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From head-hardened rail to heavy-haul locomotives, here's what rail-roads are spending on the hardware that keeps the industry moving

by Tom Murray

ou're standing trackside,watching a i 30-car coal trainroll by. Up front are twobrand-new A.e.-traction lo-comotives, and on the rear are

two more in distributed power mode. Thecars are new, too: aluminum-bodied, rota-ry-coupler bathtub gondolas, each one car-rying 122 tons of coaL.

Do you have any idea what this train isworth? Five million dollars? Ten milion?Try a number closer to $ i 7 milion. Thoselocomotives cost the railroad close to$2 milion a copy. The cars (which could be

owned by the railroad, by the utility buyingthe coaL, or by a leasing company) cost$72,000 each. That's $8 milion for the pow-er and more than $9 milion for the cars.

The cost of this equipment far outweighsthe value of the coal it's carrying. In today'sspot market, coal runs anywhere from $9

A BNSF unit coal train rounds Nebraska'sCrawford Hil in September 2005. David Hoge

per ton (I ow- Btu coal from the PowderRiver Basin) to $41 (high- Btu CentralAppalachia coal). That means the coal itselfis worth, at most, $650,000 at the mine.The railroad's freight charges could addanother $100,000 to $200,000 to the utili-ty's delivered cost.

The fact that a train worth $17 milion isused to deliver less than $1 million worth ofcoal - and that the railroad wil earn only

a fraction of that for providing the trans-portation - helps explain why railroading

is often called a capital-intensive business.To take advantage of the economics of rail-roading, you have to invest a lot of moneyup front - not just in freight cars and loco-

motives, but also in track, maintenanceequipment, and a wide array of other gearto keep the railroad in operation. Once youhave all those things, you can use them overand over again; after all, the locomotivesand cars on that coal train wil deliver hun-dreds of trainloads over their useful lives.

Yet, these aren't Just one-time purchases. Every year,North America's freight rail-roads spend bilions of dol-lars to replace worn-out carsand locomotives and renewtheir physical plant. Overthe past few years, they've

also devoted a big percent-age of their capital budgetsto expanding capacity, re-sponding to the growth inintermodal, coaL, ethanol,

and other commodities.Commuter and transit agencies have beengrowing, too, and spending milions of dol-lars on locomotives, cars, and all the otherequipment it takes to provide service.

Let's look at some of the specific itemsthat railroads spend money on in theircapital investment programs, and find outwhat these things cost. This won't be an all-inclusive list, but it wil help you understand what goes into those bilion-dollar-plus capital budgets.

cious appetite for scrap. According to oneindustry index, the average value of a met-ric ton of scrap steel in 2002 was $88. In2006, it was $275. The market has also be-come more volatile - in recent months,scrap prices rose as high as $347 per ton,and then settled back to $262. Because of

its importance as a raw materiaL, the priceof scrap has become a big driver in theprice of finished steel products.

These rising prices, and the shrinkingavailability of steeL, have had huge conse-quences for the companies that make steelfor the North American market, as well astheir customers (including freight car andlocomotive builders), and the end users,such as railroads. Carbuilders who madedeals with their customers based on a stableprice for steel actually lost money on somecontracts because of rising raw material

prices. Some companies that used to makecastings and other components for cars andlocomotives went out of business, and so

now buyers have fewer op-tions than they once did.Railroads have had to pay farmore for everythIlg they buythat contains steel - and theydo pay, particularly given thefact that traffc growth andcapacity expansion projectshave made the rail supplybusiness a seller's market.

Most freight cars are madealmost 100 percent of steel,

Used tie plates John Roskoski although there are aluminum-bodied gondolas and

hoppers used in coal service, as well as cov-ered hoppers with side, top, and end sheetsmade of aluminum. These aluminum-bodied cars are capable of hauling more tonnagethan steel-bodied cars. Aluminum priceshave been subject to many of the same pricepressures as steel between 2003 and 2005,the average U.S. selling price of aluminumrose from $1,362 per ton to $1,820. Even

these aluminum-bodied cars have a steelcenter sil, and you'll find steel II their draftgear and couplers, wheels, axles, bolsters,truck frames, brake systems, and other components. When it comes to railroad equipment, )U can't avoid steel completely.

