(The following article by Dan Piller was posted on the Fort Worth Star-Telegram website on July 23.)
FORT WORTH — Hobbled by shortages of train crews and locomotives, Union Pacific Corp. reported a second-quarter profit of $158 million, or 60 cents per share. A year earlier, Union Pacific earned $275 million, or $1.05 per share.
The Omaha, Neb., railroad, which operates a major classification yard in Fort Worth, said service delays caused by record traffic cost it more than $100 million in operating profit during the quarter.
“We know we aren’t living up to the potential of this great company,” Chairman Dick Davidson said.
Record traffic, up 11 percent from a year ago, caught the railroad without enough crews and equipment, company officials conceded.
The problem is particularly acute at Pacific Coast ports, which receive Asian imports.
The profit drop wasn’t unexpected. Union Pacific had warned Wall Street last year that until it could hire and train more than 5,000 new crew members and lease or buy 125 new locomotives, the carrier’s system would slow down and service would suffer profit-cutting erosions.
Independent rail consultant Richard Schiefelbein of Fort Worth said the situation is “serious, but not at the level we saw in 1997-98,” when Union Pacific suffered financial losses during a service congestion problem after it merged with Southern Pacific Railroad.