Rail Security Alliance Morning Briefing

Feb. 16, 2023

If you read one thing, see Freight Waves: Trade groups applaud House bill that encourages rail car scrapping.

Also note, Boston’s WCVB reports on Gov. Healey and CRRC:

“The governor says the firms will examine ‘the barriers that have kept CRRC MA from reaching the car delivery levels’ and ‘the contract, tariff and regulatory implications of potential changes to the contract that would enhance performance and increase the rate of delivery and ensure safety.'”


In News

  1. Freight Waves (Feb. 15): Trade groups applaud House bill that encourages rail car scrapping. https://www.freightwaves.com/news/trade-groups-applaud-house-bill-that-encourages-rail-car-scrapping
  2. WCVB (Feb. 15): Gov. Healey wants answers on new MBTA Red, Orange Line car delays. https://www.wcvb.com/article/healey-mbta-red-orange-line-car-delays/42927201
  3. Bloomberg (Feb. 14): Canada Clamps Down on Military Research as China Concerns Grow. https://www.bloomberg.com/news/articles/2023-02-15/canada-clamps-down-on-military-research-as-china-concerns-grow?sref=4SZHqxCV
  4. Bloomberg (Feb. 15): China’s Xi Urged Stronger Measures to Boost Domestic Demand. https://www.bloomberg.com/news/articles/2023-02-15/china-s-xi-urged-stronger-measures-to-boost-domestic-demand?sref=4SZHqxCV
  5. The Wall Street Journal (Feb. 15): Amid Tensions With U.S., China’s Top Diplomat Travels to a Wary Europe. (Feb. 15): https://www.wsj.com/articles/amid-tensions-with-u-s-chinas-top-diplomat-travels-to-a-wary-europe-2769c5c5

Freight Waves: The trade associations for rail equipment and component manufacturers are rallying behind a U.S. House bill they say would incentivize the production of new rail cars or the modernization of existing ones.

  • The Railway Supply Institute (RSI) and the Rail Security Alliance (RSA) lent their support to the Freight Rail Assistance and Investment to Launch Coronavirus-era Activity and Recovery Act, also known as the Freight RAILCAR Act of 2023. The legislation, co-sponsored by Illinois Reps. Darin LaHood, a Republican, and Brad Schnieder, a Democrat, would amend the IRS Code of 1986 in order to provide a time-limited tax credit to encourage the replacement or modernization of inefficient and outdated freight rail cars. “Railway supply is at the heart of safe, efficient and sustainable movement of people and products in the United States,” RSI President Patty Long said in a Tuesday news release. “For this reason, RSI strongly supports legislation that will offer tax credits encouraging the adoption of new, more efficient and environmentally friendly freight railcars.”
  • According to the RSA, approximately 250,000 rail cars will need to be updated over the next 15 years. The current North American rail car fleet consists of more than 1.6 million rail cars, with approximately 291,000 in storage, according to the alliance, which is a coalition of North American rail car manufacturers, component suppliers and others that formed in response to the development of a Chinese-owned rolling stock manufacturing conglomerate in 2015.
  • “Due to modern manufacturing methods and materials, new rail cars have significant safety and efficiency improvements that result in more goods being delivered to market faster, while reducing wear and tear on rail lines, further reducing incidences of service disruptions,” Rail Security Alliance said.

WCVB: New Red and Orange Line cars being built in Springfield are constantly delivered behind schedule, and now Gov. Maura Healey is trying to find out why. The governor brought in engineering and law firms to take a hard look at state contracts with CRRC, the China-based Springfield company making the new trains.

  • “They have already started work. In fact, our secretary of transportation was out there on the ground on Monday. We are going to be all over this,” Healey told WBUR.
  • The MBTA hasn’t seen a new shipment of cars in months, and the company continues to push back timelines. The governor says the firms will examine “the barriers that have kept CRRC MA from reaching the car delivery levels” and “the contract, tariff and regulatory implications of potential changes to the contract that would enhance performance and increase the rate of delivery and ensure safety.”
  • “There are operational issues that need to be addressed, and problems are being corrected as they occur. The team will have a constant presence at the facility right now,” Healey said. “I think the governor has clearly made this a top priority, which is really important,” said former State Transportation Secretary Jim Aloisi.
  • Aloisi hopes a fresh look at the contracts will pay off, but he said much more is needed. “Massachusetts and the MBTA’s riders need to have quality control, quality assurance professionals, people who know this business on the job in Springfield at all times,” he said.

