Destination:Freedom Newsletter
The Newsletter of the National Corridors Initiative, Inc.
Vol. 2 No. 44, November 5, 2001
Copyright © 2001, NCI, Inc.
James P. RePass, President
Leo King, Editor

A weekly North American Railroad update

Amtrak on the go

NCI: Leo King

PROFITABILTY? - For rail passenger service? Forget it. The Bush administration says push back Amtrak's "self-sufficiency" deadline.
'Reauthorize Amtrak,' says Rutter;
urges repealing current laws
By Wes Vernon
Washington Correspondent

The Bush administration says the future of intercity rail passenger service is "the most pressing rail issue requiring the attention of Congress and the Administration." Bush transportation managers are expected to lead the nation in a great debate next year as to how to structure passenger train operations for the 21st Century. While awaiting the consensus that will hopefully result from the debate, Federal Railroad Administration chief Allan Rutter favors maintaining Amtrak pretty much at the status quo level.

Testifying at a hearing before the Senate Commerce Committee November 1, Rutter said the administration favors "re-authorizing" Amtrak. A spokesman for FRA later toldD:F the administrator favors keeping Amtrak operating on its present course through fiscal year 2003, or beyond the deadline for operational self-sufficiency. That deadline, mandated by the 1997 Amtrak Reform and Accountability Act, will come late next year or very early in fiscal 2003 which begins October 1, 2002.

Thus, the Bush administration effectively is calling on Congress to put off that deadline for at least a year. The Amtrak Reform Council, which is mandated under the 1997 law to make a finding on whether next year's deadline is likely to be met, meets Nov. 9 to come to grips with this issue.

Mark R. Dayton, DOT's deputy assistant inspector general, told the senators he favors eliminating the self-sufficiency requirement while the country engages in a "more in-depth debate." The deadline, he said, served the useful purpose of imposing fiscal discipline, to which Amtrak has responded.

"That was not my intent in voting for the bill (to impose the deadline)," said a dismayed Sen. John McCain (R-Ariz.), the committee's ranking Republican, "Unless we mean it (when we put it in the law), we shouldn't write it."

Mc Cain and Sen. Phil Gramm (R-Tex.) made a big point of saying their states are probably not all that conducive to rail travel, and that Amtrak would "make more sense" if it were confined to the crowded corridors with large cities relatively close together.

"You don't have to put a train in my state to get my support," they would say.

But Senate Republican Leader Trent Lott (R-Miss.) said any such regional system would not get his vote. He reiterated his oft-expressed warning of "No national system, no Northeast Corridor."

McCain trotted out figures purporting to show the California Zephyr, the Sunset Limited, and other Amtrak long distance trains cost the taxpayers a ridiculous amount of money per passenger.

Amtrak President George Warrington replied, "I'm not going to sit here and try to tell you that those trains will ever be profitable." The idea, he said, is to close the gap through other routes that could "throw off" money so as to "cross-subsidize the less profitable" long distance runs.

The Amtrak boss told the senators the only profitable high-speed rail service in the world was in Japan which for decades has received a heavy capital investment of $6 billion a year, and serves a population density of 650,000 per square mile, as opposed to only 2500 persons per square mile in New York City, the most densely populated place in the U.S. Further, he pointed out that Amtrak long-distance trains routinely turn in a better financial performance than comparable operations in Canada or Australia.

Unlike Japan's system, Amtrak has never been capitalized, Warrington continued.

Committee Chairman Ernest "Fritz" Hollings (D-S.C.) had called the hearing to consider his own bill to go well beyond extending Amtrak through fiscal 2003. This legislation is separate from the Hollings-McCain bill passed by the committee in mid-October, which concentrated strictly on safety and security measures for Amtrak.

