UTU News Digest - Wednesday, June 16, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Wednesday, June 16, 1999

WASHINGTON, D.C.: Amtrak appropriation bill on deck

WASHINGTON -- Passenger rail proponents are gearing up to hit Rep. Joe Moakley (D-Mass) with a blizzard of messages today urging him and fellow Democrats to close ranks on an expected attempt by the House leadership to try to cut the fiscal year 2000 transportation measure in ways that might hurt Amtrak.

The transportation measure is expected to be considered by the House Rules Committee tomorrow, where cuts recently were made in agricultural and legislative bills that previously had been approved by the committees with jurisdiction over the issues.

Any successful counter to a Republican leadership effort to cut national passenger rail funding almost certainly depends on all Democrats voting together along with "dissident" Republicans, note Amtrak supporters, who have keyed in on Rep. Moakley due to his position as ranking Democrat on the rules committee.

Supporters are asking all those who live in or near Moakley's district to contact the congressman to urge him to support and work actively for the Amtrak funding level of $571 million, which the House Appropriations Committee approved last week. The approved funding level already represents a cut from current levels in a time when other transportation modes are likely to be enjoying increases.

Rep. Moakley can be reached:

* by telephone, at 202/225-8273 (or in Boston: 617/428-2000; in Brockton: 508/586-5555; in Taunton 508/824-6676)

* by FAX, at 202/225-3984

* by E-MAIL (be sure to include your regular mail address) to jmoakley@mail.house.gov .

Rep. Moakley's website can be accessed at http://www.house.gov/moakley .

WASHINGTON, D.C.: Shippers losing patience with Conrail carve-up

WASHINGTON -- Rail shippers are warning that some manufacturing plants could be shut down or scaled back if Conrail's new owners do not improve service.

Norfolk Southern Corp. and CSX Corp., which carved up Conrail on June 1, continue to face transitional problems, resulting in late shipments of raw materials and difficulties getting the rail cars needed to pick up finished goods.

Those disruptions, primarily along former Conrail territory in Pennsylvania, New Jersey, New York, Ohio and Indiana, interfere with production schedules nationwide. Shippers say Norfolk Southern appeared to have more problems than CSX.

Some trains are days behind schedule while others are showing up with fewer cars than expected, forcing companies that depend on the railroad to look elsewhere for cargo service.

Rail executives acknowledged Tuesday that service has been below par, but they said operations were getting smoother. They added that problems were nowhere near the gridlock that Union Pacific faced after it absorbed Southern Pacific in 1996.

"I think we feel a little more comfortable everyday and are heading in the right direction," said Bob Haulter, assistant CSX vice president for integration planning. "The yards are continuing to pump traffic in and out."

He said the company already has reworked its operating plan for Cleveland, Ohio, to address some of the disruptions.

Donald O'Brien, assistant Norfolk Southern vice president for implementation, said fewer and fewer problems arise each day.

"Service still isn't at the level we would like it to be and ultimately will be and the level that our customers have every right to expect," he said. "What we're looking at is a reduced number of delayed shipments."

Despite two years of transition planning, CSX and Norfolk Southern have both faced problems with computers -- compatibility and coding -- among other troubles.

United Parcel Service, one of the nation's largest rail customers, began moving some packages by truck on Monday, a more expensive option for longer-distance shipments. The company also had to pay its employees overtime to process delayed shipments.

"We're seeing delays of three to 12 hours still on virtually every train on both lines, and we're not seeing any indication that things are getting better," said UPS spokesman Norman Black.

Ed Rastatter, director of policy with the National Industrial Transportation League, said that while it was too early to declare an emergency, some shippers reported they may have to cut back or cease production for lack of raw materials.

Bottlenecks also are causing headaches in small towns across Ohio where trains are increasingly blocking roads and residential streets.

In Huron County, midway between Cleveland and Toledo, Sheriff Dick Sutherland said his office has been flooded with calls about trains blocking intersections.

"We've had them sitting there over four hours,'' Sutherland said. "They just stop the train no matter where they're at.''

Sheriff's officers have tried ticketing train crews, but the fines of up to $1,000 aren't much of a deterrent.

