Economic reality and relativity in the rail realm (Pat Foran, Context, July 2009

Like their counterparts at other Class Is, strategists at Canadian Pacific are trying to put their railroad in a better position to succeed, post-recession, when the “new economic reality” sets in, as CP execs put it to Managing Editor Jeff Stagl this month (see article). Just what this new reality will look like — and when it’ll start looking like it — continued to be elusive constructs as we hit the mid-year point. Most people we’ve talked to hope (rather than believe) the economy’s hit bottom. But after a dark and spooky first half of 2009, we’re just now beginning to hear rumblings emanating from the Half-Full House of Prognostication. Among the more optimistic are the predictors at USA Today/IHS Global Insight, who believe the bottoming out will end in a couple of months.

The USA Today/IHS Global Insight Economic Outlook Index suggests the recession will end in September, according to a June 24 statement. The decline in real GDP growth slowed to -4.3 percent in June and should “reach the break-even point around October-November,” the indexers said. “Recent gains in the index, though small, have been consistent, which is a good sign.”

Of course, it’s all relative. In the freight-rail realm, the economic reality was this as of June 30: North American carload and intermodal traffic continued to lag double-digit percentage points behind volumes recorded last year. And there were more than a few rail planners and observers looking at the world through glasses that were anything but rose-colored. But even the more pessimistic of the bunch don’t merely hope that rail is going to play a big role in the recovery to come, whenever and however the economy resets. They believe it.

In the meantime, we’ll continue to track the indices and indicators, and talk with the prognosticators who issue them. We’ll also check back with CP execs to see how, when and where the new economic reality, as they envision it, is beginning to manifest itself.

Talkin’ HSR (and more) with FRA’s Szabo

Last month, I met (by phone) new Federal Railroad Administrator Joe Szabo, and there was no mistaking what was on his mind: high-speed rail (HSR), big-picture policy, partnerships. But HSR definitely was on the front burner. In mid-June, the U.S. Department of Transportation issued guidelines for states and regions to apply for federal HSR and intercity passenger rail funds as part of the American Recovery and Reinvestment Act and Szabo was still buzzing about the 1,200 people who attended a series of workshops to gather input on the Obama Administration’s strategic plan for HSR development.

“In rail safety, there has been the RSAC process, and we felt that same kind of approach was imperative as we went forward with the HSR mission,” said Szabo, a fifth-generation railroader who most recently served as Illinois state legislative director for the United Transportation Union (UTU). “For this program to be successful, it’s going to take the involvement and the cooperation of all stakeholders: state DOTs, the major cities, the freight railroads. It’s vitally important to get these folks to the table.”

Getting them there won’t be enough. Constructive collaboration is a critical next step — for HSR and every other Obama Administration rail program, plan or policy.

“The President’s big on partnerships, and on lowering the tone and tenor of the discussion so we can figure out where we do have mutual agreement on issues,” Szabo said.

In the meantime, the FRA intends to help state DOTs and rail departments prepare for HSR, be it providing technical assistance or assisting them with other preparedness needs.

“There is a range of readiness and expertise levels,” he said. “For this program to be sustainable over the long term, for the President’s vision to be achieved, we need to make sure they develop the skills so they are prepared to develop the program over the long term.”

The same will apply if/when we get around to developing a national rail policy. Szabo believes we need one. He framed the matter thusly: “How do all of these pieces fit together to ensure that we have sufficient capacity to move people and goods? One of the worst things we could do is develop passenger rail and end up shoving freight onto the highway.”

He also commented on the FRA’s highly anticipated rulemaking on PTC implementation. (“We’re on track to release it in the next month or so,” he said.) But one thing Szabo, the first FRA administrator to come out of rail labor’s ranks, couldn’t comment on was a petition for an emergency order prohibiting the use of one-person crews, including remote-control operations, that UTU and Brotherhood of Locomotive Engineers and Trainmen recently filed with the FRA. (“I am recused from it — I cannot discuss it.”)

I don’t expect to hear “I cannot discuss it” very often during the amiable, eminently approachable Szabo’s FRA tenure. I look forward to hearing what he has to say as the evolution of HSR, PTC and big-picture rail policy continues.

Pat Foran, Editor