The Hollings bill that was spotlighted at Thursday's hearing (S.1530) Rail-21 would eliminate the "self-sufficiency" requirement, authorize $1.2 billion in capital and operating money for Amtrak through fiscal 2003, authorize $350 million in capital grants for the shortline freight haulers and $35 billion in loans and loan guarantees for the Class I carriers. This appears to be in line with the emerging consensus that if passenger service, especially high-speed rail, is to get up and running, it will have to be done in partnership with the freight railroads. They, too, must gain room to expand. Freight and passenger enhancement must go together like Hansel and Gretel, the freight lines have stipulated.

The $35 billion figure for the freight railroads caused McCain to wince. He said he had reluctantly agreed to $5 billion as being sufficient.

The day before the hearing, Ross Capon, executive director of the National Association of Railroad passengers (NARP) fired off a letter to Hollings stating the consumer group's position that "the closer any enacted legislation comes to Rail-21, the better public policy will be."

Speaking for the Class I carriers, Ed Hamberger, president of the Association of American Railroads, said any program to advance high-speed rail must not hinder the efficiency, economy, or safety of freight rail service.

It's all well and good, he said, to talk of getting people out of their cars and onto the rails. But that effort is counter-productive if, in the process, you end up moving freight off the trains and back onto the trucks and the crowded highways. Such a scenario, he implied, would imitate the dog chasing its tail around the tree, though the AAR president himself did not allude to that metaphor.

Bottom line: If high-speed rail is to go anywhere, freight capacity must advance also. Top officials of Amtrak, the Amtrak Reform Council and other passenger interests have spent countless hours in recent years jawboning with the freight rail executives over this. It is widely understood that when everybody wins in the partnership, that's when the rebuilding of America's railroads will move forward. Rail labor would also benefit from the many new jobs created by a healthy freight and passenger system.

Speaking of which: An interesting sidelight to the day's hearing came when Hamberger again urged repeal of the "discriminatory" fuel tax, which railroads must pay, even though most of their transportation competitors have been relieved of that burden.

What made it interesting is that Ed Wytkind, executive director of the AFL-CIO's Transportation Trades Dept., urged the lawmakers to keep the tax intact. Since the union members represented by rail labor in no way benefit from this tax on their employers, D:F had to find out why the labor people would take any particular interest in keeping it on the books.

"We think the industry has a lot of unmet needs," Wytkind told us after the hearing concluded, "and we believe the employees of this industry have a lot of unmet needs. The industry hasn't stepped up to the plate, both in terms of solving employees' economic needs and solving employees' health care needs. And because of that, it's hard for us, in clear conscience, to support a rollback for the railroads, so they can pocket the money and not provide any assistance to the employees who need it."

But how does the diminution of the health of the railroads help the rail employees?

"I don't think it's related," insisted Wytkind, "The railroads are up here trying to get a rollback in taxes like most corporate interests are doing right now, but the railroads are not going to disappear tomorrow. Their financial status is just fine."

Some comment from the AAR's Hamberger: Yes, "there are tremendous unmet needs for security for investment for capital expansion of our (rail) network. And those are done by the private sector. Those are done by the railroads who employ his (Wytkind's) peoplešIf I were on their side, I'd be saying, 'Gee, if they had this 4-point-3 cent, 200 million dollars a year, round figures, in their coffers, it would give me some leverage at the bargaining table, wouldn't it?'"

What about Wytkind's assertion that the railroads would just "pocket" the money?

"The industry has invested over the past ten years over 16 percent of our gross revenues back into the industry" as opposed to a manufacturing industries average of 3.5 percent, Hamberger notes. "We do reinvest it. And if you take a look at what the employees get paid, relative to other industries, they rank pretty high. So it would seem to me a much more viable course for them (labor) to want the railroads to do as well as they can."

Having that money go into "the black hole of the federal government - What good does that do?"

The fuel tax was imposed in the early 90's as a "deficit reduction" measure. While the highway and airline industries have long since been exempted from having to pay the fee, the railroads and the barge lines are still stuck with it.

