Full Recovery From Pandemic Might Be 2021

The COVID-19 pandemic is likely to affect the nation’s railroad systems, but the degree of that remains unknown.

Progressive Railroading reported this week that industry observers are struggling to get a handle on it because there are so many unknowns at this point.

“A better way to look at this is 10 simultaneous hurricanes in the United States and the destruction that follows,” said FTR Intel Chief Strategy Officer Clay Slaughter during a COVID-19 webinar FTR conducted on March 26. “How many businesses won’t reopen? How much permanent or semi-permanent disruptions will there be?”

Slaughter said that during a hurricane there is a concrete beginning and ending, a process that lasts for 60 to 90 days.

However, the pandemic is not necessarily a onetime event but a series of events with not-so-concrete endings, Slaughter said.

In part that is because of the wide variance in how states have reacted to the pandemic.

Slaughter predicted there will be large regional differences in how the pandemic affects railroad operations.

Another observer predicts that not only will the endings vary but they won’t come soon.

Tony Hatch, who owns his own transportation analysis firm, wrote in a message to his clients the recovery from the fallout of the pandemic might not come until 2021.

He said that will apply to everything from railroads to the economy to sports teams.

In the meantime, a number of railroad conferences have been delayed or canceled.

The Secure Rail Conference that was to have been held in Chicago April 21-22 has been moved to Aug. 25-26.

That conference seeks to address the future of rail technology and rail security.

The North American Rail Shippers Association has canceled its 2020 annual meeting that was to have been held May 12-14 in Kansas City, Missouri.

The group’s next meeting will be Mauy 12-14, 2021, in Chicago.

Infrastructure Funding Might be in Next Legislation to Address COVID-19 Pandemic

Congress is eyeing a fourth bill to deal with the coronavirus pandemic and it might address infrastructure funding.

President Donald Trump has signaled that he would support a $2 trillion infrastructure package as part of that legislation.

Other congressional leaders have also identified areas they would like to see funded but some observers think that whatever bill makes it through the House and Senate will be limited to health care matters.

Congress most recently approved a stimulus bill providing $2.2 trillion in funding, which is several hundred billion dollars more than the federal budget for one fiscal year.

Lawmakers are hoping that the stimulus bill will benefit the economy by as much as an additional $4 trillion.

The $1.018 billion that the stimulus bill provided for Amtrak was intended in part to limit the funding states must pay for services they support.

In an unrelated development, the American Association of Private Railroad Car Owners reported that several moves of private cars via Amtrak that had been planned in March were canceled by their owners as a result of the pandemic.

AAPRCO also posted its mid-term meeting from March 23 to late July.

Silent Spring

Someday trains will again roll over these rails but at the moment we don’t know when or how long it will take to recover from lost revenue and ridership.

The rails in the Cuyahoga Valley are gaining rust in the spring rain as they await the trains to resume operating.

Amtrak has curtailed service in most corridors and suspended service altogether on some routes in the face of sharply reduced bookings and skyrocketing cancellations.

Ridership of public transportation has plunged by high double digits. Most agencies continue to run buses and trains, but at reduced levels.

Tourist railroads that operate in the spring have shut down. Restrictions on large gatherings have led to cancellations of railroad club meetings and train shows.

The nation’s railroads are reporting a downturn in intermodal traffic and bracing for more traffic volume declines due to an economic downturn that is the fallout of the COVID-19 pandemic.

There are likely to be fewer trains for railfans to watch and photograph. Then again this is not an ideal time to go railfanning even if you can probably get away with it.

This will be long remembered as the silent spring when such terms as “flattening the curve,” “sheltering in place,” and “social distancing” became part of the everyday lexicon.

No one can say yet when life will return to normal. Even when it does the economic effects are expected to last a while, perhaps for months.

There will be a recovery, but how long will it take?

Like the virus itself, there is much uncertainty surrounding that question, but a few conclusions seem likely.

Amtrak executives had been boldly talking about 2020 as the year it achieved the financial break-even mark from an operational standpoint.

That won’t happen now and the intercity passenger carrier is saying it needs $1 billion to overcome losing millions from lost bookings and trip cancellations as well as other expenses related to combating the pandemic.

Earlier, Amtrak has been talking up a program of service expansion if Congress would give it a dedicated pool of money to help states get corridor services in unserved or underserved areas up and running.

That proposal, which is tied in with the carrier’s fiscal year 2021 appropriation as well as a new surface transportation law that Congress needs to approve to replace the existing law that expires on Sept. 30, was always going to be a long shot. Now the odds of it receiving funding seem even longer.

