UPRR Plans Draconian Steps To Get System Back on Track

16 March 1998 00:00  [Source: ICB Americas]

Beleaguered Union Pacific Railroad, conceding that service continues to worsen in the Texas-Louisiana chemical corridor, is taking draconian steps to try and clear system congestion in the next 30 days.

In a lengthy letter to Surface Transportation Board last week, UPRR admitted that, "the pace of improvement is inadequate and that the measurements we report...are unacceptable.

If service does not improve substantially by then, UPRR asserts that it will take stronger measures, including transfer of business to other carriers and a temporary pause in shipments to allow lines to clear.

Skeptical observers indicate things are so bad that UP Chairman Dick Davidson's days are numbered, and he could be on his way out if the latest plan doesn't work.

The railroad confesses that some trains have been held for two weeks or more, and many shippers in Texas and Arkansas are suffering from inadequate flows of empty cars.

Various reporting failures, UPRR admits, have thwarted shippers' abilities to trace their goods. In February, UP's National Customer Service Center received 80,000 calls from shippers trying to locate shipments.

The railroad's March 9 service report to STB shows that the number of freight cars on its overstuffed 310,000-car system was 342,415 for the week ending March 6, significantly more than the 303,513 cars reported during the same period in 1997.

Average train speed sagged to 12.7 miles per hour the week ended March 6, down from 13.5 the previous week and 19.1 miles per hour in the corresponding 1997 period.

UP announced on March 10 that it would bring 300 locomotives into Texas, particularly in the Houston area, to reduce system congestion.

Customers are justifiably leery about the latest UP edict, complaining that it is just one more deadline that cannot possibly be met.

One disgruntled traffic official notes that the move just relieves pressure on the railroad by applying pressure on shippers, and another believes that a moratorium on shipments could exacerbate the problem.

And there is nowhere to turn. Chief rail competitor Burlington Northern & Santa Fe Railway has more than it can handle with its own customers and the overflow traffic from UP. Trucking companies are far more expensive and booked to capacity.

Railroad Commission of Texas, whose emergency plan to ease the rail tangle was rebuffed by STB earlier, will submit a modified scenario to the agency (CMR, 2/23/98, pg. 14).

The long-term plan, with few revisions from its predecessor, will continue to propose competition for the Houston-Gulf Coast area through the use of neutral switching facilities and by allowing Texas Mexican Railroad permanent access to the Houston market.

Meanwhile the turmoil continues to heighten:

Ñ William Gebo rail services procurement manager for Dow Chemical Company, the largest rail shipper in Texas, says that only about 12 percent of Dow products are currently reaching their destinations on time, compared to about 35 percent last fall and 85 to 90 percent before the problems began--and they're getting worse.

Ñ STB Chairman Linda Morgan, at a Houston meeting on March 3, told restless shippers that an emergency service order granting Burlington Northern & Santa Fe Railway Company and Texas Mexican Railway Company access to Union Pacific's tracks in the Houston area would be extended again, to August 2, although critics note that the order has been in place for four months and has done no good.

Ñ STB, itself now under scrutiny as to its future direction and funding, will convene a hearing on April 2 in Washington to explore rail rate and competition issues.

Ñ Charges that Union Pacific is raising rates and refusing to guarantee future service levels have been leveled in an STB filing by National Industrial Transportation League, Chemical Manufacturers Association and the Society of the Plastics Industry.

Ñ Federal Railroad Administration, after the most extensive investigation in the agency's history, has sharply criticized UPRR and fined the company $131,000 for safety violations and fatalities after earlier considering penalties of up to $5 million.Houston Roundup

PLANT MISHAPS: An explosion and fire on March 3 injured two Dow Chemical Company workers near the ethylbenzene plant at the company's Freeport complex. Occupational Safety & Health Administration and other government agency personnel gathered on site.

Company officials determined that a spill of pyrolysis gasoline feedstock 10 hours before the explosion was linked to the accident.

Two tanks imploded at the Coastal Javelina plant in Corpus Christi on March 5. There were no injuries, and the facility was shut down temporarily. The unit, a joint venture among Coastal Corporation, Valero Energy Corporation and Kerr-McGee Corporation, takes sidestreams from local refineries to produce olefins.

BORDEN SUIT SETTLED: Borden Chemicals & Plastics LP has settled a lawsuit with Environmental Protection Agency, Department of Justice and Louisiana Department of Environmental Quality in a current case in US Middle District Court of Louisiana.

BCP will pay a $3.6 million penalty to the federal government and $400,000 for an environmental project in Ascension Parish. At issue were various hazardous waste violations at the company's Geismar, La., vinyl plant.

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly