Canada Calling
February 1999

by Bryce Lee

CANADIAN NATIONAL RAILWAY

Recommendations from a fatality inquiry into a train crash that killed three men in 1996 are practical and would go a long way in preventing a similar accident, said a representative of the United Transportation Union, which represents several railway unions. Jake Elder, 44, conductor Kenneth Trout, 41, and passenger John Eric Fraser, 47, died Aug. 12, 1996, when 20 runaway grain cars collided with their CN freight train east of Edson. Alberta Provincial Court Judge Raymond Bradley offered three recommendations: The railroads and the unions should clarify the rules for removing a device called a derail that would have stopped the runaway cars from reaching the mainline, removing a derail should result in dismissal; members of the health and safety committee made up of employees and managers should be free to contact the highest officials "if it is felt that a safety issue is not being properly or promptly resolved;" Transport Canada should review how it trains and monitors its 120 safety inspectors. The derail at the east end of the Edson yard was missing, and several officials testified at the inquiry that no paper trail could be found to indicate who authorized its removal and when. The inquiry was also told that Transport Canada inspectors never noticed the derail was missing, even though the yard had to have been inspected between the time of the removal and the crash. Since the crash, CN has installed more than 800 derails across Canada. Railway traffic controllers also hear a high-pitched alarm now when systems indicate an unauthorized vehicle is on the tracks. CN has also established new measures to better train workers on the use of hand brakes.

The head of Canadian National said his railway is willing to talk to people who want to take over its grain dependent lines in Saskatchewan. Paul Tellier said "the railway's preference is to find business people who are willing to take over lines up for abandonment." But he said "CN can't undermine the investment strategy of its second biggest customer, the Saskatchewan Wheat Pool, which is consolidating its grain-handling network." The proponents of a new short line railroad company in west-central Saskatchewan said they hope Tellier and CN are sincere in their negotiations with them. Rob Lobdell, president of West Central Road and Rail based in Eston, said the railway should remember farmers in Saskatchewan are their number one customer. West Central Road and Rail wants to take over the Mantario subdivision from CN which runs from Delisle to near the Alberta border.

Canadian railways need lower taxes and less restrictive regulation to become more productive and compete with giant U.S. freight carriers, says the president of Canadian National Railway Co. "Canada's low-cost and highly competitive rail transportation supports the competitiveness of Canadian industry," Paul Tellier told a business audience Monday December 7. 1998. "If our railroads are not competitive, Canadian shippers are profoundly affected." Tellier said railway productivity must be increased so the Canadian carriers can compete more effectively against U.S. rail giants whose size, efficiency and extensive continental reach pose an increasing challenge to CN and its shipping customers. Tellier said Canadian railways pay 14 per cent of gross revenues in taxes, compared with eight per cent for U.S. railroads and eight per cent for Canadian and American truckers. Tax rules are also another barrier to competitiveness because U.S. railroads can depreciate equipment in as few as eight years, while Canadian railways must wait as long as 30 years. Through its planned merger with Chicago-based Illinois Central Corp., and planned cuts of another 3,000 jobs, CN is becoming more competitive, Tellier said. But Canada's biggest railway still lags behind its U.S. competitors in some key measures by as much as 30 per cent. "Rail competitiveness is inseparably linked to regulations," Tellier said. "We must continue to deregulate."

The long standoff between Nova Scotia's Sydney Steel and CN is over. It has been confirmed the railway has requalified Sysco as a supplier of rails and placed a 10,000 tonne order. The rails are to be delivered by mid-January 1999, marking the first business between the two companies since 1995, when CN rejected an order of rails because of a flaw known as radial streaking. Sysco's efforts to restore a vital business relationship that existed for decades continued as CN turned to other suppliers and lawsuits were launched by both sides. The litigation is now ended and the companies are ready to reestablish connections.

Canadian National Railway Company and Illinois Central Corporation said December 16, 1998 in a regulatory filing that their merger transaction is consistent with the public interest, meeting the standards for approval administered by the U.S. Surface Transportation Board (STB). In their STB filing rebutting comments and responsive applications from parties challenging the CN/IC merger transaction, CN and IC said the transaction should be approved. CN and IC said their application for removal of certain trackage rights limitations at Springfield, Illinois, should also be granted because it is in the public interest. CN and IC said a number of parties are seeking conditions on STB approval of the merger transaction. Some are trying to use the STB proceeding to obtain private gains or preferential treatment. Others are attempting to delay increased competition, while other parties are pursuing remedies to some pre-existing conditions unrelated to the transaction.

CN showed that Union Pacific Railroad Company has not sustained its claims about a marketing alliance signed by CN, IC and Kansas City Southern Railway Company, which were made by UP in connection with its opportunistic efforts to secure haulage rights on IC's traffic- rich line between Baton Rouge and New Orleans, Louisiana. Contrary to UP's claims, the CN/IC/KCSR marketing alliance does not constitute common control of the three railroads. The CN/IC transaction will enhance the benefits created by the CN/IC/KCSR marketing alliance, which did not require STB approval and which today is providing coordinated interline train service between Canada, the US Midwest, the US South and access to Mexico's largest railroad. CN and IC also rejected Canadian Pacific Railway Company's attempt to use the STB proceeding to obtain an economic benefit unrelated to any effect of the merger transaction. In its responsive application, CPR is asking the STB, as a condition of approving the CN/IC transaction, to require CN to divest its interest in the Detroit River Tunnel, which it jointly owns with CPR. (The CNCP Detroit-Niagara Partnership, held 50/50 by CN and CPR, owns 100 per cent of the stock of Detroit River Tunnel Company, the corporate owner of the tunnel.)

CN and IC dismissed as groundless CPR's allegation that CN may use its current ownership position in the tunnel to block any future expansion by CPR of the tunnel's capacity that is in the interest of the partnership. CN and IC noted that CPR's divestiture request is outside the STB's jurisdiction because the partnership and all but a small portion of the assets at the center of CPR's application to the agency are within Canada, not the United States. CN and IC said CN is prepared to sell its interest in the Detroit River Tunnel on a negotiated basis at a fair price and not under duress. CN and IC also urged the STB to turn down CPR's demand for a special investigation of the CN/IC/KCSR marketing alliance because they have provided the STB and the parties with substantial information about the alliance and shown it will benefit the public interest. CN and IC stated they have fully and properly presented the public benefit of the transaction and marketing alliance.

CN and IC rejected comments from the City of Chicago, which has asked the STB to require, as a condition of its approval of the transaction, that CN/IC establish an entirely grade-separated route across Chicago; but not one that enters the downtown area. CN and IC said the city's request is part of an ongoing, pre-transaction effort to close the St. Charles Air Line and is unrelated to the merger transaction. CN and IC pointed out that the transaction will result in fewer trains operating on the Air Line and offers the potential of reducing the overall amount of CN and IC freight traffic moving through the City of Chicago. CN and IC continue to negotiate with Chicago in an effort to respond to local concerns while protecting the companies' commercial interests.

The CNR station at Paris, Ontario was demolished the first week of December 1998.

Between 2330 and 2400 on December 1, 1998, eastbound Grand Trunk Western train 396 derailed at Charlotte Michigan on the Flint Subdivision. The train had seven locomotives however only three derailed as well as the first eleven loaded multi-levels carrying new automobiles destined for Ingersoll, Ontario. Power to the Town of Charlotte was interrupted as well as 1000 feet of track destroyed. GTW detoured trains over Conrail from Battle Creek to Detroit. The westbound main was opened at 24:00 on December 2; locomotives involved were GP9u 4606, 4600 and 4624, the 4606 may be retired. The cost of the derailment exceeded US$3-million and no cause has yet been determined.

CANADIAN PACIFIC RAILWAY

The public got its first look December 10, 1998 at a special rail car that could help cut the carnage of wild animals in Banff. The C$500,000 vacuum vehicle is the first of its kind in Canada. It will suck up grain that spills from railway cars, attracting animals onto the tracks and into the path of trains. The car will be used on the Canadian Pacific Railway line through Banff and Yoho national parks. Over the past 16 years, an annual average of 33 large animals are killed in the parks by trains. The Alberta Wilderness Association, suggested the CPR should adopt new policies to slow trains down in the national parks, especially in high collision areas and the railway should consider elevating sections of track to allow for safe passage of wildlife.

Canadian Pacific Railway is banking on new access to the US east coast as a source of growth to compensate for lower commodity shipments, CPR president Robert Ritchie said December 12, 1998. The U.S. Surface Transportation Board was to receive final submissions before it makes a decision, expected by year end, on the rules and conditions for CPR's new access to New York City and Philadelphia. CPR, through its Delaware and Hudson subsidiary, has trackage rights to the east coast but has not been permitted to pick up goods along the way because the track belongs to CSX. CPR has been granted direct entry to New York City. CPR will begin service in 1999 to more of the New Jersey and Philadelphia markets and have direct access to New York City and to that city's port container terminal. The difficulty is that CPR does not own the track leading to those destinations; it only has trackage rights over lines that now belong to CSX. CSX, in its submissions to the board, has been trying to curtail CPR's access to customers along that track.

