(The following story by Ann Belser appeared on the Pittsburgh Post-Gazette website on June 15.)
PITTSBURGH, Pa. — L.B. Foster has been having a great few years in its railroad division.
Stan L. Hasselbusch, the chief executive officer of the Green Tree-based company, said the business was strong and, as fuel prices rise, looked to be getting stronger.
“It’s a great industry to be in,” said Kelly Donley, a spokeswoman for the Association of American Railroads. “There’s a rail renaissance because of a combination of economic factors and the environment. … We call ourselves the most fuel-efficient ground transportation.”
Pennsylvania is one of the top states for railroads. Industry statistics show there are more railroads in Pennsylvania than any other state because of all the short-line companies, such as the Aliquippa & Ohio River Railroad Co., which travels six miles moving freight from the main freight line at the Ohio River to Aliquippa and back.
The most recent government data available shows that the state is fifth in the nation for track miles with 5,000, sixth for employment in freight rail with 7,159 workers, and 10th for the amount of rail cargo that originates in the state.
That is partially because more coal than anything else is moved on the nations railways.
Railroads have not seen a dip in business in the last 20 years, but what they did lose was market share. As more and more goods were shipped, more of them were on trucks.
In 1960, there were 1.2 billion tons of goods moved by rail in the United States; in 1980, that number was up to 1.5 billion and, and in 2006, the last year for which figures are available, nearly 2 billion tons of goods traveled the railways. And while railroads have lost market share to the trucking industry, that is starting to change.
The Association of American Railroads figured that while it takes 27 gallons of diesel to move a ton of freight from coast to coast, the same load could be moved on a train for seven gallons.
L.B. Foster, which manufactures concrete railroad ties and supplies rails, has seen its rail business grow by double digits in the past three years, Mr. Hasselbusch said. “It’s up at historic rates.”
While railroads service suppliers, L.B. Foster supplies the railroads.
“Union Pacific is our largest customer,” Mr. Hasselbusch said. “Union Pacific, with the exception of the U.S. Navy, consumes more diesel fuel than anyone in the world.”
He noted that shipping grain, which has had record crops, is up and, with the hot weather and more electricity needed for air conditioning, so are coal shipments.
Because of track issues, Union Pacific runs its trains at only 21 miles an hour, and is making record profits, Mr Hasselbusch said.
L.B. Foster also is keeping busy with expansions and rehabilitations of mass transit such as light rail, because in cities other than Pittsburgh, Mr. Hasselbusch said, transit agencies are seeing record ridership.
“Our rail business is good,” he said.
Overall, L.B. Foster, which also supplies tubular products such as threaded piping for irrigation systems, also has been good. The company’s stock has jumped 516 percent in the last five years.
Wilmerding’s Wabtec also has seen a surge in business in the past five years.
“Freight sales for us have been at a huge level for the last few years,” said Tim Wesley, a company spokesman. “A lot of the countries around the world have been investing in rail systems.”
Wabtec has sold locomotive components to China, India, Brazil and Russia. He said the commuter rail business also was soaring as workers forgo their cars for the rails. Investors who have held on to the company’s stock for the last five years would have seen a 209 percent return for that period.
Norfolk Southern Railroad also has been very good for its shareholders.
For someone who bought stock in the company five years ago, the return on that investment, both in dividends and stock price, has been 220 percent.
“More and more shippers are realizing that moving [goods] by rail is the most economical way to go,” Rudy Husband, a spokesman for Norfolk Southern Railroads, said. But he said he wasn’t sure that was why more companies are turning to the rails.
Mr. Husband said the railroad does not ask customers that start shipping with Norfolk Southern why they are changing their mode of shipping. Instead, he said, the railroad just takes the order.
While commodities such as coal are up, from a shipping point of view, Mr. Husband, said overall shipping was down for Norfolk Southern because the housing bust has cut the need to ship building supplies such as lumber, and the slump in automotive sales has reduced the need to ship both completed vehicles and the parts to build them.
Intermodal traffic, which includes goods that are shipped from truck to train or from ship to train, is up, he said.
Mr. Husband said that was not as easy as parking a trailer on a flatbed. The trailers that go from train to truck are specifically designed for that purpose.
Ms. Donley said one train loaded with intermodal trailers can take as many as 280 trucks off the road.
And for each one of those trucks that is off the road, the use of the train instead of a trailer to move the load cuts greenhouse emissions by two-thirds, she said.