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September 2008
By Desiree J. Hanford
A sputtering U.S. economy and the resulting flat-at-best traffic volumes have prompted North American railroads to slow their locomotive-order pace this year.
Not that locomotive builders didn’t expect it. During the past few years, orders were particularly strong for big players GE Transportation and Electro-Motive Diesel Inc. (EMD), so this year’s speed bump hasn’t been much of a surprise, says Jim Husband, president of RailSolutions Inc., which provides consulting services to financial institutions, railroads and private fleet operators.
“The bottom line is that the railroads need to have a certain number of locomotives and a certain amount of aggregate horsepower in order to haul the traffic volume they expect,” Husband says. “They’re trying to balance supply and demand.”
What are they demanding when they do place power orders? Units that are more fuel efficient and feature improved emissions performance, say locomotive builders, who recently shared market observations and technology updates with Progressive Railroading.
GE doesn’t release specific order figures, but the company typically manufactures between 800 and 900 locomotives annually and is on track to meet those numbers this year, said Stephan Koller, director of communications and public affairs, in an email.
The Evolution® Series Locomotive, which remains GE Transportation’s best-selling product worldwide, offers about 5 percent better fuel efficiency and 40 percent lower emissions than previous locomotives, Koller said, saving railroads about 300,000 gallons of fuel over the life of the locomotive. In addition, GE’s Trip Optimizer uses a system of sensors, on-board computers and global positioning technology to determine the “optimum speed profile” to use the least amount of fuel possible, he said. The Trip Optimizer can reduce fuel consumption by an estimated 10 percent, or up to 32,000 gallons of fuel a year, and reduce greenhouse gas emissions by 365 tons per year.
“With ever-rising fuel prices and increasing emission regulations, railroads are looking for ways to improve locomotive efficiency,” Koller said.
In North America, there is more demand for Evolution Series AC locomotives compared with DC units, a move that’s “driven by the increased flexibility provided by the AC platform and the productivity gained by its increased pulling capacity over the DC platform,” Koller said. GE continues to see demand for DC units internationally, but Koller said the trend is moving toward AC “for the same reason as in North America.”
GE also continues to develop its hybrid locomotive, which will “capture” energy that is typically wasted in dynamic braking and reuse it to lower fuel consumption and emissions by about 10 percent, Koller said.
Although the U.S. rail market is softening because of a slowing in traffic growth and improved railroad productivity, international demand remains strong.
“GE Transportation has defied the traditional boom-and-bust cycle of the North American rail industry by capitalizing on international growth opportunities, including China, Kazakhstan and Australia,” Koller said.
Last month, GE expected to deliver a China Mainline Locomotive (CML) to Beijing. The locomotive will be the first of 300 6,000-horsepower Evolution® Series CML units GE will deliver to China’s Ministry of Railways under a $450 million contract in conjunction with Qishuyan Locomotive and Rolling Stock Works.
Meanwhile, officials at EMD anticipate another strong year in North American and international freight and passenger markets. Demand will continue to be strong in Europe, the United Kingdom, China, India, the Middle East/North Africa, Australia and Brazil, said Brian Grinter, director of marketing, in an email. The builder also is seeing more demand for spare parts and increased interest in locomotive repowering and refurbishment projects, he said.
Ecological concerns and legislative requirements are driving EMD’s locomotive business, so the company is doing what it can to help railroads retrofit their existing locomotives, says Robert Mason, vice president of engineering.
One tried-and-true option is for railroads to put emissions kits on their locomotives to reduce levels of nitrous oxide, particulate matters and carbon monoxide — areas where the U.S. Environmental Protection Agency (EPA) has instituted new emissions rules for coming years.
One of EMD’s newest products is the 710-ECO™ Repower. EMD takes a yard or road switcher locomotive that’s been in service for decades and installs a new engine — either an eight-cylinder, 2,000-horsepower or 12-cylinder, 3,000-horsepower model — that exceeds the EPA’s Tier 2 requirements, and uses up to 25 percent less fuel and 50 percent less lube oil, Mason says. The retrofitted locomotives also produce up to 70 percent less greenhouse gas emissions, which often makes them eligible for state and federal funding connected to clean air projects, particularly in California and Texas, which have tight emissions standards, Mason says.
“A locomotive that’s 50 can reasonably expect to work another 20 years,” he adds. “The products we’ve been introducing most recently really address the pressing environmental factors with the most modern locomotives.”
And eco-friendly units are in demand across the globe. The first EMD-designed JT56ACe diesel-electric locomotive jointly manufactured with CNR Dalian Locomotive and Rolling Stock Co.
(DLoco) rolled off the assembly line in July in Dalian, China. The 6,000-horsepower, environmentally friendly locomotive features dual isolated cabins, electronic fuel injection, AC traction and a microcomputer control system. The JT56ACe can reach speeds up to 74 mph. EMD and DLoco will produce 300 of the locomotives for China’s Ministry of Railways.
Moreover, EMD’s updated Class 66 European locomotive recently became the first mainline diesel-electric locomotive to achieve Lloyd’s Register Netherlands B.V.’s EU TSI Noise Certification noise reduction standards. The locomotive achieved the standards for internal cab noise level in the “horn blowing” and “locomotive in motion” categories because EMD used noise-dampening materials in the assembly process. The Class 66 unit also achieved certification for external noise levels in the “standing idle,” “start off” and “pass by” categories due to updates in EMD’s engineering and manufacturing methods and processes to reduce noise and vibration.
Other builders are responding to similar market drivers. For MotivePower Inc., demand for switcher locomotives is emissions related, driven by funding available in California and Texas, and through the federal Congestion Mitigation and Air Quality Improvement Program, says Vice President and General Manager Mark Warner.
