Crew shortages, congestion plague Union Pacific

A small number of California-based shippers attending a recent railroad customer forum say they've seen some improvement in the performance of the Union Pacific Railroad. A few others say their service levels had stopped deteriorating. But crew shortages in the Pacific Northwest and power (locomotive) shortages in Houston have had a negative impact on shippers in those regions.

Congestion in the Pacific Northwest and Houston areas were blamed for the worsening performance, leading Morgan Stanley to estimate second quarter costs related to congestion will top the $75 million UP incurred in the first quarter and could even go higher than the $80-$85 million Morgan Stanley analysts had assumed in the second quarter. UP management express some confidence following slight improvements in California and Phoenix where congestion problems had begun, but offer no timeframe for network-wide service improvements. The railroad is adding crews and locomotives to deal with the problem, but so far to little effect.

Shippers are skeptical that they'll see near-term improvements, and many are making alternative shipping arrangements, including forest product shippers in the Pacific Northwest, who are shifting freight to barge.

Intermodal shippers are disappointed by increased transit times and UP's suspension of its on-time guarantee on its Blue Streak service.