Even the sheriff spent nearly an hour-and-a-half stuck at a crossing last week.

"They kept saying it would be moving in the next 10 minutes,'' Sutherland said. "Well, it didn't happen.''

The split of Conrail was the most complex transaction in modern railroading and followed a problematic merger of Union Pacific with Southern Pacific in 1996, a merger that led to severe congestion and delays in the West and the Midwest.

The $10.3 billion transaction breaks up a 23-year-old Conrail monopoly created by Congress in 1976 out of six bankrupt carriers. CSX and Norfolk Southern, now the nation's third- and fourth-largest railroads respectively, control virtually all rail traffic east of the Mississippi River.

CANADA: CN, Tulare Valley Railroad agree on southern Manitoba Divisions

EDMONTON -- Canadian National Railway (CNR) reached an agreement in principle to transfer 230 kilometers (144 miles) of line located in southern Manitoba to Manitoba Southern Railway Inc., a newly created affiliate of Tulare Valley Railroad Company of Salt Lake City, Utah, CNR reported yesterday.

The Manitoba Southern Railway Inc. will commence operations in August 1999.

The line to be transferred extends from just west of Morris, Manitoba, in a westward direction for 230 kilometers (144 miles), to the village of Elgin. The line handled 1,900 carloads of grain in 1998.

"Tulare Valley is an experienced short-line operator with an excellent reputation for improving customer service and growing rail business," said Francois Hebert, CN assistant vice-president, corporate development. "We are pleased to have transformed this line from a discontinuance candidate to a viable short-line by reaching a commercial agreement with Tulare Valley."

The Tulare Valley Railroad Company has been successfully involved in the railroad industry for more than 30 years. The company currently operates a short-line railroad in California's San Joaquin Valley.

The transfer of the subdivisions will affect two CN employees, who have a number of options available to them under their collective agreements.

Canadian National Railway Company serves all of Canada and the U.S. Midwest, including the ports of Vancouver, Montreal and Halifax and key cities of Toronto, Chicago, Detroit and Buffalo, with connections to all points in North America.

CALIFORNIA: Fare cut for mentally ill bus riders approved

LOS ANGELES -- Orange County transit board members on Monday approved a revised reduced-fare policy for mentally ill bus riders. The streamlined application process should make it simpler to qualify for the lower fares.

Advocates for the mentally ill had argued that Orange County's requirements were too stringent and had resulted in many individuals with conditions that qualified them for federal assistance being turned away. The new procedures should go into effect before July 11.

The board also approved its largest budget ever, $695 million, for the next fiscal year. The Orange County Transportation Authority's budget includes money for 71 new employees to aid in a planned increase in bus service.

In other business, board members voted 10 to 1 to send a letter of rebuke to the Orange County Grand Jury in response to a report issued in May. The report harshly criticized transit officials, saying they were promoting a billion-dollar rail system proposed for the county instead of studying its merits.

Supervisor Tom Wilson, chair of the transit board, wrote that the grand jury had "unjustly attacked" its efforts. Supervisor Todd Spitzer was the only board member to vote against sending the reply.

JOURNAL OF COMMERCE: Cold-cargo shippers choose trucks over rail

SEATTLE -- When shippers of refrigerated commodities have a choice between rail and truck transportation, they will usually choose the superior service of trucks over the lower cost of rail.

"The railroads have a lot to learn about customer service," Terry Priest, manager of corporate logistics at Coors Brewing Co. in Golden, Colo., told the International Refrigerated Transportation Association conference here.

"It's all about service," Priest told the annual conference, which was sponsored by The Journal of Commerce and hosted by the Port of Seattle.

Coors acts on its convictions.

The brewer in recent years has reduced to 35%, from 75%, the volume of freight that it ships by rail.

Priest said that although rail rates appear on the surface to be cheaper than truck rates, the actual price differential is not significant when all factors are considered, especially the faster door-to-door service provided by motor carriers.

Because Coors considers its beer to have an optimal shelf life of 120 days, dependable, rapid transit time is crucial, he said.

Rind International Trading, a Seattle meat importer, is another shipper that has moved from rail to truck because of service.

