18 January 1999 00:00 [Source: ICB Americas]By Don Richards
Tremors continue to reverberate from Surface Transportation Board's refusal to consider an industry-government consensus plan to open up railroad competition in Texas.
Chemical shippers are upset about the STB's decision on December 21 to dismiss an industry-sponsored proposal to force Union Pacific Railroad to give up trackage to allow increased competition in lines around Houston and the Gulf Coast (CMR, 12/28/98, pg. 5).
A rail district, created by Brazoria and Fort Bend Counties to compete with UPRR because of the railroad's poor service in the area last year, also faces an uncertain future because of the ruling.
Jon Fisher, of Texas Chemical Council, is not surprised that STB dismissed the so-called consensus plan, which was promoted by TCC, Chemical Manufacturers Association, Society of the Plastics Industry, Kansas City Southern Railway, Texas-Mexican Railway, Railroad Commission of Texas and others.
Following Union Pacific's 1996 merger with Southern Pacific Rail Corporation, rail service deteriorated, costing the chemical industry millions of dollars and triggering lawsuits against UPRR by a host of companies including Dow, DuPont and Union Carbide.
Given that the board disallowed a similar proposal by TCC last March, Mr. Fisher concedes that the consensus plan would have been thrown out no matter what. "They're only going to do what the railroads want," he says.
Union Pacific, in its final service report before that function is turned over to the Association of American Railroads, says that car inventories on its system dropped significantly. They averaged 322,454 cars in late December, with the total for Texas and Louisiana falling below 98,000 cars. Train speeds, as low as 12 miles an hour during the crisis, have risen to more than 17 miles an hour.
Mr. Fisher remains skeptical. "If [the figures] are accurate, that's good," he says. "But their bumbling cost [the Texas chemical industry] a bunch of money."
He maintains that if two railroads are competing for the same business, they will be highly efficient "and nobody's going to look for other modes of transportation. I'm a big believer in competition."
But in its December 21 ruling, the federal agency said, "Whatever the merits of the more-competitors-enhance-infrastructure-investment argument, it is more appropriately made in an open access debate before Congress involving the entire rail system than in this case."
Among other UPRR developments, the company is building a $4 million, five-track expansion of its storage-in-transit (SIT) railyard in Spring, north of Houston, to support chemical business along the Gulf Coast.
SIT yards are small railyards in which covered hopper cars loaded with customers' plastic pellets are stored. Such rolling warehousing reduces the need for storage at the manufacturing site and saves time when the pellets are transported to their destination.
The 39-track Spring SIT yard was built in phases from 1981 to 1984 and has a storage capacity of 1,442 cars. Following construction of the five additional tracks, storage capacity will increase to 1,640 cars. The project will be completed in late February.
UPRR recently opened a $3.5 million, seven-track SIT yard in Longview with a storage capacity of 260 rail cars to support the chemical business in the Longview area and the Gulf Coast.
In the Brazosport area, founders of the Gulf Link Rail District hoped that a favorable ruling by the STB would allow them to buy existing rail lines, but the federal board's decision only allows the district to build additional trackage, which may be too costly for local companies.
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