In some cases, railroads seeking switchers for California operations are purchasing ultra-low emissions multi-engine switchers, such as MotivePower’s MPE-X locomotive.
Freight locomotives brought in for overhauls are updated with the latest emission-reducing equipment, but products that improve fuel consumption are also in demand, such as automatic engine start/stop and remote fuel-monitoring systems, Warner says.
“The higher the cost that fuel gets, the more attractive these locomotives are,” he adds. “And we’re not seeing any evidence that railroads are backing off from wanting low-emission locomotives.”
Commuter railroads also are dealing with higher fuel prices, Warner says. Commuter railroads are sensitive to public perception, so they want environmentally friendly locomotives. But reliability is critical to riders, giving builders reason to explore concepts such as a two-engine commuter locomotive, Warner says.
Meanwhile, National Railway Equipment Co.’s (NREC) N-ViroMotive™ locomotive is used by North American and international customers seeking four- and six-axle locomotives with a range from 700 horsepower to 2,800 horsepower. Railroads want locomotives that meet current and future EPA emissions regulations, and that reduce fuel costs, says Jim Wurtz, vice president of marketing and sales.
In the past, railroads were focused more on emissions, particularly in switching yards and communities that wanted to reduce particulate matter and nitrous oxide levels, he says. But high diesel prices have led railroads to become increasingly focused on fuel efficiency.
“Clearly, the executives are looking at the profit-and-loss statements and saying, ‘We need to do something to control the fuel bill and what alternatives are out there?’” Wurtz says. “They want to find those alternatives and implement those that make sense ASAP.”
The push behind the design and production of the N-ViroMotive came from Union Pacific Railroad, which needed to meet California’s ever-tightening emission standards. NREC also set out to design a locomotive with improved fuel efficiency, lower noise levels, improved reliability and reduced maintenance costs, Wurtz says.
After receiving N-ViroMotive orders from UP and BNSF Railway Co., NREC expected orders to slow a bit because it was unclear how much state and federal funding would be available to railroads, Wurtz says. Funding was slow coming into 2008, but recent funding from California’s Carl Moyer Memorial Air Quality Standards Attainment Program and the Texas Emissions Reduction Plan have helped, he says.
“The lull we anticipated in the second and third quarters has turned,” Wurtz says. “We feel pretty good about where we are in the marketplace today, but we need to continue working on our research.”
The Carl Moyer Program provides grant funding to encourage the voluntary purchase of cleaner-than-required engines, equipment and emission reduction technology. The Texas Emissions Reduction Plan provides state funding, including grants and other financial incentives, to projects that improve the state’s air quality, including emission reductions. Eligible applicants include those that operate certain types of equipment, including locomotives.
There’s also strong interest among railroads in Brookville Equipment Corp.’s CoGeneration™ Locomotive. But many orders continue to hinge on government funding, says President and Chief Executive Dalph McNeil. The locomotives reduce fuel costs by an estimated 25 percent, meet or exceed emission standards, and feature regenerative dynamic braking and a smokeless start.
“Several railroads are using CoGeneration not because they’re forced to, but because they want everyone to know that they’re doing everything financially and humanly possible to stay as environmentally correct as they can,” he says.
Brookville continues to take its CoGeneration show on the road in the form of a demonstration tour. In July, the unit arrived at CSX Transportation’s TRANSFLO bulk transfer terminal in Hagerstown, Md., after completing a 90-day demonstration with Norfolk Southern Corp., during which time Brookville found the locomotive to be more fuel efficient and to emit fewer emissions than a standard switcher locomotive.
Officials at Railpower Technologies Corp. know all about demos and tests. They also know that an industry-wide embrace of environmentally friendly technology doesn’t materialize overnight. During the first quarter, Railpower delivered the first-ever six-axle generator-set (GenSet) locomotive to UP, adding an ultra-low emitting road switcher to the rail’s lineup. Railpower’s RP-series switchers are designed to meet California’s strict air emission standards and reduce fuel usage.
Railpower encountered some bumps in the beginning with the new locomotive, but the company knew it had something special on its hands, particularly given the locomotive’s fuel savings and noise abatement, President and Chief Executive José Mathieu says, adding that other Class Is are testing the locomotive and other roads have expressed interest.
“It was expected that people would take a wait-and-see attitude,” Mathieu says. “We’re confident that between now and the end of the year, our order book will be in a much better position. We’ve been using this slow period to get organized because in one to three years, we expect demand for the GenSet.”
For now, they’ll focus on current demand. In July, Railpower announced it would provide two four-axle, multi-GenSet RP20BD locomotives and one hybrid GG20B locomotive to Virginia International Terminal (VIT). The contract calls for VIT to lease the locomotives for three years, then purchase the units. The RP20BD models are designed to significantly reduce emissions and cut fuel usage compared with conventional switchers.
A month earlier, Patriot Rail Corp. subsidiary Sacramento Valley Railroad announced plans to test Railpower’s RP20BD locomotive. The 2,000-horsepower, three-engine GenSet switcher — classified as an ultra-low-emitting locomotive by the California Air Resource Board — features a common DC buss design to reduce emissions from 70 percent to 90 percent and cut fuel usage from 30 percent to 50 percent compared with a conventional switcher.
Builders expect the testing and tire-kicking — and railroads’ collective desire for more fuel-efficient, eco-friendly power — to continue.
Desiree J. Hanford, who worked for Dow Jones & Co. the past 10 years covering the equities market (including transportation), is a Chicago-based free-lance writer.
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