February 2005

Spotlight on Efficiency and Safety Issues
In This Issue:
Spotlight on Efficiency and Safety
Fourth Quarter Earnings
  UP
  NS
  CPR
  BNSF
  CN
  CSXT
  KCS
New Look for BNSF
Evans to Retire from UP
 

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The Tech Corner
Internet Tips

Firefox is a keyword taking the internet by storm, or at least by quiet revolution. Firefox is a web browser that is quickly gaining acceptance and market share against the omnipresent Microsoft Internet Explorer.

Users cite several reasons for seeking out an alternative browser. The top reason is security. The majority of internet viruses and worms are designed to take advantage of flaws in Internet Explorer.

We enter 2005 clearly focused on two issues that will continue to define the railroad industry. The first issue is apparent with just a glance at the year end earnings reports for the Class 1 Railroads. In the face of unprecedented demand, fluidity and operational efficiency are key.

The railroads that were able to capitalize on this demand were boosted to record high revenues. CN and CPR's successes certainly stand out from the field. CN reported a full-year 2004 free cash flow of $1,025 million, compared with $578 million for 2003.

CPR also reported significant revenue growth which Rob Ritchie, President and Chief Executive Officer of CPR, attributed to fluidity and productivity.  "A critical element of our business model was CPR's unrelenting focus on increasing asset velocity and fluidity across the network. As a result, we began driving our productivity and efficiency indicators in the right direction at the same time as freight volumes took off. " CSX also attributed increases in revenue to greater operational fluidity.

In contrast, UP is still struggling under increased operating costs and reduced productivity. UP reported system speeds 2.2 MPH slower than the same period for 2003. Additionally, UP faced a $274 million pre-tax, non cash asbestos charge that contributed to a reported operating income that was less half that of 2003. CEO Dick Davidson recognized the call for improved efficiency, "At the top of our list for 2005 is improving service to our customers. Over the past year, efforts to increase our train crew and locomotive resources have been successful.

The next step, already underway, is to improve our network management processes to make these resources more productive. We are engaged in a comprehensive redesign of our operating network. We are calling this program our Unified Plan, and we expect to implement this plan by the end of the second quarter. Through these efforts, we believe we can simplify our operations, improve velocity and better manage the volume flowing onto our network in the face of continued strong demand."

The second issue, pushed into the national spotlight by the train crash and chlorine leak in South Carolina, will be addressing concerns about the safety of hazardous materials transport. It seems increasingly likely that security issues will be addressed with public Federal policies. Railroad and chemical industry officials reportedly agreed to reroute shipments around Washington DC after the terrorist bombings in Madrid last March, but  advocates for change, like Fred Millar, a Washington D.C local emergency planning commitee member, object to these solutions. "It is secret, and it is voluntary on the part of the railroad, so therefore it's temporary and unverifiable," stated Millar in a Christian Science Monitor article (Jan, 2004). The article also reports that members of Congress, including Rep. Edward Markey (D) of Massachussetts have called on the Department of Homeland Security to increase rail security around the country.

As the demand for improvements in rail security and hazardous materials transport increases, it seems clear that this issue will shape the state of the railroad industry through the coming year.

Users must constantly update their browsers with the latest security patches. Many users are looking for a new set of features. IE hasn't added substantially to its features in a couple of years. Still others find comfort in breaking away from Microsoft entirely. The browser is independent. It doesn't update your default document settings to open in  MS Office programs.

Mozilla's Firefox browser has been getting rave reviews for its features including tabbed browsing, built in search tools and security features. Another bonus, it is free to download. The browser does not currently support ActiveX controls, and so may not be a good choice for some business applications. However, many are giving a new browser a test drive. Security features alone may warrant a closer look. Try a search for Firefox for more information. 

  Fourth Quarter Earnings
  Fourth quarter earnings reports have been released. These reports outline the performance of the Class 1 Railroads, as well as share the insight of the company president's as they analyze their performance and outlook for the future.

For more, select the links below:
  Union Pacific
  Norfolk Southern
  Canadian Pacific Railroad
  Burlington Northern Santa Fe
  Canadian National
  CSX
  Kansas City Southern

  New Look for BNSF
  BNSF adopts new corporate and subsidiary logos and changes the name of it's railway subsidiary as part of a tenth anniversary celebration.
 More...
  Evans to Retire From Union Pacific Railroad
  Union Pacific Corporation  announced  that Ivor J. (Ike) Evanswill be retiring as vice chairman and a director of the company effective February 28, 2005. More...
  We Want To Hear From You
  Has this newsletter been helpful? Are there more topics that you would like to see covered? We are here to serve the railroad community, so send us your ideas, concerns or suggestions.