Bloomberg: Canadian Prime Minister Justin Trudeau’s government will stop funding projects affiliated with universities, institutes or labs connected to foreign military, national defense or state security entities. Tuesday’s announcement seeks to close the loop on so-called sensitive research areas that pose risks to national security, according to a government statement.

  • The Globe and Mail reported last month that 50 Canadian universities had extensive research collaborations with the Chinese military since 2005. The projects with China’s National University of Defence Technology included areas such as quantum cryptography, photonics and space science, the newspaper said. “This new action is one of many significant steps the government of Canada is taking to protect our country, our institutions and our intellectual property,” the government said, adding that guidelines were introduced for due diligence and risks to research security.
  • Like many of its allies including the US, Canada has been taking a tougher stance against China in recent months. Late last year, the country announced rules that made it harder for foreign state-owned enterprises to pursue takeovers or invest in the mining industry, targeting many Chinese firms.

Bloomberg: China is facing insufficient demand this year and the country needs “more forceful measures” to expand domestic spending, President Xi Jinping said late last year in a speech which promised more favorable policies to support private and foreign businesses.

  • China must give priority to the recovery and expansion of consumption in 2023, Xi said last December, according to an excerpt of a speech he gave at the Central Economic Work Conference. The excerpt was published Wednesday in the Communist Party magazine Qiushi.
  • It is necessary to increase the incomes of urban and rural residents, especially for low- and middle-income people who have a higher propensity to consume but have been greatly affected by the pandemic, according to the speech text. Consumer credit support should be increased in areas including new energy vehicles and elderly care services, he said.
  • China will need to rely on domestic consumption and investment to drive any economic rebound this year, with exports weakening and housing construction still dropping due to the real-estate bust. Households have accumulated a record amount of savings during the pandemic, fanning hopes that that money will be spent on consumption, but some economists have argued that the amount of extra cash which would now likely be spent is much smaller than commonly estimated, especially as a lot of it is held by the rich who have less need to consume. Unlike in the US and elsewhere, China didn’t provide pandemic stimulus checks and consumer subsidies that could fuel a post-pandemic recovery. The government’s support has focused mainly on helping businesses continue and thus preserving jobs, with senior officials saying repeatedly that free cash may give rise to welfare dependency and lower productivity.

WSJ: Wang Yi, China’s top diplomat, kicks off a weeklong visit to Europe and Russia with a difficult task: Repair fraying relations in the region at a time of heightened tension with the U.S., growing European wariness toward Beijing and concern over China’s partnership with Russia. Mr. Wang met on Wednesday with French President Emmanuel Macron at the Elysée Palace, followed by stops in Italy, Hungary and Russia.

  • The trip comes as Russia’s invasion of Ukraine stirs deep security worries in Europe—fears that have cast a chill over relations with China in light of Moscow’s close ties with Beijing. The level of skepticism in Europe is lower than that of the U.S., where the arrival of a balloon the Biden administration has called part of an extensive spying effort has fanned anger toward China. But doubts remain. “Wang Yi’s visit will not be a reconciliation,” said Alicia García-Herrero, chief economist for Asia-Pacific at Natixis. “Europe is not in the mood for love.” Mr. Wang’s stop in Russia underscores the close relationship between the two countries. Russian officials have said Chinese leader Xi Jinping is expected to visit Moscow, likely after China’s legislative sessions in March. That would be the 40th in-person meeting between Mr. Xi and Russian President Vladimir Putin.
  • The Chinese leader’s close ties with Mr. Putin will also come under scrutiny during Mr. Wang’s appearance at the Munich Security Conference later this week. Top U.S. officials, including Secretary of State Antony Blinken and Vice President Kamala Harris, will be there, as will European leaders. Before the invasion of Ukraine one year ago, Messrs. Xi and Putin declared their nations had a friendship with “no limits.” Beijing has since called for a peaceful resolution to the conflict, but hasn’t condemned the invasion and has sought to portray the U.S. as the chief instigator.

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