UTU News Digest - Wednesday, February 16, 2000

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Wednesday, February 16, 2000

WASHINGTON: Chemical producers criticize increases rate increases

WASHINGTON -- The Chemical Manufacturers Association, citing what it calls deteriorating service and rising customer costs, said plans by the nation's largest railroads to charge more for hauling freight are "unacceptable," The Journal of Commerce reported.

Fred Webber, CMA president and chief executive, said the railroads' planned rate hike "amounts to forcing customers to pay more for bad service. It is unacceptable."

In recent days, several major railroads -- including CSX Transportation, Norfolk Southern Corp. and Union Pacific Railroad -- said they are planning to impose rate increases ranging from 2% to 4%.

Individually, railroads have indicated they plan to rely less on contracts and more on public pricing, or posted tariffs. Contracts have tended to trade low rates for traffic guarantees, and were popular when the railroads had large amounts of excess capacity.

That excess capacity is gone, which gives carriers their best opportunity in years to raise rates. Tariffs can be changed relatively quickly and easily.

Rail rate increases would have a significant effect on the chemical industry, which moves more than 140 million tons of chemical products each year via the nation's railroads. The industry's annual freight bill is already more than $5 billion.

"Rail customers need consistent and reliable rail transportation to deliver raw materials and pick up finished products on a predictable and timely basis. This means a transportation service that responds to customer needs," Webber said.

Webber noted that the service problems are particularly acute for the chemical industry. Approximately two-thirds of all chemical facilities in the United States are captive to a single railroad. "The railroads exercise monopoly power over the majority of our industry," Webber said. As a result of this monopoly power, he added, "captive chemical facilities pay from 15% to 60% more for comparable service than other shippers."

The service problems and shipping costs are likely to become worse, Webber predicted, if the proposed combination of Canadian National Railway and Burlington Northern and Santa Fe Railway is approved. CMA opposes the merger, which still must be approved by the Surface Transportation Board.

"The CN-BNSF merger and the announcement by the major railroads that they plan to raise their rates underscore the urgent need for Congress to enact legislation to stimulate railroad competition and protect rail customers' rights," Webber said

A number of shipper-supported bills have been introduced in Congress -- including S-621, sponsored by Sen. Jay Rockefeller, D-W.Va. No hearings have been scheduled on any of the bills.

CMA is encouraging Congress to include rail customer provisions in any legislation it may ultimately approve. Among other things, CMA wants Congress to direct the STB to encourage competition among railroads, require railroads to offer rates and services on monopoly track segments, remove barriers to competition where railroads interchange freight, and put into law the STB process for deciding if a rail shipper is captive.

LOUISIANA: AFL-CIO steps up plan to help Democrats regain Congress

NEW ORLEANS -- A nationwide political offensive being planned this week by the unions will be crucial to wrestling the control of Congress away from Republicans, Democratic Party leaders are telling labor chiefs, the Associated Press reported.

"It's very important. It's critical to our efforts,'' said House Minority Leader Richard Gephardt, D-Mo., who met with the AFL-CIO's governing committee Tuesday. "Six seats is all we need, but I also told them there's nothing done yet, we've got to work hard.''

House Democratic Whip David Bonior of Michigan, at the labor meeting with Gephardt, said that if Democrats do get power back, one of the top priorities will be to pass laws to make it easier for workers to unionize.

"The law is such that it's just so cumbersome to have workers recognized,'' and too easy for companies to thwart them, Bonior said.

AFL-CIO President John Sweeney said the labor federation sees this as "a watershed'' election year and ``we are conducting the broadest and most intensive program we have ever conducted'' to try to influence congressional campaigns. The AFL-CIO has budgeted $40 million for the 2000 elections.

The AFL-CIO has so far picked out 71 candidates in House districts to support this year. Of those, only one is a Republican, incumbent Rep. Bob Ney of Ohio.

Democrats are mounting a strong challenge to win control of the House in the fall elections, and are counting on assistance from organized labor, among other allies.

