(Reuters circulated the following article on January 13.)
CHICAGO — Union Pacific Corp. said on Thursday the massive storm that hit California and Nevada in the past week will reduce the largest U.S. railroad’s rail capacity between the Los Angeles basin and points east by one-third for an extended period.
The company, which experienced congestion problems that pressured earnings last year, does not know the financial impact of the bad weather or when it will fully recover because different routes will come back on line at different times, a spokesman said.
“We are facing great challenges in the wake of this severe weather in the West,” Chairman and Chief Executive Dick Davidson said in a statement.
Analysts had been looking for signs of improvement from Union Pacific, which was saddled with traffic congestion and service problems last year after it was caught off-guard by record shipping volume driven by increased international trade and U.S. economic expansion.
Transportation companies posted record volumes in 2004, and capacity constraints in the trucking sector, and to some degree railroads as well, have allowed some of these companies to gain pricing power for the first time in many years.
While Union Pacific’s critical Sunset route between Los Angeles and El Paso, Texas, is now open and operating at capacity, two of the five main routes in and out of the Los Angeles Basin remain closed, Omaha-based Union Pacific said.
Union Pacific is a major hauler of shipments from the Los Angeles and Long Beach port complex, where vast amounts of Asian imports are delivered.
Track inspections on Wednesday revealed the line between Los Angeles and Salt Lake City, which goes through Las Vegas, is cut by flooding and mudslides at several points, the company said. It may take up to two weeks, or possibly more, to restore service on this line, and operations will be slowed for some time after that.
Most of the damage is in the very narrow Caliente Canyon in Nevada, where all access roads were washed out and repair work will be very difficult, Union Pacific said. This line averages 25 trains a day and is one of the two primary east-west routes between Los Angeles and the Midwest.
The coastal route that runs north from Los Angeles to Oakland is cut in several places with debris from mudslides, and ocean tides eroded track support at other points, the company said. There is no estimate for when this line will reopen.
Union Pacific said it has rerouted a number of trains and the Burlington Northern Santa Fe Corp. (BNI.N) railroad is allowing a few Union Pacific trains to operate over its line.
Union Pacific’s stock was off $1.71, or 2.67 percent, at $62.25 in late trading on the New York Stock Exchange.