Passengers will in time return to Amtrak. Suspended services will be reinstated. Many trips that were canceled or postponed will be moved to another time.

But not all of them. Some trips that were scrapped won’t be made. Those who didn’t ride during the spring will not necessarily increase their patronage to make up for missed trips.

Public transit faces a similar situation. Ridership will increase as people return to work in their offices, major public events resume, and social distancing restrictions are eased.

But it may take months for ridership and revenue to recover and budgets are going to be tight even if public money is offered to transit agencies to help them make up what was lost.

Tourist railroads, including the Cuyahoga Valley Scenic Railroad, were fortunate, if that is the right word, that their shutdowns occurred in the off season.

The pain for the CVSR would be greater if the shutdown had occurred during the summer, fall and Polar Express seasons when ridership peaks.

But much of the ridership and revenue the CVSR lost this spring is gone.

People are not going to double or triple their patronage once the trains resume operating to make up what they missed in March and April.

The wild card in all of this is how the economy performs. The recession that some economists are predicting will dampen business for Amtrak, public transit and tourist railroads because fewer people will be traveling for work or pleasure.

Some predict the recession will be relatively short and the economy will be juiced by pent up demand once life returns to normal.

Railroad restoration efforts could take a hit if charitable giving falls off during a recession as seems likely. The timeline for some if not most projects will be extended.

It may be that some operations will not survive the pandemic-induced economic downturn.

Just as some with underlying health issues will die as a result of contracting the virus, some organizations that were already operating on tight margins may succumb when lost revenue pushes them over the edge.

Rail passenger advocates may find that their agenda will shift to an all out battle to save existing levels of service rather than pushing for expansion.

Congress is spending trillions of dollars on fighting the pandemic and trying to shore up the economy.

Later this year deficit hawks in Congress can be expected to take aim at such things as Amtrak and public transportation funding in the FY2021 federal budget as a way of offsetting emergency funding approved months earlier during the depths of the pandemic.

The budget process may not be business as usual.

Back at the onset of the Great Recession of 2008, I remember Henry Paulson, who was secretary of the treasury at the time, say amid the talk of what the government should be doing to bolster the economy, “first we must make it through the night.”

As I write this we are still seeking to make it through the night of the pandemic. We keep hearing medical experts say it will get worse before it gets better. It takes time to flatten the curve.

In the meantime transportation has shifted to survival mode.

We may not have been in this exact place before, but we’ve been in similar places and managed to get through the night. Yet what a long night it can be.

North America Intermodal Service Demand Falling

Demand for intermodal transportation is falling amid lower container volumes in North American.

Moody’s Investors Service said the transportation sector faces increasing pressure due to the coronavirus outbreak.

In a report issued last week Moody’s said all transportation companies will face lower demand because of disrupted supply chains and slower economic activity.

“As the coronavirus spreads to more countries, the likelihood of longer lasting economic and financial effects has increased, the impact of which may weigh on the North American transportation sector’s financial and credit profile,” said Rene Lipsch, a Moody’s vice president and senior credit officer, in a news release release.

Container traffic at the Port of Los Angeles is down about 25 percent compared with at this time in 2019.

Moody’s noted that freight railroads already were contending with strong competition from trucking companies for container traffic.

But it said that historically railroads have been able to adapt their cost base fairly quickly in the face of weakening demand for transportation services.

The Moody’s analysis, though, said that longer term trucking companies are at risk from lower demand due to more prevalent supply chain disruptions, a broader slowdown in economic activity and potential restrictions on freight routes.

The Association of American Railroads in a report for traffic volumes in the week ending March 7 said the falloff in intermodal loadings was more noticeable than the norm over the past year.

Railroads handled 232,561 intermodal containers and trailers during the first week of the month, a 14.1 percent decrease compared with the same week a year ago.

With the number of ships arriving at West Coast ports from Asia down sharply due to the coronavirus, it stands to reason that railroads are beginning to feel an impact too, at least in terms of intermodal. It’s impossible to quantify that impact with precision,” said AAR Senior VP John Gray.

More Amtrak Service Cuts Announced

Amtrak updated its service reduction plans on Sunday and added the Colorado ski train to the list of cuts.

The service advisory said that the ski train, which operates between Denver and Winter Park, would be canceled for the remainder of the season.

Ski resorts in the state have closed due to the coronavirus pandemic.

Amtrak also said that café car service in the Northeast Corridor will be suspended on some trains operating between New York and Washington.

The carrier had earlier said that starting March 16 Northeast Corridor service will be reduced to 40 percent of its typical weekday operations.