There has been one silver lining forequipment owners from the recent rise IImetals prices: Old, obsolete cars are worth alot more now than they ever have been.James Husband, president of RailSolutionsIne., a rail-equipment appraisal and valua-tion firm, gives an example of a coal car thatmight have cost its owner $16,000 when itwas new; once it's fully depreciated, the carhas a net value of zero on the company's

books. A few years ago, that fully depreciat-ed car would have fetched $2,500 on thescrap market. Now, the owner can easilymake $6,000 .or more by scrapping it.

If there's a single factor that ties togethermost of what a railroad buys, it's steel. Andin case you haven't noticed, steel prices havebeen on the rise. Thanks in large part to therapid industrialization of China, the price ofsteel has soared throughout the world. Inthe United States, the producer price indexfor steel-mill products rose by 72 percentfrom 2002 to 2006.

The impact of China's economic growthshows up particularly in the market forscrap steel, which feeds the electric-arc fur-naces that have become Ilcreasingly popu-lar as a low-cost alternative to traditionalopen hearth methods of steelmaking.Steelmakers around the world have a vora-

www.TrainsMag.com 35

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The two SD70M-2s leading this Norfolk Southern stack train eastbound through SouthFork, Pa., represent an ',vestment of about $1.5 milion apiece. James B. Winters

IT '1 LOCOMOTIVES

Let's start our survey at the head of the

train. After a flirtation with 6,000-hp loco-motives, the North American rail industryhas settled on six-axe locomotives in themid-4,000-hp range as the ideal standard formoving freight on the main line. The NorthAmerican line-haul freight locomotive mar-ket has two builders: Electro-Motive Diesel

Ine., with corporate headquarters II LaGrange, II , and an assembly plant at Lon-don, Ont.; and GE Transportation, based inErie, Pa., part of General Electric Corp.

Each builder produces one A.e.-traction

locomotive and one D.e. model for thismarket. From EMD, it's the SD70ACe andthe SD70M - 2 (both rated at 4,300 hp); fromGeneral Electric, the ES44AC and ES44DC(both generating 4,400 hp).

The biggest factor in locomotive pricingis A.e. versus D.e. traction. For a recent or-der from GE, BNSF is reported to have paid$1.65 milion per unit for ES44DCs and$1.88 milion per unit for ES44ACs - a dif-ference of $230,000 per unit. Recent pricespaid by Union Pacific for A.e. locomotiveshave been somewhat higher: $1.93 milionapiece for EMD's SD70ACe, and $2.05 million for Up's version of the GE-built ES-

44AC, which UP designates as a C45ACCTE(the CTE stands for "controlled tractive ef-fort;' a softare feature that limits a locomo-tive's tractive effort when it is being used indistributed power mode).

Neither BNSF nor UP would commenton the prices they pay for locomotives forthis article, but like buying an automobile,it's generally understood that options such

36 Trains JANUARY 2008

as cab signals, fuel-saving devices, electronicair brakes, video cameras, etc., playa role indetermining a unit's delivered price. Onerailroad reported that its list of optionalcomponents (including fuel-saving equip-ment, video camera, and electronic airbrakes) adds between $35,000 and $40,000to the base price of its locomotives. Distrib-uted-power equipment (such as GE Harris'sLocotrol) can add another $50,000. Even

the length of the warranty can affect the fi-nal price: A five-year warranty wil cost thebuyer more than a three-year warranty.Maintenance agreements are another op-tional feature available from the builders.

Optional features (such as self-starting) addto a locomotive's base price. John Roskoski

As the figures for Up's recent purchasesindicate, in recent years GE locomotives havebeen priced at a slight premium to compara-ble EMD models. In 2006 Norfolk Southernpaid $1.67 milion per unit for 64 GE ES-40DCs (NS buys road locomotives rated at4,000 hp, versus the conventional 4,300 or4,400 hp). For the 79 EMD SD70M-2 units itbought in 2006, NS paid $1.54 milion each.However, given the fact that EMD's assemblyplant is located in Ontario, the strong Cana-dian dollar could shrink or even eliminate

the price gap between the two builders.

