Intermodal Special - Railroads adjust to boom times

By: | at 08:00 PM | Channel(s): Intermodal News  

By Karen E. Thuermer, AJOT
We’ve all heard about the jobless recovery and how too few jobs are being created for Americans today. Those in the railroad industry have a different perspective on the matter. They have quickly found that as the nation comes out of the economic doldrums, their need for new hires abounds. In fact, last April the American Association of Railroads (AAR) projected that freight railroads would hire more than 80,000 new workers well into October and 140,000 over the next 10 years. The reason: a big jump in rail-freight volumes resulting from a surge in imported and exported goods. In fact, AAR predicts freight demand to jump 67% by 2020.
Other factors besides an improving economy, however, are affecting the railroad business. While shippers traditionally turn to the trucking lines to move their goods, during the economic downturn many have been forced to explore more cost-effective methods to shave already trimmed logistics budgets. Making rail an even more attractive option, trucking rates continue to increase due to the jump in diesel-fuel prices, a shortage of truck drivers and new federal rules curtailing the hours a trucker can be on the road.
This stroke of misfortune for trucking companies has created a boon to intermodal transportation, that category in which rail cars haul ocean containers distances exceeding 500 miles, then pass the containers over to truckers to complete the delivery. Consequently, AAR statistics indicate intermodal freight is up 9.6% this year through June 2004.
“Every single railroad is up on intermodal volume this year,” says Tom White, AAR spokesman. “Intermodal freight volume has been trending upward for two decades, but this year’s growth is breaking all records. I don’t know if we’ve ever had that much of an increase, year over year, in 20 years. It really is just skyrocketing.”
UP meltdown
This surge in freight volume and need for workers has particularly caused Omaha-based Union Pacific Railroad (UP) problems. Many in the press have referred to it as “the Great Union Pacific Meltdown.”
“We’ve been very public about our manpower shortage,” says John Bromley, UP spokesman. “It actually manifested itself in 2003 when economic forecasts tended to show a flat economy.”
The railroad experienced the upsurge in demand simultaneously, while management had predicated decisions based on the recession.
This affected UP especially in metropolitan cities such as Houston, Dallas and Chicago, that were experiencing a surge in traffic.
“That, combined with a change in the railroad’s retirement law, exhausted our ample supply of conductors and locomotive engineers,” he says. “It is difficult for a railroad to ramp up, and training new railroad employees takes time. But we have taken the most aggressive approach ever by hiring 5,000 new workers this year.”
Most of these jobs are entry-level conductor positions. Those employees who are veteran conductors are being promoted to locomotive engineers.
Training for a conductor takes four months and for an engineer, six months.
Increased freight volumes also created a serious locomotive shortage for UP. UP has added more than 500 locomotives to its fleet in the last nine months and is expecting another 300 through the end of the year, according to the company’s web site. It is also speeding up deliveries of 125 locomotives from 2005 to the remainder of 2004.
To address the problem, UP had to lease as many short-term locomotives as quickly as possible.
BNSF looks brighter
Burlington Northern Santa Fe (BNSF) has had no where close to the problems experienced by UP, although their business has also picked up considerably.
According to Susan Lundsberg, BNSF spokesperson, the intermodal side of the business for BNSF grew 6.3% from 1998 to 2003, and 10.9% for its international-related business.
According to AAR, BNSF experienced a 12% increase in its intermodal freight—to a total of 1.9 million trailers and containers—in the first six months of 2004. B

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American Journal of Transportation