(The following story by Stacie Hamel appeared on the Omaha World-Herald website on May 18.)
SAN FRANCISCO — Dick Davidson faced a roomful of Union Pacific Railroad customers Monday, many with one question foremost in their minds:
When will the nation’s largest railroad have service back on track?
It was a question the chairman and chief executive said he couldn’t answer.
“I can’t tell you precisely. I guess peak season starts mid-August. I do believe our hiring will be well along. It would not be honest of me to give you a prediction of where we’re going to be,” he said during the question-and-answer period of a forum attended by about 125 people.
U.P. has grappled with service delays and congestion on its 23-state system since fall. To cut congestion, it recently shifted some business to trucks, raised some prices to cut demand and canceled a United Parcel Service contract. Monday’s nearly four-hour session was co-sponsored by the National Industrial Transportation League, a 600-shipper association, which requested that Davidson address concerns.
Although the mood remained polite, the questions were direct. “What are you doing to make sure we are getting regular, reliable switching service?”
“Should we really have to pay for a car that’s lost or that’s 60 days out . . . and we’re not getting any service on?”
“What are we going to do during the Christmas season?”
“Will you waive a fee” so a short line can transfer goods to a U.P. competitor?
“Will things get any better in the next 30 days?”
And, what one questioner called the “800-pound gorilla question: Have we allowed too much consolidation in the industry?”
Through it all, Davidson and two other senior executives presented a service update, promised to continue working on the problems and took names for follow-up, but otherwise unveiled no new initiatives.
“Obviously, we’re not happy with the situation that created the need for the meeting,” Davidson said. “All of us at the Union Pacific are acutely aware that we have failed to meet many of our customers’ needs.”
U.P.’s service problems began when the railroad was caught off-guard by the number of engineers and conductors who opted for early retirement under a newly enhanced federal retirement program, as well as how quickly shipping demand rebounded with a strengthening economy.
The problem was compounded by a severe winter across its system and a lengthy hiring and training process.
The railroad heard from a lot of small companies through the forum that aren’t large enough to have a sit-down with senior management, said Roger Nober, chairman of the Surface Transportation Board.
“A lot got issues heard for the first time,” Nober said.
Large companies also were represented, such as Nike, Procter & Gamble, Hewlett Packard, and United Parcel Service.
Being heard wasn’t quite enough for some.
Bob Schutte of D.R. Johnson Lumber Co. said after the meeting that he would have to look at alternatives such as barges because he didn’t get an answer when he pressed Davidson from the floor on when the problem will clear.
“They’re trying. I don’t think they have a time frame for when this will pass. I don’t think they have a clue,” Schutte said.
Hearing nothing new would be “disastrous,” said William Bayes before the forum. He attended to represent Cemex Inc., the world’s third-largest cement mixer, and said the Houston-based company is “deeply damaged by this.”
“We want to see U.P. take a reasonable approach and step up to the plate . . . and participate in damages,” Bayes said, referring to charges the company has been fined when rail shipments were delayed.
During the presentation, Jack Koraleski, executive vice president of marketing, said premium trains had been taken off the system and won’t be put back on until the railroad could be sure the system would remain fluid.
Houston, along with the Pacific Northwest, has become problem area for U.P., while its Sunset Corridor – from Los Angeles to El Paso – finally has cleared.
The length of time rail cars remain in terminals – a performance measure called terminal dwell time – was 42.4 hours in March 1998. It was 31 hours in March this year, compared to a healthier 25.4 hours in March 2003.
Average train speed was 18.4 mph in March 1998, 21.4 mph this March and was 24.6 in March 2003.