The Railroad Week in Review:
Late. Again. This time I was in England to visit the English, Welsh & Scottish Railway (EWS) unit of the Wisconsin Central (Nasdaq: WCLX) among other things. More on that anon.
The news of the week was of course the STB approval of the merger of the Illinois Central (IC) with the Canadian National (NYSE: CNI). According to a press release, the written merger decision is due May 25 with an effective date of June 24. At that time CN will be permitted to exercise control over IC operations and assets. A step-by-step integration of the two railroads is expected to start July 1, 1999. Implementation teams are working to ensure a safe, smooth integration process and the railroads have developed a comprehensive safety integration plan that has been approved by the FRA.
The STB set aside the marketing alliance question, noting that the agreement "did not bring KCS into common control with CN and/or IC." As one would be expect, there were conditions. KCS will get access to three IC-served shippers in Geismar LA without having to carry out its plans to "build in" to them. Regarding the Detroit-Windsor tunnel, the STB will hold CN to its earlier commitment "not to exercise unfairly any rights it may have under the CNCP Partnership Agreement respecting that tunnel to oppose any proposed improvement project" undertaken by CP. For greater detail, go to http://www.stb.dot.gov.
London's Financial Times (www.ft.com) notes that the team of Tellier and Harrison will have a network connecting both coasts of Canada, the US Heartland, the Gulf of Mexico, and the interior of Mexico. Both roads have strong performance histories. Since the 1996 IPO the CN share price is up 60% (compared with the S&P's 80%), and the IC has always enjoyed the lowest operating ratio of any US class 1 railroad. The IC's approach to scheduled unit trains combined with Tellier's focus on asset utilization will make for a strong customer-oriented railroad in deed.
The shortline benefit will be significant. Emons Transportation (Nasdaq: EMON), Genesee & Wyoming (Nasdaq: GNWR), RailAmerica (Nasdaq: RAIL), and RailTex (Nasdaq: RTEX), all own properties once belonging to and still connecting with CN. Each of these shortlines can now offer single-line service from or to any point on their lines to or from any point on the new network.
What I'm hoping to see is the Harrison Unit Train Model at work on commodities from paper to potash and from wood chips to wheat using blocks of 10-30 cars combined into single trains of multiple blocks between distant terminals and shortline interchanges. If it works wonders on EWS where they have to fit trains into working timetable (WTT) slots negotiated with RailTrack, think of the possibilities where the train operating company writes the WTT!
The latest on the Amtrak crash is that the driver's lawyer said his client did not try to beat the train; the NTSB says he did. No surprises there. However there is a question whether the driver's safety record was checked before he got hired, and the UTU is talking about political pressure to help congress find ways to cut the carnage. Elsewhere, it's been reported Congress is looking at all kind of measures except the simplest one -- closing more crossings.
The write-up here (WIR 3/20/99) drew more mail than has been seen in a while. From an attorney in Georgia: "Another truly tragic thing about these accidents is that they threaten the future commuter and regional passenger rail projects around the country by [heightening] legitimate class 1 concerns about grade crossing safety. Down here, a friend in the know told me that Item Number One on what it's going to take to put passenger trains [on freight] lines is grade crossing improvements, (or better, removal)."
From a financial analyst in Chicago: "I share your frustration at the poor quality of the media coverage of the Amtrak wreck...Reporters do want to report the facts. What they often lack is context for the facts. It's the responsibility of Amtrak and the railroad industry to create the proper context for the reporters in advance. If the industry fails to do this, it's fair it suffers the consequences, especially when the story is hot and the pressure to report is on."
From a rail-savvy mechanical engineer in Pennsylvania: " I still have nagging questions. Despite the 800,000 frame crush test limits of a Bombardier Superliner, why did the locomotive and the heritage baggage car stay structurally intact, and why did the lead sleeper literally split, crash and burn? A 14-car consist would sure seem to indicate loaded material handling cars and/or RoadRailers on the tail, decelerating into the front. Are we pushing the physics here with increased Amtrak train lengths, or was it just plain bad luck this time?"
From an unidentified newspaper report forwarded Friday: "State officials unearthed a laundry list of driving violations by the truck driver who set off the accident. During the 30 years trucker John Stokes has driven Illinois roads, he has been suspended four times, warned of a possible fifth suspension and was involved in four accidents that caused injuries, records show. Between 1966 and 1986, Stokes had at least 17 incidents listed on his driver's license, including three speeding convictions and involvement in five accidents that caused property damage. In addition, Stokes has received five speeding tickets in Indiana since 1996. And he was cited for five other moving violations in recent years, according to a report by the Daily Southtown newspaper." [Just the kind of guy you want behind the wheel of 80 tons of iron -- RB]
As most everybody knows, railroaders are not covered by workman's comp. They are covered by a system that was devised for the industry before anybody ever heard of workers comp, the Federal Employers' Liability Act. It's a system whereby the injured party has to sue the employer. Here's a gruesome example of how it works, and it is a sad tale of what happened on/to one shortline:
A former brakeman in Idaho was awarded $900,000 as a result of injuries sustained back in 1996 while working for the Eastern Idaho Railroad, a collection of former UP branch lines radiating out of Idaho Falls. The story goes that he was riding a car being switched and it derailed, pinning the man between the car and an adjacent building. The report said the extent of the employee's injuries will keep him out of future train service.
There being no worker's comp, the man had to hire a lawyer who then sued the railroad for negligence under FELA and the Safety Appliance Act (SAA). The trial took eight days and found the cause of the accident (in which the brakeman was found to be 20% at fault) was determined to be poor track conditions and extensive snow pack and ice. The verdict was unanimous in the plaintiff's favor.
The saddest part of the whole story is the last paragraph of the news item in which the law firm representing the injured worker identifies itself as having more than 40 years FELA experience, provides a website, and notes it "has offices in Northern and Southern California, Arizona and Texas and is union designated legal counsel for major railroad unions in the United States." They did not say how much of the $900,000 award went to the railroad man.
To end on a lighter note, the WSJ "A-Head" (the amusing column in the center of page one) carried a nice story about the track-side hotel in Cresson, PA, catering to the railfan community. Tom Davis, Prop., a dear friend of more than 30 years, is doing a land-office business. He told me when I called about the story that he has many weekends booked through October and has had for some time.
Commenting on the story, a mutual friend -- who's done some PR work for the big railroads -- writes about the time he took on the new manager of hotel with a track side view. "The manager said, 'Those trains of yours make noise and we're trying to run a classy hotel here. What are you going to do about it?' I suggested the trains had been making the noise since 1850 or so, and were no secret, but he was not to be appeased. So I suggested they run ads in Trains touting a birds-eye view on America's busiest mainline. He thought I was being sarcastic and hung up on me. But he did miss a potential market!"
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