IT SEEMS that Union Pacific is not out of the soup yet. Indeed, some of the stories reaching our offices would suggest that progress towards solving the fearsome congestion problems that followed UP’s merger with Southern Pacific is far from encouraging. Take, for example, the one about a train of car parts that UP offered to Illinois Central at Memphis. When IC staff asked where it was to go, the response came that we don’t know, but just take it away and park it. Or another tale about a request to CSX that it take several thousand cars waiting in New Orleans. On being asked for a destination, the reply came to just put them in a yard and we will tell you later when we know. In both cases UP was told it could keep its trains.
Just how serious the situation had become was underlined by a UP request to the Surface Transportation Board to extend its emergency service order for 60 days from March 15. Back came a hardline response that the order would be extended until August 2, the maximum permitted by law. The Board justified its decision by the ’gravity of the emergency’, saying that the crisis was ’not close to being resolved’. Not content that this would suffice, STB instructed UP to meet competing railways serving the Houston area and to submit a report by May 1 detailing how it planned to resolve the chaos along the Gulf Coast.
UP’s efforts to untangle the mess saw the regional dispatching centre jointly run with Burlington Northern Santa Fe commissioned on March 15 in the Houston suburb of Spring. The centre controls around 550 km of route owned by both railways as well as the main line formerly operated by the Houston Belt & Terminal Railroad. UP also announced that it was hiring 30 locos from BNSF to haul trains between Houston and New Orleans and on the Houston - Pine Bluff route.
But the troubles were far from over. Just over a week later, a build-up of 5500 wagons waiting to move into Mexico at Laredo caused serious delays stretching north into Oklahoma and Kansas, with coal bound for power stations among traffic affected. On March 24 UP decided to ban certain categories of southbound freight, but the blockage eased enough for UP to rescind the order on April 14, replacing it with a requirement that Mexico-bound shipments should have special permits.
UP told the STB in its March 23 report that the daily average of delayed trains had risen from 291 to 332, the highest since the trouble began. Average train speed for the week ending March 20 had slipped to 20 km/h compared with 30·7 km/h a year earlier. The only good news was improved operations on routes from Texas to Missouri, which UP said followed the start of one-way running, and reduced congestion in its Houston yards.
This was not enough to stop the STB from announcing on March 31 that it would reconsider the UP-SP merger. This drastic move came in the wake of a petition filed by the Kansas City Southern and Texas-Mexican railways which, along with the Texas Railroad Commission, want UP to divest some trackage in the region. Shippers contend that the UP/SP merger has given too much market share to a single railway - UP now controls 85% of rail infrastructure in the Houston area.
While the STB’s decision is only a preliminary step which allows it to set a procedural schedule, KCS said ’we think it’s pretty significant’, although its spokesman admitted that it would be premature to believe the STB would order divestiture. The earliest any decision could be made is September.
UP dismissed the STB move as a routine matter, but it had earlier sought to head off calls for a partial rollback of the merger by announcing plans to spend more than $570m over the next two years on infrastructure improvements in Texas and Louisiana. It is also implementing a six-month $400m project to add more double and triple track sections on its heavily used line between Salt Lake City and Chicago. o