(The following article by Brent Hunsberger was posted on the Oregonian website on April 6.)
PORTLAND, Ore. — Freshly cut two-by-fours are piling up in the shipping yards at Swanson Group Inc.’s Southern Oregon mills, an unwelcome reminder of the persistent toll that Union Pacific Corp.’s ongoing rail capacity problems are having on businesses across the Northwest.
The stockpiled lumber should be supplying new-home construction in California. But the Glendale-based company is having trouble getting cars from Union Pacific to make the trip south, thanks to congestion and delays throughout the railroad’s 23-state system.
“I need 10 to 14 cars a day, and I’m getting — on a good day — four,” said Jim Hunt, vice president of sales and marketing for Swanson Group. “I don’t look for it to look a lot better.”
Union Pacific customers nationwide feel Hunt’s pain.
The nation’s biggest railroad has taken the unprecedented step of asking some customers along its 33,000-mile system to scale back their shipments at least temporarily. Others, like Swanson Group, don’t have to be asked — they don’t see any other choice.
Union Pacific blames its congestion woes, which began in earnest late last fall, on an improving economy and a rash of early retirements thanks to changes in federal retirement regulations for railroad employees. The change, which went into effect in 2001, left Union Pacific short of experienced crews.
As a result, trains in Oregon and Washington have frequently been left dead in their tracks, short of their destination, because crews reach their work limit under federal law of 12 hours a shift.
The Omaha, Neb.-based railroad has responded with a recruiting spree, hiring more than 1,600 new train service workers nationwide in January and February. That’s more than the 1,500 workers it hired all of last year.
But the impact won’t be seen immediately by harried customers, a Union Pacific spokeswoman said Monday, because training the new employees takes at least four months.
“I think the railroad is responding,” Hunt said. “It’s just that you don’t move something that big that quick.”
Rail customers and industry observers say Union Pacific’s crew shortages and track congestion in Oregon have actually improved in the last month, even as they’ve worsened elsewhere. The problem is especially acute in California and the Southwest.
But Union Pacific isn’t out of the sticks in the Northwest, either.
Wait times for freight cars at the railroad’s yard in Hinkle, near Pendleton, a key transfer point for freight moving in and out of the Northwest, rose throughout March. Meanwhile, train speeds systemwide are declining, a sign of continued congestion on the rails.
Slowdowns in the Los Angeles area and throughout the Southwest have also triggered service disruptions in Oregon.
“The crew shortages in the Pacific Northwest appear to have gotten better,” said Ron Vincent, vice president of customer service for Portland & Western Railroad, which delivers 60,000 cars each year between Union Pacific and customers in northwestern Oregon. “The problems now have shifted to the L.A. area, and, of course, there’s residual affects from that.”
Timber operators around Oregon have had to curb operations and stockpile lumber inventories because of problems getting timely service and recovering cars caught in Union Pacific’s congestion. Other companies have been told by Union Pacific that they should make more shipments by truck rather than rail to help relieve congestion.
“If they have certain timing demands, and we don’t feel we can meet them right now, we’re suggesting that they look at trucks,” said Kathryn Blackwell, a Union Pacific spokeswoman. “We hope that’s a temporary situation we have.”
Hunt said the Swanson Group has cut hours of operations at its mills in Glendale, Noti and Roseburg from 90 to 80 hours a week and worked employees overtime loading studs and plywood onto trucks, rather than railcars. Hunt said if he can’t get more cars to clear mill inventories, he fears the company might have to shut down some mills completely.
“We can’t continue to produce at a certain level and ship two-thirds of that production every week,” Hunt said. “Eventually your inventory engulfs you.”
Compounding the Swanson Group’s problems, a fire in November shut down a 3,000-foot-long tunnel on a key rail line between Central Oregon and California, forcing the Swanson Group to ship southbound loads on a less-direct route through Union Pacific’s yard in Eugene. The tunnel isn’t expected to be reopened until May, said officials with Central Oregon & Pacific Railroad, which owns the rail line.
Union Pacific’s troubles, though, run far deeper than the tunnel fire. The company has had a problem, for instance, attracting applicants for 15 train service positions in its Hinkle yard, a situation Blackwell blamed partially on the remoteness of the terminal.
Some customers and observers say Union Pacific’s service problems stem from inefficiencies that started with UP’s merger with Southern Pacific in 1996.
Blue Heron Paper Co. in Oregon City has been forced to curtail its pulping process several times in the past two years because the railroad failed to make timely deliveries of recycled newsprint, said Craig Fletcher, the company’s fibre supply manager. The mill uses about 550 tons of recycled paper each day, some of it shipped by rail from as far as 1,200 miles away.
Even before the latest congestion problems, the employee-owned company reduced the amount of shipping it did with Union Pacific because it found it could find more efficient service from trucks, Burlington Northern Santa Fe Railway and other rail providers. It also has decided to ship more finished rolls of paper by truck, Fletcher said.
“If we have a choice based on where the freight originates and what the costs are . . . we’ll go with brand B and not brand U,” Fletcher said.
State officials have questioned whether recent dispatch and management decisions haven’t made recent problems even worse.
On one occasion in February, the railroad used four crews over three days to get a train from Portland to Eugene, said Ed Immel, a rail planner with the Oregon Department of Transportation. On another occasion the same month, a long freight train was left parked with cars spilling onto the main rail line, blocking an Amtrak passenger train from passing and requiring Amtrak to bus passengers from Portland to Vancouver, Immel said.
“We think there’s some stuff that’s just bad decision-making,” Immel said.
Blackwell said such criticism of dispatchers was unfair.
She said the railroad’s chairman and chief executive, Richard K. Davidson, and president, James R. Young, toured the railroad’s Idaho and Oregon operations by train the weekend of March 27 and said Young was “very enthused” with the progress the railroad was making.
“It was my impression that the Pacific Northwest in general is actually doing pretty well,” Blackwell said. “I was told that was a good part of the railroad to be in.”