The current House has 222 Republicans, 211 Democrats and two independents, one aligned with each of the two major parties. A switch of six seats next fall would deliver control of the House to Democrats. Political strategists in both parties say the battle for a majority is likely to be decided by as few as 35 or 40 races scattered around the country.

AFL-CIO political director Steve Rosenthal said that there's no denying unions would like to see labor-friendly Democrats, who lost control of the House in 1994, win it back.

But since expectations are that if they do, it will be by a small margin, Rosenthal said, "We are (also) aggressively seeking pro-worker Republicans across the country.''

In the Senate, where chances of a Democratic takeover are considered slimmer, the AFL-CIO has so far committed its muscle to about a dozen candidates, all Democrats.

In addition, key states with large union membership have been earmarked as crucial to the presidential campaign of Vice President Al Gore, who the AFL-CIO has endorsed. Among these are Illinois, Michigan, New Jersey, Ohio, Pennsylvania and Wisconsin.

Sweeney said the labor federation has already mobilized 1,600 local union political activists across the country -- compared with about 450 for the 1998 congressional elections -- to lead a campaign that will rely more heavily than in the past on one-on-one contact between union members.

That will include biweekly leafleting at job sites between April and August and door-to-door campaigning. The goal is to double the percentage of the AFL-CIO's 13 million members who get one of these personal contacts from 11 percent in 1998 to 22 percent this year.

Union women will be a focus of AFL-CIO outreach, starting at a March kickoff conference in Chicago.

Low-income, so-called "waitress moms'' are seen as an important swing-vote group this year. They have "the most sensitivity, the greatest volatility'' said Karen Nussbaum, director of the AFL-CIO Working Women's Department.

The AFL-CIO is also launching a new Internet access service this month that union households can purchase for $14.95 a month.

An alternative to commercial services like America Online, it will include political features such as online voter registration forms, cyber-chats with candidates and a how-to on becoming a presidential nominating delegate.

WASHINGTON: Probe urged for Boston Big Dig

WASHINGTON -- The Big Dig's most vocal congressional critic wants to know if there's a big lie lurking below the nation's largest public works project - a highway tunnel in downtown Boston that is long overdue and now is expected to cost $1.4 billion more than expected, the Associated Press reported.

Rep. Frank Wolf, R-Va., head of the House Appropriations transportation subcommittee, called for an investigation Tuesday into whether officials overseeing the project, known as the Big Dig, committed crimes by withholding information about cost overruns.

While acknowledging "what happened was unconscionable,'' Transportation Secretary Rodney Slater asked lawmakers for flexibility to deal with the issue. He told the subcommittee he needed more time to review an internal audit before taking further action.

The three-mile Big Dig project, officially called the Central Artery-Third Harbor Tunnel, goes through downtown Boston. It was started in 1993 and was supposed to be finished next year, but various delays have pushed back the completion to perhaps as late as 2006.

Meanwhile, The Boston Herald reported that federal auditors have uncovered another $190 million overrun in building an electrified bus line that is part of the project.

Some estimates now put the project's cost at more than $13.2 billion, nearly twice the amount estimated when the project began in 1993.

In a report, the department's inspector general, Kenneth Mead, chastised state and federal transportation officials for "an alarming lapse in oversight.''

Last week, the highway project's managers revealed the new, higher cost estimate. The disclosure came only hours after the Federal Highway Administration, charged with overseeing the project, had signed the project's yearly finance plan, making no mention of the overruns.

Meantime, the Securities and Exchange Commission is looking into whether state transportation officials misled investors by failing to disclose the cost overruns before a $200 million bond issue in December. And on Tuesday, the Massachusetts Senate decided to freeze Big Dig funding until there is a better plan to finance the shortfall.

Wolf is a longtime critic of the project and some Massachusetts lawmakers fear Mead's report will give him ammunition to try to cut Big Dig funding. To Wolf, the timing of the Big Dig's announcement and protest about an earlier draft inspector general report looked like "deliberate deceit.'' He asked whether there might be a "civil or criminal penalty for not telling the truth'' in this situation.

