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Part 1 : Freight Locomotive Market Update
— by Walter Weart
Rail traffic is increasing, locomotives are aging and federal emission regulations are tightening — a few reasons new locomotives are hotter commodities heading into 2011 than they've been for a while.
Although the latter two factors have existed for several years, they weren't enough to motivate many railroads to acquire locomotives because of weak traffic demand. But factor in rising carloads or ridership for much of this year and a number of roads are becoming power shoppers again.
Union Pacific Railroad, which hasn't acquired new locomotives since 2008, plans to purchase about 100 new locomotives in 2011, said spokesman Tom Lange in an email.
New motive power also is on tap for Norfolk Southern Railway. The Class I already has placed orders for 100 SD70ACe locomotives from Electro-Motive Diesel Inc. (EMD) and 142 Evolutionª Series ES44AC units from GE Transportation. Forty-two of the GE units are scheduled for delivery by year's end and the EMD units will begin to arrive next year; deliveries from both builders will continue at rate of 25 units per year through 2014.
CSX Transportation plans to buy locomotives next year, too — 50 GE units — as well as assess motive power purchase requirements beyond 2011.
At BNSF Railway Co., mostly four- or six-axle AC units will be added to the fleet in coming years depending on business needs, said spokesperson Suann Lundsberg in an email. As of press time, the Class I hadn't yet finalized its 2011 locomotive purchase plans.
Meanwhile, more DC units are scheduled to join CN's fleet next year. The Class I plans to acquire 50 EMD and 35 GE locomotives by the end of the first quarter to replace older units and accommodate business growth, said spokesman Mark Hallman in an email.
Whether they're for AC or DC units, four- or six-axle models, or generator-set (GenSet) switchers, locomotive builders will gladly take the orders. During what became a prolonged business downturn, they continued to revamp their locomotive models to improve fuel efficiency and reduce air emissions.
Now, builders are ramping up production while continuing to tweak product lines to meet railroads' efficiency and environmental-compliance needs, as well as demands for enhanced electronics associated with distributed power initiatives and positive train control (PTC) implementation.
GE traces a production upturn to overseas orders and recent domestic business from a few Class Is and one major passenger railroad.
The company received an order from the Massachusetts Bay Transportation Authority for 20 locomotives, which will be built in partnership with MotivePower Inc. and utilize GE's Evolutionª Series technology, says Brett BeGole, GE's global locomotive operations general manager.
The locomotives will be equipped with AC traction motors and comply with the U.S. Environmental Protection Agency's (EPA) Tier 3 standard, which tightens allowable nitrogen oxides, particulate matter, carbon dioxide and other emissions from locomotive and marine engines by 2012.
A Tier 4 standard will further restrict emissions in 2015.
GE also is addressing how many powered axles are required on an AC locomotive. Tractive effort can be tailored to fit certain requirements and each axle can be operated at a proper speed for various conditions, such as snow on track, says BeGole.
"As part of our AC technologies, we use individual invertors on each axle, which allows our customers to order six-axle locomotives with either two or three powered axles on each truck," he says.
In addition, GE continues to refine the Evolution Series locomotive, which complies with the EPA's current Tier 2 standard and addresses "next-generation" environmental, reliability and efficiency requirements, says BeGole. The locomotive, which features GE's AC propulsion technology and control equipment, provides fuel savings of about 6 percent and helps reduce emissions, he adds.
To notch up its environmental-friendliness efforts, GE is building a manufacturing plant in Schenectady, N.Y., to produce more advanced batteries, including a high-energy-density, sodium-based chemistry battery, for the Evolutionª Hybrid version of the locomotive.
The plant is scheduled to open in fourth-quarter 2011.
"We see a significant opportunity for our Evolution Hybrid for both switching and mainline service," says BeGole.
GE also is working with railroads to address upcoming Tier 3 requirements. In September, BNSF obtained five Tier 3-compliant locomotives from GE to begin operational testing.
To help railroads comply with Tier 4, GE plans to employ non-urea, in-cylinder engine technology.
An organic compound added to fuel to reduce emissions, urea is non-resistant to cold air temperatures, says BeGole.
In addition, railroads would need an available urea supply wherever locomotives are fueled, adding cost for maintaining the supply and building necessary urea infrastructure, he says.
