Western Railroad Discussion > UP discusses the layoffs, business slowdown

Wall Street Journal reports on the decline in Union Pacific's business.  Steep declines in coal, in particular, have resulted in stored locomotives and 900 layoffs. About 800 of the 7600 locomotives are stored.Much of the weakness stems from coal shipments, which have fallen about 25% quarter-to-date because of milder temperatures and as power plants switch from coal to natural gas. The railroad had expected coal shipments to decline in the mid-single-digit range.The trend could continue, said Chief Executive Lance Fritz in an interview. “The remainder of the year, we don’t know what to expect,” he said.

WSJ, or search how UP moves to offset lower cargo volumes

My impression is that UP coal business has declined much more than BNSF coal business has declined. Some of this may be simply luck of the draw as to which power plants converted to natural gas. But in some cases, BNSF underbid UP and UP management decided not to match BNSF's price. In one infamous case, BNSF got a big contract away from UP by bidding one cent less per ton.

Best regards,

Rob L.

CoalAge http://coalage.com/  is the place to go for production numbers by state and by quarter.  MT , up 10%, 300,000 tons per month and CO, up 12% , 100,000 tons per month but production is down in WY, down 3.5%..which is about 1.25 million tons per month.  That probably means less trains for UP.
Total drop in production is significant in the east.
Roger Beckett

BNSF too...

http://www.kansascity.com/news/business/article22457550.html

Did anyone watch the UP CEO on CNBC's "Mad Money" Wednesday night?  I had to mow the
lawn and missed it.  In a tease on "Fast Money" he did say zero derailments was an achievable
goal, which I thought a little facile and trite.  

Nick Tharalson,
Marion, IA

Years ago I asked the question on this website "What will UP do when their coal business goes way down?"  It was during a previous discussion about carload / traffic mix.  That day is now here.

Just think of all the carload traffic (REVENUE) they've lost / chased away by:

--pulling out spurs to customers
--reducing switching
--not soliciting the business
--reduced train frequency

Too many eggs in one basket.  Not good.  Now they're feeling it.  I would love to hear how it goes / what the customers say when UP goes seeking the lost carload business again.