Archive for Railways

Restructuring Overview // opinion column from India on India Railways


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.


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.


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.


“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: Sent from my iPad

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.”


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

Stunning graphs on resource capital project spending is a “wake up call” for planners

From mines around the world to the dependent rail and port projects, the changing global economics commodity cycle suggests a downer “Bear” market for projects that add to global capacity and output.

This down cycle could last from a short 2 to 3 years OR AS LONG AS 7 or more years. Strategic Planners to to rethink their now outdated assumptions from supporting logistics projects in diverse places like Mozambique, Botswana, Mongolia, Brazil, and even in the Canadian/Alaska Yukon region.

What ever capital plans for building the supporting ports and railways they had developed by big engineering companies — the underlying due diligence economic assumptions are now likely “under water” so to speak.

Billions and billions of proposed dollars in drawing board completed project engineering can no longer pass an economic feasibility test for recovery of he rail project capital P&I.

Instead these industry planners should brace themselves for at least another two years of shrinking budgets and outlays. The earliest signs of a “subdued” resource recovery might not be until early in 2018 say some experts.

But even this prediction might be too bullish. Why? Because metal prices have already fallen 12% further than they did during the bear market in the 1990s. In that bear market, capex only recovered to its pre-crash (1997) level after seven years (2004),” according to Mark Fellows.

Mark Fellows, director of consulting for a mining research firm reports that “while sustaining capital expenditure is down 13% since the peak in 2012, capital expenditure on new developments has been even harder hit.” “Spending on brownfield expansions is down 25% while greenfield project expenditure has plummeted by nearly one third” on a global basis.

Mr Fellows concludes this by comparing the current 2013-2015 downturn to the previous bear market in mining which ran from 1997 to 2002. He therefore argues that the current witnesses global capex cutbacks are far from over.

The report is published by SNL Metals and Mining. DOLLARS OF PROJECT EXPANSION PLANS AT RISK

The report finds that total capital spending across all mining companies has declined by around $70 billion since the 2012 peak to just over $150 billion forecast for this year. As one business case example, the project investment at BHP Billiton this year will be $10 billion below its 2013 peak. The world’s number one miner only has four projects in the works, two of which are almost complete, compared to 18 mine and infrastructure developments just two years ago.

In a press story by Frik Els on 21 September 2015 titled: “This is the scariest mining chart you’ll see today”, the investor alert numbers are brought out visually.

This is another piece of economic trend evidence in my blog’s strategic theme of changing times for traffic that feeds the dreams of massive new rail freight projects.

“a Bridge Too Far” analysis?

Only the strongest as low cost per ton-kilometer cost new rail projects might be competitive.

Too many rail projects on the drawing boards are simply under designed as to the necessary competitive productivity to prosper as investment grade scenarios. Trains would be too small because they often lack big train technology design features of the most successful resource rail carriers. Axle loads too small. Train lengths too short. Clearances too shallow. Net to tare wagon rates are too low

Too many are now ill advised rail schemes. “Schemes” in North American business language generally means a buyer beware concept plan”.

In Africa alone, I estimate that as many as two thirds of “announced” rail line freight projects may be too risky to build as currently designed around old market demand and old post World War-2 rail engineering standards. That could mean as much as $25 to $34 billion of “schemes” seriously require a second due diligence look just in Africa.

Africa is not alone. The billions in proposed rail engineering in the Canadian Yukon/Alaska region also need serious market demand re-examination. If not by the project sponsors, then certainly by the investors they will approach. Brazil, Mongolia, Swaziland, Senegal — all of their rail design and expected market traffic assumptions need serious review for their current planning.

For more, log onto

Chart Sources: SNL Metals & Mining

Greenfield cap ex spending chart

Bear market recovery projection for commodities chart

Rail freight data shows ten to eleven percent China contraction year over year

21 August report

Not yet widely reported.

State news outlet Xinhua on Tuesday reported that China’s rail freight volume had dropped by nearly 11% (10.9%) on a year-on-year basis during the month of July 2015.

The rail freight handled was 278.9 million tonnes for the month this year.

For the first seven months of 2015, China’s rail freight has dropped by 10.2% to 1.98 billion tonnes compared to the same 7 month period in 2014.

The data was reported by the National Development and Reform Commission.

