Posts Tagged ‘BNSF’

5 Class 1 RRs to Cut 2017 Capital Spending

January 28, 2017

Five of North America’s seven Class 1 railroads plan to spend less in 2017 on capital spending than they did last year.

train image2Norfolk Southern’s capital budget will remain static at $1.9 billion while at CSX capital spending will fall from $2.7 billion to $2.2 billion.

The NS budget includes $930 million for track maintenance, $290 million for locomotives, $240 million for positive train control, $170 million for facilities and terminals, $110 million for technology and similar initiatives, $80 million for infrastructure, and $50 million for freight cars.

The CSX budget figures include $307 million in payments for locomotives that were purchased under seller financing and delivered in 2015.

In 2017 equipment investments are significantly less due to the completion of locomotive purchases.

Canadian Pacific plans to spend C$1.25, an increase of 6 percent from the 2016 budget with around 70 percent of that earmarked for basic replacement and maintenance of way work

Union Pacific has cut its capital budget by 11 percent compared with 2016. The western freight hauler plans to spend $3.1 billion, compared with $3.5 billion last year.

BNSF is cutting capital spending by 13 percent from $3.9 billion to $3.4 billion, saying it has invested a lot of capital in network improvements and growth during the past several years.

At Canadian National, capital spending for 2017 has been set at C$2.9 billion of which C$1.6 billion is for for basic track infrastructure work.

Kansas City Southern has slashed capital spending by about $30 million and expects to spend between $550 million to $560 million in 2017.

CP Won’t Bar Harrison from Working for CSX

January 25, 2017

A regulatory filing made by Canadian Pacific with the U.S. Securities and Exchange Commission shows where E. Hunter Harrison can and cannot work under the terms of his non-compete agreement with CP.

E. Hunter Harrison

E. Hunter Harrison

Harrison, who recently stepped down as CP’s CEO, cannot work for Canadian National, BNSF or Union Pacific. But he could work for CSX, Norfolk Southern or Kansas City Southern.

CP granted Harrison a limited waiver of the non-compete clause, which also included waiving a provision that Harrison is not permitted to solicit for employment at another company any CP employees above the level of manager.

Specifically, CP’s waiver makes an exception for the railroad’s chief of staff.

News reports have said that Harrison is teaming up with activist investor Paul Hilal of the firm Mantle Ridge to oust CSX CEO Michael Ward.

Some believe that Harrison would use being the head of CSX to lead a merger effort. Last year Harrison and CP unsuccessfully sought to merge with NS.

If Harrison does make a bid to become part the CSX CEO, he will have until Feb. 10 to do so under the terms of the CSX bylaws for nominating members of the board of directors and filing resolutions to be heard during the annual meeting, which is usually held in May.

NS Crews Will All Be Home for Christmas

December 14, 2016

Norfolk Southern said this week that it will cease hauling freight between Christmas Eve and Dec. 27.

NS logo 2In a service advisory sent to shippers, NS said it will halt operations at 3 p.m. on Dec. 24 and resume them at 7 a.m. on  Dec. 27.

However, NS employees will working on New Year’s Day when operations with run as usual with the exception of some yard jobs that will be idled.

Trains magazine observed that such a total shutdown such as the one that NS is planning is rare. Citing BSNF as an example, the magazine said that railroads might slow their operations on Christmas but will run some trains.

BNSF, Amtrak in Montana

October 28, 2016

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Last July, Ursula and I traveled on Amtrak to Glacier National Park in Montana to celebrate our 25th anniversary.  Here are a few photographs that highlight our trip.

The top photo shows an eastbound at the Izaak Walton Inn, where we stayed for a week.

In the middle photo is the eastbound Empire Builder at the Two Medicine Bridge at East Glacier. The bottom photo shows  a westbound at the summit of Marias Pass.

I’ll be showing more image of Montana trip next April during my program at the Akron Railroad Club meeting.

Photographs by Edward Ribinskas

Amtrak’s Empire Builder in Big Sky Country

October 23, 2016
Snow covered mountains loom behind Amtrak's eastbound Empire Builder as it heads for Chicago near Browning, Montana.

Snow covered mountains loom behind Amtrak’s eastbound Empire Builder as it heads for Chicago near Browning, Montana.

Amtrak’s Chicago-Seattle/Portland Empire Builder passes through Montana during daylight hours in both directions. That makes it an attractive target for photographers.

Akron Railroad Club member Roger Durfee went chasing after the Builder during his trip to the Treasure State last September.

He tracked down No. 8 in various locations including against a backdrop of mountains, open range and grain elevators, making images near Browning, Cut Bank, Shelby, Malta and Havre.