DOT takes central security role
By Leo King

U.S. transportation Secretary Norman Y. Mineta said last week at a Washington transportation security conference that the Rail Security Act of 2001, along with other pending legislation, "may play a central security role" for the U.S.

Mineta, speaking before a national transportation security summit, told his audience, the Office of Homeland Security and the Homeland Security Council "will coordinate federal, state and local efforts to strengthen protections against terrorist attacks here in the United States and DOT has a very important role to play in all efforts at increasing homeland security." To that end, he said, legislation has been introduced "as the Secure Transportation for America Act by the House Transportation and Infrastructure Committee and the House Subcommittee on Aviation, which would establish a new Transportation Security Administration within DOT."

Although most of his speech dealt with airport and airline security, he did not overlook rail security.

He said a new Transportation Security Administration "would be responsible for security for all modes of transportation. We are awaiting to see how this will play out and are working on all the issues involved with the potential for a new DOT operating administration."

Mineta noted, "While aviation is critical, it is not the only key transportation asset of the U.S. Your conference is focusing on surface transportation, and I want to discuss how we must work to also protect the critical infrastructure elements of our railways, roads, transit systems, pipelines, and waterways."

He pointed out that in September, he created the National Infrastructure Security Committee (NISC) at DOT "to focus on intermodal transportation security issues in the 'new' threat environment. It has established various 'Direct Action Groups, or DAGs,' that bring in key industry reps, labor leaders, and other stakeholders to provide input to DOT on maritime, pipeline and hazardous materials issues."

Mineta also observed "In the wake of the September 11th attacks, we have found ourselves revisiting very important issues that certainly had our attention prior to that date, but to which we are now a captive audience."

They include the need for improved information sharing and dissemination of threat information between government and industry as well as "The need for protections and incentives that encourage private sector entities to voluntarily work with government, and to cooperate among themselves knowing their proprietary information is protected, and they include the obvious need for security-related legislative changes.

He added there is other pending legislation on the Hill of which DOT may play a central security role.

"The Rail Security Act of 2001 (S.1550), introduced in the Senate two weeks ago by Senators McCain and Hollings, provides for improvement of rail safety and security, to include expanding railroad police authority to any rail carrier, and for assessing security risks associated with rail transportation."

That legislation was reported out of the transportation committee and is awaiting passage by the full Senate and move on to the House.

Mineta said, "It also provides for a review of existing DOT rail regulations for the purpose of identifying areas in which those regulations need to be revised to improve rail safety and security."

The Transportation Secretary noted other legislation raises a "heightened awareness for the need for collective action and facilitates the development of coordinated interagency and public-private approaches to port security."

He said other transportation security measures include improving transit security.

Mineta said, "The traveling public may experience some inconveniences, but we must do what is prudent in order to protect our citizens and transport workers - with safety and security as our highest priorities. The public, however, must also understand the need for patience, and that patience is the new form of patriotism."

Kentucky Cardinal returns to Louisville
Passenger rail service will have to wait a tad longer to return to Louisville, because of engineering and construction complications. A $600,030 project for Amtrak passenger train service is about 35 percent complete, officials said.

In August, Louisville Mayor David Armstrong said the city hoped to finish track and station renovation by the end of October, but National Association of Railroad Passengers (NARP) Region 5 director Jon Owen said the Kentucky Cardinal's inaugural run into Louisville Union Station will take place on, December 4.

A southbound morning train from Chicago will be the first.

Ceremonies are planned at the station, and are scheduled to begin at 10:00 a.m. after the train arrives.

At least three private cars are slated to be added to the train's regular consist to accommodate dignitaries and guests.

A luncheon at the Kentucky Railway Museum is planned featuring authentic recreations of Louisville & Nashville Railroad dining car fare, such as the famous Gulf Coast Seafood Platter and grilled steaks.