Canadian Pacific Ltd.'s railway unit expects higher operating profit in 1998, despite a difficult year for commodities shipments, the company's president and chief executive said December 12. Canadian Pacific Railway expects the fourth quarter of 1998 to be our strongest quarter of the year, and expects operating income for the full year to be strongly above that for 1997. In 1997, the Calgary, Alberta-based railway posted record operating income of C$668 million, excluding special gains. CPR is planning capital expenditures of C$800 million in 1999, after a record topping C$1 billion this year, mainly as part of its locomotive fleet renewal. Capital spending would then drop back to between C$500 million and C$600 million over the following two years. Looking to 1999, Ritchie is optimistic about new opportunities for its St. Lawrence & Hudson Railway, a wholly-owned unit based in Montreal which owns or has rights to some 2,000 miles of track stretching from Montreal through Toronto to Chicago and from Montreal to Washington, D.C.

Canadian Pacific Railway (CPR) will defend itself vigorously against a C$45-million lawsuit filed December 23, 1998 by the Canadian Wheat Board (CWB). CPR is disappointed the Canadian Wheat Board has begun a long and costly legal process when CPR has offered the possibility of non-binding mediation to reach an out-of-court settlement. The company added the CPR has never willfully discriminated against grain shipments and will vigorously defend that fact. The CWB's C$45-million statement of claim, filed in the Federal Court of Canada, follows about 10 weeks of Canadian Transportation Agency (CTA) hearings held earlier this year to investigate a CWB level-of-service complaint about railway service during the winter of 1996/97. CPR provided an appropriate and reasonable level of service to grain shippers, performing as well as possible during the winter of 1996/97, when severe weather hobbled transportation throughout Canada and parts of the United States.

The CTA ruled in September 1998 that the majority of service impacts during the winter of 1996/97 were weather related and that fault could only be reasonably attributed to CPR for a small number of grain movements during a limited period of time in only one grain corridor. The agency issued no orders against CPR and, at the same time, lauded the performance of railway workers in the face of exceptionally harsh winter conditions.

Canadian Pacific has completed the acquisition of Australia - New Zealand Direct Line from its two owners, Bollor Group of France and Brierley Investments of New Zealand. The transaction includes ANZDL's container shipping services and brand name in two key regional trades, US West Coast to-from Australia/New Zealand and Trans-Tasman. Also included are ANZDL's organisation, its containers and chartered ships. ANZDL is now part of CP Ships, Canadian Pacific's container shipping business. The acquisition will increase CP Ships' annual revenue and container volume by nearly 15%. As one of the most readily recognised brand names in the Australian trades, ANZDL will strengthen substantially CP Ships' presence in these markets, where it began building a regional platform in October 1997 with the acquisition of Contship Containerlines. The two lines will continue to operate with separate focused management, and market their respective brands individually.

A quarterly dividend of 14 cents Canadian per share on the outstanding Common Shares of Canadian Pacific Limited was declared December 8, 1998 by the Board of Directors. The dividend is payable on January 28, 1999 to shareholders of record at the close of business on December 24, 1998.

The Surface Transportation Board has ordered that Delaware & Hudson train-dispatching offices should remain in the United States. The decision affects five dispatching positions that D&H parent Canadian Pacific planned to move from Milwaukee, Wisconsin, to Montreal to join dispatchers of CP's eastern Canada subsidiary, St. Lawrence & Hudson, of which D&H is also a part. D&H dispatchers were brought from New York State to Milwaukee in the early 1990's when most of the dispatchers for CP subsidiary Soo Line were in Milwaukee. CP subsequently moved the Soo dispatchers to Minneapolis. Originally, the STB said the D&H jobs could be moved to Canada, but the dispatchers asked for a reopening of the proceedings, and a statement from the US Federal Railroad Administration was obtained which suggested that the offices should stay in the United States. The FRA is proposing a new regulation that all rail lines in the United States be dispatched from US soil. The possible FRA decision forced a review of this case, and the STB then sided with the FRA. It is possible that CP will move the D&H positions back to New York State. What this decision does not reflect was the future; CP may well have moved everybody to Montreal then (and in their grand plan) everybody was probably then to be uprooted two or three years later and moved to Calgary Alberta. Head office is in Calgary hence all other similar functions "should" be located there as well; or so was the thinking. CP figured if CSX can dispatch from Florida, CP could dispatch everything from Calgary. This may have been flawed. There would have been unfamiliarity with the territory with dispatchers controlling trackage they have never seen let alone heard of or thought existed.

St.L&H and the CPR are in the process of relettering their highway vehicles in Southern Ontario from St.L&H to Canadian Pacific. Apparently CPR is planning to assemble new hump sets consisting of one SW1200RS LSC daughter hump control slug with two SD40's. The source has suggested three hump sets initially; and if successful, more to follow.

The new Iron Highway Terminal at Derry Road and Winston Churchill Road in Mississauga Ontario, west of Toronto is nearing completion. Iron Highway operations currently located at the St.L&H facilities in West Toronto will move once the facility is complete and Iron Highway trains will originate on the Galt Subdivision there for points east and west. April 1st, 1999 is the target for the Iron Highway to get SD40's instead of the GP38-2's.