This is the territory of the former Great Northern Railway, which was built by “empire builder” James Hill. For decades the Empire Builder was the premier passenger train on the GN.

Today these tracks are owned by BNSF and Amtrak’s Empire Builder is the only passenger train to use these rails.

Photographs by Roger Durfee

Two views of No. 8 near Browning Montana. Glacier National Park is beyond those mountains.

Two views of No. 8 near Browning Montana. Glacier National Park is beyond those mountains.

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Passing an empty crude oil train west of Malta.

Passing an empty crude oil train west of Malta.

Passing a waterway near Shelby.

Passing a waterway near Shelby.

Making a station stop in Malta.

Making a station stop in Malta.

In the barren countryside between Cut Bank and Shelby.

I like how I could do a broadside of the whole train out there.

Dropping down into the Valley of Cut Bank Creek.

Dropping down into the Valley of Cut Bank Creek.

Gliding over Cut Bank Creek on a high trestle.

Gliding over Cut Bank Creek on a high trestle.

Passing an old elevator at Ethridge.

Passing an old elevator at Ethridge.

Getting fuel in Havre.

Getting fuel in Havre.

The heritage of this line is Great Northern as someone wants you to know in Havre.

The heritage of this line is Great Northern as someone wants you to know in Havre. The stained glass shows “Rocky,” the GN mascot.

Posing with a relic of the Great Northern in Havre.

Posing with a relic of the Great Northern in Havre.

Indiana Iron Ore Pellet Plant to Close

October 18, 2016

A Minnesota Company that had shipped iron ore by rail to a plant in Indiana has closed as part of a bankruptcy settlement.

IndianaMagnetation had a facility in Grand Rapids, Minnesota, that extracted iron ore concentrate from old mine waste sites in Minnesota’s Mesabi Range.

The ore was transported by rail to a pellet plant that Magnetation built in 2014 in Reynolds, Indiana.

Iron ore pellets were made in Reynolds for AK Steel facilities in Ohio and Kentucky. CSX moved the ore to Reynolds and transported the pellets to the AK Steel plants. BNSF had handled the ore between Minnesota and Chicago.

The Indiana plant will close on Oct. 25, putting 160 employees out of work.

The last train was loaded in Minnesota on Oct. 4. Officials blamed the company’s demise on a downturn in the domestic steel industry, saying that iron ore prices have crashed.

Magnetation had sought bankruptcy protection in May 2015, listing more than $1 billion in debt and assets worth less than half that.

The company said it will preserve its Indiana facility  to protect its value for a potential buyer although no would-be buyers have yet approached Magnetation.

UP Most Heavily Fined Railroad in 2015

June 16, 2016

Union Pacific was the most heavily fined Class I railroad last year, paying $4.7 million after being cited by the Federal Railroad Administration.

FRAThe FRA conducted nearly 64,000 safety and hazmat inspections of railroads, contractors and shippers, and reported 11,000 defects serious enough to warrant fines.

UP was cited for 2,471 violations and 47,802 defects.

BNSF paid fines of $3.6 million after being cited for 2,794 violations and 42,132 defects.

Among railroads serving Northeast Ohio, CSX paid $1.6 million and was cited for 719 violations and 41,296 defects. Norfolk Southern paid $1.2 million in fines and was cited for 426 violations and 29,545 defects.

Amtrak was fined $205,000 after being cited for 213 violations and 2,324 defects.

Hazmat shippers collectively were assessed $3.9 million in fines and cited for 1,423 violations and 14,111 defects.

The period covered was the 2015 fiscal year, which ended on Sept. 30.

NKP 765 to Pull Chicago-Galesburg Excursions

May 26, 2016

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Nickel Plate Road No. 765 will power all-day excursions between Chicago and Galesburg, Illinois, on June 25 and 26.

The trips will depart at 8 a.m. from Chicago Union Station and operate during the annual Galesburg Railroad Days festival. There will be a three-hour layover at the festival. The train is expected to return to Chicago at 6:30 p.m.

Fort Wayne Railroad Historical SocietyThe Galesburg Zephyr will make an intermediate stop at 8:30 a.m. in the Chicago suburb of Naperville, Illinois, and is being run in partnership with Amtrak and BNSF. The train is expected to arrive in Galesburg at 11:30 a.m. and depart at 3 p.m.

In a news release, the Fort Wayne Railroad Historical Society, which owns and operates the 765, said that an Amtrak locomotive will accompany the train to provide head-end power for lighting and air conditioning.

The train will offer passenger cars from the 1940s and 1950s and include accommodations in standard coach, deluxe coach, first class and dome car.

Tickets can be ordered online at fortwaynerailroad.org or by calling 888-718-4253.

