Union Pacific takes actions to address capacity issues

Union Pacific Corp. is taking additional measures to manage traffic growth on its rail network. This is another step in the company's continuing effort to improve operating efficiency in the face of unprecedented customer demand. Over the past nine months, Union Pacific focused its efforts on adding the critical resources needed to help meet demand. During that time, nearly 2,500 trainmen were added into train service, almost 700 conductors have begun engineer training and the company acquired 500 locomotives. By the end of the third quarter, another 1,250 trainmen are expected to complete training.

While operations did stabilize during the second quarter, record business volumes in each of the first six months of the year have made it difficult to improve service performance. In fact, during the second quarter of 2004, the company handled more carloads than in any other quarter in its history.

Looking ahead, demand continues to increase, with the upcoming peak shipping season demand expected to be at record-breaking levels as well. Because of this, Union Pacific plans to supplement its previously announced recovery efforts with broader volume restrictions in key corridors. Included in these actions is an allocation system for certain shipments through key terminals, as well as an overall reduction in train starts that will likely impact each of the company's six commodity groups. Despite these measures, the company anticipates that volumes in the second half of 2004 will exceed last year's record levels. On a full year basis, commodity revenue growth is expected to be in the approximate range of 4 to 6 percent, as previously projected.

"While the timing of our recovery remains uncertain, we are convinced that the actions we have undertaken are the right ones," said Dick Davidson, chairman and chief executive officer. "Demand for our services has never been stronger and we are absolutely committed to restoring our operational efficiency so that we can take advantage of the opportunities ahead."

www.up.com

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