Struggling to resolve its crew shortages and track congestion, Union Pacific Corp. is asking some customers to temporarily scale down their use of the railroad.
The move to shed business is the most visible indicator to date that the nation's largest railroad has yet to turn around the service problems that have dogged it since the fall.
The worst problems are focused in the Los Angeles area and along Union Pacific's busy freight route between California and Texas. But in many parts of the carrier's 33,000-mile route system, freight trains are coming to a stop on passing tracks and even on main tracks, sometimes for hours, because crews reach the limit of their federally mandated maximum 12-hour shifts, and new crews aren't available right away to move the trains forward.
Union Pacific, which is based in Omaha, Neb., has acknowledged that it far underestimated the number of train crew members that would leave after changes in the federal retirement law for railroaders two years ago. The new law, which lowered the age at which employees with 30 years service can retire with full benefits to 60 from 62 years of age, left Union Pacific short of locomotive engineers and conductors.
Meanwhile, the railroad has seen a rapid increase in demand for rail service in recent months due to the nation's recovering industrial economy as well as a strong grain harvest.
Now, Union Pacific executives are approaching "a few" customers to divert shipments to trucks, limit the amount of new business on the railroad and find ways to change loading and unloading operations to reduce the number of train crews needed, according to Union Pacific spokesman Bob Turner. Such moves, he said, would take pressure off the Union Pacific system until it hires and trains about 4,000 new crew members this year.
Mr. Turner said the customers include factories and warehouses in Los Angeles, Phoenix and Tucson, Ariz., whose freight shipments require a "significant" number of crews. He declined to identify any of the customers.
United Parcel Service Inc., the Atlanta-based parcel-delivery giant, said it recently agreed to suspend certain expedited train services on Union Pacific. "We certainly have an interest in seeing them resolve any congestion problems that they have," said UPS spokesman Norman Black. He said Union Pacific will pay UPS the additional, but as yet undetermined, costs to put the shipments in trucks for a month.
Union Pacific experienced massive service breakdowns in 1997 and 1998 following its takeover of Southern Pacific Rail Corp. The problems then started in the Houston area after Union Pacific consolidated freight yards and spread through much of the Union Pacific network in the West. Mr. Turner said the company doesn't expect a repeat of those breakdowns.
The United Transportation Union, which represents trainmen and conductors, says Union Pacific ignored advice from the union to hire more train crews. And it blames the company's top management team, led by Union Pacific chairman and chief executive Dick Davidson, for holding down costs at the expense of service now and in 1997.
"It's just amazing that these guys haven't learned from Houston. I thought that would never recur," said UTU spokesman Frank Wilner.
Union Pacific's Mr. Turner said the railroad is "taking this very seriously." Even though the carrier is handling considerably more freight shipments now, Union Pacific has spent about $18 billion since 1997 to maintain, upgrade and expand its tracks, equipment, facilities and locomotives.
"All of our computer systems, dispatching, repair and track systems are fully integrated today, and they weren't during the merger," Mr. Turner said. "The condition of our railroad from a maintenance and capacity standpoint is significantly better and our locomotive fleet is younger."
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