Prices range from $149 for standard coach to $379 for a seat in the upper level of a dome car. Other ticket prices are $189 (deluxe coach), $249 or $279 for first class accommodations.

The route of the train is the former Chicago, Burlington & Quincy mainline, now owned by BNSF.

BNSF Will Become a Player in Merger Game

December 14, 2015

BNSF has jumped into the fray over the proposed Canadian Pacific-Norfolk Southern merger with BNSF Executive Chairman Matt Rose saying that his company has spoken with NS and CSX about possible merger activity.

Rose also indicated that if the CP bid to acquire NS appears to be moving ahead, then BNSF will become a player in the merger game.

Rose has been making the rounds of late to speak about possible Class 1 railroad mergers, giving interviews with Bloomberg TV Canada and Trains magazine columnist Fred Frailey. Rose also has addressed Wall Street Analysts in a conference call.

Cowen & Company Managing Director Jason Seidl told Railway Age that he believes that “Norfolk Southern shares will outperform and that investors will start to look at eastern rival CSX.”

Siedl noted that Warren Buffet, whose Berkshire Hathaway owns BNSF, “is paying attention” and has long been enamored with the railroad sector.

“If CP’s overtures toward NS come to fruition, we believe that other railroads will be forced to scramble to match the scale and product offerings of their newly-formed transcontinental peer,” Seidl said. “This could push the industry from seven Class I’s (BNSF, CN, CP, CSX, Kansas City Southern, NS, Union Pacific) to four.

Some analysts believe that Rose has been speaking out as a way of giving notice to the Surface Transportation Board that the “end game scenario” may be at hand.

Seidl said that CP has more to offer NS to entice it into a merger and that other railroads may show interest in merging with NS. He said that merger talk comes as a time when railroads have been posting lackluster carload volumes.

In his conversation with Wall Street analysts, Rose said BNSF would seek to acquire another railroad if CP and NS file a merger application.

Earlier in the week, CP CEO E. Hunter Harrison downplayed the possibility that a CP-NS merger bid would trigger a round of railroad consolidation.

“I don’t see it as automatic that they’ve got to merge,” Harrison told Wall Street analysts. “I just think it’s a lot of rhetoric about nothing.”

Rose hasn’t ruled out BNSF making a bid to acquire NS and would have the ability to outbid CP in a bidding war because Berkshire Hathaway has a “war chest” of $66 billion in cash.

In his interview with Frailey, Rose hinted that if CP-NS consummated their merger then BNSF would seek to merge with CSX.

Rose said a CP-NS merger would result in NS’s profits being taxed at Canada’s lower corporate tax rate, thus putting CSX at a competitive disadvantage.

Yet Rose said he would prefer not to play the merger game. “I always put myself in the minds of my customers,” he said. “I just sense customers feel there has been too much consolidation and too much market power put in the hands of railroads.”

Analysts have noted that an application to the STB for a railroad merger would trigger a “downstream effects” review to discern how the industry might react. That provision was part of the merger rules that the STB promulgated in 2001.

The STB said the “downstream effects” rule gives the board, “the information needed to rule on what would likely be the first step in an end-game situation in which only two or three competing transcontinental railroads would remain in North America.”

NS has thus far rebuffed CP’s acquisition overtures and even trotted out a white paper by two former STB members that argues that the board is unlikely to approve a CP-NS combination.

BNSF’s Rose Doesn’t See Coal Volumes Returning

August 11, 2015

A top U.S. Class 1 railroad executive told an energy conference that coal traffic on the railroads is in decline and that it is not going to recover.

In fact, Matthew K. Rose, the executive chairman of BNSF, fears that the Power River Basin line may become stranded assets.

Rose, speaking at the U.S. Energy Information Agency’s 2015 EIA Energy Conference, said changing energy policies have led to falling coal volumes.

In 2006, BNSF moved 287 million tons of coal out of the Powder River Basin in Wyoming and Montana.

“It was a time of heavy coal demand,” Rose said. “We had a severe weather disruption in the basin that constricted deliveries going into the summer. The administration and Capitol Hill strongly believed that our investment in our coal network was insufficient and that much more investment was needed if we were to meet the forecast of demand going forward. We invested heavily and now the capacity and the operations of the [Powder River Basin] lines are very, very impressive.”

Less than a decade later, Rose doesn’t believe that BNSF will see that level of coal volume again.

“That leaves us with millions of dollars in investment in what will eventually be stranded assets,” he said.

For now, Powder River coal remains important to BNSF’s bottom line, accounting for about 20 percent of its traffic and 25 percent of its revenue.

Rose doesn’t believe that the same scenario will play out with crude oil, “because other commodities benefit from the expansion of these crude routes.”