In addition, Keystone Service will operate on a Saturday schedule between Philadelphia and Harrisburg, Pennsylvania.

Amtrak will not provide service to the Pennsylvania cities of Ardmore, Paoli, Downingtown, Parkesburg, Coatesville and Exton.

The Hartford Line and Valley Flyer will operate  on a Saturday scheduled seven days a week.

On the Empire corridor, the Maple Leaf will operate only between New York and Niagara Falls, New York, with service to Toronto suspended.

The New York-Montreal Adirondack will operate only between New York and Albany-Rensselaer, New York.

Amtrak said other services may be affected by service cuts and changes as circumstances surrounding the coronavis pandemic change.

Amtrak Eyes Service Cuts Due to Lost Revenue, Bookings

The coronavirus pandemic may cost Amtrak “several hundred million dollars” due to cancellations and depressed bookings.

The passenger carrier has warned its employees that this may result in significant reductions in service.

Thus far Amtrak has suspended operations of three Acela Express trains and will curtail operations in its Keystone Corridor in Pennsylvania effective today.

In an announcement posted on its website, Amtrak said that in coordination with the Pennsylvania Department of Transportation Keystone Service will operate on a reduced schedule, with no service to the Ardmore Station.

Effective March 13 Amtrak will operate 18 daily Keystone trains (nine in each direction) along with the Pennsylvanian between New York and Pittsburgh.

All trains will remain in service on the weekend. Amtrak said this schedule reflects the “S” schedule or special schedule that Keystone Service has set for severe weather or other service disruptions.

In an email sent to Amtrak employees earlier this week, the company’s senior vice present and chief operating officer, Stephen Gardner, said the carrier has instituted “aggressive measures to cut costs.”

Gardner said future bookings are down 50 percent compared with a year ago and cancellations are up more than 300 percent.

Amtrak plans to implement a voluntary leave program for “non-mission critical employees” willing to take unpaid time off.

The passenger carrier has also said it is waiving change fees for all trip reservations made before April 30.

It is not just Amtrak that has been affected by the COVID-19 outbreaks. Airlines have reported drops in bookings and are canceling flights.

Also hit hard has been public transportation. Northestar Research Partners said a poll it conducted found that Americans are switching their travel habits from public transit to either staying home or relying more on cars to get around.

Of the 1,000 people surveyed, 48 percent indicated a belief that riding public transit poses a high health risk due to the virus, and 30 percent to 40 percent said they have reduced their use of public transportation.

“People’s movement away from public transit is likely to have long-term consequences,” said Jennifer Yellin, senior vice president and co-lead of Northstar’s transportation practice.

“The implications include lost revenue for public transit authorities, which is ultimately used to upgrade and maintain systems.”

Public transit systems have stepped up cleaning of their rail cars and buses as well as stations.

Amtrak said it will disinfect trains and stations multiple times a day, and, in some cases, on an hourly basis.

Coronavirus Depressing Intermodal Traffic

The effects of coronavirus pandemic is manifesting itself in depressed intermodal traffic.

The National Retail Federation said this week that the pandemic will have a longer and larger effect on imports at major U.S. retail container ports than was previously believed.

NRT said factory closings and travel restrictions in China have hindered production.

“There are still a lot of unknowns to fully determine the impact of the coronavirus on the supply chain,” said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold in a news release.

Gold said Chinese factories have begun returning to production, but other issues are affecting cargo movement.

These have included the lack of availability of truck drivers to move cargo to Chinese ports.

Hackett Associates said its projections are that some sort of normalcy will return to trade by late March or early April.

The firm produces a monthly Global Port Tracker report for the NRF.

Forty percent of respondents to a recent NRF survey said they’re seeing disruptions to their supply chains while another 26 percent expect to see disruptions as the virus continues to spread.

U.S. ports covered by the Global Port Tracker handled 1.82 million 20-foot equivalent units in January, a 5.7 percent increase from December but down 3.8 percent from unusually high numbers a year ago related to U.S. tariffs on goods from China.

February was estimated at 1.42 million TEUs, slightly above the 1.41 million TEUs expected a month ago but down 12.6 percent from last year and significantly lower than the 1.54 million TEUs forecast before the coronavirus began to have an effect on imports, NRF officials said.

March is forecast at 1.32 million TEUs, down 18.3 percent from last year and less than the 1.46 million TEUs expected last month or the 1.7 million TEUs forecast before the virus.

April, which had not previously been expected to be affected, is now forecast at 1.68 million TEUs, down 3.5 percent from last year and lower than the 1.82 million TEUs forecast last month.

