OMAHA, Neb. — Union Pacific’s decision to shift its local switching operations in Eugene, Ore., to Genesee & Wyoming short line Central Oregon & Pacific could be a model for improving carload service and turbocharging growth elsewhere on UP’s system, CEO Jim Vena says.
The deal, announced last month, combines a Class I’s strength of long-haul service with short lines’ advantage of providing more frequent and more flexible local service. “It’s a given that we’re real good at some things and … the short lines are local carriers that do a better job in certain things,” Vena said in an interview on Thursday.
“They can attract more business,” Vena says.
G&W CEO Michael Miller says its short lines typically exceed the Class I carload growth rate by a couple of percentage points in any given year.
Eugene was a natural location to hand off local operations, Vena says, because CORP was already interchanging with UP at Eugene Yard. The move will eliminate double-handling of cars, shaving 24 hours off transit time.
“We think that it’s a win for the customers, it’s a win for Union Pacific, and it’s a win for G&W. It really is. And we’ll look at other places too,” Vena says.
CORP will serve 22 customers on nearly 28 miles of trackage leased from UP, including Eugene Yard. UP will retain trackage rights. Customers include those shipping or receiving forest products and paper, grain, propane, and scrap metal.
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.
The CORP lease is scheduled to take effect on Feb. 8, according to regulatory filings with the Surface Transportation Board. This type of transaction is typically exempt from board review. But the SMART-TD union, which represents some of the UP workers whose positions will be cut when operations are handed to CORP, opposes the deal. Opposition to what otherwise would be an exempt transaction can prompt an STB review.
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 last month.
UP has said its Eugene employees can transfer to other locations or apply for a job with CORP.
Could not find the filing. Is CO&P leasing 2 separate lines? Is This lease part of the Amtrak line? Is UP going to maintain the track or is CO&P going to maintain it? There are some 10 MPH locations on some track.
Needless to say, it wouldn’t have been as attractive if the short line had connections with other class 1’s and any customers *UP willingly gave up switching directly* became open to competition.
Double edge: UP customers may/will get better service. UP employees get run over because of losing their jobs and homes. Its just another deal where the main line railroad gets rid of expense of employees. That has been going on for some time and probably won’t end until the class ones get rid of switching. The “run around ” of labor will not cease and that is a doggone shame.
UP employees can transfer or hire on with CORP/G&W, this is a program that has been a long time coming. Class 1’s should have started doing this years ago, because as the shortline/regional increases traffic they will have to hire more crews, more crews = more jobs for union members(for those shortlines/regionals with union contracts).