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Railroad worker shortage threatens recovery

According to shippers and industry groups, American freight railroads are struggling to bring back workers, slowing down chemicals, fertilizers and other products, disrupting factory operations and recovering from a pandemic. May interfere with.

The issue comes from federal regulators who are concerned that the cost savings and new operational plans implemented on most of the freight railroads celebrated on Wall Street are causing poor service to some customers. We are collecting scrutiny.

Martin Overman, Chairman of the Surface Transportation Board, said: “It’s like a professional soccer team with only one quarterback.”

The board of directors overseeing freight railroads is looking at ways to improve competition in the railroad industry. This is a mission highlighted by the Biden administration’s recent executive order to promote more competitive markets in many industries.

The challenges arise primarily from two issues that are afflicting the US economy. It is a labor shortage and a broad supply chain bottleneck as manufacturing surges and the economy recovers.

Union Pacific Railroad in St. Louis. The company says it has taken steps to ease the congestion of cargo moving to Chicago.


Photo:

Luke Charrette / Bloomberg News

Railroad executives say they have done their best to drive a group of employees into quarantine and overcome and manage the pandemic that caused fluctuations in demand due to irregular production at some factories.

CSX Co., Ltd.

CSX 1.25%

CEO Jim Foot expected the railroad to hire 500 new conductors to help increase demand and fall more than expected, but so far 200. He said he only added. “Just as it’s hard to find someone who wants to be a barista, it’s very hard to get out and find someone who wants to be a train conductor,” he said.

When the economy grew rapidly last year, railroads shrank rapidly, expelling thousands of workers and taking hundreds of locomotives offline. It was in the midst of years of promotion by railroads such as CSX and Norfolk Southern. Co., Ltd.

And Union Pacific Co., Ltd.

UNP 0.79%

Changes that have already brought less workers to streamline their operations by running fewer trains with more cars.

Some railroads have implemented Covid-related reductions so that workers and locomotives can be quickly recalled if the pandemic is rapidly mitigated. Some railroads have set up reserve committees in place of layoffs to allow workers to take unpaid leave or work for a week a month. This allows you to stay profitable and return to work in just 48 hours instead of 15 days with a normal layoff. The idle locomotive was parked and maintained so that train transportation could be resumed.

However, other workers who were temporarily dismissed are late to return, and many of them are hesitant to move to new missions. Training took months and the Covid-19 protocol further expanded several training classes.

The shipper noticed.American Chemical Council with members like Dow Co., Ltd.

And Honeywell International Co., Ltd.

In a letter to the STB, railcars have been waiting in the yard for over a week, more than doubling the travel time on some routes. Some factories are about to close due to lack of materials, while others are delayed in production.

Jeff Sloan, senior director of regulatory and technical issues for industry groups, said the deterioration in service indicated that the railroad cut too deeply before the pandemic and could not catch up. “They were clearly not as prepared for the increase in traffic as they should be,” he said.

Based in Jacksonville, Florida, CSX is the first U.S. rail operator to implement an operating philosophy called precision railroads since 2017, when Hunter Harrison, who pioneered the idea of ​​Canada’s major freight lines, joined the company as CEO. was. This strategy requires longer train mileage, tighter schedules, and the ability for railroads to dispose of locomotives, reduce workers, and close facilities.

The implementation was offensive to operation and customers complained about the mayhem on the truck when changes were made. But some railroads followed, partly because of Wall Street’s pressure to lower costs and boost margins and stock prices.

CSX and other companies say they have recently increased their hiring to meet the growing demand for transportation. Norfolk Southern is training 114 conductors as of mid-June and plans to add 72 to 96 new trainees each month for the rest of the year.

CSX’s Foote urges railroads to reassess how they hire certain jobs, such as those who need to work on weekends and holidays, or spend days away from home. I said there is. They are offering a $ 3,000 bonus to workers who provide referrals for new employees, which Mr. Foot said helped increase the pool of applicants.

“It’s a challenge for us to find ways to bring more normality to the hours that railroad employees were working to make their jobs more attractive,” Foot said. “It’s not about work.”

Throughout the freight rail network, employment levels are still below pre-pandemic levels. According to data shared with the STB, railroads reported 47,444 transport employees in June, down from about 51,800 in March 2020.

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The labor shortage is exacerbated by the congestion of products entering and exiting the railway system. Freight delinquency at ports means the tension of freight railroads pulling cargo inland, but the tight market for trucks also creates pinch points when trains transport containers to the highway.

“The supply chain is only as good as the weakest links in the chain, and there are many weak links in the chain,” said Christian Weatherby, a transportation analyst at Citi.

BNSF Railway, a unit of Union Pacific and Berkshire Hathaway Co., Ltd.

BRK.B 1.08%

We are taking steps to ease the congestion of cargo moving to Chicago. Union Pacific has suspended traffic from certain West Coast ports to Chicago’s multimodal transport facility for seven days this week, eliminating unprocessed trains waiting to be unloaded. BNSF said it will measure traffic from several West Coast ports to Chicago.

STB Chairman Oberman said that while some industries report good service, others continue to suffer from the same problems, such as crew shortages, delivery delays, and other service cuts. Stated. “Overall, I don’t think we have a system that does what it’s supposed to do,” he said.

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Read more articles on supply chain challenges selected by WSJ editors

Write to Paul Ziobro (Paul.Ziobro@wsj.com)

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Railroad worker shortage threatens recovery

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