Posts Tagged ‘Union Pacific’

NS Requiring COVID-19 Vaccinations for Employees

October 21, 2021

Norfolk Southern told its employees on Wednesday that they must be vaccinated against the COVID-19 virus by Dec. 8.

In a memorandum sent to employees, NS said the move is in reaction to an executive order issued by President Joseph Biden and various related guidelines requiring federal contractors to require vaccinations for all employees.

The memo noted that NS is a federal contractor because it handles shipments of military vehicles and jet fuel for the U.S. Department of Defense.

NS is the second Class 1 railroad to announce an employee vaccine mandate. Union Pacific said on Oct. 13 it was requiring vaccinations by Dec. 8.

The mandates have draw opposition from three railroad labor unions, which are threatening work stoppages if the mandates are not rescinded.

The unions are the Transportation Division of the International Association of Sheet Metal, Air, Rail and Transportation Workers; the Brotherhood of Locomotive Engineers and Trainmen; and the Brotherhood of Maintenance of Way Employees.

UP and the unions have both filed lawsuits over the vaccine mandate.

Railway Age columnist Frank Wilner wrote on the trade journal’s website that the unions are not directly opposing mandatory vaccinations but demanding that UP collectively bargain such a result.

The unions want the railroads to give their members additional pay for becoming vaccinated.

The text of the NS memo can be read at https://www.railwayage.com/freight/class-i/ns-requiring-covid-19-vaccinations-for-all-employees/

Supply Chain Congestion Seen as Lasting 6 Months

September 17, 2021

Industry observers expect that the tangled global supply chain will take at least six months to untangle, reported Trains magazine this week on  its website.

The magazine quoted intermodal consultant Larry Gross as saying the strain on the intermodal operations is unprecedented, the worst he has seen in his 41 years in the business.

Gross spoke during a panel discussion at the Intermodal Association of North America’s annual Intermodal Expo event.

Analysts say that a flood of imports driven by an explosion in consumer spending has hindered the supply chain between Asian ports, to U.S. ports to railroad networks and their intermodal terminals.

Also driving the congestion has been the fact that retailers are struggling to keep up with consumer demand because their product inventories dipped during the early stages of the COVID-19 pandemic.

A record 59 container ships recently were reported to be anchored off the ports of Los Angeles and Long Beach awaiting berth space.

Lars Jensen of Copenhagen-based Vespucci Maritime told the panel that some of those vessels have been in San Pedro Bay for more than two weeks, delaying the unloading of more than 400,000 twenty-foot equivalent units, or TEUs, the standard measure of international containers.

Much of that cargo will eventually travel to the Midwest and Texas via BNSF or Union Pacific intermodal trains.

Rail intermodal volume has fallen by 10 percent from its May levels and is down 7 percent compared to where it was a year ago at this time.

 “What we really have here is a system starting to bog down from all the operational constraints, congestion, and lower velocity, shortage of equipment, you name it,” Gross said.

He said all links in the supply chain share some of the blame for that congestion.

One panelist, Evan Armstrong of Armstrong & Associates, said railroads are missing an opportunity to pick up business that is instead going to trucking companies.

Yet railroads say shippers have been slow to pick up their containers at intermodal terminals, particularly in Chicago, and that has had a cascading effect.

 Shippers also have been holding containers at their warehouses, which has created a shortage of chassis used to tote containers.

Tim Denoyer, vice president and senior analyst at ACT Research, said the chassis shortage is unlikely to be resolved for another six to 12 months.

Officials at Union Pacific, Norfolk Southern, and Canadian Pacific all said during the panel discussion that intermodal systems were in “disarray” around the globe.

They said their intermodal networks have capacity to handle current volumes, but only if all links in the supply chain are working relatively smoothly.

“Everything depends on speed,” said Leggett Kitchin, NS vice president of domestic intermodal. “At the current speeds, the box supply is probably tight.To the extent that we can speed up, and the street can speed up, then we’ll have capacity to grow into.”

A UP Kind of Day

September 10, 2021

This past Wednesday was a Union Pacific kind of day. It began with catching a former Union Pacific 10-6 sleeping car on the rear of Amtrak’s westbound Lake Shore Limited in Chesterton, Indiana.

The car, now owned by Webb Rail, was built in June 1950 by Budd. In its current reiteration, it read “Pullman” in the letterboard and “Pacific Union” in the car name space.

A few hours later I had ventured further east to Otis, Indiana, where I caught Norfolk Southern train 39E coming around a curve with a pair of UP motors.

The train originates in Elkhart and goes to the UP at Proviso Yard in Chicago.