A.C. traction can add nearly a quarter-milion dollars to a new GE locomotive. Tom Kline

Green Goat: 00,000Prototype Green Goat No. 2001 RailPower

Clean, green switchersEnvironmentally friendlier, or "green;'locomotives, are finding increased favor foryard and terminal work, particularly in stateswith stringent air-quality standards. Texas

and California have even provided funds forrailroads to replace older switch engines

with these newer models at yards withintheir states. These locomotives include:

. Hybrid models, such as the "Green

Goat" from RailPower Technologies Corp.

- understood to be priced at roughly

$800,000 per unit. These locomotives havea small diesel engine that charges a large

bank of batteries.. Genset units, such as those produced by

Genset: 990,000Fort Worth & Western NRE genset Wes Carr

RailPower and National Railway Equipment.(Look for Wabtec's MotivePower subsidiaryto launch a genset model in 2008.) These

units have either two or three generator sets,with each set consisting of a diesel engineand electrical generator. UP paid $990,503for an early twin -engined genset from NRE,the 1,400-hp GS14B (road number UPY2005). Later models are understood to besimilarly priced. Recent orders for gensetunits have outnumbered those for hybrids.

. "Clean-diesel" units that exceed EPATier 2 emission standards. Southern Cali-fornia wil be horne to 16 clean-diesel units

remanufactured by MotivePower for Pa-cific Harbor Line. These 2,000-hp locomo-

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C ean-diesel: .3 mi lionPacific Harbor Line MP20-C3 Dave Crammer

tives (14 six-axle MP20C-3 units and twofour-axle MP20B-3 versions) are priced at$1. milion each.

The pricing for these tyes of switchers isnot as clear-cut as it is for new road units,since "green" locomotives contain a numberof used components. Underframes, trucks,traction motors, and other equipment maycorne from retired units, and the value ofsuch reused parts can influence the price byas much as $250,000. Were it built from en-tirely new components, a four-axle gensetwould be priced close to $1.5 milion. Also,for now, "green" locomotives remain spe-cialty items whose engineering and design isevolving, and this, too, affects their cost.

I

The secondhand fleetFreight locomotives are long-lived as-sets, and as newer units enter the rail-roads' fleets, older units are cascaded intosecondary service.

Eventually they fall out of the bottomof the Class I fleets and into the used-lo-comotive market, where buyers includeleasing companies, short lines and region-al railroads, and industrial firms withlarge rail operations.

A recent survey of this market conclud-ed that some used locomotives - an EMDSD60, for example - can be worth more

than $300,000. Well-maintained SD40-2sand GP38-2s sell for $200,000 to $300,000.

5040-2: 00 and upLeased First Union SD40-2 Matt Van Hattem

At the low end of the used market are

inoperable "hulks," whose frames and otherstructural components can serve as the

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5060: 300,000 and upEx-CPR SD60s on the Indiana Mike Schaller

foundation of a virtually new locomotive.Even these units can fetch $50,000 to asmuch as $100,000.

What about parts?Maintenance costs are a fact of lifewhen it comes to locomotives. Space doesn'tallow us to go into everything it takes tokeep a locomotive in service, but here iswhat one Midwestern regional railroad re-cently spent on various replacement items:

. Rebuilt D77 traction motor: $7,500.

. Rebuilt locomotive axle: $2,300.

. High-friction brake shoes for a four-axlelocomotive: $784 (16 shoes at $49 each).

. Oil filters: $500 each (requiring replace-ment twice a year).

Rebuilt items typically require that therailroad supply a "core" (i.e., the worn-outpart) to the vendor to be remanufacturedinto a saleable item.

