PTC: Cause, effect and the implementation of change; From capex to FedEx, January was a momentum-building month — by Pat Foran (Context, February 2011)

— by Pat Foran, Editor

PTC: Cause, effect and the implementation of change

It's a sentence that typically appears in positive train control (PTC) stories published in both the trade and popular press: "A Metrolink engineer caused the Chatsworth, Calif., accident that led to The Rail Safety Improvement Act of 2008 and the federal call for PTC implementation at more than 40 railroads." Less typical is any reference to the progress Metrolink planners are making toward their goal of installing PTC by the end of 2012 — three years before the mandated deadline, as Managing Editor Jeff Stagl reports this month (see story). It's quite a goal, considering there are a few PTC equation elements the Metrolink team can't control.

Metrolink's PTC system, which will be based on BNSF Railway Co.'s and Union Pacific Railroad's systems (the commuter railroad interfaces with both Class Is), hasn't been fully developed yet. Interoperability issues haven't been resolved. There's also a "qualified manpower" issue, as Federal Railroad Administration Senior Electronics Engineer Mark Hartong put it during an October 2010 ProgressiveRailroading.com webcast. ("Whether or not we will see enough people available who can fill all of the needs of the different entities who have to comply [with the PTC mandate] — it shall be an interesting topic, to see how it actually plays out," Hartong said.) Meanwhile, Metrolink hasn't secured a spectrum license for necessary radio frequencies, and a radio system hasn't been engineered.

The good news: Metrolink has secured funding for the project's $201.6 million public portion, 80 percent of which the state of California will cover. The FRA will kick in $20.6 million in grants; the U.S. Department of Transportation, $17.8 million in stimulus formula funds. More good news: Metrolink officials clearly are committed to meeting their self-imposed deadline. They're also presuming leadership on the PTC front. As Metrolink CEO John Fenton told Stagl: "We want to set an example of what implementation should look like."

No doubt, other rail and agency execs want to be exemplary in this regard; they just aren't talking about it the same way, or as publicly. Of course, Metrolink execs are under the magnifying glass here. They, too, read the requisite insert strings in PTC stories. Ultimately, PTC isn't just about implementing technology or collaborating with other railroads; it's also about implementing culture change. It's about people. Metrolink execs get that. And it's heartening to see them embrace their place under that glass.

From capex to FedEx, a momentum-building month

For the rail realm, January was definitely a month to write home about. "Rail" was name-checked on the largest of political stages; Class Is posted sterling quarterly and year-end financials, and unveiled double-digit 2011 capex budgets; and longtime truck user FedEx joined the rail intermodal evolution.

In his Jan. 25 State of the Union address, President Barack Obama restated his vision for U.S. high-speed rail (HSR). His goal? Give 80 percent of the country access to HSR within 25 years. The president also reiterated his call for infrastructure investment, reminding Congressfolk (and the rest of us) that the United States built the transcontinental railroad. They're only words, but if the president hadn't uttered them, he'd have sent a loud-and-clear message of a different sort. Particularly with respect to HSR.

Then there were the Class I earnings reports. Issued between Jan. 20 and Jan. 27, they reflected across-the-board revenue and income growth, and operating ratio improvements. As for capex: Five of the seven largest railroads revealed that they've set aside up to 25 percent more dollars for capital projects than they did last year. PTC project work accounts for some of that, but Class Is also will make huge investments in infrastructure — and, in some instances, cars and locomotives, which has buoyed the near-term outlooks of those who toil in the finance and leasing sector.

Capping off the month was FedEx Freight Corp.'s Jan. 31 announcement that it would launch a new unified less-than-truckload (LTL) network, and offer new FedEx Freight® Priority and FedEx Freight® Economy LTL services. FedEx selected Norfolk Southern Railway as its preferred eastern rail carrier, marking the first time FedEx "will systematically use rail intermodal service" in its 40-year history, said NS Executive Vice President and Chief Marketing Officer Donald Seale during the Class I's Q4 earnings conference on Jan. 25.

Meanwhile, freight-rail traffic continued to improve. Although the year-over-year comparables weren't quite as good as they were a year ago (there's no way they could be), traffic volumes last month reflected what Class I execs figured they would when they offered up their 2011 forecasts: "We'll see slow growth, but sure growth," they told us. It's the "sure" word that cements it. One month in, rail's 2011 roll is in full (albeit slow) swing.