Archive for Jim Blaze

Back to the Future for the UK rail structure? // 2015 review

Was the British Rail privatization effort ever successfully completed. Or just a juggling of the accounting books?

What do you think? Here is an interesting review in part from Zthe Economist in early October 2015 //

The original Railtrack company actually according to many economists was partially re-nationalized when financial oversight shifted to the replacement Network Rail company within about a decade of the initial change.

More passenger riders? Yes. At more public subsidy? Yes.

Is that success?

Quite a few in the UK don’t think it was successful. Note this from The Economist on 3 October 2015 Railways “Gravy trains” Why Labour’s plans to renationalise the railways are so popular

FEW topics get Britons as hot under the collar as the state of the country’s railways. When trains are delayed—at the slightest hint of snow, or when leaves fall on the track—passengers fire off furious letters and tweets. According to polls by YouGov, more than half of Britons would like the government to take the railways back under state control.

This makes Labour’s plan for a publicly run “People’s Railway”, affirmed at its conference this week, a popular policy as well as a radical one.

By some measures Britain’s railways are booming. Since the network was privatised in 1994, the number of train journeys taken each year has doubled. The growth in passenger-kilometres travelled has been among the fastest in the European Union.

BUT… …the service has become far more expensive, with rail fares now 24% higher in real terms than in 1995.

And as well as being pricey, the service is often uncomfortable: 22% of passengers commuting into London and 16% of those travelling into Manchester have to stand.

// The Economist writes that …”passenger frustration also reflects the fact that privatisation was rushed through and in many ways flawed.” When British Rail, the monolithic state operator, was broken up in the 1990s the government stringently followed a European directive to separate the tracks from the trains.

The idea was to boost competition by ensuring that different train operators could whizz up and down the same stretches of track.

But in some circumstances this led to inefficiencies, with employees of privately run train companies doubling up against those from Network Rail, the state-owned company which controls all 20,000 miles (32,000km) of track. Investment has risen since privatisation, but so has government subsidy…

The subsidies adds up to around £4 billion ($6 billion) a year.

According to a report published in 2011, costs per passenger-kilometre have hardly improved since 1996.

And Network Rail is in disarray. The company, which was brought on to the government balance-sheet in 2014 with £34 billion of debt, is due to publish three reports over the next six months looking at how it can be restructured.

Read the column in full at: www.economist.com/news/britain/21669057-why-labours-plans-renationalise-railways-are-so-popular-gravy-trains

Restructuring Overview // opinion column from India on India Railways

Bravo!

A gutsy but professionally focused opinion column points out why modernizing the vast but bureaucratic Indian Railways may be a hopeless task.

It’s about politics and the self preservation of jobs and management roles while facing objections from other land users. It is not just a technology fix that is needed.

Here are just a few points that illustrate the issues.

1) BROKEN MARKETING TACTICS

The government has so far lacked the will to increase passenger fares because it is an unpopular suggestion. Instead, they hike up the cost of freight transport to subsidize passenger rides. What India gets as a result is a vicious cycle: Companies (shippers) choose to transport goods via highways because doing so by train has become too expensive and inefficient. That results in a lack of the expected cash flow freight subsidy funding needed to make rail improvements for passenger rail. And to the extent possible by bus or auto, the rail commuters leave the railways for highways.

2) CUT UP THE RAILWAY INTO MORE BUT SEPARATE ORGANIZATIONS

One ever popular policy suggestion is to minimize the Ministry of Railways power by making the Indian Railways two independent organizations—one responsible for the track and infrastructure and another for operating the trains. But some do not see that restructuring happening anytime soon. Furthermore, it did not work out well when tried in the UK. Why would it work in India?

It might be better to just fire everyone in charge today and hire an all new monopoly provider.

3) TAKING FOREVER

“If nothing changes, it will take them 100 years just to build the Dedicated Freight Corridor,” say some professional observers. For example, the government hasn’t even started looking at people and land relocation plans in urban area for an alternative, high-speed railway network.

Heck, the Dedicated Freight Corridor execution is already about a decade delayed. That is about the professional in charge lifetime of the current leadership generation (at about 10 to 15 years as the top people in an organization).

TICK TICK TICK The clock is ticking.

So little is happening.