A rebuilt traction motor sits between the wheels of a remanufactured six-wheel truck atSouthern Pacific's Houston, Texas, shop. Tom Kline

www.TrainsMag.com 37

The 80 tank cars owned by Midwest Ethanol Transport in this Iowa, Chicago & Easternunit train, eastbound near Genoa, II., add up to a $6 millon investment. Lance Wales

Want to buy a freight car? You may

have to get in line, because most NorthAmerican freight car manufacturers havebeen quite busy lately fillng orders. The listof builders includes American Railcar In-dustries (which makes tank cars and coveredhoppers); FreightCar America (a specialistin aluminum bodied coal cars); Greenbrier(whose principal product is intermodalcars); National Steel Car (which lists all car

tyes in its catalog); Union Tank Car (focus-ing exclusively on its namesake car type);and Trinity Industries (another diversifiedbuilder and the giant of the industry, with amarket share approaching 50 percent).

In January 2004, the Association of

American Railroads put into effect new stan-dards governing the use of 286,000-pound(llO-ton capacity) cars in interchange ser-

vice. The net effect was to increase the priceof a new car by thousands of dollars, in partbecause of the limited number of supplierscapable of producing components such asroller bearings, side bearings, and pedestaladapters meeting the new standards.

In the past two years, the most popularcar types have been tank cars and coveredhoppers to serve the renewable fuels mar-ket. Tank cars, of course, are used to carryethanoL. The standard capacity in this mar-

ket is 30,000 gallons, and the cars are closeto 60 feet in length. A new one costs about$80,000. DDGs - dried distilers grains -are a byproduct of ethanol production, andare used as animal feed. The covered hop-pers for this market are big, too. Stretchingmore than 63 feet in length, these cars can

38 Trains JANUARY 2008

handle as much as 6,350 cubic feet, as op-posed to a covered hopper for grain service(such as corn), which would normally havea capacity of 5,150 to 5,250 cubic feet (andwould typically be about 58 feet in length).A 6,350-cubic-foot car would be priced atjust under $80,000 in today's market, or

about $5,000 more than a 5,l50-cubic-footmodeL The latter car has been around for afew years, and in the used market, a lO-year-old covered hopper of this size is valued atbetween $45,000 and $50,000.

In the used-car market, size matters -

particularly whether a car has. a nominalcapacity of 110 tons (equal to 286,000

pounds on rail, including the weight of the

.:

Greater size and longer remaining life makea new HO-ton covered hopper for grain

(top) worth about $50,000 more than a used100-ton car. Top, Jeff Wilson: bottom, Dave Crammer

car itself) or 100 tons (263,000 pounds). Anolder, 4,750-cubic foot, 100-ton grain car,would be worth between $20,000 and

$25,000 in this market, or Just half the valueof its 11 0- ton counterpart.

A string of five-unit double-stack well cars fill out a BNSF train at Cadiz, Calif. Howard Ande

The other two fast-growing car marketsare coal and intermodal. In 2007. builders ofthese car tyes saw their backlogs shrink ascar owners worked off surpluses from thesomewhat overheated order levels of 2005and 2006. But both car tyes are expected to

be in demand again in 2008 and beyond.PreightCar America, which specializes

in aluminum-bodied coal cars, delivered6,756 cars in the first half of2007 at an aver-age price of $76,700 each. During this peri-od, 85 percent of the company's productionconsisted of coal cars, primarily 4,200-cu-bic-foot hoppers (which can be built eitherfor rotary dumping or for automatic bottomdischarge) and 4,400-cubic-foot coal gon-dolas (rotary dumping only). In today'smarket, an aluminum-bodied coal hoppercosts about $82,000 and a gondola $72,000.

The most popular intermodal cars beingbuilt today are the three-unit double-stackwell car, which can carry 53-foot domesticcontainers, and the five-unit well car, whichcan carty 40-foot international containers inthe lower position and containers up to 48feet long in the upper position. TTX Co.(which is owned by the major North Areri-

Not everything is hauled in coal cars orcontainers. Here are the mid-2007 marketprices for some other car tyes. (Prices are

approximate, and vary depending on the ex-act car specifications and other factors nego-tiated between the customer and carbmlder;lengts shown are Ilside dimensions.)

