(The following story by Leslie Wimmer appeared on the Fort Worth Business Press website on September 28, 2009.)
FORT WORTH, Texas — Rows of locomotives are still parked at Union Pacific Railroad’s Davidson Rail Yard under the Hulen Street bridge in Fort Worth, waiting for the company’s shipping volume to go back to pre-recession levels.
Both Union Pacific and Burlington Northern Santa Fe Railway have seen shipping volumes and demand drop during the last year, with Burlington Northern continuing to see flat and dropping volume numbers, and Union Pacific seeing slight increases in some types of goods.
Because of the recession, Union Pacific currently
has 4,500 employees furloughed, 54,000 rail cars waiting in storage, and 1,850 locomotives parked, said Clint
Schelbitzki, the company’s director of public affairs.
But, because shipping volumes have increased some through 2009, Union Pacific was able to bring back 800 employees in April who had been previously laid off, he said, adding that 16,000 rail cars and 250 locomotives also have been put pack into service since April.
“The positive in all of this for us
has been our maintenance schedule,” Schelbitzki said. “When you don’t have as many trains moving across your system, you’re able to do more maintenance, and, the downturn has allowed us to strengthen our rail infrastructure across our system.”
In 2009, Union Pacific invested $1.7 billion into improvements to its entire rail system, which totals 32,000 miles, including $13 million on improvements to 30 miles of rail line running from Roanoke to Fort Worth. The improvements included 45,000 ties, 100,000 tons of rock ballast to create a stable roadbed along the tracks, and road surface improvements at 38 crossings.
Ultimately, the investment in track improvements will translate into results for Union Pacific’s customers once demand and volume move back to normal levels, Schelbitzki said.
“The improved public safety, service and reliability from the infrastructure investment is being communicated back to us by our customers in the form of customer satisfaction,” he said. “We’ve had all time record satisfaction scores this year… It’s at its highest levels and we feel it’s attributed to the investment.”
Schelbitzki said the company surveys customers who make up 95 percent of the total freight shipments on their railroads.
Burlington Northern Santa Fe began seeing a severe decline in demand and volume in the fourth quarter of 2008, said Suann Lundsburg, the company’s director of communications programs. The decline got worse through the first half of 2009.
“The economy has affected the railroads in terms of volumes have declined. Consumer spending is down, and when consumer spending is down, imports are down, which means people don’t need to transport as much stuff,” Lundsburg said.
Burlington Northern breaks its volume measurements up into four areas: Agriculture products, coal, industrial products and consumer goods.
Industrial products mostly relate to building materials and construction products, and because building starts have continued to go down since late 2008, volume levels for those shipments have declined as well. Consumer goods have followed the same trend, she said, adding that because consumers aren’t buying as many products, manufacturers aren’t shipping as much.
Coal volumes are flat, she said, because of soft demand and reduced electricity generation. As a result, coal stockpiles are building up, and the company is working through those stockpiles.
Agriculture shipments have been fairly stagnant as well, Lundsburg said, but because this month falls in the middle of harvest season, the company doesn’t know yet if agriculture volumes will go up. BNSF will release its third quarter earnings reports soon, she said, and investors will have a better idea of volume outlooks.
“Because volumes are down, we have adjusted our capital expenditures, but still have a strong maintenance capital budget, and expansion has been reduced to expect changes in the market,” Lundsburg said.
Union Pacific will begin forecasting its volume expectations for 2010 later this year, Schelbitzki said, adding that the company expects its maintenance investments pay off next year.
“When business levels come back, we’re going to be ready for it,” he said.