Omaha, Nebraska — Union Pacific said it would stop imposing temporary restrictions on shipments by certain businesses while it reviews a policy criticized by federal regulators and shippers at a hearing last week.
Union Pacific has imposed more than 1,000 such embargoes this year — far more than all other major freight railroads combined — as part of its efforts to clear congestion along its lines. UP is suspending all new embargoes, Chief Executive Lance Fritz said in a brief letter to the US Surface Transportation Board on Friday.
The orders, which forced companies to temporarily curb shipments and pull some railcars from the UP network, have drawn the attention of regulators because they have increased sharply over the past few years. In 2018, UP used 140 of them, according to the STB.
STB members and companies that rely on rail to transport raw materials and finished goods said at a two-day hearing last week that the embargo has disrupted business operations and driven up shipping costs as companies may have to resort to more expensive modes of transportation such as Freight.
Many businesses are served by only one railroad. Their bulk product might not be well suited for trucking, so when Union Pacific imposed restrictions, they didn’t have much choice.
Typically, railroads use embargoes in extreme conditions when things beyond their control, like floods or bridge fires, impair their ability to move goods. However, business groups say they believe UP’s deep layoffs are a major reason why the Omaha, Nebraska-based railroad is struggling to meet customer expectations.
Union Pacific executives argued at the hearing that the temporary restrictions were needed to help improve the railroad’s performance, but STB Chairman Martin Obermann said they did not appear to be of significant help to Union Pacific because its performance statistics still lag behind what should be. There are levels.
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