Boxcars: A 60-foot, 9-inch boxcar withdouble 8-foot plug doors (TTX's T Box, forexample) would be priced at $1 10,000, whilea 50-foot, 6-inch boxcar with a single 12-

foot plug door (TTX's F-Box, for example)

would be priced at $96,000.Covered hoppers: A 6,245-cubic-foot

lined covered hopper for plastic pelletswould be priced at $86,000; a 5,150-cubic-foot covered hopper for grain service at$74,000; and a 3,250-cubic-foot covered

hopper for cement service at $68,000.Gondolas: A 66-foot mil gon would

cost $79,000; a 52-foot, 6"inch mil gon,$75,000.

Detroit Edison aluminum coal gon Tom Murray

TTX three-unit double-stack car Jeff Wilson

can railroads) is the biggest single buyer ofintermodal equipment, although BNSF hasalso bought intermodal cars in recent years.

66-foot mil gon Cody Grivho

73-foot centerbeam lumber car Dave Crammer

Other car tyes: A 73-foot centerbeamlumber car would sell for $74,000 in thecurrent market, a 42-foot covered coil car,$89,000; and an 89-foot bilevel auto rack,$130,000.

Aluminum rapid-discharge hopper Jeff Wilson

BNSF five-unit well car Malt Van Haltem

A three-unit car would be priced at approxi-mately $175,000 to $200,000, and a five-unitcar at $250,000 to $275,000.

Double-door T-Box boxcar Dave Crammer

Single-door poBox boxcar Dave Crammèr

Maintenance costs are ongoing. Hereare some of the items that railroads have tobuy to keep their cars II service:

Wheelset (axle, bearings, and wheels):A new one could cost as much as $2,700, butrebuilt wheelsets can be obtained for justunder $1,000.

Draft gear' $500 to $800.Coupler: $450 to $600 A coupler costs $450-$600. Tom Kline New 33-inch wheelsets on BNSF Tom Kline

www.TrainsMag.com 39

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Riders board the New Mexico Rail Runner Express. The Albuquerque commuter servicebegan in 2006 with five MP36PH-3C locomotives and 10 bilevel cars. Elrond Lawrence

HOW MUCH DOES I. COST? THE PASSENGER SIDE

Like the freight railroads, commuter-rai

service is enjoying robust growt. In the pasttwo years, Albuquerque, N.M., and Nashvile,Tenn., have joined the rans of North Ameri-can cities with commuter service, and SaltLake City, Minneapolis, and Austin, Texas,

wil start up soon. Meanwhile, well-estab-

lished operators, includig those in Philadel-phia, New York, Boston, and Toronto, are re-placing earlier generations of equipment.

Wabtec's MotivePower unit has emergedas the dominant supplier of commuter loco-motives, thanks to its MPXpress family ofengines. Since early 2005, MP has announcedthe following commuter orders:

. january 2005: five units for Albuquer-que's New Mexico Rail Runner service, val-ued at $2.5 milion each.

. October 2005: 27 units for Ontario's GOTransit, at $4.1 milion each (plus an optionfor an additional 26 units).

. june 2006: 1 i units for Utah TransitAuthority's Front Runner service and 11 forSouthern California's Metrolink, at $2.7 mil-lion each.

. June 2007' 33 units for Metrolink, RailRunner, and Minnesota's Northstar service,with a price tag of $2.75 milion each.

The U.S. orders have been for theMP36PH-3C locomotive. It has what Mo-tivePower calls a "645-style" engine rated at3,600 hp for traction plus a smaller diesel toprovide power for car heating, air condition-ing, and lighting. Depending on customerspecifications, these units may contain manyremanufactured components, Ilcluding themain diesel engine, alternator, air brake

40 Trains JANUARY 2008

components, trucks, and traction motors.The GO Transit order is for a more pow-

erful (and higher priced) MP40-3C unit,powered by EMD's 710 engine, and contain-ing a significant amount of other EMD-pro-duced content including generators, tractionmotors, and microprocessor control equip-ment. Francis Hui, manager of equipmentdevelopment at GO Transit, told TRAINSthat the GO units wil have "a 4,000 tractivehorsepower main engine plus another 1,000hotel horsepower auxiliary engine, whileothers (i.e., the MP36PH-3C modelJ have atotal of not more than 4,200 hp. The powerenables us to operate a 12-car train:'

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Salt Lake City's Front Runner (top) acquiredWabtec's 3,600-hp MPXpress units; Toron-to's GO Transit has a 4,000-hp version onorder. Top, Tom Magazin; bottom, MotivePower Inc.