A special excursion package is also planned to allow travel on that night's northbound Kentucky Cardinal, leaving from Louisville around 9:00 p.m., to Scottsburg, Ind., with return to Louisville via chartered bus.

Vermont ridership declines on both trains
Ridership on Vermont's two Amtrak passenger trains has dropped recently, with the Ethan Allen Express between Rutland and New York City losing 16 percent of its riders last month, and the Vermonter losing that percentage in the past year.

The ridership numbers mirror a national trend in the travel industry, said officials who promote the two Amtrak trains. They blamed a poor economy for some of the slowdown, and the events of September 11 for making the problem worse, according to the Associated Press.

"Travel in general has taken a beating in the last several months," said Karen Dunn, a spokeswoman for Amtrak who works in Philadelphia. "We started to see a steady decline in travel in general in the summer. The events of September 11 haven't helped much."

Amtrak released figures Tuesday that showed the Vermonter experienced a 2 percent drop in ridership in September 2001 over September 2000. Vermonter ridership for Amtrak's fiscal year 2001, which ended Sept. 30, was down 13 percent compared to fiscal year 2000.

Ridership on the Ethan Allen Express dropped 16 percent in September 2001 over the same month the year before. It was down 5 percent in fiscal year 2001 compared to fiscal year 2000, Dunn said.

Vermont agreed in July to pay Amtrak $2.2 million to operate both passenger trains. The Vermonter, which started up in 1995, runs between St. Albans and Washington, D.C., through New York City.

Vermont's shares of the costs are based on ticket sales. The latest one-year contract, signed in July, calls for Vermont to do a better job of marketing the trains.

On Tuesday, state officials said the latest figures did not raise any doubts about the future of the trains.

ARC to meet Friday, will plan Amtrak future
Amtrak's Reform Council reports it will be conducting a special public business meeting in Washington on Friday in Washington.

The council reported in the Federal Register it will conduct a business meeting on November 9 from 10:00 a.m. to 4:00 p.m. "during which time the council members will discuss, among other issues, Amtrak's financial performance for Fiscal Year 2001, the impact of the events of September 11th on Amtrak's ridership and financial performance, and their views on whether Amtrak is likely to meet the statutory self-sufficiency requirement set forth in section 204 of the Amtrak Reform and Accountability Act of 1997."

The ARC stated the public meeting will take place in room 2230 at USDOT headquarters, (the Nassif Building), 400 7th Street, SW. The notice added, "Because this meeting will be held in a federal building, all attendees must bring an I.D. and pass through metal detectors to attend the meeting."

The Council's website is

Maine starts passenger rail expansion plans
The federal government has agreed to contribute $5.5 million to extend Amtrak passenger rail service some thirty miles northward from Portland to Brunswick, Maine, and state officials say more federal funds could follow. The federal dollars, however, will require a lengthy environmental assessment and add about a year's delay to the project, according to a report in Friday's Portland Press Herald.

The funds will allow the state to rebuild the rail lines north of Portland to the same standard as they are south of the city, said Russ Spinney, head of the division for multi-modal project development for the Maine DOT.

The entire project is expected to cost $25 million to $30 million. The DOT has already secured $10.5 million in state funds and plans to seek more federal money, Spinney said.

The assessment will look at environmental, social and financial implications of extending rail service to Brunswick on DOT's favored route, through Portland along the I-295 corridor, and then north of the city on the rails owned by the St. Lawrence & Atlantic Railroad.

The state's preliminary plan calls for an 1,800-foot-long bridge across Back Cove. DOT officials had hoped to start work on the bridge next June, but the project first needs a permit from the U.S. Coast Guard, and the Coast Guard won't accept a permit application until an environmental assessment is completed, Spinney said. An environmental assessment could take six months or longer to complete, and the Coast Guard permitting process could require about nine months, which could push back the start of bridge construction until the spring of 2003.

NJ Transit to receive new engine
New Jersey Transit (NJT) is awaiting the arrival of the first pair of new electric locomotives from Germany.

