Tuesday, January 31, 2012

Rail Freight Investment Booms as Employee Disputes Settle Down

Billions to be Spent on Infrastructure Development this Year
Shipping News Feature

US – Things are looking positive on the freight rail scene at the moment with the Association of American Railroads (AAR) announcing yesterday that its members, including all the major freight railroads of the U.S., Canada and Mexico, intend to invest a record $13 billion in capital expenditures in 2012 to expand, upgrade, and enhance the nation's freight rail network. The cargo carrying rail companies claim this will also mean a projected 15,000 new employees before the end of the year in new jobs and the replacement of retirees.

Although the spectre of a strike is still a possibility the drawn out negotiations between unions and the National Carriers’ Conference Committee (NCCC), a division of the National Railway Labor Conference (NRLC), which began in January 2010, are showing results with three more unions ratifying new agreements with the employers in the past fortnight. This means that ten of the thirteen unions involved in major wage and conditions negotiations are in agreement with new contract terms leaving two which have agreed tentatively to the deals and only the Brotherhood of Maintenance of Way Employees (BMWE), which has agreed with the railroads to extend the “cooling off” period until the 8th February.

The NCCC represents more than 30 railroads, including BNSF, CSX Transportation, Kansas City Southern, Norfolk Southern and Union Pacific in national bargaining with the major rail unions and the ten unions so far signed up in turn represent over 100,000 workers. All parties welcomed the news of further infrastructure investment and in recent years, railroads have been spending roughly 17% of their annual revenue on capital expenditures, compared with the average U.S. manufacturer’s spend of around 3%.

There are currently hundreds of infrastructure projects underway nationwide, privately owned freight rail networks are maintained through continued investments that have reached record levels in the past three years. These investments include expenditures such as intermodal terminals that facilitate truck to train freight transport; new track, bridges and tunnels; modernized safety equipment; new locomotives and rail cars, and other components leading Edward R. Hamberger, AAR President and CEO to comment:

"Unlike trucks, barges or airlines, America's freight railroads operate on infrastructure they own, build and maintain themselves so taxpayers don't have to. And this year they are investing at a record rate to meet the demands of the recovering economy. These investments help businesses get their goods to market more efficiently and affordably, so they too can innovate, invest and hire.

“That's how freight rail spurs the American economy and supports jobs all across the country. As the demand to move more freight by rail increases and a significant percentage of the rail workforce hits retirement age, freight railroads are continuing to add and fill jobs nationwide. These jobs are well paying, highly skilled careers that cannot be offshored."

The AAR claim that average compensation for a rail employee is around $100,000 per year, with jobs ranging from engineers and dispatchers, to law enforcement, information technology and industrial development. Freight railroads have roughly 175,000 employees nationwide and the companies have an aggressive policy toward hiring military veterans and reservists meaning 20% of new railroad employees are veterans.