This 12-car NJ Transit train of new bilevels has an ALP46 locomotive at each end. C.L Lach

Car talkCommuter operators have also beenbusy ordering new cars. Virginia RailwayExpress, for example, ordered 50 bilevel cars

00 cab cars and 40 trailers) in 2006 fromSumitomo Corp. at an average price of $1.85milion. Boston's Massachusetts Bay Trans-

portation Authority, in its 2007 capital bud-get, set aside $190 milion for 75 new cars,or an average of $2.53 milion per car. Andin Pennsylvania, the Southeastern Pennsyl-vania Transportation Authority wil replace

its electrified Silverliner II and II M. U. carswith 104 new cars from United Transit Sys-tems at an average price of $2.98 milion.

In summer 2007, New Jersey Transitplaced its third order with Bombardier forbilevel commuter cars designed to fit underthe wires of the agency's electric-powered

routes and within the confines of Amtrak'sHudson River tunnels. The new 45-car or-der augments a fleet of 234 cars currentlyarriving. The first cars (of what wil nowtotal 237 coaches and 42 cab cars) arrivedin 2006, with deliveries running through2009. NjT puts the average cost per car at$1.9 milion. On lines out of New York's

Penn Station, the bilevels are hauled byNjT electric locomotives, including thenewest motors to run in North America: 29German-built, 100-mph ALP46 locomo-tives, delivered by Bombardier beginningin 2002 at a price of $4.7 milion apiece.

At the other end of the passenger spec-

trum is the cruise-train market, where thejourney, not the destination, matters most.In 2007, the Alaska Railroad spent $3.58

milion apiece on a pair of bile vel dome cars- with full kitchens and dining rooms -built by Colorado Railcar; The railroad plansto buy two more cars in 2008.

A new bilevel cab car and trailer bring up the rear of a Virginia Railway Express train leav-ing Crystal City, Va. VRE ordered 50 new cars in 2006 at $1.85 milion apiece. Mike Schaller

AI

Alaska Railroad's new $3.58 millon bilevels sport an upper-level viewing deck. Tom Murray

From the buyer's perspectivei its not juIn talking with people whC) buy and sell materials for the rail indus-try, we heard two recurring themes: The ultimate cost of many itemsdepends on how it gets into the customer's hands, and life-cycle costsmust always be kept in mind as part of the purchasing decision.

The costs of the supply chain include not only the price charged bythe vendor, but all of the other transportation and logistical costs ittakes to get a given product i the place where it will be used. Rail,ties, and ballast, for example, all require transportation to the job site,and sometimes additional preparation (such as welding rail Into quarter-mile strings). The location of the source canbe a significant factor in minimizing supplychain costs. Large railroads will often havecontracts with ballast producers at multiple lo-cations, and use the closest one for each ma-jor job that requires ballast.

Life-cycle costs are harder to determine,because they require estimating what it willcost to maintain and keep a particular piece ofequipment in operation over a period of manyyears. The bottom line, though, is that some-times a higher-priced alternative is the lower-

pricecost one over the life of the item being purchased. A.C.-traction loco,motives are a good example: One of their advantages over comparableD.C.-traction units is their lower maintenance costs, despite the highersticker price for A.C. units. That's not A.C.'s only advantage, but whenit comes to making a purchasing decision between the two, mainte-nance costs have to be factored into the equation.

