STB chairman slams Union Pacific over lack of information about embargoes

Chairman Marty Oberman has “serious concerns” about the lack of data that Union Pacific has provided to the Surface Transportation Board ahead of a two-day hearing on the railroad’s use of embargoes.

UP (NYSE: UNP) executives will be in Washington next Tuesday and Wednesday to explain why the railroad’s use of embargoes has increased dramatically since 2017. Freight railroads deploy embargoes as a temporary means to control traffic because of congestion or weather-related issues. Embargoes restrict how much traffic is moved.

STB has received reports that the embargoes are hampering shippers’ operations, the board said last month when announcing the hearing.

In a Thursday letter to UP President and CEO Lance Fritz, Oberman said UP’s prehearing filing didn’t adequately address eight different topics related to the significant increase in the railroad’s institution of embargoes aimed at addressing network congestion.

The board received a nine-page PowerPoint presentation from UP this week in response to STB’s request.

“It was expected that UP would have produced documents relating to the inception and continuation of the practice of more frequent use of embargoes, as well as the rest of the topics delineated by the Board. However, the PowerPoint presentation is silent on most of the topics listed in the November 22 order,” Oberman said. “For example, the PowerPoint contains no discussion or data relating to or explaining the increase in UP’s use of embargoes since 2017 and whether that increase is related to the quantity of UP’s resources during that period. Therefore, it only partially responds to the order.

“Unfortunately, UP’s failure to fully respond to the order has hindered the Board in its efforts to understand this increase in the use of embargoes, and their causes and impacts,” Oberman continued, adding that UP will be expected to provide additional information after next week’s hearing.

The hearing comes as STB has sought to pressure the railroads to improve rail service. Service disruptions in the first half of the year led STB to collect feedback from shippers and unions about the causes of the disruptions. The board has been collecting additional service metrics as a result of that feedback.

Although rail service has improved, STB wants UP to provide its rationale for increasing its use of embargoes over the last five years, from 27 in 2017 to 886 in 2022. The 2022 figure is from January through October.

In response to the letter, Union Pacific said Friday that it “looks forward to discussing with the STB how we use embargoes to control traffic movements temporarily when needed to address congestion. We are committed to restoring the fluidity of our network – and with that, the consistency and reliability of our service to all our customers.”

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