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10/23/2009



Rail News: Rail Industry Trends

Updates from Vossloh/Global Rail Systems, GATX, Unitrac, Penumbra Capital and RailRunner


• Vossloh AG recently acquired a majority interest in Global Rail Systems Inc., a supplier of railroad automation technology. The acquisition complements Vossloh’s three other U.S.-owned companies: Vossloh Track Material (formerly Pohl Corp.), Cleveland Track Material Inc. and Vossloh Fastening Systems America Corp., according to a statement issued by Global Rail. Under terms of the agreement, Global’s management will remain in place. “This is a perfect marriage of track and train control technologies,” Global Rail founder Coy Beaman said. “We have the right resources to establish Vossloh in the U.S. signaling market and place Global Rail Systems’ products in Europe.”

• Yesterday, GATX Corp. reported third-quarter net income of $19.6 million, or $0.42 per diluted share, compared with net income of $73.9 million, or $1.46 per diluted share for the same 2008 period. GATX’s rail segment posted a profit of $47.8 million, a 55 percent decline compared with third-quarter 2008’s $106.3 million. For the year’s first three quarters, the rail segment reported profit of $135.2 million, a 46 percent drop-off compared with the same 2008 period. As of Sept. 30, GATX’s North American rail fleet totaled about 111,000 cars. “We maintained our rail fleet’s utilization at almost 96 percent in the third quarter,” said GATX President and Chief Executive Officer Brian Kenney in a prepared statement. “However, lease rates continued to decline. While we have shortened the term of lease renewals in 2009 in anticipation of an eventual market recovery, the current pressure on rates will have a dampening effect on lease income through 2010.”

• Unitrac Railroad Materials Inc., a specialty trackwork manufacturer and distributor of new and relay rail, recently received a contract to supply 72 panelized turnouts for a Evansville Western Railway terminal project located in North Baltimore, Ohio. Construction is already under way; Unitrac, a wholly owned subsidiary of Healey Railroad Corp., recently began shipping material to the site. Most of the panelized turnouts will be on wood ties, with a portion on steel ties.

• Three former freight-rail execs have set up their own consultancy shop. Former Florida East Coast Industries Inc. (FECI) Chairman, President and Chief Executive Officer Robert Anestis; former RailAmerica Inc. Vice President and Treasurer, and FECI VP and Treasurer Brad Lehan; and former FECI Assistant VP of Public Affairs Husein Cumber formed Penumbra Capital L.L.C., a consulting firm that aims to help rail clients with financing and refinancing opportunities, such as Railroad Rehabilitation & Improvement Financing program loans, states grants, short-line tax credits and Congestion Mitigation and Air Quality program funding. Based in Ponte Vedra Beach, Fla., Penumbra Capital also plans to help clients create, maintain and maximize right-of-way income from cables, fiber optics, signboards and cell towers.

• RailRunner™ N.A. Inc., which offers a container-based intermodal transport system, recently entered into a 10-year collaboration agreement with Kolkata-based Stone India through wholly owned subsidiary Stone Intermodal Pvt Ltd. Under the pact, Stone will manufacture, operate, distribute and sell RailRunner products in India. Stone will invest $32 million in two phases. In Phase I, Stone will “set up the facilities” for manufacturing in its current location, where there’s capacity to build 25 RailRunner freight cars per month, according to a prepared statement. In Phase II, Stone will develop a “greenfield manufacturing plant” with capacity to build 500 RailRunner cars per month. Stone officials believe the marketplace will support 50 operating RailRunner freight routes within five years.


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