A Union Pacific freight train carries goods east near Palm Springs, California, a key link within the roadways and railways that connect the southern California metropolitan areas, in addition to the busiest port complex within the nation, with the remaining of the U.S.
David Mcnew | Getty Images News | Getty Images
Union Pacific is pausing the usage of embargoes on its freight network, a practice that had increased significantly this 12 months and led the Surface Transportation Board to call Union Pacific CEO Lance Fritz and other of the rail’s top executives to a hearing in Washington, D.C., earlier this week.
In a letter addressed to STB chairman Martin Oberman and sent to the STB on Friday by Fritz, the Union Pacific CEO stated, “We’re taking a tough have a look at our use of congestion-related embargoes. To facilitate that tough look, we’re immediately pausing any additional embargoes under the pipeline inventory management program we began in November.”
In accordance with STB data, the railroad’s use of embargoes to manage congestion increased from a complete of 5 in 2017 to greater than 1,000 thus far in 2022. Reports that the embargoes are hampering shippers’ operations and adding to provide chain problems for the national economy were amongst reasons that led STB to call the hearing.
Union Pacific carries nearly 27% of freight served by rail and nearly 11% of all long-distance freight volume.Â
The railroad has contended that on account of its geographic span, variety of yards, customer facilities, and commodity mix that embargoes are certainly one of the few tools it has to administer and meter customer-controlled railcar inventory levels and alleviate network congestion. It has also referred to embargoes as a tool of “last resort.”
The STB has been vocal about its frustrations with Union Pacific, stating ahead of the Dec. 13-14 hearings that Union Pacific “failed to offer any detail” in response to an order from the STB to clarify a “dramatic increase in embargoes since 2017,” including whether UP has maintained sufficient resources during that point period.
The STB has been considering how UP’s staffing and repair levels have impacted the provision chain and if a scarcity of labor is an element of the rationale behind the embargoes. Unions have said that at the same time as major freight rail corporations add employees, the info supplied to STB on hiring is masking a longer-term trend of labor attrition. A labor lawyer who testified at this week’s hearing said that the category I freight rails could also be hiring, but they aren’t retaining existing employees so there isn’t a net gain.
“As a substitute, they’re lengthening trains to sizes that exceed infrastructure capability which is adding to the congestion, as an alternative of adding employees to enhance the service,” said Richard Edelman, certainly one of the attorneys representing the rail unions.
A CNBC review of the Union Pacific labor data supplied to the STB and starting January 2019 through October details the history of labor attrition, a timeframe that features the mixture of the deployment of the corporate’s precision railroading strategy called, Unified Plan 2020, which was launched in October 2018 and rolled out in phases across your entire Union Pacific rail network. The impact of the Covid pandemic may also be seen within the drop in labor.
In accordance with a Union Pacific spokesperson, total craft hiring was 27,753 in October 2022 in comparison with 32,315 in October 2019.
Union membership data shows employment on the entire Class I rails, including Union Pacific, is down from just before the beginning of the pandemic and even down between October 2021 and October 2022.