STB Finds 5 Class 1s were Revenue Adequate in 2020

September 10, 2021

The U.S. Surface Transportation Board has determined that five Class 1 railroads had adequate revenue during 2020.

The carriers were BNSF, CSX, Kansas City Southern, Soo Line (Canadian Pacific) and Union Pacific.

A railroad is considered to be revenue adequate if it achieves a rate of return on net investment equal to at least the current cost of capital for the railroad industry.

During 2020 the STB determined that to be 7.89 percent.

The five carriers cited by regulators achieved a rate of return on net investment equal to or greater than the agency’s calculation of the cost of capital for the railroad industry.

Ultimately, It Comes Down to Control and Self Interest

August 10, 2021

I ran across a pair of columns last week that help illuminate why expanding rail passenger service in the United States is so challenging and happens so infrequently.

One piece was written by Jim Mathews, president of the Rail Passengers Association and appeared on that organization’s website.

The other was written by a Union Pacific vice president and appeared on the website of Railway Age although it originally appeared on the UP website.

Mathews was in part writing in response to a recent U.S. Surface Transportation Board decision that established a timeline in a case Amtrak brought seeking to prod CSX and Norfolk Southern into allowing intercity passenger service between New Orleans and Mobile, Alabama, to begin next year.

The proposed service has been in the works for five years and funding is in place for capital improvements and operating expenses.

But Amtrak and the host railroads – CSX in particular – have been unable to reach agreement on what infrastructure improvements are needed.

Mathews pointed out that CSX has demanded work that would cost 19.5 times what a Federal Railroad Administration study estimated was needed.

Mathews doesn’t think NS or CSX have been negotiating in good faith, saying there is ample data available to move ahead on the Gulf Coast service, including infrastructure improvements.

“What are CSX and N-S really after in their long-standing opposition to the Gulf Coast restoration?” Mathews asked, perhaps rhetorically.

He believes the host railroads are demanding study after study until they can finally get a result “that gives them cover to stop the restoration.”

There is likely some truth to that. It’s a strategy Class 1 railroads have used before to stymie new passenger service or expansion of existing service.

If you drag the process out long enough those wanting the service might get discouraged and go away.

A subset of that strategy is demanding expensive infrastructure work that is too costly for Amtrak or a transportation agency to afford. It is all a way of getting to “no” without saying it as such.

And that brings me to the column by Wes Lujan, assistant vice president of external relations at Union Pacific.

He begins by contending UP is not hostile to Amtrak and other entities seeking to use UP rails for expanded service on existing passenger routes or creating new service on freight-only routes.

Lujan argues that UP has worked with Amtrak and state agencies in California and Illinois on projects that enabled expanded and faster passenger service and will continue to do so.

But Lujan said Union Pacific is put off by how Amtrak and others are demanding access to UP rails by announcing those plans and then bringing political pressure on the railroad to agree to them.

He cited the Amtrak Connect US plan announced earlier this year of 39 new routes to be implemented over the next 15 years at an estimated cost of $75 billion.

That plan, Lujan wrote, was created in conjunction with state transportation agencies but not in consultation with the railroads that would host those trains.

“Instead of a unilateral push to expand passenger service, it would be transformational if we faced these challenges collaboratively, as partners with passenger agencies and with a common understanding that the U.S. freight rail network is a dynamic system that moves the physical goods that drive the American economy,” Lujan wrote.

To boil down Lujan’s argument to its essence, if you want new or expanded passenger service be prepared to pay for it. That means funding infrastructure improvements “and (emphasis in original) provid[ing] more reasonable compensation for access to host railroads.”

I would not take everything that either Mathews or Lujan wrote at face value. At the same time each has shown how each side comes at rail passenger expansion from different perspectives that hinder the creation of the partnerships that Lujan espouses.

To have a partnership you need to have willing partners who are committed to working through their differences to reach an agreed upon end goal.

There must be some incentive for both parties to work toward that end goal, and it helps when there is more balance in the relationship than is typically the case when Amtrak or some agency wants new rail passenger service.

Mathews wants more of what Lujan opposes: Using political pressure and the power of government, specifically the STB, to force railroads to be more cooperative in allowing passenger rail expansion and seeing to it that those trains operate on time.

Host railroads, though, see little in it for them in allowing passenger trains to use their rails.

Their purpose is hauling freight, not passengers. It is not realistic to expect freight railroads to respond to every proposal for passenger trains on their rails with a response of “that’s a great idea; let’s sit down and figure out how we can make it work.”

It may be that the partnerships that Lujan cited are more the exception than the rule.

