Railway Report
Monday, June 26, 2023
“Never interrupt someone doing something you said couldn’t be done” - Amelia Earhart
News
Montana Bridge Collapse Sends Train into River
A freight train derailment and bridge collapse in Montana caused ten cars to plunge into the Yellowstone River, resulting in spilled asphalt and molten sulfur cargo. Fortunately, the Montana Department of Environmental Quality conducted tests and found no negative impacts on the water and treatment facilities in the affected counties. The authorities are investigating the sequence of events and the extent of the cargo spread in the river. The cause of the derailment is unknown at this time. Cleanup efforts are underway, and no injuries were reported. While the high temperatures of the hot sulfur and asphalt pose hazards, the potential long-term effects are expected to be minimal. This incident is not considered a crisis, although it is not an ideal situation either. The Montana Rail Link is committed to addressing any impacts and understanding the accident's causes. This derailment follows a similar incident in Ohio four months ago, which raised concerns about health and environmental issues.
Source New York Times
Italian Freight Transport Deal
Italy's state railway operator, Ferrovie dello Stato, is reportedly in discussions with MSC Mediterranean Shipping Company regarding a potential partnership in freight rail transport. According to Corriere della Sera, MSC, owned by Italian entrepreneur Gianluigi Aponte, may acquire up to 49% of Tx Logistic, a train company owned by Ferrovie. This collaboration aligns with a memorandum signed by the two companies last year to facilitate the transportation of goods from rail to sea. The potential deal falls in line with MSC's expansion strategy, as the group is also in talks to acquire Italian high-speed train operator Italo from Global Infrastructure Partners. Additionally, Aponte's company has recently made other investments, including the acquisition of Bollore SA's African transport and logistics business and an investment in Italian ferry company Moby SpA. While MSC expressed initial interest in ITA Airways, the successor of Alitalia, it has decided not to pursue a bid for the Italian flagship carrier.
Full Story Bloomberg
Decline in UK Rail Freight Volume
The Office of Rail and Road's quarterly review has unveiled the impact of the UK's economic situation on freight rail usage and performance in the first quarter of 2023. Freight moved by rail experienced a significant decline of seven percent compared to the previous year, partly due to strike action limiting operating days for freight trains. Construction freight dropped by four percent, while coal volumes saw a remarkable increase of fifty percent, driven by rising gas prices and preparations for potential power shortages. Intermodal maritime freight reached its lowest volume in nine years, despite having the largest share of all freight moved. Overall, there was a three percent decrease in the total volume of freight moved in the first quarter compared to the same period last year. Intermodal non-maritime freight saw a three percent increase, while domestic waste experienced a seventeen percent decline. The review suggests signs of returning stability in some areas of freight movement, but the industry continues to face challenges.
Read More at Rail Freight
Russia Expands Freight Networks
Russia is accelerating the expansion of the Baikal-Amur Mainline (BAM) and Trans-Siberian railway to enhance their capacity and efficiency. The project involves the electrification of new sections, requiring significant investments and the construction of substations and overhead networks. Funding challenges were overcome as the Russian government approved the allocation of necessary funds by raising tariffs for electricity transmission and reducing dividend payments. The goal is to increase the carrying capacity of both railways to 182 million tons by 2024 and further expand it to 210 million tons by 2031. This infrastructure project aligns with Russia's plans to redirect cargo flows towards the East. The modernisation aims to address the shortage of transported cargo volumes, particularly coal, and facilitate the reorientation of exports to the East. Heavy trains with capacities of up to 7,100 tons may be introduced to support this effort. Additionally, parallel modernisation projects are underway, and financing from China and India is being considered for upcoming projects, including the construction of tunnels and a bridge. However, existing bottlenecks continue to limit cargo traffic, and further solutions are needed beyond tunnel construction.
Source Rail Freight
Brazil Completes Railway After 37 Years
Brazil has completed the Norte-Sul railway, a 2,260km link connecting the northeastern port of Itaqui to the southeastern port of Santos. The railway aims to connect Brazil's agricultural sector to global markets, allowing farmers in Goiás, Mato Grosso, and Minas Gerais to transport cash crops like soy, corn, and cotton to ports in the southeast and north regions. The completion of the railway is expected to attract investment and generate job opportunities along its length. The project, which began in 1986 but faced delays, gained momentum in 2007 with government intervention. Rumo, Latin America's largest logistics company, operates the southern section of the railway and invested $833 million in rolling stock and terminals. Other companies involved in the project include VLI and state-owned Valec. The completion of the Norte-Sul railway is anticipated to stimulate further expansion of Brazil's rail network, with plans for a public-private partnership to construct a 520km line between Salvador and the port of Petrolina next year.
Full Story Global Construction Review
More HS2 Delays Add £366 million To Bill
The decision to delay construction of part of the High Speed 2 (HS2) rail line in the UK is expected to add £366 million to the project's final cost, according to internal government estimates. The controversial HS2 project, originally intended to link London to Manchester and Leeds via Birmingham, has faced multiple setbacks, cost overruns, and scope reductions. The delay to the Birmingham to Crewe section, known as phase 2a, was implemented as part of a cost-cutting effort due to inflationary pressures. The completion of the first phase has already been pushed back, and much of the line to Leeds has been canceled. The delay to phase 2a is anticipated to increase overall costs, and experts predict that the total price tag of HS2 could reach £100 billion. The government plans to use the next two years to develop a more affordable scheme design for the Euston station in London. The High Speed Rail Group and industry experts are urging the government to establish a long-term plan for the project's delivery.
More at Financial Times
Economy
Weekly Total US rail traffic down 3% YOY.
Commodities which posted a decrease were:
Grain down 23.6%
Forest products down 3.2%
Grain down 23.6%
Commodities which showed an increase were
Motor vehicles and parts up 21.8%
Metallic ores and metals up 11.8%
Nonmetallic minerals up 8.1%
Canadian railroads reported a weekly decrease of total carloads of 1.4%. Mexican railroads reported an increase in total carloads of 18.6%.
Global markets were relatively un-phased by the the short lived uprising of Wagner mercenaries in Russia. The biggest fears from traders was the increased risk of future supply shortages in the oil market, putting pressure on prices.
China’s largest online retailer Alibaba is seeking approval from the HKEX to list it’s grocery business.
India's economic activity expanded in May due to strong domestic demand, allowing policymakers to keep interest rates higher for longer. While some indicators such as exports and tax collections showed weakness, overall robust demand and moderating raw material costs are driving the country's growth. However, the risk of heat waves and below-normal rains poses a potential challenge to the economy.