Even more compelling is the argument In favor of premium, head-hardened rail for use in curves. Standard rail is cheaper to buy upfront, but it would wear out so fast that it would be uneconomical in the

long run, given the cost not only of buying re-placement rail, but the costs of maintenancecrews and track time. In fact, avoiding down-time is a major factor in every purchasing deci-sion made by railroads. With track and equip-ment being used at much higher levels than inthe past, no railroad wants to make a purchas-ing decision today that will come back to hauntit in the future because of excessive down-time. Reliability is a far bigger selling point to-

LoWer maintéiiricéCo$t$ are one advan- day than it was to the previous generation oftage of A.C. locomotives. Howard Andê railroaders. Tom Murray

www.TrainsMag.com 41

A Union Pacific track gang replaces ties at its yard in Jonesboro, Ark., on March 4, 2003.New wood crossties have an average cost of about $35 before installation. David Hoge

c

The biggest single factor in any major

railroad's capital budget is the money itspends to maintain and improve mainline

track. Norfolk Southern's $1.4 bilion 2007capital budget, for example, allotted $607milion for maintenance of way, and 90 per-cent of that was spent on mainline trackage.

Materials - rail, ties, ballast, and relatedcomponents - represent one portion of thetrack budget, but installation cost is anotherbig factor Here's what one medium-sizedMidwestern railroad spent on a recent trackimprovement project: It bought lIS-poundjointed rail for $960 per ton, which equatesto $37 per track-foot. The labor required toinstall the rail added another $ i 5 per footto the cost. The ties it purchased cost $35each, and installation added as much as an-other $16 per tie. It also spent $7 per ton forballast, and when resurfacing a line, it wiluse up to 800 tons of ballast per mile toraise the track two inches. (The track struc-ture settles over time, and resurfacing re-stores a smooth, level profile.)

Now consider what it costs a Class I rail-road to put on one of the maintenance blitz-es that have become common in the indus-try. A blitz (also known as a jamboree)involves taking a line out of service for an

extended period and giving maintenance-ofway crews unrestricted access to the track.It's a headache for operating personnel, butit's better than daily service interruptionsover a much longer period of time.

In early 2007, BNSF staged a mainte-nance blitz on its 107-mile line between Bakersfield and Fresno, Calif. The railroad

42 Trains JANUARY 2008

TRACK

spent $17.5 milion to install eight miles ofnew rail and 77,000 new wood ties; rehabili-tate 16 grade crossings; and resurface theline, using as much as 400 tons of ballast permile. (Since this is a critical part of BNSF'snorthern California main line, it gets regu-1ar maintenance attention and doesn't re-quire as much resurfacing as a branch orsecondary line might.)

The Alaska Railroad published a de-tailed track rehabiltation budget for 2007that includes these elements:

. $15.3 milion to replace jointed rail withwelded, plus defect detection, rail grinding,and rebuilding of mainline switches over 28

route-miles between Hurricane and BroadPass, as well as mileposts 181-187 (Wilow).

. $6.6 million for the installation of con-crete ties in high-degree curve areas north ofNenana and south of Denali Park.

A concrete tie machine at work during aBNSF maintenance blitz (top); stacks ofnew wood ties. Two photos, Charlie Dischinger

. $5.5 milion for the installation of64,000 wood crossties between MP 436(Dunbar) and MP 358 (Healy).

. $4.3 milion for ballast and surface on200 track-miles, using 100,000 tons of rockballast (averaging out to 500 tons per mile).

A Loram rail grinder at work on BNSF. A new rail grinder costs about $8 milion. Jeff Wilson

Damage-resistant rail Tom Kline

Just like locomotives and freight cars,the cost of rail has been impacted by rising steel prices. Rocky Mountain SteelMils of Pueblo, Colo., one of two NorthAmerican rail manufacturers for the ClassI market, was selling its products (rods,bars, and pipe, as well as rail) for an aver-age of $356 per ton in 2001. By the firsthalf of 2006, that average had more thaI!doubled, to $750 per ton.

Rocky Mountain is part of the EvrazGroup, based II Russia. The other major

domestic rail manufacturer is Mittal Steelof Steelton Pa., a unit of Netherlands-

based Arcelor Mittal, the largest steelmakerin the world. A third producer, Steel Dy-

namics of Columbus, Ind., is preparing toenter the North American rail market.

