(The following article by Dan Piller was posted on the Fort Worth Star-Telegram website on August 9.)
FORT WORTH — Federal regulators, eager to avoid a reprise of the tie-ups in rail service that occurred seven years ago, have asked the nation’s railroads how they plan to avoid a worsening of the congestion that has beset parts of the nation’s rail system in Texas and elsewhere.
The concern comes as grain harvests in the Midwest loom and their demand on rail service is expected to further stress the system.
“The railroad industry is undergoing a fundamental structural change,” said Roger Nober, chairman of the U.S. Surface Transportation Board. “In the past, the problem was not enough business. Now the carriers have more business than they are able to handle. And we may see a doubling of the nation’s freight load in the next 20 years.”
But right now, the nation’s railroads are struggling to keep manpower levels up and to keep up with service demands, he said.
“The performance of Class 1 Railroads, as reflected in recent statistics, raises concerns about their ability to meet the ever increasing service demands being placed on them,” Nober said in a letter to Burlington Northern Santa Fe Railway, Union Pacific Railroad and other major carriers.
Nober said in an interview Friday that of the carriers, Union Pacific has the worst problems. The carrier, which has a classification yard in Fort Worth, has seen significant congestion in Los Angeles and Houston because of record demand for rail service and an acknowledged shortage of train crews.
Nober said that while Fort Worth-based BNSF hasn’t seen congestion at the same levels as UP’s, he is monitoring BNSF’s mainstay line from Los Angeles across the Panhandle north to Chicago that carries much of the railroad’s intermodal service.
Union Pacific and BNSF have seen their traffic increase by double-digit percentages this year as more freight has switched from trucks to rails in response to higher diesel fuel prices. In addition, heavy import traffic from Asia through the Port of Los Angeles has stretched service to the limit in Southern California, which UP and BNSF serve.
Houston was the center of an extensive tie-up on the UP system beginning in the summer of 1997, shortly after Union Pacific merged with Southern Pacific, that slowed down much of the nation’s rail network for most of a year. Nober said the problem this year isn’t as serious as seven years ago, but he doesn’t want it to become worse.
“We’re not at the level we were back then, but I want to make sure that the system stays fluid,”said Nober, referring to the congestion that has caused the carriers’ average speeds to fall in recent months.
Union Pacific has acknowledged its problems. Chairman Dick Davidson told investors last month that UP’s service was “unsatisfactory” and that the railroad was working to eliminate service problems.
Union Pacific is hiring as many as 5,000 more train crew workers, but the training and break-in periods take several months. The railroad has said that it is short of workers because more older workers took advantage of an early-retirement offer than expected.
“Not only did they lose more retirees than they expected, but they have record traffic,” said Texas Railroad Commissioner Charles Matthews, who was a vocal critic of UP in 1997-98.
Matthews said the chief victims of the service problems are the petrochemical industries along the Texas Gulf Coast, which rely almost exclusively on railroads to ship their products north.
“I don’t hear as many complaints from the DFW areas, or from agriculture,” said Matthews.
For UP, the problem has been costly. The company said that during the second quarter, extra costs associated with slower service cost the company $100 million in operating profits.
Nober said that he is concerned because the Midwest fall harvest season traditionally puts heavy strain on the nation’s railroad capacity. Record corn and soybean crops and good prices suggest strong demand for railroad service this fall.
“The problem comes about when even if the railroads have enough capacity to carry the harvest, their systems slow down anyway,” said Nober.
In its response to Nober’s letter, Union Pacific acknowledged only “modest improvement” in speeding up its system. UP’s trains, which historically average 24 to 25 mph, averaged 22 mph during June and July. That still isn’t as bad as the 12- to 13-mph average UP endured in 1997-98.
The carrier also has seen increases in two other key performance measurements: the number of cars in its system and the length of time the cars spend in classification yards.
Nober and Matthews said that BNSF has had fewer congestion problems than UP and has yet to suffer a profit reduction. In its response to Nober’s letter, BNSF said it is training 1,200 train crew members and is adding 350 locomotives.