Union Pacific Railroad Expanding Shipping Capacity to Meet Demand

Grain shipments in northern tier states slowed dramatically last winter because of extended freezing temperatures and heavy snow, which caused significant rail delays. As temperatures warmed, railroads still had to deal with tremendous backlogs and growing volumes across multiple commodities while preparing for another record harvest.

Last month, Union Pacific Railroad’s Assistant Vice President of Grain and Grain Products Hasan Hyder discussed with U.S. Grains Council leadership the ways Union Pacific is growing its business to support the booming grains markets.

Preparing for another bumper crop

The Union Pacific Railroad operates through much of the western United States from Louisiana to California and Minnesota to Washington. It is involved heavily in transporting grains to major exporting ports in the Pacific Northwest and the Gulf Coast. Of all agricultural products moved by Union Pacific in 2013, 68 percent were grain or grain products.

After delays last year in the Chicago area due to poor winter weather coupled with an increase in U.S. grain shipments, Union Pacific made efforts to dedicate more cars to meet demand in preparation for the 2014/2015 crop this fall. For example, the company has already increased its grain covered hopper cars from 15,000 in 2013 to 16,600 this year.

“The export terminals themselves have made significant investments over the last several years, so we have as well across our network,” Hyder said. “As we look to the fall, we feel pretty confident that we’ll be prepared from our side to handle the shipments to export terminals.”

Record capital investments

With growing capacity demand from grain and other industries, capital investments have become a priority for railroads throughout the United States. Industrywide, railroads have spent $210 billion on capital expenditures and maintenance costs over the past 10 years. Union Pacific alone is planning to invest $4.1 billion in 2014, a record for the railroad.

Of this investment, 42 percent is dedicated exclusively to expanding Union Pacific’s available capacity, including the addition of new locomotives, rail-owned cars, related equipment and commercial facilities. This will translate to 229 new locomotives and new cars for 2015 and 2016.

After a challenging 2013/2014 marketing year impacted by weather and increasing volumes, Union Pacific is preparing itself to meet demand for the new crop year. Significant investments in new capital will ensure that the company continues to stay ahead and meet the growing needs of its customers.