Crack the Whip on Union Pacific

Ahuge portion of the Southern California economy was put on hold early this month by what experts call the nation’s worst railroad logjam in at least 25 years. The blame fell on the administrators of the Union Pacific Railroad, which swallowed Southern Pacific railroad last year and has been in need of a collective Heimlich maneuver ever since.

The problems: too few locomotives, engineers, freight cars, administrators, computers and more. The results: stranded cargo along major stretches of Union Pacific’s 36,000-mile rail system and costly delays for shippers and customers that, by some estimates, total up to $1 billion.

In the Los Angeles area the situation became outrageous, transforming a run from the ports to Chicago from three or four days to three weeks or more.

The good news now is that the problems at the Los Angeles and Long Beach ports have eased considerably. The bad news is that Union Pacific doesn’t deserve much credit. At Long Beach, for example, the Christmas cargo rush is largely over. Additional dockworkers were hired to help handle the mountain of shipping containers that piled up during the worst of the railroad mess.

In Texas, the federal Surface Transportation Board took the unusual step of ordering Union Pacific to at least temporarily open its rails to competitors to ease snafus. It should be noted that the Transportation Board approved the 1996 Union Pacific/Southern Pacific merger with few stipulations.

There is much to learn from this experience, particularly since pending mergers could leave the nation with just three major rail carriers. Union Pacific slashed and burned its way through the Southern Pacific infrastructure, only to find out, belatedly, that it needed Southern Pacific’s locomotives, cars and administrators. Union Pacific should be required now to meet specific performance objectives or face serious fines, at the least. Small wonder some Texans want the merger voided to allow rail competitors back in on a permanent basis.

During the debacle, shippers and customers found themselves with few alternatives to Union Pacific, leaving the railroad with relatively little to lose in terms of major business. That’s something the Surface Transportation Board ought to take up during its Wednesday meeting on Union Pacific.

Economic pressures should drive Union Pacific to reforms. Even some of its shareholders are suing the railroad. But that’s not enough. Union Pacific isn’t just another large business. It’s one on which the nation depends for everything from petrochemical shipments to trade with Mexico and the Pacific Rim. Union Pacific took on that role and must be made to meet its responsibilities.