(Bloomberg News circulated the following story on February 10.)
WASHINGTON, D.C. — Union Pacific Corp. has as much as doubled some rates in Arizona for shipping items such as steel and copper, helping to cut demand for rail cars as the company tries to reduce congestion on its network.
The new prices take effect March 1 and also cover salt, rock and paper for industrial use, the Omaha-based company said Wednesday. The increases of as much as $3,000 a shipment might be applied in other areas to thin out congestion, spokesman John Bromley said.
Union Pacific has struggled with delays since an unexpected surge in demand starting in late 2003 left it short of train crews and equipment.
Delay-related costs contributed to a 62 percent drop in net income last year. The railroad cut capacity earlier this year on a route between Los Angeles and El Paso, Texas, that passes through Arizona, after California storms slowed service.
Items for which the railroad doubled prices include steel from central Missouri to Phoenix, scrap paper and lignin liquor, a paper byproduct used as a food additive.
Rates will rise as much as 52 percent from San Manuel, Ariz., to destinations in Texas and Tennessee. Prices also are rising for construction products such as shingles, aluminum and sand.
“Arizona is at the top of the list that we are looking at,” Bromley said. “Some of the shippers are getting way more cars than they have the ability to unload. That has jammed up our facilities.”
Bromley would not say where else prices might be increased or which customers are affected.