During the 1980s, the growth of rail intermodal service from West Coast ports enhanced the ability of meat exporters in Australia and New Zealand to serve the large population centers in the U.S. Midwest and on the East Coast, said David Rind, the company's president.

Truck transportation's superior performance and reduced handling have resulted in a steady shift of business from rail to truck, Rind said.

RAIL STILL COULD REBOUND

But both Coors and Rind are hedging their bets, and will be willing to increase their use of rail if the service improves. Coors supported the recent rail industry mergers, saying they will lead to more efficient service at competitive prices. "We're trying to get back to rail," Priest said.

Shippers of refrigerated cargoes have enjoyed the best of both worlds from motor carriers -- reliable service at bargain prices -- but the price factor may change. Reefer rates in the trucking industry have been under siege. This is causing a severe shortage of drivers and the exit of carriers from the industry, said Newton Bayless, president of Century Truck Brokers in Carmel Valley, Calif.

"If you want to be a carrier or a driver today, you should get your head examined," he said.

FROZEN IN TIME

Twenty-five years ago, Bayless loaded a shipment from Nogales, Ariz., to Cleveland. The gross revenue was $2,100. Last winter, the gross revenue for a shipment from Nogales to Cleveland was also $2,100.

Recent surveys show that reefer carriers are getting $1.50 a mile for dry freight, but only $1.25 per mile to haul reefer freight. As a result, trucking companies are getting out of the reefer business and moving into dry freight, Bayless said.

The situation is just as bad for drivers. It is not unusual for a driver to spend 10 hours waiting for his truck to be loaded, or actually helping to load it. Drivers do not get paid for this time. They also have to put up with abuse from customers who deny them access to company restrooms, cafeterias and pay phones.

It is no wonder, then, that drivers are leaving the industry in droves and are securing higher-paying jobs where they can get more respect, Bayless said.

BIG DEMAND FOR DRIVERS

An American Trucking Associations report stated that if the trend continues, the industry will need 80,000 new drivers a year to handle the work load.

"This can only be changed if the people in the ivory towers take time to see what's going on with drivers and carriers," Bayless said.

MICHIGAN: UAW, automakers begin contract talks

DEARBORN, Mich. (AP) -- Ford Motor Co. and the United Auto Workers kicked off the auto industry's triennial contract talks yesterday with a warning from the UAW's top leader that automakers are subjecting workers to too much overtime.

UAW President Stephen P. Yokich acknowledged that many UAW members have become used to working the kind of overtime that can boost their wages well above $70,000 a year. Working overtime traditionally was considered prudent in the industry's good times to sock away cash for the inevitable layoffs of lean years.

The industry likes overtime because it is cheaper than hiring additional workers and paying them the UAW's generous lifetime benefits. Last year the average Ford hourly worker put in 9.4 hours of overtime a week.

But with the industry in an unprecedented era of stability and expecting to post record domestic sales this year, Yokich said Monday that it's time to reconsider the cost of too much work.

"There's got to be a balance of some overtime and spending time with your families," Yokich said. "There's other families that need good jobs as well."

His comments reflected the union's chosen theme for this year's talks: "Bargaining for Families."

Ford and union negotiators met to formally open the 1996 talks with handshake ceremonies at Ford headquarters and at DaimlerChrysler AG's U.S. headquarters, and is to be repeated today at General Motors Corp.

Among the key issues for the industry this year are changes in manufacturing that would allow lower-paid supplier workers to do more subassembly work. Health and safety, job security, wages and benefits remain perennial big issues.

Ford President Jac Nasser noted the significance of this year's talks, which will produce a new contract that will carry the industry into the 21st century.

"Not only is it a new contract for a new century, but it's a contract that a lot of people in the U.S. and in the world will be watching -- not only what we accomplish, but how we do it," Nasser told the bargaining teams. "The how is almost as important as where we come out in the end."

Unlike strike-prone rival GM, Ford has enjoyed peaceful labor relations with the UAW for two decades. Ford has not endured a nationwide UAW strike in 23 years.

Yokich said there have been 42 work-related deaths in the domestic auto industry during the current three-year contract.

"That's 42 too many as far as we're concerned," he said.