INDUSTRY NEWS

Locomotive Leasing Partners (LLPX) GP38-2 2203 (ex-FNM 9275) is due to be released from Alstom (AMF) in January 1999. The locomotive was to be painted in the LLPX colours of blue and white with GATX/EMD lettering. The repairs of NYS&W B40-8 4006 are completed. It is expected she will be released fully painted sometime in December 1998. The eighth CNR GM SD75I being built from kits has entered the paint shop and Alstom has negotiated a contract for ugrades to 40 BNSF units.

Bombardier Inc. has landed a C$2.6-billion contract from a British rail company to supply and maintain its rolling stock. The deal, which Bombardier called the biggest rail-transportation contract it has ever been awarded, is with the Virgin Rail Group. The final order is for the design, supply and maintenance of 78 trainsets, comprised of 352 diesel electric cars, of which 216 will be equipped with Bombardier's tilt technology. Bombardier will maintain the new trainsets as well as Virgin Rail's CrossCountry fleet for the next 13 years. The rolling stock accounts for approximately C$955 million, while the maintenance portion represents about C$1.64 billion. The 352 cars will be manufactured at Bombardier Transportation's facilities in Britain, France and Belgium. Deliveries will begin in December 2000 and run through July 2002. Bombardier Transportation is a unit of Montreal-based Bombardier Inc., a conglomerate active in aerospace, rail transportation equipment, recreational products and financial services. The parent company's revenues for the fiscal year ended last January 31 were C$8.5 billion. Bombardier has announced that Robert Brown is replacing Laurent Beaudoin as president and chief executive officer. The change is effective February 1st, 1999.

Bombardier Transportation said December 21, 1998 it has received orders worth C$180 million to supply rail coaches in Germany and Usbekistan. Deutsche Bahn has ordered 98 double-deck passenger coaches, representing part of an option of 350 ordered by the German rail network. This purchase brings the total vehicles ordered by Deutsche Bahn to 499. It will use the coaches to carry passengers to and from the Expo 2000 world exhibition in Hannover. The value of the order is C$148 million and deliveries are to begin in the second half of 1999. They will be supplied by DWA, Bombardier's German-based division, and built in Gorlitz. Bombardier also got an order to supply 25 passenger coaches for Usbekistan, worth about C$32 million. The vehicles will be built in Halle, Germany, for delivery in 2000. The Usbekistan State Railways fleet is comprised of more than 500 coaches already produced by DWA.

A rapid rail-shuttle service between downtown Montreal and Dorval Airport could be functioning in four years; if a feasibility study now under way comes to fruition. The service would feature departures every 20 minutes or half-hour and run 20 hours per day from 5:30 a.m. to 1:30 a.m., said Michel De Bellefeuille. He is manager (commuter services), at the Montreal-based St. Lawrence & Hudson Railway arm of Calgary- based Canadian Pacific Railway Co. CP would like to build a spur line from the Dorval station to take travellers directly to and from the airport. St. Lawrence & Hudson would dedicate a track running from the Windsor terminus just west of the Molson Centre, with stops along the way at the Vendome metro station and at the existing Dorval rail station. Depending on the equipment chosen, the service could run as fast as needed and make each run in less than 20 minutes. The feasibility study is being carried out by the Agence Metropolitain de Transport which is responsible for commuter-train and regional-transportation planning. Another partner in the project is Aeroports de Montreal. News of the anticipated service surfaced when Jacques Cote, president of St. Lawrence & Hudson, disclosed that such a rapid-rail link could be running "in three or four years."

A popular summer attraction in Manitoba is returning in 1999. The Prairie Dog Central operated one of the oldest vintage locomotives in North America. The federal and provincial governments have each put up C$300,000 to get the train running again in 1999. Private donations to the attraction totalled more than C$500,000. The train shall be operated by the Vintage Locomotive Society and costs will be covered by passenger fees. The train will run on weekends and holiday Mondays, from Winnipeg, Manitoba.

Santa was real to thousands of children in the Lower Mainland of British Columbia thanks to West Coast Express passengers. Riding the fourth annual Santa Trains from Mission to Vancouver, thousands of passengers donated gifts and cash to Christmas Bureaus and related agencies along the WCE route. SHARE Community Services in the Tri-Cities, the Christmas Hamper Society in Maple Ridge, Haney and Pitt Meadows and the Mission Christmas Bureau reported that more than 1800 gifts and C$800 in cash were donated by Santa Train passengers. Santa Trains ran December 12 and 19, bringing holiday crowds into Vancouver in the morning and returning them home at night. Fares were waived for passengers donating toys or cash to help bring Christmas to needy children. West Coast Express donated the train, Canadian Pacific Railway donated track time and crews, and VIA Rail donated maintenance and cleaning staff.