Read the column at: www.citylab.com/commute/2015/10/what-it-will-really-take-to-fix-indias-railways/408664/ Sent from my iPad

Reports shows just how poor Brazil’s transport infrastructure is. // Two decades of progress hope — wasted on things like global soccer get them this

Something to reflect upon from a Bloomberg global news story on Oct 7, 2015

Two decades of promised growth and investment. Much of it wasted.

Now Brazil is forced to compete against nations like Mexico who have far superior road and highway infrastructure that move their supply chains. What a shame. What a mistake. Where was the oversight due diligence during all of those years?

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Gerald Lee, a former airline executive, thinks he can help ease one of Brazil’s most-absurd problems: “How do you ship large quantities of goods fast from the nation’s manufacturing hub when there’s not a single usable highway in or out of town?” Barge it down the Amazon River for a ten day transload supply chain. That is the best he can make out of a bad situation.

What happens is that products like TVs made in deep-in-the-jungle Manaus float down the Amazon River by barge to the Atlantic Ocean port town of Belem. From Belem, the goods go on trucks for pothole-filled delivery runs, many of them to distribution centers in Sao Paulo, about 1,600 miles away — and 10 days later.

MEXICO WINS

That can be more than twice as long in time as an 18-wheeler traveling a similar distance from Mexico City to the U.S. road-and-rail hub of Kansas City, Missouri. Or to even closer Houston.

When people criticize Brazil’s transportation infrastructure for being among the worst in the world, behind even Ethiopia’s, this is what they’re talking about.

Manaus, the nation’s only tax-free zone and home to 40 percent of its computer and electronics manufacturing, is just one of many reasons the World Bank says companies in Brazil spend more on logistics than in the U.S.  Moving many of Brazil’s exports can take twice as long as out of Mexico.

This was going to be fixed. But it never was.

How long will the needed investments take? No one is saying. I professionally would expect about 15 to 20 years.

The funding for long promised roads and railways is uncertain.

Heck, one point two years ago Brazil was promising foreign aid to help build Ethiopia railways. Unbelievable? Fact is often stranger than fiction.

To read the entire article, go to bloom.bg/1hrwCiI

Coal Industry Seeks Unusual Partner in the UN Green Climate Fund for poorer nations’ energy needs

If you cannot beat them, try to join them… …in order to help the poor nations achieve desperately needed energy supply.

Yes, from environmentally harmful coal.

The coal industry, viewed as a key contributor to global warming, is seeking a once-improbable collaborator They are trying to work with a fund set up under United Nations climate negotiations.

With more than 2,000 new coal power stations planned or being built in Asia to Africa, the UN Green Climate Fund should help finance making the plants more efficient, according to Mick Buffier, the chairman of the World Coal Association.

New coal technology can cut climate-warming gases by about a third per unit of power, though it adds about 50 percent to the $315 million cost of a 500-megawatt plant in China, the group said.

The Green Climate Fund is meant to channel climate-related aid from industrial nations to developing countries. Bangladesh alone said it needs $16.5 billion in the 20 years through 2030 to ensure its plants will use so-called “super-critical” clean technology.

At the same time, older funding sources like Citigroup Inc. announced on Monday that it will cut back on financing for coal projects.

To read the entire article, go to bloom.bg/1N1eoA3

So cheap that neither Bureaucrats at FAA or the Pilot Union Can Holdback Cockpit Video Forever….

Technology smallness and it’s cheap cost will overwhelm the opposition

“Resistance is futile”

Railway trains too.

From a Bloomberg report on Oct 8, 2015

It was after 11 p.m. on March 30, 2013, when the Alaska Department of Public Safety helicopter lifted off near Talkeetna, north of Anchorage, after rescuing a stranded snowmobiler. Freezing rain was changing to heavier snow, and visibility was decreasing. Within minutes the chopper had crashed, killing its pilot, a state trooper, and the person they’d been sent to rescue. Usually, investigators from the National Transportation Safety Board have to guess what went wrong in such situations. But when they examined the chopper’s charred wreckage, they found a treasure in the ashes: a cockpit video recorder.

The footage, from a camera mounted on the ceiling behind pilot Mel Nading, ruled out mechanical problems or ice as factors in the crash. Rather, investigators could see that Nading was confused. He allowed the helicopter to slow and start rocking back and forth, then reached out and reset the device that should show whether the craft is flying level—a decision that sealed his fate, making it “very unlikely that he would regain control of the helicopter,” the NTSB said in its report.