The Association of American Railroads said that for the week ending March 7 intermodal traffic was down 14.1 percent for the week compared to the same period of 2019.

U.S. weekly rail traffic was 462,303 carloads and intermodal units, down 9.1 percent compared. Total carloads for the week were 229,742 carloads, down 3.5 percent compared while intermodal volume was 232,561 containers and trailers.

“Comparing rail traffic from one week to another must be done with caution because many different factors can come into play, especially in the winter when the weather can play a big role,” said AAR Senior Vice President John T. Gray.

“That said, rail intermodal loadings last week were down noticeably more than the norm over the past year. With the number of ships arriving at West Coast ports from Asia down sharply due to the coronavirus, it stands to reason that railroads are beginning to feel an impact too, at least in terms of intermodal. It’s impossible to quantify that impact with precision.”

For the first 10 weeks of 2020, U.S. railroads reported cumulative volume of 2,323,120 carloads, down 6.2 percent from the same point last year; and 2,475,466 intermodal units, down 7.7 percent from last year.

Total combined U.S. traffic for the first 10 weeks of 2020 was 4,798,586 carloads and intermodal units, a decrease of 7 percent compared with last year.

“We’ve not seen the impact yet from the extended Chinese New Year volumes. But we expect to see this show up in our intermodal volumes over the coming weeks,” CSX CEO James Foote said at an investor conference in New York this week.

Foote said steamship companies serving China are optimistic that they will be able to return to normal operations once the coronavirus threat subsides.

Many sailings were cancelled due to the virus. Foot said CSX is ready to handle an expected surge in intermodal traffic once it comes.

Canadian Pacific Chief Financial Officer Nadeem Velani said at the same conference that international container volume will continue to falter into the second half of March and early April before recovering.

Velani expected as “quick recovery” as retailers and manufacturers restock their inventories, which have been depleted amid extended manufacturing shutdowns in China.

“We don’t see this as lost volumes,” Velani says.

Unions Want FRA to Act on Coronavirus

Two railroad unions have asked the Federal Railroad Administration to take action to protect rail workers from the coronavirus.

The Brotherhood of Locomotive Engineers and Trainmen and the SMART Transportation Division have asked the FRA to issue guidelines directed at railroads, their employees and passengers.

“We and other rail labor organizations take this issue very seriously, and we have been monitoring it closely,” BLET President Dennis Pierce and SMART-TD President Jeremy Ferguson wrote in a letter to FRA Administrator Ronald Batory.

In a related development, executives at three Class 1 railroads canceled their planned presentations at the J.P. Morgan Industrials Conference in New York City due to concerns about the spread of the coronavirus.

The executives from Norfolk Southern, Canadian National and Union Pacific said they would not be speaking at the conference.

Also related to the coronavirus pandemic, the Commuter Rail Coalition has warned that the virus outbreak could disrupt efforts to complete installation of positive train control equipment.

The coalition said that was because of factory closings in China, where the virus originated. “Vendors have so far only alerted agencies to the threat, and agencies are exploring whether they have options for alternative sources for any components that might be cut off,” said KellyAnne Gallagher, executive director of the coalition.

CVSR Cancels Trains March 13 to April 12

The Cuyahoga Valley Scenic Railroad has canceled all trains scheduled to operate between March 13 and April 12 due to concerns about COVID-19.

In a notice posted on its website and distributed via an email blast, CVSR said it canceled trains in an effort to prevent the spread of the virus.

Passengers who have already purchased tickets for rides between March 13 and April 12 can submit them for an exchange, gift certificate reimbursement, or refund.

To receive one of those passengers should contact customer service at customerservice@cvsr.org.

The message suggested that some might want to consider donating their tickets back to the CVSR.

CVSR said that the expected high volume of calls and emails will mean that passengers should expect up to wait up to 24 hours for a response.

The railroad said it will adjust its operating plans as additional information becomes available from federal and state health officials, but it expects to resume operating on April 17.

Amtrak Still Operating Most Trains

Amtrak said this week that it will continue operating the bulk of its trains but is taking precautions to guard against coronavirus, also known as COVID-19.

The carrier said that includes increasing the cleaning of trains and stations, and stocking up on additional quantities of sanitizers and disinfectant wipes to be made available for passengers and employees.

Amtrak said it has waived change fees travel on bookings made through April 30.

Thus far the only trains that Amtrak has suspended are three Acela Express trains between New York and Washington.

In a notice posted on its website and sent out via an email blast, Amtrak said it continues to monitor the virus and is taking the advice of health experts.