Both rail producers and major railroads

141-pound head-hardened rail Fred W. Frailey

are tight-lipped about the price of rail but

one industry source told us that as of May2007, $900 per ton was a common figurefor standard rail sold to a distributor. Thedistributor, in turn, would add a markup asthe rail is resold to smaller railroads, tran-sit agencies, industries with rail facilities,ete. Larger railroads, which buy their raildirectly from producers, can expect to payless because they buy rail in large quanti-ties, and offer the mils the potential forlong production runs.

But not all rail is equal. In BNSF's Fres-no-Bakersfield maintenance blitz, for ex-ample, the railroad installed 136-poundrail on tangent track and 141-pound railin curves. Much of the rail used in curvesis head-hardened, which gives it a longerlife. This can add $80 per ton to the cost,in addition to the higher per- mile cost as-

As Union Pacific continues double-tracldng its Sunset Corridor between WestColton, Calif. and El Paso, Texas, grade

crossings along the route have had to be re-configured to make room for the secondtrack. For 50 such crossings in Arizona, UPsaid it is spending a total of $18.4 milion, oran average of $370,000 each. There's been

some pressure on the railroad to installoverpasses or underpasses in lieu of gradecrossings at high-traffc locations; a UPspokesman said those can cost anywherefrom $10 milion to $30 milion each. Gates drop on BNSF in Texas. Tom Kline

And don't forget the equipment that

supports these track maintenance pro-

grams. The two major suppliers of tampers,ballast regulators, undercutters, spike driv-ers and pullers, rail grinding machines, andother track machines are Harsco Corp.

(through its Track Technologies division,which was formed through the merger ofFairmont Tamper and Pandrol jackson)and Plasser American, a unit of Austna-based Plasser & Theurer.

The machines these companies manu-facture are often custom-built for specificclients or projects, so their pricing is evenless transparent than in other areas of the

rail supply business.Industry sources say that $500,000 to

$600,000 is a common price for a relative-ly plain-vanila tamper. Southern Califor-nia Regional Rail Authority, operator ofthe Metrolink commuter system, bought aHarsco switch tamper a couple of yearsago for $541,000; Plasser American bid $1milion for the same contract. More elab-orate, high-speed tampers can cost $2milion or more, and some track machin-

ery gets even pricier.Harsco recently announced it would sell

"more than 40 new rail grinding machines"to the Chinese Ministry of Railways, and

II::0.()

Ties ready for installation David C. Warner

sociated with heavier raiL.Discussions with people in the industry,

as well as the railroads' annual R-l reportsto the Surface Transportation Board for

2006, indicate that Class I railroads are pay-ing, on average, between $750 and $800 perton for raiL. The exact figure for each rail-road depends on several variables, includingwhere it buys its rail as well as its mix ofstandard rail (for tangent track) and premi-um rail (for curves). With the Class Is in-stalling approximately 475,000 tons of newrail per year, their total rail budget is in ex-cess of $350 milion, plus installation costs.

The Class Is spend even more on the 14milion to 15 milion ties they install eachyear. At $35 per wood tie (concrete ties av-erage about 50 to 100 percent more), thispart of their engineering program costs therailroads more than $500 milion each year.

()o3i:l1..IP

l1:ia.()o

1-30 crosses UP at Little Rock. David Hoge

expected to generate more than $350 mil-lion in revenues from the deaL. That ap-

pears to put the cost of each machiie inthe vicinity of $8 milion.

Bottom line: The next time a long coaltrain stops you at a grade crossing, trycounting dollars as well as costs. You mightbe amazed at how much the railroads arespending to keep that long train rolling. i

TOM MURRAY is editor and publisher of the

financìal newsletter Rail Stock Watch. He hasworked in both operations and marketing atBoston & Maine, Soo Line, CSX, and South-ern Pacifc. He lives in Santa Maria, Calif

www.TrainsMag.com 43