About 40% of UP’s traffic originates or terminates outside the U.S., so trade has a big impact on the railroad’s volumes, Fritz noted in a wide-ranging interview with Steve Forbes last week.
UP’s traffic volume is down 6% this year through Nov. 16. But the traffic decline has accelerated over the past few months, with UP’s overall traffic down 10% since Oct. 1, including a 12% drop in intermodal traffic.
The Trump Administration was right to use tariffs to get China to the negotiating table, Fritz says. And he says the U.S. needs free trade deals that are fair and are in the spirit of World Trade Organization agreements.
“I won’t argue against the initial use of tariffs to get China to the trading table,” Fritz says. “I will argue that the approach of putting every purchase from China into a 25% tariff is going to be incredibly damaging to our economy over the long run. And the longer those tariffs are in place it will be incredibly damaging to our economy. We have to be sensible about how we apply pressure in other ways.”
The U.S. should enlist the aid of other trading partners and use other diplomatic tools to put pressure on China, Fritz suggests.
“The longer and the deeper tariffs go, and the broader they’re applied, the more harm they do to the U.S. economy,” he says.
Fritz praised the Trump Administration for its handling of the USMCA trade deal that is set to replace the North American Free Trade Agreement. The deal addresses many of NAFTA’s shortcomings, Fritz says, and should be ratified as soon as possible.
Trade with Mexico and Canada is critical to the U.S. economy, Fritz says.
Fritz and Forbes also discussed the rail industry’s adoption of technology, including positive train control, the prospects of increased regulation, and the need to fully fund the Highway Trust Fund and ensure that trucks pay their fair share of road costs.
I highly agree with John Packard and Brian Rose
So what is Trump supposed to do? Continue to let China hose us in every way possible? I agree 100% with Ken Marx’s comment in this thread.
In the long run, I don’t like tariffs either. They are, in reality, taxes that American’s pay and they should be kept in the shortest terms possible. We can do that with Canada, Mexico, and most other countries. However, in the case of China, tariffs continue to be needed as a long term exercise. China plans to dominate the world, replace the world’s currency, end freedom in Hong Kong, control shipping in the South China Sea, and control the Panama Canal. They also are developing space weapons that can shut down our GPS system and even our power grid. Beyond tariffs and sanctions, there is little we can do to keep them at bay short of war. Mr. Fritz can go after his short term profits, but the rest of us need to be more focused on the long term. It’s not about pleasing investors. It’s about survival.
I agree with Brian Rose. Fritz and his posse of bozos have gone to far with the PSR joke.
Correct thinking on China. Short term is what China wants from us.
Wall street and stockholder like cheap labor nothing is going to change that. America doesn’t know how to make anything anymore or at least that’s the tag line used as an excuse for not wanting to pay a livable wage in this country for the same work because it would cut in to the profits & dividends.
When you realize how ripped off we have been a trade war has been long overdue. Put America first and railroads second.
you would have more business than you could handle if you get rid of PSR and put the customer first
11/19/19 Marketplace article (public radio)mentioned nearly 20 percent drop in US exports from La/Long Beach year over year since the start of the trade war…
I’m soooo glad Mr. Fritz says Trump has the right to use taruffs. I’m sure Trump is relieved.
Perhaps Fritz should concentrate on the purpose of his rr, moving freight for his customers instead of chasing freight customers away.
The rear reason Fritz is upset is because his shareholders won’t be getting a bigger cut.
As far as USMCA, it’ll be 1 year on Nov. 30th that this trade agreement has been introduced and supported by all 3 countries. But Nancy Pelosi sits on it refusing to bring it for a vote in the House. Maybe Fritz should give Pelosi a call.
I’m soooo glad Mr. Fritz says Trump has the right to
Let’s see, so we let China walk all over us so Mr. Fritz can have more traffic all the while he and his minions run off their existing traffic at breakneck speed, right.
I guess Union Pacific shouldn’t have ignored all that non-intermodal business over the years.