Five ex-VIA Rail RDC-1 Budd cars were recently sold to Cuba for tourist and excursion service, being moved from storage in Toronto for work at CAD industries in Lachine, Quebec. Three are former Canadian Pacific units (CP 9049 originally Duluth South Shore & Atlantic 500, as well as 9055 and 9100); one was former CN D-352) the fifth was built for the Chicago & Eastern Illinois. The numbers would correspond to VIA 6124, 6132, 6147, 6120 and 6109. An RS18m's recently sold to Cuba was painted at Canac, Montreal, and appears ready to be shipped. It is numbered 29004 and is lettered Acinoc. These ex-CN locomotives which had been converted to RSC-14s from MLW RS18s numbered 1750 and 1751 were sold by Canac. Since the first two that went there a few years ago were 29001-29002, one may assume this one and its yet to be painted mate will be numbered 29003 & 29004. Neither of these units have been chop-nosed.

On December 21, 1998, westbound and eastbound GO Trains were delayed for hours as a GO train and a Jeep Cherokee met in the fog on the CN Kingston Subdivision and all morning rush GO trains were cancelled from Oshawa to Toronto Union. The 401 was blocked from Oshawa to Pickering. The morning VIA train, #651, was the first westbound by the scene at about 08:35 and it was delayed by about 15-20 minutes. The red Jeep Cherokee was still lying on the centre track, almost underneath the Markham Road overpass, when 651 went by at 5mph on the north track. An eastbound GO train was being inspected by police on the south track. The Jeep was not on a grade crossing when it was hit as this is well to the west of the Scarborough Golf Club Road crossing (the only crossing before Guildwood). The Jeep had been stolen and was deliberately driven up onto the tracks and abandoned. At least four GO Transit eastbounds and two VIA eastbounds were lined up all the way back to Scarborough. The eastbound GO trains would have formed the westbound morning rush from Oshawa. Passengers were being bussed to Scarborough Town Centre by GO bus; however there were insufficient buses to handle the overflow.

While many are concerned about the brain drain of Canadians to the United States, there is a similar activity on Canadian railways. CNR & CPR are increasingly putting their focus on the United States at the same time as they continue to cut jobs and abandon track in Canada. Presently 39 per cent of CN's business is in the United States or across the Canada-U.S. border. With the proposed acquisition of Illinois Central this will rise to 50 per cent. It would appear to CN that north to south trade is growing at about 10 per cent annually, versus east to west trade at around three to four per cent.

Canadian Pacific was also active in the United States during 1998, trying to protect its northeastern subsidiary Delaware and Hudson from being squeezed into oblivion in the wake of major consolidation by U.S. carriers. Calgary-based CPR has also signed an alliance with Norfolk Southern so it can develop a double-stack container service for a North-South corridor bypassing Chicago as well as New York. CPR's trans-border corridor between Chicago and Vancouver is also poised to expand. Major expansions were completed to inter-modal yards in Toronto and Calgary, while expansion of the Vancouver yard will be completed in 1999. Both railways see the United States as a growing market, where less restrictive tax laws are in place and deregulation is farther advanced than in Canada. A parallel trend to the disposal of employees, and track in Canada is the creation of more shortline railways, as entrepreneurs take up track sold off by CN and CP Rail and try to make a profit carrying local traffic, and feeding freight to the two majors. By the end of 1998 were 48 railways in Canada, up five from the same time last year. Since the Canadian rail industry started to be deregulated in mid-1996, 7,231 kilometres of track were transferred to new owners, and 1,213 kilometres were abandoned.

A long-awaited review of how grain is handled and transported in Canada was released Wednesday December 30, 1998. Justice Willard Estey's report includes 15 recommendations to improve Canada's grain-handling system including a suggestion that the Canadian Wheat Board back out of its role in grain transportation. "Apart from sales and marketing, it is recommended that the Board have no operational or commercial role in the handling and transportation of grain," the report says. It also recommends the multi-party group that deploys grain cars to port should be abandoned, and those decisions left to rail companies. Such a recommendation was the main feature in Canadian Pacific Railway's presentation to the Estey commission. The report also suggests some new rules for the railways. It recommends rules be clarified and modified to make it easier for short-line operators to buy abandoned track and have greater access to main lines. As well, it suggests communities receive some form of compensation for branch-line abandonment. The report also says a greater proportion of federal and provincial fuel taxes be directed to highway maintenance and that ports at Prince Rupert, BC, and Churchill, Manitoba, be upgraded. The National Farmer's union is criticizing the report. The group says a recommendation to get rid of a cap on grain freight will lead to rural rail service closures.

