Amtrak Route Performance Misstated - Pew Charitable Trust

Here is the report from Subsidyscope; a program funded by the Pew Charitable Trust.

http://subsidyscope.com/transportation/amtrak

The issue that Subsidyscope addresses is that Amtrak, in its unaudited Monthly Performance Reports, is misstating the financial results (mostly losses that result in understatements) of each route in that they do not charge Depreciation as a cost of providing service over a route.

OK lets take a closer look at Depreciation and especially within Amtrak since on one hand it is a private enterprise and on the other a government agency.

To start, let's consider the definition of an Asset. Such is a piece of property, tangible or intangible notwithstanding, from which economic benefit will be derived over current and future accounting periods. Depreciation is a systematic method over which the cost, i.e. the expenditure of an asset incurred in a current period and from which economic benefit will be realized over a number of future accounting periods, is allocated to both the current and future periods.

Additionally, and this is important in the case of Amtrak and many another transportation company that use leased equipment, Depreciation also represents a restatement of lease obligations so that the cost of the economic benefit is better expressed over the asset's economic life as distinct from the timing of the lease payments. This is known as a Capitalized Lease and is required under existing accounting Literature so that a fair comparison may be made between enterprises that purchase their assets and those that acquire such by lease.

Virtually all of Amtrak's locomotives and rolling stock is leased.

Amtrak's audited Financial Statements of course recognize Depreciation as an expense; there is further recognition of Depreciation within the unaudited Monthly Performance Reports. However, it appears that no allocation of Depreciation is made to the routes resulting in an, as Pew sees it and for that matter the GAO, a misstatement of a Route's financial performance. Rather, Amtrak considers Depreciation be be an expense no different than that of the Bureaucracy - 60 Mass and elsewhere.

To restate route performance with depreciation of equipment assigned to such as an expense element would make for inconsistent reporting - and Consistency is a standard of financial statements considered by the Accounting profession. Additionally, we have to consider a significant difference between Government Accounting and that of private enterprises. In government, Depreciation is not recognized. For example if the Navy builds an aircraft carrier which takes five years to build and will see active service for thirty, the costs incurred each year it is being built will be reported during the construction period. After that, it sails the Ocean Blue and going "pop pop" after the Bad Guys, without any Depreciation. On one hand Amtrak is government so why have Depreciation and especially why allocate over each route? But on the other, Amtrak's "Depreciation" is mostly represented by lease payments so it IS 'cash out the door'. But on the other hand, Amtrak is private enterprise (or so they tell me ); therefore Depreciation should be recognized.

Wish I knew the answers - all I can do is set forth the parameters.

Positive Train Control and Amtrak

It appears that the first impact of the provisions within the Rail Safety Act of 2008 are coming home to Amtrak, as TRAINS Newswire reports that the BNSF has "put out feelers" to Amtrak regarding reroute of the Southwest Chief via their main "Transcon" line that last saw a scheduled passenger train on A-Day. Such a reroute would again provide Amarillo TX and Wichita KS with service but would leave Raton NM and the Boy Scout's Philmont Ranch as well as Albuquerque without. While this proposal represents a "treading of old sod", this is the first mention of such since enactment of RSIA '08 and its 2015 target date for installation of Positive Train control over all lines that handle passenger trains, as well as on lines that handle any appreciable volume of Hazardous Material.

Here is straight from the Act:

quote:
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Sec. 20157. Implementation of positive train control systems

‘(a) In General-

‘(1) PLAN REQUIRED- Not later than 18 months after the date of enactment of the Rail Safety Improvement Act of 2008, each Class I railroad carrier and each entity providing regularly scheduled intercity or commuter rail passenger transportation shall develop and submit to the Secretary of Transportation a plan for implementing a positive train control system by December 31, 2015, governing operations on--

‘(A) its main line over which intercity rail passenger transportation or commuter rail passenger transportation, as defined in section 24102, is regularly provided;

‘(B) its main line over which poison- or toxic-by-inhalation hazardous materials, as defined in parts 171.8, 173.115, and 173.132 of title 49, Code of Federal Regulations, are transported; and

‘(C) such other tracks as the Secretary may prescribe by regulation or order.

‘(2) IMPLEMENTATION- The plan shall describe how it will provide for interoperability of the system with movements of trains of other railroad carriers over its lines and shall, to the extent practical, implement the system in a manner that addresses areas of greater risk before areas of lesser risk. The railroad carrier shall implement a positive train control system in accordance with the plan.
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Part 173.115 seems to cover anything that goes "up in smoke". 173.132 seems to be anything that could take care of your "sniffles" - and then a little more. I must note my surprise in that the Act does not address 173.50, or "things that go boom".

