WASHINGTON — Genesee & Wyoming short line Central Oregon & Pacific will lease and operate nearly 28 miles of Union Pacific trackage in the Eugene, Ore., area as part of its deal to take over the Class I railroad’s local switching operations.
Details about the transaction, which was announced yesterday, appeared in a regulatory filing with the Surface Transportation Board today.
In all, CORP will lease 27.58 miles, plus UP’s Eugene Yard and “certain related excepted track.” Included in the deal: 20.58 miles of the Brooklyn Subdivision, where UP will maintain trackage rights; 3 miles of the Springfield and Marcola Industrial Leads in Springfield, Ore.; and 4 miles of the Coos Bay Industrial Lead in Eugene.
The G&W short line will serve 22 customers on the leased trackage, including those shipping or receiving forest products and paper, grain, propane, and scrap metal. UP and G&W executives said the transaction will improve first- and last-mile service and reduce transit times.
UP would not say how many jobs are affected by the transaction. But CORP notified UP employees that the short line has 20 job openings, including 15 train crew positions, two mechanical jobs, and three maintenance-of-way positions.
“We’re working with impacted employees to find other opportunities within Union Pacific (they can also exercise their seniority) and have shared the openings at G&W,” UP spokeswoman Kristen South said in an email.
“G&W has a proven track record of service in the PNW and this move allows us to take dwell out of the terminal, enhancing car cycle time — ultimately providing better service to our customers,” she said.
Jeremy Ferguson, president of the SMART-TD union that represents conductors, blasted the transaction.
“This lease is a blatant example of hedge fund-driven railroading, where the financial interests of Wall Street investors outweigh the safety and wellbeing of workers and communities,” he said. “The unionized, highly-trained workforce that Union Pacific is discarding has the qualifications necessary to operate these trains safely. By replacing them with a less experienced and less qualified workforce, UP is not only jeopardizing rail safety but also diminishing the ability to ensure smooth and reliable service for the businesses and industries that depend on this vital transportation network.”
Representatives from the Brotherhood of Locomotive Engineers and Trainmen and the Transportation Trades Department of the AFL-CIO did not immediately respond to requests for comment today.
The UP-G&W deal is reminiscent of one between Canadian National and Watco in Louisiana. In 2021, CN handed off local switching at a nine-plant petrochemical complex to the new Watco short line Dutchtown Southern. Thanks to Dutchtown Southern providing service seven days per week – up from five – and offering customers multiple switches per day, traffic grew 47% in the 1.76-mile short line’s first year of operation.
From a service perspective, independent analyst Anthony B. Hatch says having Central Oregon & Pacific perform local service and UP handle the long haul combines the strengths of short lines and Class I railroads. The deal should produce carload volume growth, if the Dutchtown Southern is any guide, he says.
But Hatch wondered about how the outsourcing of local service to a short line would affect labor relations at Union Pacific. UP is the only Class I railroad that did not reach a tentative agreement with any of its unions before the start of the national contract negotiation process this fall, he notes. The current contract runs through June 2025.
UP executives have said that they want to negotiate work rule changes that will help the railroad provide more reliable and consistent service by improving crew availability. In some terminals, for example, rules permit some crews to operate eastbound but not westbound. To keep crews in balance, UP wants road crews to be able to run trains in any direction.
“We want to make some changes in the rules and help us provide better service,” CEO Jim Vena told Trains in October. “We’re not asking for huge changes.”
UP also continues to work on implementing new work/rest schedules as part of an agreement reached last year with the BLET. UP aims to reach a similar scheduling agreement with SMART-TD.
Translation:
“OMG! Another opportunity for a non-union shortline to show how bad we do our jobs and give Class I’s more ammunition to contract out our jobs.”
I worked for Watco. We took over switching a paper mill from IC. The mill doubled production within a year. We took over switching at another paper mill. There the increase was well over 50%, despite NS and CSX unions attempting to sabotage our efforts during the first 6 months. And so on.
The Class I’s WANT to give better service. They can’t.
I always get a kick out of the unions and their blindness. this is a good deal for all involved. and after 30 years on the railroad I can tell you the short line workers are much more qualified.
This is the future. Short lines provide better service when it comes to carload business. Class 1’s don’t want to be bothered with it. Will unions lose out on jobs? Initially yes. But if the shortline provides better service and the business grows, that extra business is handed off to the Class 1. Over time this will protect those jobs for Class 1 employees handling the extra business and should eventually create more jobs.
Give UP management credit on this one. Customers want flexibility and service, service, and more service. Union want more work rules, less flexibility and less service. End result. Shortline will probably build up loose car load biz and make a buck for its efforts, UP gains more cars out of region not less, and well union loses out on jobs