Bombardier Transportation presented the first of 29 electric multipurpose locomotives for New Jersey Transit (NJT) at a rollout ceremony at its facility in Kassel, Germany on October 18.

The class "ALP 46" electric locomotive design "is derived from the German Railway's Class 101," Bombardier stated in a press release.

More than 145 of these kinds of locomotives have been operating successfully for the German Railway (DB) since 1996, according to Bombardier.

Bombardier Transportation's facilities in Switzerland and Germany are implementing the technical adaptations for the American market. The locomotives, which are manufactured at Bombardier's Kassel facility, will run on the electrified network of New Jersey Transit as well as that of Amtrak. The first two locomotives will be shipped from Germany to the U.S. at the end of November, and will undergoing extensive testing in Pueblo, Colo., at the USDOT and AAR test site.

The locomotives can reach a top speed of 100 mph.

Some of the remaining F-40's

NCI: Leo King

THIRTY LEFT - Amtrak has 30 F-40s left in service. Of these three, only the 288 remains.
Amtrak F-40 numbers continue to decline
Amtrak's EMD F-40PH 2,000 hp engines still in service on the passenger railroad continue to dwindle. Most have been replaced by 4,000 hp and 4,200 hp GE P-40s and P-42s. A recent list shows there are 30 engines left on the property and in service, although two are now in Alaska. Excluded are units on long-term lease and no longer carrying Amtrak reporting marks.

Engin NumberService area
223AMT Montreal
226NEC (Northeast Corridor)
233Amtrak West
242Denver Ski Train
263AMT Montreal
271NEC - Work train service
278NEC - Work train service
283Denver Ski Train
289Denver Ski Train
293AMT Montreal
294301 NEC Work train service
311AMT Montreal
315Alaska RR
319AMT Montreal
320Alaska RR
372San Diego Coaster
381Amtrak West
382Amtrak West
399Amtrak West
400Amtrak West
415Amtrak West

Thanks to Gene Poon

Oregon train to run three hours later
Amtrak's train 552 is operating three hours later between Eugene and Portland, Ore. The temporary change began October 29 and is expected to continue through December 20. The train departs Eugene at 12:30 p.m., and arrives in Portland at 3:15 p.m. A new temporary bus, 5752, will operate on train 552's normal schedule. It will connect at Portland with train 752.

Tie gangs will be performing Willamette Valley trackwork.

Thanks to WashDOT and Jim Hamre

Ex-MIT student charged with fraud
A former Massachusetts Institute of Technology student was charged last week by federal prosecutors with securities fraud for his alleged role in a five-year-old case of insider trading of Conrail shares. Raj H. Prabhakar, 29, of San Francisco, was charged in the scheme, which netted $400,000 profit, prosecutors said. In 1996, Prabhakar allegedly passed inside information about Conrail's pending takeover to a former fellow student, Elies Fenjiro, prosecutors said, who pleaded guilty to related charges in 1997 and was sentenced to three years in prison.

'Five Yard' raises AG's ire

Five Yard at Readville

NCI: Leo King

FIVE YARD - "Five Yard," the site of the former New York, New Haven & Hartford Railroad's Readville Shops - about half of which are in Readville at the southernmost point of Boston - and the other half in Dedham - is under fire because of alleged contaminants in the ground. The sign on the fence states, "Warning, Contaminated Area. Site contains hazardous materials which may be harmful to public health. No trespassing. Per order of Massachusetts DEM and MBTA police." The foreground track is a loop.