Here is a "quick reference" link to HAZMAT

http://environmentalchemistry.com/yogi/hazmat/placards/

I continue to hold, and others apparently concur, that the PTC mandate under RSIA '08 will result in reroutes of both passenger trains and HAZMAT. It will also raise the threshold at which a railroad will say 'that line is no longer worth it" i.e. it generated enough on-line traffic or was a nice detour to have "just in case' with its existing train control system. There could well be loss of passenger train service or, where loss of any rail service is on the table, the spectre of 're-reg'.

Now to address the issue at hand. As I noted, the Scouts have been very loyal to both the railroads and Amtrak over the years, and many a railroad executive 'got there' owing to contacts (whoops, networking in newspeak) he made through being active in Scouting. But loyalty has its price - and the maintenance to passenger train standards of some 200 miles of track solely to accommodate the "one a day", especially since the ante is being greatly raised as a result of the PTC mandate, just may now come at too high a price.

Another factor favoring the reroute is the double tracking through the Abo Canyon on the "Transcon". Apparently this project has moved forth - Recession notwithstanding. With or without passenger trains, that line either has or will have a train control system that will qualify as "PTC". There is also the possibility that passenger traffic potential at both Amarillo and , albeit "plane loving", Wichita will offset losses at Albuquerque which would likely continue to be served by an Ambus through Belen. Bypassing major cities is nothing new for Amtrak - even the "Amshack in the Styx" cases of Richmond and Jacksonville represent a "bypass".

In short, I think the industry could care less, and likely even endorse, any PTC implementation over publicly owned lines such as the NEC that predominately handle passenger trains. After all, who will pay the bills?

While the Metrolink incident at Chatsworth CA would have been avoided with an active PTC system, I still have to question how HAZMAT incidents occurring either at Weyauwega WI or Rockford IL could have been avoided even if such were in place.

All told, this one could well end up a "happen" this time.

Repeal The "$8B for HSR" Provisions of ARRA '09

Here's one to think about.

Various postings at other passenger rail forums suggest that the Requests to Appropriations ($8B) ratio is in the range of a 12 to 1. Obviously, someone is going to walk away empty handed, but there is one certainty: the "wired in" consultants will be fed.

By the time any of these projects to be funded under this ARRA '09 provision move forth, the economy will be in recovery mode.

Had the legislation called for "$8B for the NEC", that would be one thing; but it didn't and in fact specifically called for the allocations to be AWAY from the NEC.

Time to get rid of this before passenger railroad transportation simply is lumped in with "Bridge to Nowhere".

Wisconsin Talgo Equipment Order - Thoughts

The Talgo equipment used in Amtrak Cascade service between Vancouver BC and Eugene OR appears to be a commercial success with strong public acceptance, and acquisition of such by the sponsoring agency appears to have been a smart move. Indicative of such is that the "four a day' (+the Seattle-LA Coast Starlight) cover the route in 3'30' while the "three a day" prevalent during 1969 needed 4'00'.

Where I do have a problem, however, is that local agencies seem be be hearing the "siren' of Talgo's "hell on wheels' business model. That model is simply if you buy 'em from us, we'll build 'em wherever you want. Wisconsin recently ordered two Talgo train sets for Chicago-Milwaukee service, with an option for a third for use on a proposed Chicago-Milw-Madison route. Talgo has agreed that the assembly work will be done at a Wisconsin facility and that 80 some jobs will be created resulting from the project. To ensure that the jobs are held by Wisconsin residents, the facility will likely be located in Central Wisconsin as distinct from "border towns" such as, say, Beloit or Kenosha.

My problem is that absent a permanent assembly facility, Talgo will simply set up shop anywhere someone will buy their equipment resulting in increased costs (as well as possibly 'relaxed" quality control) from reduced operational efficiency. While not the case in the Northwest, I would dare say that Wisconsin will end up with equipment unsuitable for the essentially tangent Chi-Milw run. Bi-Levels modeled after the California cars are the most suitable equipment for any Midwest Corridor initiative, but watch Talgo try and peddle their product and business model, say, here in neighboring Illinois.

Those 80 Wisconsin jobs are going to be the most expensive jobs a locality ever "bought".

$8B For HSR

$8B for HSR? Well that is shorthand for the $8 Billion appropriation included within the ARRA '09, or Stimulus legislation, for the development of High Speed passenger rail service throughout the land. The enacted legislation provides that the funds will be allocated to the States in a "revenue sharing" model so that no region, especially the Northeast, will have a disproportionate share of the funding.

Many a state has submitted applications and to such extent that the funding will likely yield little benefit beyond throwing some "consultant feed" into the troughs at which they "chow down". That is the unfortunate thing.

