Will UP Start Metering Traffic?

Written by Marybeth Luczak, Executive Editor
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Union Pacific (UP) is calling on customers to help reduce the number of active railcars on its network, as the Class I railroad’s operating car inventory and car dwell times rise, and car and train velocities decline.

“Over the past few weeks, our network has experienced some setbacks—including numerous service interruptions, crew shortages in select areas and delays to our network—as we have seen our operating inventory continue to climb over the past 60 days,” UP Executive Vice President, Marketing and Sales Kenny Rocker wrote in an April 11 customer letter that was posted online. “This additional inventory has led to more congestion in yards, an imbalance of our resources, and further slowdown of our operational performance.”

What actions has UP taken to address this? Rocker reported:

• “We added 50 locomotives to our active fleet since January and are adding an additional 100 locomotives.”

• To help meet demand for crews despite a tight labor market, UP is “recruiting heavily to alleviate crew shortages in certain locations” and has modified “recruiting strategies to attract more applicants. We are aggressively hiring and streamlined our onboarding process to get new hires on the job faster. We have 450 employees currently in training to graduate in early summer with more in the pipeline. Additionally, we relocated approximately 80 crew members to support crew demand in specific locations across the system.”

• “We are removing 2% to 3% of UP-controlled cars from our network across multiple commodity groups. We are in daily dialogue with our unit train customers to maintain fluidity and reduce their inventories on our system. For intermodal, we are closely monitoring the inland ramps to make sure our supply chain partners have ability to dray their shipments off the ramps.”

Despite these actions, “operating inventory levels continue to rise on a daily basis,” according to Rocker, which is why the Class I railroad is asking customers for help.

“We have already identified and notified those customers who can help us manage the current congestion by reducing their rail car inventories,” he wrote. “If we do not see reductions to the operating inventory through their voluntary efforts, then we will begin metering traffic after April 18th. This action, along with our other ongoing initiatives [described above], will give us the ability to work through our backlog and improve the service for all our customers. We are actively monitoring the progress of our operating inventory levels and will remain in close contact with you to keep you updated.”

Rocker ended the letter thanking customers “for your patience, your loyalty and your business. By working together, we will restore service to the level that you expect and deliver a more reliable service product to all our customers.”

UP is among the four U.S.-headquartered Class I railroads scheduled to appear before the Surface Transportation Board on April 26-27 to address the impact on rail service of employee reductions, implementation of Precision Scheduled Railroading, and pursuit of lower operating ratios.

In related developments, UP Chairman, President and CEO Lance Fritz on Aug. 5, 2021 responded to Surface Transportation Board Chairman Marty Oberman’s July 22, 2021 letter to Class I railroad CEOs requesting information on the extent of congestion at key U.S. container terminals and on their railroads’ policies and practices for assessing container demurrage fees. “I want to assure you that Union Pacific’s tireless efforts and continuous process improvements will yield improved fluidity within the network and clear congestion,” Fritz wrote. “But clearing our network will take some time, and it will require the cooperation of all stakeholders in the supply chain.”

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