(The following article by Anya Sostek was posted on the Pittsburgh Post-Gazette website on June 4.)
PITTSBURGH — When Stan Hasselbusch joined L.B. Foster straight out of college 34 years ago, the rail industry was going nowhere — physically or metaphorically.
Major railroad companies were declaring bankruptcy in rapid succession, victims of decades of growth in truck and highway shipping that left railways with too much capacity and not enough traffic.
Now, Hasselbusch and the rail industry are riding high. The chief executive officer and president of L.B. Foster has watched both earnings and the stock price at the Green Tree transportation supply company soar in the past year, aided by a booming rail industry that generates half the firm’s business.
“I’ve been in this business since I’ve been out of college. I’ve really seen things turn around,” he said.
Soaring global trade, a prolonged economic expansion and high fuel prices have pushed the rail industry to its healthiest levels since World War II, generating what industry insiders term a “rail renaissance.”
In the global economy, trains often are called upon to transport both imports and exports to and from ports before they reach their final destinations. And with trade levels reaching record levels on both sides of the ledger — both imports and exports — ports have been busier than ever.
The intermodal freight industry — in which goods are transferred on multiple modes of transportation, from container ships to trains and then to local truck depots — has seen the number of units shipped on train cars rise 27 percent from 2000 to 2005.
They’re up another 8 percent so far this year, with higher fuel costs playing the biggest role. The run-up in gasoline prices has prompted companies to switch from shipping their goods by truck to rail, particularly over long distances.
“There’s such an advantage moving people and product by rail over other means of transportation,” said Al Neupaver, CEO of Wilmerding-based Wabtec, which supplies locomotives, brakes and other equipment to the rail industry.
Fuel costs are at least three times cheaper by train vs. truck, said Tom White, spokesman for the Washington, D.C.-based Association of American Railroads. At distances exceeding 700 miles, that figure can rise to four or five times less expensive, Neupaver said.
Whatever the advantage, the favorable trends for rail have had a direct — and lucrative — impact on local rail supply companies. “What’s really interesting is how it has filtered down,” said Hasselbusch, of L.B. Foster.
His company’s stock price has jumped 155 percent in the last year and 433 percent in the last three years. Wabtec stock is up 74 percent and 176 percent the same periods.
At L.B. Foster, Hasselbusch used his company’s production of concrete ties as one symbol of the upward trend in the rail industry.
Ties are the horizontal slats that join the rails together. Traditionally, they are wooden, but concrete can better support the huge loads of coal and other heavy materials that are now being shipped in larger quantities.
Production of concrete ties at L.B. Foster has gone from 500,000 units last year to more than 800,000 this year, with more than a million expected next year. Many of the ties are going to new tracks being built in the Southwest by the Union Pacific railroad.
In addition to supply companies, global trends also are benefiting short-line and regional railroads, which operate smaller tracks that usually move goods to and from the main railroad lines.
Pennsylvania has the most regional and short-line railroad companies in the country — 59 — and the state has invested millions of dollars into helping companies rehab hundreds of miles of track.
Those companies have managed to capture some of the goods that were previously shipped by truck.
“The tons and carloads that we moved are up significantly,” said Dave Collins, senior vice president of the Genesee & Wyoming railroad for the New York and Pennsylvania region.
“From a relative standpoint, we’re much more competitive in the markets in areas that we haven’t been in the past.”