Without a cap, and with added competition, the farmer's union says higher cost rural lines will be closed. The group says that will hurt rural farmers, who will be forced to truck their grain at a higher cost. The Saskatchewan Association of Rural Municipalities is pleased with at least one of the recommendations of the Grain Transportation Review. The suggestion that private companies be allowed to run trains on CN and CP lines, providing they met certain criteria would lead to better utilization of railway lines.

The Ringling Brothers Circus Train is coming to Eastern Canada. Conrail, or its successors will deliver the train to the St.L&H at Niagara Falls, Ontario on June 7, 1999 for delivery to Toronto. The train will then proceed back west to Hamilton for June 14; then on June 20 travel from Hamilton to Ottawa; on June 28 the train will travel from Ottawa to Montreal; and on July 5, the train will travel back to the United States.

Ontario Northland has a new experimental paint scheme. GP38-2 #1800 was released some weeks ago in the new livery of orange nose and cab, dark blue carbody, with a white O.N. RAIL, with a curved line below, plus a couple of stripes. The very large letters ON are applied to the nose a la CPR, to the rear and on each side of the hood. RAIL, again in large white letters appears only on the side of the hood following the letters ON. The balance of the reporting marks are in white. 1800 was spotted at Toronto's Union Station on December 31, 1998 so the locomotive is making the rounds. No photographs available yet.

VIA RAIL

A federal plan to split VIA Rail into private franchises would doom the railway, officials at a conference on the railway's future were told. Politicians and researchers said the plan, being studied by a cabinet committee, would spell the end of the passenger railway, which has seen its budget slashed in recent years. Bloc Quebecois member Michel Guimond says the franchising plan will threaten jobs at VIA. Guimond says franchising should be tried as a pilot project. But he says if the government gives away everything, Via Rail will be nothing but an empty shell. Guimond said he believes VIA Rail's head office in Montreal would be closed under the proposal. He said the plan would be a major blow to Montreal's already declining role as Eastern Canada's main transportation centre. The conference also heard from University of Alberta professor John Bakker, who presented the results of his study on the British railway franchising system. He concluded that service to passengers deteriorated and the system mainly benefitted shareholders and their lawyers. The Commons committee tabled a report in June that said Via's existence hangs in the balance. In October, Federal Transport Minister David Collenette said getting the private sector involved may be the only way to keep VIA Rail viable.

The National Post in its December 12, 1998 edition reported a British bank has been hired to advise Ottawa on selling VIA Rail. Hambros Bank, which oversaw the privatization of British Rail in 1992, will produce a business plan to break VIA into three operations. Sources told the Post that several groups may be prepared to bid for the proposed franchises which will cover Western Canada, Atlantic Canada and the Windsor-Quebec corridor. The interested groups include Richard Branson's Virgin Rail, which operates Britain's western region, and Montreal-based Bombardier. A spokesman for Collenette says the government remains committed to the long-term future of passenger service in Canada.

On Saturday December 12, 1998 VIA ran a Santa Claus Train for the Toronto based employees of VIA/CN. VIA 6434 east operating as 695 passed Seaway at around 14:00 or so. There were 8 coach cars and a dome car on the rear. This train operated between Union Station and Niagara Falls VIA Station, turning on the Stamford Sub. at Clifton. The train passed through Hamilton on it's return trip at about 16:45 and the consist included the F40s 6434, Home Hardware 6429, 8 LRC coaches, HEP 8610, and dome observation Tweedsmuir Park bringing up the markers. As an aside, the 6434 has been updated with a small Canadian flag between the number boards, and the word "Canada" above the headlight on the nose. In addition VIA has been repainting coaches by emblazing the word "Canada" in large letters on the sides of the coaches. In addition recently repainted VIA coaches have the word "Canada" emblazoned in very large railroad font centred on the sides below the windows as well as large Canadian flags on the sides of the cars near the doorways.

Seen in mid-December 1998 enroute to Mexico were former VIA Electro-Mechanical (EM) coaches 5452, 5455, 5476, 5486, 5489, 5490, 5501, 5533, baggage 9663, steam generator car 15405. The Tuscola & Saginaw Bay in Michigan has purchased from Canac former VIA Cafe Lounge 762, EM coaches 5447, 5576, 5581, 5646 and steam generator 15481.

SHORTLINES

Canadian National Railway will transfer its Pine Falls subdivision to Brandon-based Cando Contracting. The 107-kilometre line extends northeast from Winnipeg to the community of Pine Falls. The subdivision currently handles about 7700 cars of freight traffic annually, serving shippers in the forest and industrial products, coal and grain industries. Cando provides maintenance and freight transportation services to the nation's railroads and a variety of shippers.

There were no injuries when a train derailed one mile east of Mattawa, Ontario the morning of December 21, 1998 on CPR trackage operated by Ottawa Valley RaiLink. Train 431 consisting of CPR SD40-2's 5790 and 5921 as well as 20 cars carrying general freight were derailed.

