(The following report by Stacie Hamel appeared on the Omaha World-Herald website on July 9.)
OMAHA — Citing a rail system that has remained stubbornly congested amid record shipping demand, Union Pacific Railroad said Thursday that it will further limit service.
The Omaha-based railroad — the nation’s largest — has grappled with slowed trains and service delays since last fall. Its latest actions were posted on the company’s Web site in a letter to customers from Jack Koraleski, executive vice president of marketing.
The actions targeted peak season, generally from mid-July to early November when shipments increase for retail merchandise for Christmas, new models in the automotive industry and the fall grain harvest, the letter said.
The railroad is taking steps to protect key corridors and terminals, such as the central corridor through Iowa and Illinois and several others at least partly in California. The actions include:
— Creating an allocation system to schedule intermodal and other shipments.
— Temporarily limiting rock and aggregate materials carloads in Texas that are delivered throughout U.P.’s 23-state system.
— Consolidating some automobile and chemical trains.
— Regulating the volume of selected agricultural commodities.
A railroad spokeswoman declined to specify areas of the country affected or the number of trains that would be cut.
Although the changes are prompted by peak season, they can’t all be characterized as temporary, said U.P. spokeswoman Kathryn Blackwell. Restoring service would depend on when the system becomes more fluid and train speed increases, she said.
“We aren’t making the progress we want to make,” she said. “This is a critical season. We need to make sure that we do the best we can for our customers under these difficult circumstances.”
The letter hinted that further service cuts are possible. “If demand for freight transportation continues to surge into 2005 and we approach the limits of our physical capacity in key corridors, we will refine our methods to mange the flow on to our network,” the letter said.
Blackwell said agricultural shipping demand has decreased in the past month and the railroad has lowered its forecasts for harvest. “I don’t think that is going to be a huge concern,” she said.
Pat Ptacek, executive vice president of the Nebraska Grain and Feed Association, said he expects the 60 or so elevators in the state that can accommodate 54-car or longer trains wouldn’t be affected by any U.P. cutbacks.
The company stopped serving some smaller elevators about 10 years ago, and Ptacek said the remaining elevators that can accommodate only small trains might have cause to worry, although he noted that he had no details of U.P.’s plans.
“If what they’re doing is just saying they’re cutting back, they’ve already been doing that for years,” he said.
Blackwell said that cuts are being made across U.P.’s industry sectors and that the railroad is taking as much business as it can handle.
U.P. has moved a record amount of freight each of the last six months, Blackwell said. “Put that in perspective with our service woes and we’re still moving more than ever before. That’s pretty impressive.
“When we’re carrying record volumes and we’re still turning away business, that tells you something about the economy.”
(Staff writer Mark Kawar contributed to this report.)