They occurred in states with a long history of paying to fund passenger service and its capital expenses. Those states also have agencies that have a history of working with Amtrak and its host railroads and understand that it takes time and money to get to “yes.”

Many, although not all, of the routes in the Amtrak Connect US plans are in places where state governments have not funded intercity rail passenger service and which lack agencies with experience in overseeing and managing rail passenger service.

Railroads are accustomed to working with state transportation departments on public-private capital projects. But they see something in it for them in those projects.

Those also tend to be one-off projects that do not involve an on-going commitment to paying for such things as operating expenses as is typically the case with intercity passenger rail.

I doubt that Mathews would disagree with Lujan’s assertion that passenger rail development works best when you have a partnership of the willing.

It is just that Mathews is not convinced that railroads are all that willing to establish those partnerships to host new and additional passenger trains. These partnerships are far more difficult to establish than Lujan is willing to admit.

Ultimately, it comes down to control. Like anyone else, railroads don’t like being told what to do with their property and don’t want to be forced into doing something they don’t see as being in their interests or something they simply believe is not necessary.

Union Pacific Releases ‘Big Boy” Tour Sked

August 5, 2021

Union Pacific has released a detailed schedule for the August tour of its “Big Boy” steam locomotive.

The 4014 is slated to depart its home in Cheyenne, Wyoming, today at 8 a.m. with its first stop on the tour set for Sidney, Nebraska.

The tour will continue toward Kansas City before heading south to Texas and then east to New Orleans.

From the Crescent City the “Big Boy will head north to St. Louis through Arkansas, before moving on to Denver for the Labor Day Weekend.

It will then return home to Cheyenne. The 4014 last operated in 2019. A 2020 tour was canceled due to the COVID-19 pandemic.

More information is available at https://www.up.com/heritage/steam/schedule/index.htm?fbclid=IwAR2UWj4kihbbSkrVy7UilhWXRXc5b9F71I_7akX3jPusVEtBN1mpxys4ggs

J.B. Hunt Can’t Meet Customer Demand for Intermodal Service Due to Congestion

July 21, 2021

Intermodal shipper J.B. Hunt said this week that it cannot meet the demand for its service because of reduced velocity in the North American railroad network.

During a quarterly earnings call on Monday, Hunt managers said the demand for its services exceeds its capacity.

Managers said another factor behind that was slow customer turn times.

In recent weeks some Class 1 railroads have begun limiting acceptance of intermodal shipments because of congested terminals.

BNSF, for example, is limiting the flow of international containers from the ports of Los Angeles and Long Beach to its Logistics Park Chicago intermodal terminal for two weeks to work off a backlog of containers in Chicago.

Union Pacific has temporarily suspended inbound moves of international containers from West Coast ports to its Global IV terminal in Chicago.

Chicago is the largest single destination for cargo arriving at the ports of Los Angeles and Long Beach, the two busiest ports in North America.

Los Angeles handled record container volume in June, while Long Beach saw record volumes in May.

CSX has been restricting the flow of containers from the Port of New York and New Jersey to terminals in Chicago, Cleveland and Indianapolis.

In Canada, backlogs have been reported at the Port of Vancouver due to fire-related line closures and operational restrictions affecting Canadian Pacific and Canadian National.

Darren Field, president of Hunt’s intermodal division, said labor shortages at intermodal terminals and at customer warehouses is the major reason behind slow turnaround times for Hunt’s containers.

Hunt has imposed accessorial charges and in some cases is restricting capacity to some customer locations in an effort to encourage shippers to increase their turnaround times.

 “We are working very closely with our rail providers and customers to improve our capacity across the network by focusing on reducing the detention of equipment and helping our rail providers reduce congestion across their terminal infrastructure,” Field said.

J.B. Hunt primarily uses Norfolk Southern also routes some containers via CSX.

Field said he does not expect railroads to melt down despite reduced velocity and capacity limits at some intermodal terminals.

He said at some locations employment levels are 5 percent below where they need to be to handle current volume.

“All of the railroads are very focused on these challenges and they are out addressing them,” Field said.

UP Big Boy to Hit the Road in August

June 16, 2021

Union Pacific announced this week that its “Big Boy” steam locomotive will return to the rails in early August.

No. 4014 will make a 10-state tour that will include Arkansas, Colorado, Kansas, Illinois, Louisiana, Missouri, Nebraska, Oklahoma, Texas, and Wyoming.

Although the railroad has yet to release an itinerary it said display stops will include: Aug. 14 (Fort Worth, Texas); Aug. 17 (Houston); Aug. 21 (New Orleans); Aug. 29 (St. Louis); and Sept. 6 (Denver).