The NDRC blamed “plunging demand for transportation of major commodities, including coal and metals” for the weak rail traffic numbers.

There was no real growth in rail volume even though China’s official GDP is reported to be growing.

South Africa electric utility dispute with major coal supplier

The dysfunctional issues surrounding the government managed electric utility threatens the so called National Development Plan.

Here is the latest business news from multiple sources. News reports suggest that South Africa’s ailing mining sector has already shed more than 35,000 jobs over the past two years.

Mining company’s complain of the rising costs, particularly for electricity and wages.

Tonight, mining giant Glencore announced that it is placing its Optimum coal operation under “business rescue” due to Eskom’s unreasonable supply contracts. Optimum previously contracted to supply 5.5 million metric tonnes of coal per year to Eskom. ”

Glencore claims that “This has resulted in it supplying the coal at a price significantly below the cost of production for a number of years”.

Meanwhile, South African coal prices for exported coal have reportedly dropped 23 per cent over the past year due to a global glut of the fuel. Eskom is therefore looking to renegotiate the rate it pays for domestic coal.

All of the coal is mostly moved by rail.

Railway Renaissance! Maybe not as challenges come from re-sourcing thermal coal

As a Middle Ages historian in college, I can tell you that the Renaissance period had its ups and downs.

The modern North American so called Renaissance Rail Freight Period has challenges also. Loss of potential thermal coal traffic market share is one such challenge.

Next time you are at a rail conference, look for a due diligence balance in the railway future discussion.

Renaissance Challenge #1 is to rail thermal coal markets and routes… The Bloomberg news has an excellent report on the changes coming in the U.S. Coal by rail market. Here are a few highlights:

“Coal Left Fighting Over America’s Last Plants as Rules Mount” — a report by Tim Loh and Mario Parker – Aug 2, 2015

One theory is that various states will fight to Steal Markets from one another & therefore rail coal train corridors could significantly change. We saw such massive rail routes changes in the 1970’s to 1990’s period as the Powder River traffic literally exploded as a new rail market.

Now comes a new cycle fight. One example is the fight for resourcing origin markets between the Illinois Basin producers and the Wyoming Powder River area. Illinois miners may try to “take 60 million tons of Powder River Basin’s market” says one source, Robert Moore, CEO Foresight Energy LP in St. Louis.

This geographic resourcing is particularly interesting since the rail regulators at the STB in ashington typically ignore source competition as an economic variable.

Amidst this, the pending Clean Power Plan rules will seek to cut coal-fired electricity by 90 gigawatts. The Energy Information Administration reported earlier that this cut would come out of about 292 gigawatts of coal-fired generation capacity that was in line during in 2014.

New replacement thermal coal power station in the next decade or two? Unlikely.

The railroads will therefore fight for a diminishing share of the coal energy market over possibly much shorter average lengths of haul as states fight for resourcing.

No one knows how this will play out even if there is a Rail Renaissance under way.

What is the calculated financial risk impact on the big 6 North American rail companies from such new sourcing + route shifting + power station energy changes?

To read the entire Bloomberg article and its authors’ story focus, go to

US revised 2015 Climate Rules will hit railroads hard as soon as 7 years…by 2022

An important Coal background report from Bloomberg, Aug 1, 2015

The Obama administration has reduce the differences among state goals in a landmark climate change rule, addressing complaints from states such as Arizona and Florida… Selectively, this add further pressure to the long term profitability issues senior railroad managers face.

Rail freight commodity mix is going to change significantly as a result.

This is a good topic for upcoming U.S. Railroad forums and possible marketing lessons for students seeking to enter the rail industry.

A few Highlights:

According to Bloomberg sources, the new rules from the Environmental Protection Agency will force cuts in greenhouse gases from power plants. It is to be the centerpiece of President Barack Obama’s plan to address global warming.

US power plants burning coal produce almost 40 percent of the United States electricity, and release the most carbon dioxide for every kilowatt generated.

Each state will have to submit plans to the agency by 2018 on how it will achieve the EPA-mandated goal, which begin to bite in 2022 and phase in through 2030.