Five Yard at Readville

NCI: Leo King

FIVE YARD - "Five Yard," the site of the former New York, New Haven & Hartford Railroad's Readville Shops - about half of which are in Readville at the southernmost point of Boston - and the other half in Dedham - is under fire because of alleged contaminants in the ground. The sign on the fence states, "Warning, Contaminated Area. Site contains hazardous materials which may be harmful to public health. No trespassing. Per order of Massachusetts DEM and MBTA police." The foreground track is a loop. Five Yard at Readville

NCI: Leo King

FENCED OFF - The Sprague Street overhead highway bridge spans the lead tracks to the Dedham Secondary and so-called lightly used "Five Yard," west of the high-speed, main line tracks. The MBTA installed the fencing in September. The track at the left is fenced off somewhat farther back. One state agency, DEM, is suing another state agency, MBTA, for dragging its feet in cleaning up what the DEM considers to be a hazardous waste site. Bay State Attorney General Tom Reilly filed a lawsuit on October 3 alleging the T's "systematic failure" in cleaning up environmental hazards at the yard. Three other yards populate the area - CSX's Readville freight yard on the eastern side of the main line, "Two Yard," at the top of the hill on the Dorchester Branch, and the MBTA's Readville Facility, east of the main line and the Dorchester Branch.
Freight lines...

CSX on the side

NCI: Leo King 

CSX is raising $400 million to "refinance some commercial paper." The freight railroad operates from Florida to Illinois to Massachusetts.

CSX raises $400 million in debentures

CSX Corp. last week priced a registered public offering of 20-year zero coupon convertible debentures. CSX disclosed the fund-raising plan on October 25 and shut the door on October 30.

The debentures are unsecured, unsubordinated obligations convertible into CSX Corp. common shares under specific conditions. Each convertible debenture has an initial yield to maturity of one percent and is convertible into 17.7461 shares of CSX common stock, which is equivalent to an initial conversion price of $46.16 per share. That is a 37.5 percent premium over the October 24 closing price of $33.57 on the New York Stock Exchange.

Credit Suisse First Boston led the offering; J.P. Morgan and Salomon-Smith-Barney were senior co-managers. Eight other investment banking firms were co-managers.

The gross proceeds from the offering will be approximately $400 million (approximately $460 million if the underwriters exercise their over-allotment option in full).

The company stated it intends to use the net proceeds of the offering to redeem other debt and to refinance a portion of outstanding commercial paper. The balance, if any, will be used for general corporate purposes. The securities are being offered under a shelf registration statement previously filed and declared effective with the Securities and Exchange Commission.

P&W pays 4 cents a share
Providence & Worcester Railroad Co. reported on October 31 it declared a dividend of $.04 per share on its outstanding common stock. It will be payable on November 22 to shareholders of record on November 8.

The report came at the directors' regular quarterly meeting.

FEC earns nearly $7 million
Florida East Coast Industries, Inc. last week (FECI) reported operating revenues of $74.9 million for the third quarter ended September 30 compared to $70.1 million in the third quarter of 2000. Operating profit for the third quarter of 2001 was $4.2 million compared to $4.6 million in the third quarter 2000. Net income for the third quarter of 2001 was $2.0 million ($0.05 per diluted share) compared to $2.1 million ($0.06 per diluted share) in the third quarter of 2000.

FECI reported third quarter consolidated pro forma operating revenues of $67.4 million and net income of $6.8 million compare to prior year's $63.2 million and $8.5 million, respectively; third quarter 2001 pro forma operating profit of $12.3 million compares with prior year's $12.9 million.

Its Florida East Coast Railway's quarterly freight revenues climb back to 2000 levels though overall operating revenues were off 2.3 percent at $39.1 million. Operating profit was $8.6 million compared to $10.5 million in 2000.

The firm's trucking outfit, Florida Express Carriers' revenues increased by 18.8 percent to $9.5 million; FLX reports operating loss of $1.5 million.

Its realty unit, Flagler Development Co. earned a rental revenues increase of 24.6 percent to $17.6 million. Other rental efforts increased 19.8 percent to $12.0 million; surplus property sales total $4.2 million.

EPIK Communications reported revenues of $2.9 million vs. year 2000 $0.4 million, but another unit lost $7.1 million vs. prior year's $7.5 million while Flagler Financial closed at $87 million, 6.95 percent seven-year fixed rate, mortgage financing.