Slater agreed "there is a real issue here about how this came to be and who knew what and when.'' Once he finishes reviewing Mead's report, Slater promised to find the answers.

Big Dig spokesman Jeremy Crockford denied any wrongdoing. "We have been working very closely with Federal Highway since the beginning. We reject any notion that we left them in the dark about the project.''

Rep. John Olver, D-Mass., said even if there was no deliberate deception, oversight of the project has been woefully lax. "It's hard for me to understand how the manager of the Federal Highway Administration could have missed the $1.4 billion change,'' he said.

TEXAS: BNSF faces firm's challenge

FORT WORTH -- Burlington Northern Santa Fe Corp., which has been assuring shippers they won't be hurt by its proposed merger to form North America's largest railroad, faces pressure to restore competitive service to an Iowa corn-processing plant, Bloomberg reported.

Roquette America Inc. wants the nation's second largest railroad to find another carrier for its Keokuk plant. The closely held company, served only by Burlington Northern now, also is asking regulators to reopen the carrier's 1995 combination with Santa Fe Railway because of the lack of competition.

The request comes as Burlington Northern seeks Surface Transportation Board approval to merge with Montreal-based Canadian National Railway Co., forming North America's largest railroad. This week, Burlington Northern promised to maintain service levels and customers' competitive choices in the merger.

"We are captive to one railroad," said Lee Williams, director of logistics at Roquette America, a unit of the French food and chemical company Roquette Freres.

Roquette America, which ships about 8,000 carloads a year for the Keokuk plant, said the 1995 combination eliminated its competitive service. At the time, regulators gave Southern Pacific Railroad, now part of Union Pacific Corp., access to Roquette to preserve competition. Union Pacific no longer serves Keokuk.

"We have been talking with Roquette for the past six or seven months and have presented a number of service alternatives, none of which has been accepted," said Burlington Northern spokesman Richard Russack, who didn't provide specifics. "There was competition there until (Union Pacific) chose not to provide service."

Customers and competitors have questioned the proposed merger of Burlington Northern and Canadian National, citing the congestion and delays after previous mergers involving Union Pacific, CSX Corp. and Norfolk Southern Corp.

NEW YORK: I.D. Systems awarded pilot program by Union Pacific Railroad

NEW YORK -- I.D. Systems, Inc. (Nasdaq: IDSY) announced today in a press release that it has been awarded an initial pilot program by Union Pacific Railroad (UP), a subsidiary of Union Pacific Corporation (NYSE: UNP), to monitor trains using the company's patented wireless asset tracking and management system. The system will provide UP and one of its customers, FMC Corporation (NYSE: FMC), with real-time location and status of railcars carrying hazardous, high-value chemicals between Wyoming and Nevada. The program will commence in the spring of 2000.

Jeff Young, Director of UP's Advanced Operating Systems Group, said: "UP and its customers have a vested interest in developing new, cost-effective ways to track the location and status of locomotives and railcars in real time. We are committed to working with I.D. Systems and FMC to apply this unique technology to our industry, and we view this initial pilot program as a first step toward the potential replacement of our existing system for monitoring railcars. We are excited to evaluate I.D. Systems' technology for improvements in asset utilization through the use of real-time information."

With I.D. Systems' patented wireless asset tracking and management system, railcars communicate vital data (order of the train, status of contents, geographical location, etc.), utilizing a combination of radio frequency, cellular or satellite link, and the Internet. In the pilot program, UP and FMC management will be able to view and analyze this data remotely -- and in real time -- using the system's web-based reporting tools and on-line graphical route maps. The company's system is unique because it communicates data from an entire train of railcars with just one cellular or satellite link. Compared to railcar-tracking systems that rely on satellite transmitters on every railcar, the I.D. Systems approach can save millions of dollars in ongoing satellite communications charges. The company's approach also provides significantly more information than the railroads' existing railcar-tracking system, which cannot provide data in real time, as it relies on only about 1,200 "reader" sites throughout the entire United States.