"As we are doing with Tier 3, we will be field testing our Tier 4 technology to ensure full compliance," says BeGole.
EMD also is trying to help railroads address regulatory changes. The company — which earlier this year was acquired by Caterpillar Inc. subsidiary Progress Rail Services Corp. — has tested, validated and certified more than 100 new emissions kits now required for overhauling various models in 22 engine families in anticipation of further EPA regulations, said Progress Rail Services Chief Marketing Officer Marty Haycraft in an email.
EMD continues to upgrade its locomotives, too, such as by enhancing electronics. For example, the SD70ACe now can save up to 250,000 gallons of fuel over its lifespan compared with locomotives produced as recently as six years ago, said Haycraft.
The SD70ACe, which can provide increased tractive effort and flexibility for operating in heavy-haul and intermodal service, addresses the North American trend toward AC traction systems, he said. However, the majority of active locomotives worldwide employ traditional DC traction systems, and both EMD and Progress Rail offer new and rebuilt products and various services to support those units, Haycraft added.
EMD also aims to serve the market for four-axle locomotives used in switching, short-haul and transit applications. There's strong demand for four-axle units and a somewhat limited supply because the two major builders focus on providing six-axle locomotives, says Jim Husband, president of RailSolutions Inc., which provides rail equipment consulting services to railroads, private fleet operators and shippers.
In 2008, EMD introduced the 710ECOª Repower, which is designed to "refresh" four-axle units with the latest microprocessor-controlled engine technology to comply with the Tier 2 standard, reduce fuel usage up to 25 percent, cut lube oil consumption 50 percent and shrink maintenance cycles to 184 days, said Haycraft.
"We believe there will continue to be a small market for four-axle freight/switcher locomotives [and] this market will be dominated by repowering older locomotives," he said.
Last month, Progress Rail obtained a $12 million contract from Pacific Harbor Line Inc. to repower 16 Tier 2-compliant locomotives with Tier 3-compliant Caterpillar engines. To be repowered at Progress Rail's Tacoma, Wash., facility during 2011, the locomotives will feature Caterpillar 3512C HD engines equipped with diesel particulate filters.
Progress Rail also offers four-axle models, such as the PR22B GenSet, which features multiple Caterpillar C18 engines generating up to 2,200 horsepower. The switcher complies with Tier 2 and Tier 3 emission standards.
In addition, Progress Rail announced plans last month to locate a $50 million locomotive manufacturing plant in an existing Muncie, Ind., facility to serve the diesel-electric locomotive market and position the company to obtain more transit-rail business. The first locomotive is scheduled to roll off the assembly line by 2011's end.
Other GenSet builders likely will assemble more units next year, as well. Demand for the environmentally friendly switchers is growing because the units can match a GP 38-2's performance, comply with Tier 2 standards and provide fuel savings, says RailSolutions' Husband.
During the past six to eight months, National Railway Equipment Co. (NREC) has noted more interest in GenSets from Class Is, short lines and industrial customers, says Jim Wurtz, vice president of sales and marketing. About 300 of the company's Tier 3-compliant GenSets are in service in North and South America, and Australia, with horsepower ranging from 700 to 2,100.
By second-quarter 2011, NREC plans to begin offering a 3,600-horsepower, two-engine GenSet.
The company also is working on a Tier 4 model featuring a Cummins engine that could be developed by third-quarter 2011, says Wurtz.
A supplier that can provide a Tier 4 solution with a non-urea selective catalytic reduction system to cut nitrogen oxides emissions will be the "big winner," he says.
"I think a major challenge for the railroad industry will be the aggressive position the major urban areas take on emissions, and the railroads are looking to their suppliers to solve this problem," says Wurtz.
R.J. Corman Railroad Group, which acquired GenSet manufacturer Railpower Technologies in May 2009, also is addressing Tier 4 compliance issues. The RP14BD four-axle switcher — one of the company's RP Series GenSets — already is Tier 3-compliant and will be Tier 4-compliant in advance of the EPA's 2015 deadline, says Bruce Greinke, R.J. Corman's executive vice president of finance. Next year, the company hopes to develop a new product that can handle a wider range of emission requirements, he adds.