UP said its “Experience the Union Pacific Rail Car,” a multi-media walk-through exhibition “providing a glimpse at the past while telling the story of modern-day railroading,” will accompany the Big Boy on its 2021 tour.

The tour will begin and end at the railroad’s steam shop in Cheyenne, Wyoming.

Creel Warns CP Could be Merger Target

May 21, 2021

Canadian Pacific CEO Keith Creel repeated this week his assertion that if his company fails to buy Kansas City Southern that will make CP a target for acquisition by another North American Class I railroad.

Speaking on Thursday to investors on a webcast, Creel said the bid by Canadian National to buy KCS “is a direct threat to the North American rail network. And, more specifically, the U.S. rail network.”

Creel said U.S. regulators will take note of that.

CN has proposed to buy KCS in a $33.6 billion stock and cash transaction. It has asked the U.S. Surface Transportation Board to allow it to place KCS into a voting trust while the review process of the merger plays out.

CP earlier sought to buy KCS for $29 billion, an offer the KCS board had accepted at one point. Then CN made a counteroffer and last week the KCS board deemed the CN bid to be “superior” to the CP offer.

Creel has expressed concern that if KCS and CN merge that would leave CP as the smallest Class 1 system in North America and it would lack the scale and reach of the other systems.

 “CP is a strong franchise, with or without the KCS transaction. Our story of lowest cost, safest, best service, best volume growth in the industry in three years . . . to me truly defines what best is,” Creel said.

Creel contended CP would be an attractive merger partner because of its size and performance record.

 “If you’re looking for a partner, what would you want to partner with? And we will explore our strategic opportunities.”

Some railroad industry analysts have speculated that if CN and KCS merge as proposed, that could set off the long expected final round of Class 1 railroad mergers in North America.

Other analysts, though, have said the CN-KCS merger would not necessarily upset the balance of Class 1 systems in North America of two systems in Canada, two in the U.S. West and two in the U.S. East.

CP is seen as unlikely to seek to buy another Class 1 system and is more likely to become the target of an acquisition.

When the late E. Hunter Harrison was CEO of CP, he unsuccessfully sought to merge with Norfolk Southern in 2015 and had talks about merging with CSX.

Creel said this week a merger involving CP and another Class I would have to be based on growth.

“The CSX and the NS, they’re doing a great job creating efficiencies and service offerings and capacity with their networks,” Creel said. “So it’s not an operating play. It would have to be a revenue, pro-service, pro-competition play.”

Industry analyst Anthony B. Hatch told Trains magazine it is unlikely CSX, NS, Union Pacific or BNSF would initiate merger talks with CP or any other Class I because they are more interested in stability than growing in size.

However, Hatch says, one of the U.S. Class 1 systems might be interested in having Creel as a potential successor to one of its chief executives.

Hatch sees Creel’s merger talk as a political game designed to scare shippers, members of Congress, and federal regulators into fearing a final round of rail mergers.

CP Wants CN-KCS Reviewed Under Stricter Rules

May 4, 2021

It’s another week and another round of dueling statements from Canadian Pacific and Canadian National as they vye to buy Kansas City Southern.

In the latest development, CP has told the U.S. Surface Transportation Board that a CN-KCS combination should be reviewed under the board’s current merger rules pertaining to Class 1 railroad mergers.

However, CP had earlier urged regulators to consider its bid to buy KCS under the less stringent pre-2001 rules.

CP justified the contradiction by saying its acquisition of CP would be a true end-to-end merger whereas CN taking over KCS would have significant overlap that could led to less competition in certain areas.

For its part, CN wrote an open letter to “Kansas City Southern community” that explained while its offer is superior to that of CP.

In turn CP cited what it termed “mounting opposition” to the CN-KCS combination, saying the STB has received more than 110 letters in opposition to a CN takeover of KCS.

Also weighing in on the fight for KCS was Warren Buffett chairman of Berkshire-Hathaway, which owns BNSF.

Buffett suggested CP and CN may be overpaying to control KCS and that the merger would not gain either system much traffic growth.

“There’s no magic to the Kansas City Southern,” he said.

However, Buffet said he understood why the Canadian Class 1 systems are dueling for KCS. “I’m sure from the standpoint of both CP and CN, there’s only one K.C. Southern,” he said.

“They’re not going to get a chance to expand. They’re not going to buy us. They’re not going to buy the UP (Union Pacific). The juices flow, and the prices go up.”

“People are not going to remember what you paid, but they’re going to remember whether you built a larger system,” Buffett said.

BNSF will watch closely how the fight over KCS plays out, Buffet said.