OMAHA, Neb. — It will take several more weeks for Union Pacific to fully recover from California wildfires that disrupted service on its I-5 and Feather River corridors.
“Everyone here is focused on ensuring that we can get the system ramped back up,” says Eric Gehringer, UP’s executive vice president of operations. “It is not something that takes days. It does take weeks.”
The I-5 Corridor that links California and the Pacific Northwest was severed for a month when the Lava Fire on June 28 heavily damaged UP’s Dry Canyon Bridge in Hotlum, Calif., near Mount Shasta. The Dixie Fire, meanwhile, last month damaged the decking of two bridges on the Feather River Corridor near Oroville, Calif., shutting the route for 11 days.
The bridge outages forced UP to detour and hold traffic while repairs were under way. Trains operating between Portland and California detoured via Salt Lake City, adding five days or so to the normal two to two-and-a-half day transit time.
The number of trains held also spiked last month, rising from an average of 103 per day in the week before the Dry Canyon Bridge burned to 187 per day in the week ending Aug. 6, according to data UP reports to the Surface Transportation Board.
On-time performance in July fell for both intermodal and manifest traffic, although trip-plan compliance remained above the levels of two years ago.
Gehringer told an investor webcast on Tuesday morning that UP is on the mend. “I see every single day, consistent continuous improvement, whether you look at our inventory count, whether you look at our trains held, or whether you look at even the total number of trains,” he says. “We’re working all those back down to our historical best, and I expect nothing less than that.”
Some 73% of intermodal shipments arrived on time last month, while 67% of merchandise and auto carloads arrived on time. “They’re not in a place that we would deem in any way acceptable, nor do our customers,” Gehringer says.
Gehringer praised UP’s firefighting teams, who were deployed to Northern California and operated water tank trains to protect the railroad. “They are the heroes of the Union Pacific and what they do day in and day out to mitigate any damage,” Gehringer says.
Clearing Intermodal Congestion
The wildfire damage came amid pandemic-related supply chain disruptions, including a surge in international intermodal traffic. Due to labor shortages and pandemic-related protocols, shippers have been slow to pick up and return containers to intermodal terminals, which has in turn crimped chassis supply and drayage capacity — and created a backlog at terminals.
UP last month halted international intermodal shipments from West Coast ports to its clogged Global IV intermodal terminal outside Chicago for a week. “We accomplished 99% of exactly what we wanted to do, which was be able to draw down that inventory, get it into the terminal, give our customers an opportunity to be able to dray that off,” Gehringer says.
Now, with 32 container ships anchored off the ports of Los Angeles and Long Beach awaiting dock space, Gehringer says UP is working with ocean carriers, ports, and drayage providers to limit congestion in the weeks ahead.
Gehringer says UP has enough crews and locomotives to handle current traffic volume, and has about 600 people in the conductor training pipeline. “We continue to be very judicious on how we think about resourcing our [crew] boards and keeping that very lean to what we need and not more than what we need,” he says.
Is UP Too Lean to Grow?
UP officials were asked whether they’ve cut too deeply as part of a shift to a Precision Scheduled Railroading operating model — and whether UP is too lean to grow. The railroad has shed nearly 12,000 jobs, or 28% of its workforce, since adopting PSR in October 2018.
“I see no indication at all that we are suboptimizing our resource base to be able to meet the expectations of our customers,” Gehringer says, pointing to service metrics that are better now than before the railroad adopted PSR.
Chief Financial Officer Jennifer Hamann says volume growth is essential. “We want to grow. We’re planning to grow. And that’s a very important part of what we see ahead for ourselves at Union Pacific, and that’s going to drive … strong returns,” she says. “You can’t save your way to prosperity, so to speak. We want to be the most efficient railroad we can be. We think we should be the most efficient railroad in North America, and with that drive very strong volumes.”
She adds: “PSR is going to support our ability to do those things – not hinder them.”
Gehringer and Hamann spoke with analyst Amit Mehrotra at the Deutsche Bank 2021 Transportation Conference.
“An … average[!] … of 103 trains per day being held.”
Interesting that it is Efficiency that is touted [an internal measure], rather than Effectiveness [an external measure].
CFO Hamann’s statement is just pure cooperate speak BS, nothing more and it means absolutely nothing.
“Chief Financial Officer Jennifer Hamann says volume growth is essential. “We want to grow. We’re planning to grow. And that’s a very important part of what we see ahead for ourselves at Union Pacific, and that’s going to drive … strong returns,” she says. “You can’t save your way to prosperity, so to speak. We want to be the most efficient railroad we can be. We think we should be the most efficient railroad in North America, and with that drive very strong volumes.””
So where does the UP think they are going to find more shippers willing and able to present them with 100+ car unit trains ready to roll?
She is delusional. The UP is optimizing returns to current shareholders and executives as the railroad sinks in to the toilet.
Totally Agree. Common sense does not trump dollar signs…If the stock holders of these big companies could draw a dividend without running a single train, they would claim they are doing the right thing. Go figure! (no pun intended)