R.J. Corman is working with the Modesto & Empire Traction Co. (M&ET) to develop a software program that would enable two of a GenSet's three engines to run and the third to be held in reserve in case either of the two others fail. R.J. Corman is filling an order for five GenSets from M&ET, which placed two Railpower units in service in October 2008, and is leasing five more while the new switchers are being built.
Next year should be a strong one business-wise because R.J. Corman has re-established its market position and customer base, says Greinke.
Although 2010 locomotive production has been lower than expected for Brookville Equipment Corp., the company is anticipating steady business through 2011, said Marketing Representative Erin McKillip in an email.
The company continues to develop new features for its locomotives, most of which are driven by federal emission requirements, PTC provisions, remote monitoring and GPS tracking, said Mechanical Engineer Jason Maher.
For example, Brookville plans to use knowledge previously derived from developing its mining products to offer "well-designed and quality exhaust after-treatment packages" that can withstand the harsh environment of locomotive service, he said.
Brookville currently offers a BL20GH locomotive featuring a 2,000-horsepower, German-manufactured diesel engine. In 2008 and 2009, the company produced six of the locomotives for MTA Metro-North Railroad, six for the Connecticut Department of Transportation and four for the Staten Island Railroad.
In July, the Buffalo & Pittsburgh Railroad Inc. commissioned a Brookville GenSet. Built through a public-private partnership between the railroad, EPA, U.S. Department of Transportation, Pennsylvania DOT, Southwestern Pennsylvania Commission and Brookville, the GenSet features two computer-controlled diesel engines.
Brookville also has developed a demonstrator GenSet based on a GP-38 platform and equipped with three Cummins engines. The GenSet has undergone field trials conducted by several U.S. railroads.
Railserve Inc. has developed a GenSet, as well. The Tier 3-compliant Lower Emissions And Fuel (LEAFª) locomotive features software produced by Alternative Motive Power Systems. The LEAF is designed to reduce nitrous oxide and particulate matter emissions about 76 percent, and cut fuel consumption 45 percent to 60 percent compared with a conventional locomotive.
A subsidiary of The Marmon Group, Railserve provides in-plant switching services. The company owns 160 locomotives and provides service at 65 locations.
"We were using some locomotives in Texas purchased with emission-reduction grant funding. The failure rate was unacceptable, so we [developed] an alternative," says Railserve Co-President and Vice President Tim Benjamin.
The company owns 25 LEAFs, which are leased to industrial customers. Last month, Railserve announced it sold one of the GenSets to Archer Daniels Midland — its first commercial sale of a LEAF locomotive.
Meanwhile, MotivePower aims to fulfill locomotive orders for several commuter-rail operators. The company has received a 26-unit order from the Maryland Transit Administration for MARC service; a 57-unit order from GO Transit; and a 20-unit order from Virginia Railway Express. The new locomotives will replace exisiting fleets, says MotivePower Vice President and General Manger Mark Warner.
The company also continues to rebuild locomotives, including seven units for the Southern California Regional Rail Authority, with an option for three more, and three units for Altamont Commuter Express, with an option for two more.
"Another area where we see an opportunity is the fact that the switcher fleet is aging and will require replacement," says Warner.
The replacement of old motive power affords railroads the opportunity to acquire more reliable units with better environmental and electronic controls, especially electronics associated with distributed power (DP) and PTC.
CSXT will request that builders pre-wire all new locomotives to accommodate PTC, as well as include DP capability as a feature on many newly acquired units, said spokesman Gary Sease in an email.
For the past 15 years, every line-haul locomotive acquired by BNSF has been equipped with DP — a trend the Class I expects to continue.
"As the data communications and other onboard electronic enhancements associated with the deployment of PTC occur, we will look for opportunities to leverage that onboard electronics infrastructure to improve the reliability and cost-effectiveness of existing distributed power technology," said BNSF's Lundsberg.
However, integrating advancements in emissions and train-control technologies will "significantly add to the complexity of tomorrow's locomotive designs," she said.
Builders' charge: Don't jeopardize productivity at the expense of functionality.
"We need to ensure that these changes, at a minimum, maintain the current level of reliability of the overall locomotive," said Lundsberg.
Walter Weart is a Denver-based free-lance writer.