-complete clause.

Hilal contends that the compensation deal that Mantle Ridge is seeking from CSX is $200 million and includes $120 million of stock options, about half of which are tied to “very real” performance measures.

Another sticking point is the 72-year-old Harrison’s refusal to agree to have a physical exam by an independent physician.

Harrison told the Journal he was willing to negotiate his pay with the CSX board,

In his letter, Hilal contended that Harrison wants $32 million per year over four years – or $128 million – of which $20 million per year is performance-based.

“His package is worth very little unless he performs spectacularly,” Hilal wrote. As for the changes on the CSX board, Hilal said he is only seeking a seat for himself.

Harrison would occupy another seat along with four other independent directors who would be agreed upon by CSX and Mantle Ridge

“Why are we asking that new directors be added? As we’ve discussed, precision scheduled railroading requires dramatic operational and cultural change,” Hilal wrote. “Change like that starts at the top, with significant new blood on the board not wed to the old ways or legacy decisions and with no ties to any previous strategy or anyone.”

Moorman Calls for Passenger Rail Investments

February 16, 2017

Amtrak President Charles “Wick” Moorman told a Senate committee this week that the United States needs a new era of infrastructure investment in order to ensure a healthy future for long-distance passenger rail travel.

Wick Moorman

Wick Moorman

Speaking to the Senate Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security, Moorman said, “The time is now to invest in our aging assets.

“More than ever, our nation and the traveling public rely on Amtrak for mobility, but the future of Amtrak depends on whether we can renew the cars, locomotives, bridges, tunnels, stations and other infrastructure that allows us to meet these growing.”

Noting that Amtrak posted a record ridership of more than 31 million passengers and ticket revenues of $2.2 billion in 2016, Moorman said. “I’m certain that we can get even better by relentlessly improving our safety culture, modernizing and upgrading our products and strengthening our operational efficiency and project delivery.”

Moorman called for additional support from Congress and the Trump Administration to upgrade aging assets in order to continue to provide reliable services and network operations.

Among the improvements that Moorman cited as urgently needed are construction of tunnels and bridges on the Northeast Corridor; expansion of stations in Chicago and Washington; construction of a fleet of new or rebuilt diesel locomotives; and construction of track, signaling, and other improvements to remove choke points on host railroads or restore service in key underserved markets, such as along the Gulf Coast.

Moorman said Amtrak is focusing on identifying ways to improve collaboration with the 21 states and various commuter agencies that it partners with to provide service on corridors across the country. He urged the federal government to explore different ways to support intercity passenger rail service.

This could include direct investments, public-private partnerships and innovative financing, streamlining of the environmental review process, and less bureaucratic red tape.

“Investments in these sectors can help spur the rebirth of America’s passenger rail manufacturing and supply sector,” Moorman said.

G&W Traffic Up 27% in January

February 16, 2017

The acquisition of the Providence & Worcester Railroad last year has helped Genesee & Wyoming railroads post a 27 percent overall traffic increase in January 2017 when compared with the same month in 2016.

G&WThe P&W acquisition was completed last November. G&W railroads handled more than 138,500 railcars in January 2017, an increase of 11 percent over the 124,400 railcars it handled in 2016.

G&W also reported increased traffic on other railroads due to increased shipments of coal, coke, agricultural products and minerals and stone traffic.

Its best performing commodity in January was coal and coke with its railroads carrying more than 22,400 carloads of coal in January 2017, compared with 18,400 carloads in the same month in 2016.

Charger Locomotives Undergoing Operations Testing

February 16, 2017

The new Charger locomotives to be used by Amtrak corridor trains are undergoing national certification testing in Washington State.

Amtrak logoThe Washington Department of Transportation said the Siemens SC-44 units are being tested on Cascade service through the end of this month.

The Chargers are expected to begin regular service later this year pulling trains in Washington, California, Illinois, Michigan and Missouri.

The departments of transportation of those states collaborated to develop the 4,400 horsepower locomotives, which are being assembled in Sacramento, California.

CSX Sets Special Board Meeting on March 16 to Consider Mantle Ridge Proposal to Make Hunter Harrison CEO

February 15, 2017

Hunter Harrison and the Mantle Ridge hedge fund will get their day before the CSX board of directors and shareholders.

CSX logo 1The board on Tuesday agreed to call a special meeting for March 16 at a time and place to be named later to consider the hedge fund’s “extraordinary requests.”

Mantle Ridge has proposed making Harrison the CSX CEO. Harrison last month retired early as head of Canadian Pacific so that he could, presumably, seek the top job at CSX.

Harrison and CP sought unsuccessfully to merge with Norfolk Southern l;ast year but that company’s board rejected the overtures.

In a news release, CSX said Mantle Ridge has acquired less than 5 percent of its stock but is seeking compensation and control far in excess of the scope of its stock ownership.

CSX acknowledged that it has held talks with Harrison and Mantle Ridge during which the hedge fund demanded substantial representation on the CSX Board and that Harrison immediately replace current CSX CEO Michael Ward.

The railroad said it has made several offers to Harrison and Mantle Ridge that would have made Harrison the CSX CEO and given Mantle Ridge three seats on the CSX board.

Mantle Ridge has rejected those offers and countered with its own demands, many of which focus on Harrison’s compensation and the composition of the CSX board.

One noteworthy point made in the CSX news release is that Mantle Ridge has agreed to compensate Harrison for the millions of dollars he agreed to forgo when he retired early from CP. Mantle Ridge wants CSX to make up most or all of that.

Harrison has also rejected a CSX request that he take a physical exam.

CSX said in its statement that it is wary of granting control to a shareholder who holds less than 5 percent of its stock and is demanding benefits from CSX that may exceed $100 million.

CSX said the requested reimbursement and tax indemnity could exceed $300 million and are thus extraordinary in scope and structured largely as an upfront payment and as equity grants that would be payable to Mr. Harrison upon his death or disability with only a portion of the equity grant including any performance metrics.

“The CSX Board is committed to being responsive to the interests of its shareholders and has closely observed the market reaction to Mr. Harrison’s possible employment,” the railroad said in its statement.  “Accordingly, in light of the unusual circumstances surrounding Mantle Ridge’s approach the CSX Board has decided to seek guidance from shareholders on whether CSX should agree to Mr. Harrison’s and Mantle Ridge’s proposals.

CSX said it would schedule its regular board meeting, usually held in May, after the special March meeting.

NS Opens New Chicago Locomotive Shop

February 15, 2017

Norfolk Southern has opened a new locomotive shop in Chicago adjacent to its 47th Street intermodal facility.

NS logo 2The $9.5 million facility has 16,300 square feet and comes with a 125-ton drop table to inspect, repair, or replace traction motors; a mobile, 7.5–ton overhead gantry crane, and a 77-foot-long inspection pit.

It can handle four locomotives indoors at once and will employ 25 craft workers around the clock.

“The new facility is strategically located on Norfolk Southern’s primary rail line serving Chicago, and it will allow NS to rapidly make repairs to locomotives moving freight to our major terminals,” said NS vice president mechanical Don Graab in a statement. “The investment is part of NS’s commitment to provide timely and reliable service and will enable us to move goods even more efficiently across the Chicago gateway and benefit intermodal customers shipping freight to East Coast markets.”

With the opening of the shop NS will no longer have to move locomotives requiring extensive maintenance to other shops on its system.

NS also operates a minor repairs shop in Chicago at Calumet Yard. NS has six yards in the Chicago region that handle more than 100 trains a day.