Robert W. Anestis, Chairman, President and CEO stated in a press release "Transportation revenues improved in the third quarter despite soft industry demand, and although our operating profit in this quarter declined compared to prior year because of competitive pricing in trucking, higher than usual maintenance expense at the railroad and expenses of new initiatives, FECR remains among the most efficient in North America, with an operating ratio of 75.0 percent through the first three quarters of 2001."

Norfolk Southern Coal

NCI: Leo King

"King Coal" has kept Norfolk Southern in the green for a century.
NS' coalfield land company
observes century anniversary
Norfolk Southern Corp celebrated the centennial anniversary of its subsidiary Pocahontas Land Corp., whose fossil fuel resources serve domestic and international energy markets.

"The story of Pocahontas Land is a story about more than coal," said David R. Goode, NS chairman, president, and CEO. "It is a story of how the company's activities have supported generations of miners, railroaders and steelworkers in West Virginia and throughout the world."

In 1901, Norfolk and Western Railway, a Norfolk Southern predecessor company, acquired lands held by Flat Top Coal Land Association and vested them in its subsidiary Pocahontas Coal & Coke, which was renamed Pocahontas Land Corp. in 1939. Since 1901, 1.7 billion tons of coal has been mined from Pocahontas Land properties. Currently, Pocahontas Land has reserves totaling an additional 1.7 billion tons.

"Through sound land management practices and leadership in reclamation efforts, Pocahontas Land has given back to the community, providing educational and recreational enrichment as well as economic opportunity for many," Goode said. Recently, the company donated land for home sites to the West Virginia Housing Development Fund to aid victims of summer flooding.

"Norfolk Southern obviously is bullish on coal for the future," Goode said. Pocahontas Land manages more than a million acres, and 70 percent of the current production of its lessees is used in electricity generation. "Our nation's energy needs and public policy incorporating clean-coal technology favor both Pocahontas Land's resources and Norfolk Southern's transportation network," Goode said.

Meanwhile, NS's vice-chairman and CFO Henry C. Wolf will address the Salomon Smith Barney 16th annual transportation conference today. Wolf's presentation, focusing on recent financial results and strategic initiatives, is scheduled to begin at 11:10 a.m. Interested investors can listen to it by live webcast at:

Wolf's remarks will later be posted on NS's website at

  Across the western pond...

China allows foreigners
back into rail business

In a move hearkening to China's quasi-colonial past, when foreigners built railroads across the land, the Beijing government said last week that it would allow foreigners to build railroads here again and invest in the companies that ship freight on the rails.

China's rail transport is one of the most tightly controlled sectors in the country, reported The New York Times on October 29, so the change is a significant one.

It is just one of many initiatives that the country is taking before its entry into the World Trade Organization in order to prepare better to face international competition.

Membership in the global club that regulates trade is expected to transform the country's economy as fundamentally as did the economic reforms of Deng Xiaoping, who is credited with shaking China out of its decades-long Marxist stupor.

China has already opened its airlines to foreign investment, and it promises to open its trucking industry after the country enters the trade group, but railroads are particularly sensitive because most of the country's freight is moved by rail. Railroads are also the primary means of long-distance travel for most of the population, since China has yet to complete a national network of long-distance, high-speed highways.

As a result, China's railroads, whose trains were largely powered by steam locomotives well into the 1980s, are overburdened by demand. Companies relying on them for freight transport complain that they spend an inordinate amount of time tracking their shipments, which often disappear at some point along the country's 50,000 miles of track.

Under the new rules, China will allow foreign companies to take minority stakes in rail freight joint ventures within three years, and to hold majority shares within six years.

Foreigners will even be allowed to build rail lines and operate them for up to 22 years before turning them over to the government.