While it is my firm conviction that there is a need for rail passenger service in the 21st century, that need is where there are people traveling "en masse', i.e. mass transportation, and in which addition to other facilities such as another four lanes to the NJ Turnpike or Garden State and a "twin span' for the George Washington Bridge, would be far more costly to both pocketbooks and society. Development of these Corridors need not be limited to the Northeast and Southern California, but being pragmatic, that is where the people are and where there is greater likelihood of passenger rail transport development obviating, or at least slowing down, the need for other more costly highway and airway infrastructure.

Projects such as Kansas has applied for to provide track improvements for a proposed Kansas City-Oklahoma City route (a continuation of the existing OKC-Ft Worth Heartland Flyer) have to be questioned. But then, volks, this is how the game is played - spread the largess about the land!!!

While that $8B could make meaningful improvements to the Northeast Corridor, and even to Southern California services, it appears that the $8B is going to end up a 'Bridge to Nowhere"; sorry such will likely be the case.

VIA Strike Over - Issues Unresolved

At least so far as the public is concerned, "It's over":

www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090726/via_rail_090726/20090726?hub=TopStories

Having been a Labor Relations Officer on a US Class I (I left end of 1981 to enter practice as a Chartered Accountant - CPA down here), I'm of course most interested in the issues that remain unresolved. It would appear that VIA Locomotive Engineers have assigned runs, the issue appears that the men would like a little more time off AT HOME, as distinct from a hotel room that I presume up there also must meet standards of suitable lodging. But any hotel room, be it at the Dive Inn or the Four Seasons, has a way of getting old - fast.

The funny thing is that the media is reporting that VIA Engineers operate in unassigned service, such as (applicable terms down here) pool or "chain gang". Here is applicable brief passage to Canadian Business July 22 material:

"Some of the outstanding issues are linked to VIA's implementation of an antiquated crew utilization procedure designed for freight service which creates uncertainty as to when a locomotive engineer will be required for work'," said Shewchuk. He also acknowledged that wages and benefits remain a major concern but the requests are not outside of the norm in the industry".

Oh well, guess media up there and ours down here have one thing in common - they get it wrong. Of course, if Ellis were still an active journalist, as distinct from holding an administrative position within the Higher Education community in which journalistic skills are a necessity, that statement would be made with less credibility.

However, as I noted above, the carrier has not set forth publicly their position in this dispute; their only 'face' seems to be their PR gal (note I did not refer to her as 'Spin Lady") who has used her airtime (rightly I think) addressing passenger inconvenience issues.

But I do think that VIA Engineers in service anywhere outside the Quebec-Windsor Corridor must accept that VIA is a tri-weekly operation, and such will result in long layovers away from home. There is simply no way to avoid it, and it must further be accepted that operational efficiency, if even possible with tri-weekly frequency, results with establishing runs for as long as you can lawfully run. Sure, passenger service gives you predictability with your life, i.e. you know more or less when you are going to go, but it comes at the cost of the long layovers. Hopefully, any Engineer desiring to hire on (presume VIA recruits amongst Rules Qualified Engineers with CN) is aware of this unavoidable operating practice.

I sincerely hope that both parties will come together in good faith and work for a resolution! Good Luck to all concerned.

Possible VIA Strike July 24

There is some possibly that VIA Locomotive Engineers will strike systemwide at 24JUL1700 GMT, or high noon in Toronto tomorrow. There does not appear to be any reportage regarding the issues, but the following outlines the possible impact on the Canadian tourism industry (lest we forget, such comprises a far greater portion of their GNP than it does ours).
Here is a link to the material that was prepared by the Canadian Press:

http://money.canoe.ca/News/Other/2009/07/22/10225266-cp.html

As of a few moments ago Amtrak 63 (24) Maple Leaf, which is interchanged with VIA at Niagra Falls for continuation to Toronto will operate NY-Niagra Falls, but has been embargoed for interchange with VIA. #69 (24) Adirondack will operate as scheduled NY-Montreal.

However 510 (24) Pacific International shows "sold out" Seattle to Vancouver, but that seats are available Seattle to Bellingham. Possibly the Superliner equipment is handled (wyed) at Vancouver by a VIA Engineer (the Amtrak T&E must be afforded a respite if they are to make it home under Hours of Service) and it is not practical to assemble a bi-directional consist, i.e. Talgo equipment.

Now it is a case of "the jury's still out'; but be it noted there is a long history of having labor disputes, rail and others, resolved during the Eleventh Hour. After all, neither party wants to appear to their constituencies as having backed down and a timely and orderly settlement would lay either open to criticism of having done just that.