Eamons Transportation Group, Inc., announced December 23, 1998 that, subject to making certain filings relating to its financing, it has completed the acquisition of a 94-mile rail line in Quebec, Canada, through a newly formed subsidiary, the St. Lawrence & Atlantic Railroad (Quebec) Inc. ("SLQ") for C$7,000,000. On July 23, 1998, Emons announced an Agreement In Principle to acquire this rail line, designated as the "Sherbrooke Line", from Canadian National ("CN"). The Sherbrooke Line connects with CN's Halifax-to-Montreal main line at Ste. Rosalie, Quebec, and Eamons' New England operations, the St. Lawrence & Atlantic Railroad Company ("SLR"), at the Quebec/Vermont international border. Based on current levels of business, SLQ will handle about 23,000 carloads of freight in the first 12 months of operations, as well as 10,000 to 12,000 intermodal trailers and containers travelling between SLR and CN. As a result of this transaction closing later than anticipated, SLQ began operating the line on December 1, 1998, under an interim agreement with CN.

Canadian Pacific Railway (CPR) announced November 20, 1998 it has finalized an agreement to transfer its rail operations in the Okanagan region of British Columbia to OmniTRAX Canada. Under a long-term lease agreement with CPR, OmniTRAX Canada has established a new shortline company; the Okanagan Valley Railway (OKAN) to provide rail service on the Okanagan Subdivision, a 151-km (94-mile) stretch of track from Sicamous south to Armstrong, Vernon, Lumby and Kelowna, B.C. The new railway is scheduled to take over operations of the Okanagan line on November 21, 1998. The Okanagan Valley Railway will provide rail service to and from CPR's east-west main line at Sicamous, with running rights over the 77-km (48-mile) CN-owned southern section of the line, between Vernon, Lumby and Kelowna. CN will continue to operate via long-established running rights with CPR between Armstrong and Vernon. With a direct connection to CPR's main line at Sicamous, the Okanagan Valley Railway will provide shippers and receivers on the Okanagan line with continued rail access to Canadian, U.S., and international markets. Among the freight currently carried on the Okanagan Subdivision are aggregates, forest and resource products, chemicals and some grain. There is no passenger service on the line.

RailAmerica hopes to have the final agreement for startup on the E&N Railway, signed with the CPR by December 30th, with an official startup date by January 15 1999. RailAmerica locomotives bright red and silver GP38's 3809, 2796, 2813 and GP 10's 1001, and 1002 are currently being stored in Vancouver, BC at the Southern Railway of BC yard, and will be shipped by railway barge to Nanaimo on Vancouver Island two days before startup.

DEPARTMENT OF CORRECTIONS

***In a previous column I identified the new owners of the Ottawa Central as Genesee Rail-One. This was incorrect, my apologies!***

The Quebec Railway Corporation [QRC]; the operators of the Chaleur Bay Railway, Charlevoix Railway Co., and co-owners of the New Brunswick East Coast own the Ottawa Central. The present roster consists of RS-18u's 1815, 1824, 1828, 1838, 1842, and 1865, plus C-424 4202. Start-up was Monday, December 14, 1998. The Ottawa Central is the operator of the former CN Alexandria Subdivision between Coteau Station, QC and Hawthorne (just outside of Ottawa) and the Beachburg and Renfrew Subdivisions. Paint is gloss black with a yellow frame stripe and white diagonal stripes on the ends. The 1815 and the 1848 don't have the yellow frame stripe. As the OC shares the line with numerous VIA trains operating between Ottawa and Montreal, the regular train picks up empties from the Ontario L'Orignal railway on its northbound trip and takes them to Ottawa and the returns south the following day with all of the empties, and additional day in the car cycle. Also on the Ottawa Central has also leased the U33B with reporting marks ADSX 3300, the unit being built 1068 36873, for PC/CR 2895, to Moxahala Valley, Panther Valley, then Reading, Blue Mountain & Northern, then Merrillees. Anyhow, it will sure be a strange thing to have in the Ottawa Valley and also Ontario's only true working U-boat.

MOTIVE POWER

Canadian National:

CN 1369 retired 1202, SD40 5205 retired 1211. GP9u 4105, was retired 1109, was then reinstated 1127, was then again retired 1204. GP9u 4012, retired 1123, was then reinstated 1204; and placed in long term storage. The 18 Kansas City Southern units, upgraded from various CN SD40 locomotives have now been sent to the Kansas City Southern. The locomotives are being sent to UP and BNSF to pay horsepower hours owed. GTW 4707 & 4702 have been sold by Western Railroad Dismantlers in Bliss Idaho and they were moved from CLN in Charny Quebec to the South Central Florida and renumbered 9022 and 9021 respectively.