In the dark, without an accurate reading, Nading had no way of knowing which way was up. “It really gave us the insight that this pilot was spatially disoriented,” says John DeLisi, the NTSB’s chief aviation investigator.

“Without that video, we would have been looking at a pile of burned-up wreckage, trying to figure out what caused the erratic flight path that led to this crash

Since 2000, the NTSB has recommended that the Federal Aviation Administration require cockpit cameras. The Air Line Pilots Association, North America’s largest flight crew union, has opposed the change, arguing that video can be misleading, especially where it’s not clear whether a pilot is fighting a malfunction or causing a plane to lose control. The money spent on cameras would be better invested in training and other safety measures, the union says. “Cameras in the cockpit will not prevent a single accident,” ALPA President Tim Canoll said in a statement.

The problem for the union is that video equipment has become so cheap that cameras are increasingly common in aircraft. That’s made their benefit more than theoretical.

After the Talkeetna accident, Alaska’s public safety agency began requiring pilots to receive instrument training every 90 days so they’d be able to navigate in whiteout conditions. (Nading hadn’t had such training since 2003.)

“Video recorders in the cockpit can provide information that would not otherwise be available,” says NTSB Chairman Christopher Hart. “Simply put, more information is better. And video, by its nature, has proven to be a rich source of it.”

OVERCOMING RESISTANCE BY OTHER AGENCIES

An FAA spokesman referred to letters the agency has sent the NTSB saying that it has no plans to revise its policy on cockpit cameras. At least one U.S. lawmaker, Florida Republican Representative John Mica, says he’ll push for a cockpit video requirement next year, when Congress is scheduled to pass legislation reauthorizing the aviation agency.

The bottom line: The spread of cockpit video technology is boosting the NTSB’s push to make it standard in aircraft. T

in rail trains too.

To read the entire article, go to bloom.bg/1OofeKn

Here is how BNSF is growing // with a shift to Stack Trains

Much of the world operates railroads that lack the necessary vertical clearances and the standard 1435mm heavy axle track gauge that allows for double stacking international goods in huge containers.

The World counts containers as 20-foot long boxes. In North America the standard is a whopping 53 feet long box.

Thirty years of big train progress in North America has given the Mexican to Canada rail companies the market ability to sustain self financed rail growth as coal shipments drop in the modern world

What is your railroad doing to adapt?

This story is found in a Bloomberg report.

Railroads are already winning more of this so-called intermodal business here across North America. Rail shipments of containers grew 15 percent over the last decade That offset the traffic losses as other cargoes, such as coal and ores have dropped in some cases by 11 percent to as much as 20 percent in the eastern US coal area.

Intermodal traffic is actually growing on the US railroads by about double GDP and also by about twice the rate of truck over the highway mode. Even with a somewhat slower US economic growth this year— intermodal rail freight is up 2.3 percent in 2015, the Association of American Railroads reports.

But persuading shippers to switch still isn’t always easy to do. It has to be significantly cheaper per trailer or container mile if rail rather than by highway in order for it to be a better transport deal for shippers.

Shippers decide. Not politicians. At least in the US markets.

It is strictly a matter of economics. While it might be cheaper by ton-mile to send freight by rail, it generally takes just a bit longer in time and a bit more in distance rather than by straight trucking from origin to destination.

There is also a cost of transferring containers onto the trains and then back to trucks for final delivery.

All of this geography of intermodal makes it difficult to compete with direct trucking on trips of less than about 600 miles here in North America. That is confirmed in an interview with Larry Gross, a partner at FTR Transportation Intelligence. Trucks are more punctual and flexible. They generally will always be quicker than by a truck to rail to truck intermodal substitute.

For more about the successful private BNSF rail investment report, log onto:    www.bloomberg.com/news/articles/2015-10-07/buffett-bets-on-rail-superhighway-to-beat-trucks-as-coal-fades

Mind numbing, jaw bone breaking numbers

A Bloomberg commodities index that tracks returns from 22 raw materials has fallen 50 percent since a 2011 high

Down BY HALF!

Not by a crummy 3% to 5% . Or even Ten percent

By a jaw breaking 50% range.

Who is getting fired for these numbing numbers? Where was the due diligence? ————

What did your strategic plan assume?

