(The following article by Steve Raabe was posted on the Denver Post website on July 15.)
DENVER — Clogged rail lines across the U.S. and a shortage of freight-hauling capacity are starting to hit some Colorado businesses hard.
The West Elk coal mine near Paonia has curtailed production because Union Pacific can’t supply enough freight cars to haul away the coal.
A cement plant in Florence may suspend operations because its coal supplies are growing shorter by the day.
And only because Colorado faces a subpar wheat harvest are farmers not worried about an imminent rail transportation crisis.
A combination of cutbacks at Union Pacific and a resurgent economy have railroads scrambling to find enough workers, locomotives and freight cars to move growing product inventories.
“Rail service has been a major challenge for us,” said Deck Slone, a spokesman for West Elk mine owner Arch Coal Inc. “We have missed a lot of shipments, and there is simply no place for us to put more coal.”
Arch Coal said missed shipments and production cutbacks because of bulging inventories cost the company an estimated $8 million in the second quarter.
Slone declined to say how much production has been lost at West Elk during sporadic shutdowns this year. He said workers have been assigned to nonmining tasks when production has stopped.
“But there’s a limit to how much of that you can do,” he said.
National railroad cargo shipments rose 6 percent through June and are headed for a record high, according to the Association of American Railroads. But congestion on the lines caused average train speeds to fall 6.7 percent in the year’s first half.
Cement maker Holcim (U.S.) Inc. said there is a “high risk” of closing its limestone-firing kiln at the Portland plant south of Cañon City, forcing the reassignment of some of the kiln’s 150 workers.
“We’re in a real bind because of the coal situation,” said Looman Stingo, Holcim senior vice president of logistics.
He said demand for cement has risen sharply this year as a growing economy pushes consumption of concrete.
But difficulty in getting adequate coal shipments from Union Pacific for cement manufacturing could cause shutdowns at Florence and plants in Texas and Iowa, Stingo said.
“The economy picked up, and the (rail) carriers got more business,” he said. “The Union Pacific got caught flat-footed.”
Roger Nober, chairman of the U.S. Surface Transportation Board, the federal agency that regulates rail carriers, said Union Pacific reduced employment and equipment purchases last year to cut costs, and it has been unable to catch up with the fast-growing economy.
“A year ago, (Union Pacific) was lauded as an industry leader in cost control, and Burlington Northern was criticized as being too lax,” Nober said.
Now, he said, Burlington Northern is better able to handle increased freight volumes.
Union Pacific spokeswoman Kathryn Blackwell said the company expects to hire 5,000 new train-service workers this year and is purchasing locomotives at an accelerated rate. However, the new employees need four to six months of training before starting work.
“Business is very strong, and demand is more than we can handle at this point,” she said.
Union Pacific and Burlington Northern reported that idle times for trains are longer this year because larger loads and staff shortages have made it harder to switch crews or to add or remove cars.
Colorado is likely this year to have one of its smallest winter- wheat harvests in decades, because of drought and less planting by farmers. But the spare crop will help prevent rail transportation problems, said Scott Kirkwood of Haxtun-based Grainland Cooperative.
“Here in the short term,” he said, “rail capacity doesn’t seem to be an issue for us.”