Presenting "Maintenance of Way Spending Report 2011"; Class I capex at $12 billion for 2011; modest international trade growth in store for 2011 — by Pat Foran (Context, April 2011)

— by Pat Foran, Editor

Presenting Progressive Railroading's 'Maintenance of Way Spending Report 2011'

We've designated our April edition as the "Annual Infrastructure Challenges Issue," which afforded an opportunity to explore a few salient maintenance-of-way topics, including the age-old challenge of managing track-time windows. For the most part, North American freight and passenger railroads are spending more on infrastructure improvements this year; as rail traffic picks up, crews have less time to complete the work. But MOW managers are finding ways to get the work done, as Managing Editor Jeff Stagl notes this month.

As for railroads spending more on infrastructure upkeep this year: How much more? What will they spend it on, project wise? As James Thurber, Casey Stengel and any number of others put it: You could look it up. Chances are you'll find it in "Maintenance of Way Spending Report 2011."

Available exclusively from Progressive Railroading magazine, the report provides detailed MOW data from dozens of freight and passenger railroads, including Class Is, regionals, short lines and transit agencies; total budget figures and cost estimates for various projects and materials; details on rail, tie and bridge programs; and the equipment and materials needed to complete all planned work.

To be downloaded in pdf format, Maintenance of Way Spending Report 2011 is available for $249. The price includes a six-month update, which will be available in the fall. For more information, visit: www.progressiverailroading.com/MOWSR.

Capex: Class Is to spend a record $12 billion this year

Speaking of spending: This year, U.S. freight railroads plan to spend a record $12 billion on capital expenditures, or 12.1 percent more than the $10.7 billion they set aside for capex last year, according to an Association of American Railroads (AAR) report issued last month.

"Even during the worst recession in a generation, freight railroads have been plowing record amounts of private capital back into the rail network each and every year, achieving one of the highest capital investment rates of any U.S. industry," said AAR President and CEO Ed Hamberger in a press release announcing the report, titled "Great Expectations 2011, Railroads and Continued U.S. Economic Recovery."

Of course, a regulatory framework that provides certainty would "foster continued economic recovery and job creation," he added.

Regarding the latter: U.S roads boosted hiring at 2010's end, helping increase employment 5.2 percent compared with 2009 levels, the report states. There's more to come — railroads will hire 10,000 people this year, and up to 70,000 in the next five to eight years, Hamberger said during a March 9 teleconference. "And I would point out these are good jobs," he added. "The average U.S. wage earner earns about 60 percent of what railroad workers earn."

In short: When President Obama urged U.S. businesses to get back in the game by investing capital and hiring, he wasn't talking to the Class Is.

"Freight railroads have been in the game for the past 30 years, investing more than $480 billion to build and maintain America's freight-rail network with private capital, and supporting jobs all across the country," Hamberger said.

Trade tracked: modest growth in store for '11

Expect international trade to continue to pick up (albeit modestly) this year while structural changes transform the shipping industry over the longer haul, supply chain and logistics experts said during a panel discussion at the Port of Long Beach's annual "Pulse of the Ports: Peak Season Forecast" event held March 30 in Long Beach, Calif.

Trade will increase modestly this year vs. 2010's double-digit gains, although the recovery "happened a little faster than we thought," said Dan Smith, a principal at consulting firm The Tioga Group in an item posted on the port's website.

Longer term, the industry will undergo "profound changes" that will transform the way goods are transported globally, panelists predicted. Container ships will get bigger as rising fuel costs force vessel operators to "slow steam" to conserve fuel. Railroads are modernizing facilities to meet demand and compete more efficiently; trucking companies are "greening" fleets to meet environmental standards, panelists said.

Meanwhile, the expansion of the Panama Canal, which is slated for completion by 2014, "will be a game changer, but the change will happen gradually," Smith said. How gradually? "They are building for trade volumes in 2030," he added.