Coal-Heavy States

The EPA’s initial proposal would have forced states like Arizona, which have a lot of natural-gas plants and scope for renewable power growth, to make cuts in emissions of more than 50 percent by 2030. …the coal-heavy states such as Kentucky, West Virginia, Wyoming and Montana faced cuts of 21 percent or less.

Under the scheduled new rules, EPA is tweaking its forecasts for the amount of natural gas and renewable energy growth it estimates can be accomplished in those states…

The White House claims that… …the final plan will be stronger than what was proposed in 2014.

How this will hurt individual coal hauling railroads financially is not yet predicted.

To read the entire article, go to

CSX, Georgia Ports Authority MOU to open new inland port


Is such a short haul intermodal Port of Savannah inland corridor possible? Or just a boutique market?

355 miles? Really?

Being promoted as a MOU. That’s not a legal contract. So how real is this? And can it be profitable given the short distance? Or will it need to be subsidized? Too little info at this time to tell.

New Release highlights:

CSX Transportation and the Georgia Ports Authority (GPA) signed a MOU agreement yesterday to establish an inland port in northwest Georgia.


The Georgia Governor and officials from the ports authority, CSX and Murray County signed the memorandum of agreement.  It sets up the Appalachian Regional Port in Chatsworth, Ga. From there, It might use trucks or rail to service a hinterland market of Alabama, Tennessee and parts of Kentucky.

It is to be operated by the GPA. This new inland terminal/transfer/storage port facility will be located on 42 acres in Murray County. The site is next to U.S. Highway 411 and provides access to Interstate 75.

But the facility may not become operational until 2018.

Port officials estimate the CSX route will reduce Atlanta’s truck traffic by 40,000 moves annually. That is about 150 containers a day. The calculated highway mileage is about 355 truck miles.

Normal economics see rail intermodal profitable competition ranges versus trucking at longer 600 plus mile distances. In theory this might work with by using on near dockside lower drayage cost within the Savannah port.

What do you think? A good investment? Or too risky for my pension funds?–45233


Selected observations from others

The port of Charleston inland terminal at Greer SC is quite different than this Savannah opinion. For one thing it is between Greenville and Spartanburg and down the road from the BMW plant which is a very big deal up there so the terminal was a natural for truck drays from the port and vice versa. The rail angle is to connect the port drays to the Crescent Corridor including base load traffic into and out of the region.

One person recently observed that with reasonable wait times the dray men are making 2 turns per day, very good economics for them.

Some of these short inland operations can work.

US Shale Oil Output Heads for Record Drop

From Bloomberg, Jul 13, 2015

Shale fields that powered the U.S. energy renaissance will suffer the biggest drop in output since the boom began after companies idled more than half their drilling rigs.

How many crude oil train sets may be stored?

To read the entire news report, go to

Production from the prolific tight-rock formations such as the Eagle Ford in southern Texas will decline 91,000 barrels a day in August  the Energy Information Administration said Monday.

About 645 rigs were drilling for oil last week, down from 1,609 in October, according to oil-field service company Baker Hughes Inc.

Commodity Global Surpluses Persists — means weak demand for rail services

A Bloomberg report on Jul 8, 2015

The analysis of the demand for port and rail freight always begins with an examination of the market supply/demand at the buyers level. China and India are the major demand markets. But the long term surplus of supply means tough times ahead for suppliers in the emerging nations.

According to a Bloomberg report, the world is still mired in a surplus of most commodities, which means tough years ahead for prices and shipments of added materials. The actual source is from analysts at Goldman Sachs Group Inc. led by Jeff Currie.

“Long-term surpluses in most commodity markets require prices to remain lower for longer,” the Currie team wrote. The markets are contending with declining costs, a strengthening dollar and slowing growth in emerging economies like China that use a lot of raw materials, the bank said.

Patrick Pouyanne, the chief executive officer at French oil giant Total SA, told a parliamentary commission in Paris that the oversupply of oil will last into 2016. A sustained long term recovery this year isn’t likely, Societe Generale said in a report today.

Despite the long term slide in prices and the lowered market demand, most emerging nations have still not adjusted their strategic plans for rail,and port growth. Their current tactics seem to be “damn the torpedoes, and full speed ahead”. That kind of thinking over the past decade resulted in Greece’s economic headache.

Who will step up and change investment strategy first? Who is going to be that leader?

To read the entire article, go to Sent from my iPad