The government said it planned to choose several potentially profitable proposed railroad lines for international bidding soon, including a line from northeast China's Heilongjiang Province to Yantai in eastern Shandong Province.

Passenger transportation will remain off-limits to foreign investors for the time being.

China hopes to reform its financially pressed railroads before the national highway system is complete and the global trade rules allow foreign trucking and airfreight companies to compete in the country's distribution system, which will be open wide to foreign investment within five years.

Without competitive pressure now, the railroad industry won't develop fast enough, state media reports say. The industry needs money to lay more track.

Foreigners were the first to bring railroads to China, starting with a nine-mile stretch from Shanghai to the Yangtze River in 1876. Later, France built railroads linking southern China's Yunnan Province and Vietnam, Germany built railroads in eastern China's Shandong Province, and Japan built railroads in the northeast part of the country. Many of the rail companies sold bonds to finance their efforts.

The issuers of those bonds began defaulting in the 1930s when war loomed. Bondholders sued the Communist-led government for reparations after it came to power in 1949 and nationalized the railroads. The lawsuits did not end until 1987, when the United States Supreme Court refused to hear the appeal of a lower court decision in China's favor.

Intricately printed Chinese railroad bonds, suitable for framing, can now be bought for pennies at antique markets around the world. Meanwhile, China has been selling new railroad bonds to its citizens to finance the system's expansion.

The New York Times is online at


November 7


Highway-Rail Grade Crossing Town Hall meeting
Dallas, Tex.
Contact Jessica Franklin, Texas A&M Univ.
E-mail or call
979 845 5817

November 9

Amtrak Reform Council

Business Meeting 10 a.m.-4 p.m.
Open to the public.

Room 2230, USDOT headquarters (Nassif Building), 400 Seventh Street, SW., Washington, D.C. 20590.

Persons attending must bring an I.D. and pass through metal detectors.

Contact Deirdre O'Sullivan, Amtrak Reform Council, Room 7105, JM-ARC, 400 Seventh Street, SW.,
Washington, D.C. 20590, or by telephone at (202) 366-0591 or fax at 202-493-2061.

November 10-14

National Industrial transportation League

94th annual meet
Charlotte, N.C.
Fax 703 524 5017

January 11-15 2002

National Railroad Contractors Assn.

Annual exhibit and technical meetings
Coral Gables, Fla.
Contact Ray Chambers, 800 883 1557


Dear Editor:

Regarding "The way we were" in your October 15 issue, South Station had 28 tracks.

Bob Pelletier
Lawrence, Mass.

Mr. Pelletier is a 20-year Amtrak veteran.

South Hamptom Yard

NCI: Leo King

TIME CAPSULE - At one time, Electro-Motive Division of General Motors ruled the roost not only at South Hampton Street Yard in Boston, but across the entire system. Amtrak operated 213 of the 2,000 horsepower locomotives - before there was catenary, before there were electric engines in Boston, before a high-speed maintenance building was erected; for that matter, even before a second wing was added to the main structure.
End Notes...

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Destination: Freedom is partially funded by the Surdna Foundation, and other contributors.

Journalists and others who wish to receive high quality NCI-originated images that appear in Destination: Freedom may do so at a nominal fee of $10.00 per image. "True color" .jpg images average 1.7MB each, and are 300 dots-per-inch for print publishers.

In an effort to expand the on-line experience at the National Corridors Initiative web site, we have added a page featuring links to other rail travel sites. We hope to provide links to those cities or states that are working on rail transportation initiatives - state DOTs, legislators, governor's offices, and transportation professionals - as well as some links for travelers, enthusiasts, and hobbyists.

If you have a favorite rail link, please send the uniform resource locator address (URL) to the webmaster in care of this web site. An e-mail link appears at the bottom of the NCI web site pages to get in touch with D. M. Kirkpatrick, NCI's webmaster in Boston.

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Copyright © 2001, National Corridors Initiative, Inc. & Leo King.