(The Record published the following story by Reed Fujii on its website on August 4.)
STOCKTON, Calif. — Union Pacific Railroad, rebuilding its business of moving perishable goods from the West Coast to Eastern U.S. markets, confirmed it expects to take delivery of 1,500 refrigerated cars in the next few years.
There are two reasons for buying the new cars: The railroad is finding strong demand for expedited service on cross-country deliveries, and, while Union Pacific has refurbished many of its refrigerated cars, the existing fleet is nearly 30 years old and much of it is simply wearing out, said John Philp, assistant vice president of marketing.
Trinity Industries Inc. of Dallas will build the new boxcars, with delivery to begin this fall and stretching out probably into 2005, Philp said from his office in Omaha, Neb.
The cars will be used for the Express Lane perishables service, operated jointly with CSX Transportation, which provides guaranteed delivery from California and the Pacific Northwest to destinations in the Midwest and East.
Since its launch in April 2000, Philp said, “There’s been good demand for that.”
And it’s not alone.
Last year, Burlington Northern Santa Fe and Swift Transportation Co. began offering seamless truck-to-train transport service for perishable goods moving among points on the West Coast in the Midwest and Southeast. BNSF bought 700 new refrigerated railcars to handle the traffic.
Customers have responded, said Lena Kent, BNSF spokeswoman.
The railroad’s perishable shipments rose 35 percent in the first three months of the year and another 19 percent in the second quarter, Kent said.
“The reason there’s been such an significant increase in our perishables business is the fact that we have invested in the new equipment to meet the needs of our customers as well as increased reliability,” she said.
Railroads once dominated cross-country transport of perishable goods, with packing sheds dotting rail lines throughout the Central Valley being the only option.
But they ceded nearly all of that business to long-haul trucks over the past 30 years as the interstate highway system was build and railroad service faltered as the industry struggled with deregulation and consolidation.
“They’re not going to use you if their product deteriorates before it reaches the East Coast,” Philp said.
Still, railroads hold the price advantage over long-haul trucks.
“If you have the (quality) rail service, there’s plenty of market demand,” he said.
Somewhere between 90 percent and 95 percent of perishable goods move by truck, a tempting target for the two railroads.