HOUSTON — Since the Union Pacific railroad system went into gridlock this summer, Houston resin packaging firm United DC has been getting anywhere from five to 50 rail cars full of resin delivered each day.
The trouble is, it's supposed to get 25 a day, every day.
So President Marc Levine is forced to send home 15-20 employees on slow days and has workers there 16 hours straight on busy days.
The irregular delivery is costing the company at least $1,000 a day — not enough to cripple the business, but enough to put a dent in the bottom line, Levine said.
``The Union Pacific does not have their act together to allow me to run my business sanely,'' he said.
That and other problems, including processors and resin makers shutting down because they cannot get or ship materials, prompted the Washington-based Society of the Plastics Industry Inc. last week to ask federal regulators to intervene.
The Oct. 21 petition from SPI, the Chemical Manufacturers Association and the National Industrial Transportation League asked the Surface Transportation Board to take emergency action, including freeing companies with UP contracts to find other ways to ship products.
SPI President Larry Thomas said solutions also could include giving competitors trackage rights into Union Pacific lines.
``It's not so much the government coming in and fixing the problem,'' he said. ``It's the government coming in and making Union Pacific look at all the options.''
An STB spokesman had no comment on the petition, and said the agency has scheduled a hearing Oct. 27 to look at the problem. The agency can take over railroads temporarily, but agency officials told the Houston Chronicle that they generally act when a rail system is in bankruptcy or cannot fix itself.
Union Pacific, the nation's largest railroad, said federal action is not needed, and told STB on Oct. 20 that it has turned the corner on problems it has encountered since it bought Southern Pacific's rail system and began merging it with its own.
Opening up UP lines to other railroads would increase congestion, according to UP spokesman John Bromley, and is motivated by other rail systems' desire to get into Union Pacific's franchise.
Union Pacific officials blamed the difficulties on a combination of management miscues in merging the rail systems, and unforeseen problems, but said more locomotives and crews, computer upgrades and new labor agreements will put the system back on track in 30-90 days.
Several Houston-area companies said they have not seen any improvement in the rail service, and one resin manufacturer, who spoke on condition of anonymity, said he did not have faith that UP could solve the problem quickly enough. Most plastics companies contacted declined to speak on the record because they said they feared retribution from UP.
Union Pacific managers said they underestimated the problems they would face merging the two railroads, and they were hit by unforeseen problems like rainstorms that washed out track in Arkansas, temporarily eliminating a key route into and out of Houston.
Problems mushroomed quickly earlier this summer. The system was in gridlock and cars were waiting at least 10 days to get out of the Houston petrochemical hub, compared with the typical three days, UP managers said.
``We had never experienced anything quite like it,'' said Douglas Glass, assistant vice president of chemicals in UP's marketing and sales department. ``You might describe it as a meltdown.''
UP officials said they did not lay off train crews or make unwise cuts in operations, but Glass said railroads generally are under financial pressure.
``Was there pressure to meet Wall Street's expectations?'' he said. ``Absolutely. We've had to cut our way into prosperity.''
The railroad reduced excess cars on its system by 19 percent in the two weeks before Oct. 17. The number of trains that were held because they did not have locomotives dropped 43 percent between Oct. 17 and the start of UP's recovery program Oct. 1. In Texas and Louisiana, the company has reduced the number of cars on the rail lines from 108,000 to 105,000, UP said.
``We've turned the corner on reducing congestion,'' UP Chairman Dick Davidson said in a statement.
And in the Houston area, yards generally are much more fluid and trains are running out on the days they are scheduled to in the Settegast Yard, a major switching point — rather than facing the six-day delays that were common several weeks ago, said Craig Kercher, director of terminal operations for that yard.
The Southern Pacific network also turned out to be in much worse shape than anticipated, which in some cases required UP to double what it thought it would need to spend on improving some yards, Glass said.
For example, SP was short of money to build a storage facility, the Dayton Yard, along its rail line to petrochemical plants in Baytown, and wound up building a yard that does not meet UP standards and letting another company manage the yard, he said.
And it has taken several months longer than anticipated to negotiate labor agreements that allow UP crews to work on SP tracks and vice-versa, even though the two companies have merged, Glass said.
UP also was forced to sell a key SP route into and out of Houston, as a way to get federal regulators to approve the merger, and they thought they could reroute traffic around it, Glass said.
But SPI's Thomas said he was skeptical that UP was surprised by some of the problems in the merger.
``I don't think that cuts it,'' he said. ``I question, `Why not?' Why did they not know or have a good handle on operational issues?''
Thomas toured UP rail yards and met with plastics industry officials Oct. 22 and 23.
John Tinkle, president of resin packager Wald-Tinkle Packaging & Distribution Inc. in Houston, said both UP and SP did not spend enough money during the past decade on infrastructure to serve the chemical industry. The Dayton Yard stores nearly 3,000 plastics rail cars, but does not have access to the yard from both front and back, he said.