Ford negotiators also will be tackling the future of the 23,500 UAW workers at the company's Visteon parts unit. Ford is expected to spin off Visteon in the next year or two, though it says no final decision has been made.

WASHINGTON, D.C. -- Prices seen steady following month-earlier jump

WASHINGTON (AP) -- Consumer prices held steady in May following an April jump that was the largest in nearly nine years.

Falling energy prices balanced rising food costs to help keep the Consumer Price Index flat last month, the Commerce Department said today.

Core prices -- which exclude the volatile energy and food categories and are the most closely watched by economists -- rose a modest 0.1 percent as clothing and auto prices declined and medical and housing costs edged up.

So far this year, the annual rate of inflation felt by consumers is 2.6 percent, compared to a 1.6 percent rise for all of 1998, the smallest in a dozen years.

The May calm came after consumer prices rose an unexpectedly sharp 0.7 percent in April. A record increase in energy prices led that upward swing.

In response, Federal Reserve officials, after a May 18 meeting, issued a warning that if inflation persists, they are more likely than not to raise interest rates later this year. That would make credit more expensive, likely slowing the economy.

The Fed's next meeting is scheduled for June 29-30. Many economists, however, believe that central bank officials will wait at least until later in the summer before deciding whether to take any action on interest rates.

Although the April spike in prices was surprisingly large, it was not totally unexpected and many analysts have predicted more moderate inflation for the rest of this year.

Prices are expected to rise as other countries begin to recover from nearly two years of global financial turmoil and world demand picks up.

Energy prices dropped 1.3 percent in May after a record 6.1 percent jump in April. Gasoline prices fell back 2.7 percent after a 15 percent rise.

The April energy price spike, caused mainly by a spring agreement by the Organization of Petroleum Exporting Countries to limit production, had been expected to be temporary.

Electricity and natural gas prices also declined in May, although fuel-oil prices continued to edge up slightly.

Food prices, meanwhile, rose 0.4 percent in May, building on a 0.1 percent April rise. The cost of fresh vegetables was up 4.9 percent and fresh fruit prices rose 1.5 percent. Meat prices rose 0.2 percent overall, although poultry prices were down 1.2 percent.

Clothing prices fell 0.2 percent in May, with the cost of footwear down 1.3 percent. Computer prices also dropped, by 1.9 percent. The apparel and computer industries continue to be affected by stiff competition from low-priced imports.

The price of new cars and trucks also fell in May, by 0.1 percent, and public transportation costs dropped 1.5 percent. Airline fares fell 2.5 percent.

The cost of tobacco and smoking products declined 1.4 percent.

Among prices that increased in May: The cost of housing was up 0.1 percent with rents rising 0.2 percent. And the price of medical care rose 0.2 percent with prescription drug prices climbing 0.4 percent. Drug prices are rising at a 6.1 percent annual rate so far this year.

ILLINOIS: UP awards monitoring system contract

NAPERVILLE -- StarTrak L.L.C., a majority owned subsidiary of Varlen Corporation, today announced it has received an order for 100 HealthTrak(TM) monitoring systems for the Union Pacific Railroad (UP).

StarTrak was awarded the contract and five-year satellite service agreement to provide railcar remote monitoring to the Union Pacific Damage Prevention Group. Union Pacific uses the information to proactively identify the railcar location as well as car handling events, which may result in damage to the customer's lading. StarTrak provides information directly into Union Pacific's information system as well as via the Internet.

Freight cars using StarTrak's system carry strategically placed low-cost monitoring sensors. These sensors detect potentially damaging events and send this information via satellite to the railroad operating manager, private car owner or shipper. This satellite link provides two-way, interactive communication, enabling the owner or operator of a railcar to request information on its location, load status and operational behavior, the Varlen Corp. said. In addition to the HealthTrak(TM) system, StarTrak has fielded specialized products for refrigerated car, tank car, load weigh, locomotive, and logistical applications.

Varlen is a leading manufacturer of precision engineered transportation products for the railroad, heavy-duty truck/trailer and automotive industries, and of petroleum analyzers. The company, headquartered in a Chicago suburb, manufactures its products in 28 facilities in the United States and Europe and sells them to customers around the world.