To read the entire Bloomberg report, go to bloom.bg/1MKPHrc

Interesting leadership observations offered to the railroad industry

Those who were at the keynote Railway Interchange 2015 address by retired Navy SEAL Robert O’Neill heard this leadership message.

Mr O’Neill held the crowd’s attention with his humor and stories of war, including headline making raids that resulted in the rescue of Captain Richard Phillips in April 2009…

His message to attendees about the topic of success & leadership was one that translates from the theater of war to the operations of an office or a railroad:

Never quit. That is his personal mantra.

O’Neill touched on several main points when developing a “never quit” attitude. 1) developing people skills, 2) knowing the difference between over planning versus being prepared, and 3) removing emotion from the decision-making process.

His advice — to keep moving forward through challenges

To recognize that all stress is self-induced

To recognize that failure is a great learning tool.

He also noted that keeping a sense of humor helps.

Lessons there for all of us

Commodity Collapse — might last a lot longer than many think

From Alaska to Mongolia, and South Africa to Brazil, old strategic plans are being trashed.

“It would take a brave soul to wade in with both feet into commodities,” says Brian Barish, who helps oversee about $12.5 billion at Denver-based Cambiar Investors LLC. “There is far more capacity coming on (line) than there is demand physically.” — “the only way that you fix the problem is to basically shut capacity in, and you do that by starving commodity producers for capital.”

// Projects on the drawing boards for a decade are now being abandoned. From mines to ports to railways. Investors this year are clearly dumping future commodities based holdings.

The Bloomberg Commodity Index, a measure of returns for 22 components, is poised for a fifth straight annual loss

This news WAKE UP CALL harks back 24 years… This index slide is the longest slide since the data begin in 1991.

It’s a reversal from the previous decade, when booming growth across Asia fueled a synchronized surge in prices, dubbed the commodity super cycle. Now, that output is coming to the market just as global growth is slowing.

Investors need to brace for a “long winter,” with the commodities bear market predicted to last for many years and oil dropping to as low as $35 a barrel, said Ruchir Sharma, who helps manage $25 billion as the head of emerging markets at Morgan Stanley Investment Management in New York.

Goldman Sachs has an even dimmer outlook.

AMONG THE CONSEQUENTIAL STRATEGIC CHANGES… … are these two. 1) Chesapeake Energy Corp. has cut its workforce by 15 percent. 2) Caterpillar Inc. may shed 10,000 jobs as demand slows for mining and energy equipment. 3) The big railroad freight companies in the lower 48 are again storing locomotive power.

For more, see: www.bloomberg.com/news/articles/2015-10-05/commodity-collapse-has-more-to-go-as-goldman-to-citi-see-losses

Another Bridge Too Far Rail Scheme? // Europe into N. Am. Via Russia!

siberiantimes.com/business/investment/news/n0160-plans-for-new-transport-route-unveiled-to-link-pacific-with-atlantic/

We may have missed this probable last great rail plan proposed earlier this year.  But it is still on the Internet for all to read.

// Plans for new transport route unveiled to link Pacific with Atlantic

By The Siberian Times reporter23 March 2015

“New cities and industries could be created from construction of high-speed railway and motorway routes spanning whole of country”reads the story line.

At a meeting of the Russian Academy of Science, the head of the Russian Railways Vladimir Yakunin presented the idea for the Trans-Eurasian belt Development (TEPR).  That was back in th Spring.

Politicians fostered the concept  “as a powerful and versatile transportation corridor that would join up to other networks and reach from the Atlantic to the Pacific, via the heart of Siberia and the Far East.”

Me?  I think it is a really bad idea.

The suggested plan has zero published economic feasibility supporting it. Just a lot of political leaders and academics. No shippers are clamoring to use the route? Why pay for the suggested long land route rail services where super sized container ships are far cheaper?

It reads like “Just another great plan, wrapped In golden chain” so to speak.

And it’s lead RZD rail supporter is no longer in that promoting job as the summer ends.

The admitted rough capital cost estimate from supporters is in the TRILLIONS of dollars.  Yet back in the spring, without documentation, Mr Yakunin of RZD insisted to reporters that the economic returns would outweigh these investments.

Viktor Sadovnichy, rector of the Moscow State University, said the network would help the Far East and Siberia feel more in touch with the rest of the world.

Or is the entire scheme simply economic nonsense?

So far, no one is advancing the cash to build it. It is just another wish list railroad idea. Investors should beware.