Tariffs or not, UP is too busy using spreadsheets to chase away wanting customers.
UP loves Asian trade. The container shows up. The bar code tells it where to go. UP takes it half way there and drops it off.
UP loves Power River coal. Unit train shows up, the auger dumps in the coal, it gets sprayed for dust and again they take it half way and then drop it off. No large thinking, no mass organization, little management required.
No fuss, no muss.
Now, people like chloride maker Hasa in Los Angeles who needs 5 day service, that is pure hassle and pure overhead in their minds and not the kind of business they want. Requires someone to think, organize, manage and operate.
That gives you a really good indication of what UP really wants. In some circles that is called “easy money”.
The rest of the world calls it “laziness”.
Mr Winter, you are wrong. The House and Pelosi have nothing to do with the treaty. Its your friend McConnell who is holding it. Under the Constitution treaties must be approved by a 2/3 vote of the Senate. Now Mitch may have trouble getting the votes, but from my research of the situation he has made no effort to advance this ir tried to het Dems to support it.
Trump is out to destroy America with his trade war. Fritz should have spoken out 8 months ago. The economy is going down the toilet and even if the “trade war” was settled today, it would take a year for the economy to recover.
Consumers lose with tariffs. Tariffs protect obsolete U.S. industries that have not updated their technologies. The same arguments that have been directed at China were directed at Japan 30 years ago. We did not suffer then, and we will not suffer now.
I hope all you model railroaders who buy all those new models, with all their excellent detail, will rise to the patriotic cause when the price eventually rises 20-30% to cover the costs of these stupid tariffs.
We live in a global economy. Ostriches, pull your heads up out of the sand and realize this.
Ira, you’re right about trucks on I-80. In Sept I was driving cross country on that hwy & I swear there that most times it seemed the trucks outnumbered the cars. I also sidetracked along Hwy 30 in NE for about 95 miles. Only 7 trains on the UP line in that distance, although some were very long (no surprise).
Businesses can see no further than their own immediate interests. As others have observed China is an oppressive dictatorship. They have stated their intention of world economic domination. Reversing the total laissez faire policy of the past decades is going to be painful but needs to be done. The Union Pacific may be suffering from the trade wars (although much of the imports will shift to other countries in Asia) but he’s also got to worry about a bigger Panama Canal. There is a humongous amount of domestic traffic left for them to compete for. Just go out and count the trucks on I-80.
I may be an investor with Union Pacific, but that does NOT mean that I agree with Mr. Fritz here. Union Pacific the past several years has relied far too much on the handling of import/export traffic.
In truth, what really needs to be looked into is how to better handle/attract domestic traffic both intermodal and non-intermodal. The ELD (electronic log device) deadline is coming soon (12-19-19) and there has been quite a bit of talk in the trucking industry regarding potential troubles both short and long term. Yes, international traffic is nice to have, but what good does it do when the domestic opportunities get left behind/taken by competition? I’d say it’s high time that the railroads get cracking on business domestically regardless of Wall Street.
Remember, China needs us. China HAS to create around 15,000,000 new jobs a year just to keep up with their birthrate coming to working age
https://www.reuters.com/article/us-china-economy-jobs-creation/china-says-needs-to-create-jobs-for-15-million-people-every-year-idUSKBN1CR02R
Could y’all maybe wait till AFTER the new “made in China” MTH engine I’ve got on order is in the US before any more lines are drawn in the sand?
I was kind of hoping to have it for Christmas. 🙂
If anything, we need stronger tariffs. Normalizing relations and then proceeding to trade with a country that’s our enemy is one of the most foolish things this country has done in the past 50 years.
Uh huh.
With that quasi-Kristallnacht going on in Hong Kong I can’t say I’m too concerned with products coming in from China, tariffs or no tariffs.
I’d hate to see peoples attempts at freedom quashed and to think I paid for it.
Screw Wall Street Mr. Fritz. There’s bigger issues here.
Well said Mr. Hunn! Sums it up well.