Canadian Pacific:

There was a special CPR train of five retired units in December; GP9 1606, SD40's 5660, 5738, 5938, 6032 all moving from Ogden Shops in Calgary Alberta to Mandak Metals at Selkirk, Manitoba to be scrapped. Broadway Motors, a company based in Chicago Illinois has purchased Soo SD40's 737, 742, 744, Soo SW1200's 1209, 1222, and CP GP30 5001. Soo SW1200 1209 is sitting at St. Luc Yard, in Montreal still in faded Milwaukee Road colours with the numbers barely legible.

The last of the CP MLW C424's have all been sold to the parent company of the New Brunswick East Coast, The Quebec Railway Corporation of which RaiLink owns 27 percent; the balance owned by residents of Quebec has acquired 4210, 4219, 4230, 4235, 4237, and 4243.

At of the end of December 1998, AC440CWs 8534, 8577, 8578 of the order for 80 of those locomotives assigned to the Soo Line yet to be delivered. Of the Ogden-constructed SD90MACs, 9100, 9102, 9103, 9112, 9119, 9120, 9121, 9122, 9124, 9126 were in mainline service across Canada. Units numbered 9104 to 9111 were at VMV for painting and were expected to be delivered in 1999.

SHORTLINES:

A pair of former Squaw Creek Coal U33C's, 3809 (ex-Southern) and 5752 (ex. BN), both waybilled from Joseph Day, Boonville, Ind., to CLN Industries, Capreol, Ont.

The 4 BC Rail M420s sold to OmniTRAX have arrived on the Carlton Trail and Hudson Bay Railways. The former BCR M420W 643 and M420B 681 went to the Carlton Trail, M420B's 683 and 685 were sent to the Hudson Bay Railway at The Pas, in Manitoba. All units should be in full BCR red, white and blue paint. M420Ws 641, 644, 646 and 647 are still in user with 642 as shop switcher at Squamish. BCR's RS18 630 has gone into the shop for conversion to a Caterpillar power. BC Rail has leased HLCX SD40u 6056 ex-HLCX SD40 5008, nee Kansas City Southern 609; HLCX SD40u 6060 ex-MPI SD40 9022, exx-MK 8304, exxx-UP 3059; HLCX SD40u 6074, ex-HLCX SD40 5039, exx-CRL 835, exxx CR 6304, nee PRR 6051; HLCX SD45-2M 6518, ex MKCX 9522, exx CSXT 8935; HLCX SD40u 6083; HLCX SD45m 6518; HLGX C30-7 6801, 6803. In addition the following locomotives are soon expected: C30-7u's 3621-3626 in full BC Rail paint. These are ex-HLCX 6701, 6703, 6708, 6709, 6707, 6705; nee Conrail 6601, 6603, 6608, 6609, 6607, 6605.

The New Brunswick Southern has sub-leased two E-Amtrak EMD FL-9 locomotives 484 and 487 from the Bangor & Aroostook Railroad to be used as trailing power on freights. The Canadian American Railroad has leased and had regeared for 65 mph freight usage eight Amtrak F40's numbered 254, 266, 345, 364, 365, 376, 397 and 403, all of which are either on the property or enroute; still in full Amtrak colours. After regearing these locomotives should be considered equivalent to a GP-38 locomotive albeit with a different carbody.

Across the Canadian Shield is a recent publication published by the CN Lines Special Interest Group. The publication illustrates railroading in the northern reaches of the province of Ontario covering the period of transition from steam to diesel power in the late 1950's on the CNR. Edited by Al Lill and Robert Wanner this publication portrays railroading from a very different perspective. The publication is hardbound and priced at C$49.95 in Canada or US$36.95 for US orders. To order by mail please send cheque or money order payable to CN Lines Books, 260 Henderson Highway, Winnipeg, MB R2L 1M2, Canada. Please add $5.00 for postage and if mailing to a Canadian address, 7% GST on to the price of the book.

Thank you to the following individuals for contributions for the February 1999 Canada Calling: Rainer Auer, Will Baird, Christian Base, Brent Best, Robert Bowdreau, Kenny Borg, Gerry Burridge, Reg Button, Bruce Chapman, Alex Collins, Glenn Cunningham, Gil Emery Jr., Steve Goodman, Roman Hawryluk, James R. Hay, Joseph F. Kazmar, Randy Kotuby, Doug Page, JDBR, Earl Roberts, Jim Sandilands, Robert Sandusky, Donald S. Scott, The LGR Smith Company, Dennis Smolinski, Mike Swick, Byron Thomas, Drew Toner, Robert Wanner, Adolf W. Wolf.

Please continue to send contributions by snailmail to Bryce Lee, 1377 Eden Place, Burlington, Ontario L7S 1J9 Canada or by e-mail to brycelee@globalserve.net. Alternate e-mail shpbur@passport.ca

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