Pacer Stacktrain -- a Major UPRR Customer -- Says Intermodal Trains Now Starting to Move Again
But one of Union Pacific's largest customers, Pacer Stacktrain, says the washouts stemming from severe mid-January storms have not shut down the state's flow of commerce, nor even UP's role in it, as many believe. Pacer Stacktrain is a division of Pacer International, Inc. (Nasdaq:PACR), the non-asset based North America third-party logistics and freight transportation provider.
“UP's intermodal trains are beginning to move on a daily basis between the Los Angeles Basin and the Midwest -- some on Burlington Northern Santa Fe (BNSF) tracks and some via alternative UP routes”
"UP's intermodal trains are beginning to move on a daily basis between the Los Angeles Basin and the Midwest -- some on Burlington Northern Santa Fe (BNSF) tracks and some via alternative UP routes," said Tom Shurstad, president of Pacer Stacktrain. "We anticipate based on current information that the UP will have largely resolved its storm-related network problems on the hard-hit south-central corridor within weeks."
Pacer Stacktrain operates a North America network of cost-efficient double-stacked trains (carrying two tiers of containers). It manages the special rail equipment and the loading, tracing and advance-arrival notification for its customers, while using the power, crews and trackage of the railroads. It also maintains managers in the field to facilitate train loadings and interchanges.
Shurstad said the crippling work stoppages conducted by owner-operator truckers last April and May, coupled with railroad service issues, constituted a significantly greater barrier to the flow of intermodal cargo than does this current, one-off problem faced by UP. "Traffic out of Northern California during that period in 2004 came to a complete halt as a result of the work stoppages," he said.
"But shippers and carriers are resourceful," said Shurstad. He noted that service providers made herculean efforts last year to help customers find solutions, and despite added costs related to contingency measures, Pacer International's year-over-year financial performance has continued to improve. He also said the growth of intermodal volumes last year (and in the opening weeks of this year) have contributed to increased demand.
"To put all this in perspective, Pacer added container capacity in 2004 and we are adding more in 2005 to better prepare for growth. At the same time, we and other providers are collaborating with the railroads to implement alternative routes and solutions.
"Meanwhile, the rest of our North America intermodal network is fully operative, with only the south-central Los Angeles-Midwest corridor -- equivalent to about 20 percent of our total volumes -- currently constrained," he said. "As noted, we expect that situation to be resolved soon."
Specific Strides
Even as UP's ongoing efforts to restore the main south-central artery continue, Shurstad said the railroad is finding ways to detour selected intermodal trains in an effort to keep volumes moving. Some of the brighter spots he mentioned:
-- UP's "Sunset" corridor continues to run about 25 intermodal trains per day between Los Angeles and points eastward, with some going through to Chicago.
-- Additionally, UP has begun to shift to the Sunset two or three additional daily detour trains in order to support eastbound international shipments. UP has told Pacer it intends to increase that number, based on daily evaluations.
-- Selected intermodal trains have also begun to operate from the Los Angeles Basin to Chicago through special emergency arrangements with the BNSF. These trains, now beginning at the rate of two to three a day, connect to the UP at Vaughn NM. The intent, Pacer said, is to prioritize eastbound trains for international freight to reduce or even avoid potential vessel backups.
-- Customers have begun shifting freight to other West Coast gateways, which should ease the pressure on the Los Angeles gateway. Intermodal equipment and infrastructure are already in place at those alternative ports.
-- UP is beginning to offer domestic intermodal trains from Chicago to Los Angeles via alternative routes. (Note: this service is still embargoed regardless of route and only moves via permit.) The first train was set for Tuesday (Jan. 18). The intention, according to Pacer, is to increase these re-routed domestic trains (as well as the international ones) as capacity permits.
-- On Jan. 12, when major interruptions occurred as a result of damaged UP infrastructure, approximately 50 intermodal trains were initially stranded. All but one have been re-routed and have completed their transits.
ABOUT PACER INTERNATIONAL -- Pacer International, a leading non-asset based North America third-party logistics and freight transportation provider, offers a broad array of logistics and other services through its subsidiaries and divisions to facilitate the movement of freight from origin to destination. Its wholesale services include Stacktrain (cost-efficient, two-tiered rail transportation for containerized shipments) and cartage (local trucking) services; and its retail services include intermodal marketing, truck brokerage, truck services, warehousing and distribution, international freight forwarding, and supply-chain management services. Pacer International is headquartered in Concord, California. Its principal business units Pacer Stacktrain and Pacer Global Logistics are headquartered in Concord, CA, and in Dublin, OH, respectively. Pacer International is a member of the "Forbes Platinum" for 2005, a list of the "Best Big Companies in America." Web site: www.pacer-international.com.
Note to Editors: Issued by Steve Potash and Company, tel. 510-865-0800, or steve@potashco.com.
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