Date: Mon, 13 Oct 1997 22:18:27 -0400
From: jonathan flanders <72763.2240-AT-CompuServe.COM>
Subject: M-I: Commodities up a creek


I wonder what the value of these lost commodities are? A WSJ article last
week projected a greater impact on the US economy from this Union Pacific
snafu than the one  created by the UPS strike.

Jon Flanders



 
                    October 13, 1997

 Union Pacific Loses Track Of Shippers' Railroad Cars

 By ANNA WILDE MATHEWS and DANIEL MACHALABA
 Staff Reporters of THE WALL STREET JOURNAL

 Have you seen Ed Shineberger's rail car?

 It's nearly two stories tall, 60 feet long and
 crammed with 120,000 pounds of carbon soot --
 the stuff that makes tires black. For a month
 now, the rolling behemoth has been caught up in
 Union Pacific Corp.'s unprecedented tie-up,
 riding aimlessly around Louisiana and Arkansas
 and stopping twice in the same city. It was last
 seen somewhere near Lake Charles, La., still 700
 miles from its final destination near Nashville,
 Tenn.

 "It's like a lost puppy looking for its home,"
 says Mr. Shineberger, who, as a logistics
 manager for Degussa Corp. in New Jersey, is in
 charge of tracking the rail car's wayward
 journey.

                       Forget about making the
                       trains run on time. Union
                       Pacific's mounting debacle
                       isn't just about late
                       shipments, but a series of
                       misroutings and missed
                       deliveries that can only
                       be described as a comedy
                       of errors. Just last week,
                       one company's entire load
 of liquid gas virtually evaporated into thin air
 by the time it arrived. Other boxcars have
 arrived full -- but in the wrong city -- or have
 been bounced half a dozen times between places.
 The most frustrated shipping executives have
 gone to Union Pacific's rail yards to search for
 their freight -- only to find their cars
 hopelessly trapped.

 One company, Solvay Polymers Inc., waited 51
 days for Union Pacific to move a shipment of
 plastic resin from Houston to Fort Worth, Texas,
 about a four-hour drive by car. "A covered wagon
 could have gotten it there quicker," says
 logistics director Mike Scherm.

 The problem comes down to this: The nation's
 largest railroad has lost its ability to
 accurately track the movements of hundreds of
 freight cars in the Gulf Coast region and
 western U.S., although it still is making
 on-time deliveries through much of its system.

 Normally, the company can follow shipments
 through a computer network linked to its 36,000
 miles of track. Crew members on trains transmit
 their location to Union Pacific's main computer
 center in St. Louis, where routes are monitored
 and assigned. But for several months now, the
 company has been trying to implement a $3.9
 billion merger with Southern Pacific Rail Corp.
 that has thrown much of that tracing system into
 disarray. Each railroad had its own computer
 system and dispatching methods. Integrating them
 turned out to be more difficult than
 anticipated, says John Bromley, a Union Pacific
 spokesman.

 "It's a huge task," he says. Trying to pull
 together a combined work force of 52,000 only
 made matters worse; many workers from one
 railroad were unfamiliar with the other's
 computers and operations. What's more, cutbacks
 left the company short of the crews and
 equipment needed to handle the combined
 freightload.

 "We're making progress," says Mr. Bromley,
 adding that the company has ordered or leased
 300 more locomotives and plans to hire hundreds
 of additional train operators. He says Union
 Pacific expects to put both railroad systems
 under the same computer system by early next
 year.

 But that's little consolation to the hundreds of
 companies and transportation managers swapping
 horror stories. Carloads have disappeared for
 days when they were moved without being picked
 up by Union Pacific's computers. Some
 transportation managers are following the errant
 journeys of their urgent rail shipments with
 computers tied to Union Pacific's tracking data.
 "We're monitoring it every day," says Donald
 Welch, logistics manager for a unit of Temple
 Inland Inc., which makes giant rolls of paper
 for cardboard boxes and other goods.

 Mr. Welch describes an itinerary of one recent
 shipment that reads like a game of ping pong:
 Memphis to Little Rock, then back to Memphis,
 then back to Little Rock, and so on for 2 1/2
 roundtrips, before finally making it to
 California via El Paso, Texas. "It's almost
 comical except it is costing lots of people lots
 of money," says Mr. Welch.

 Indeed, some companies like Air Liquide America
 Corp. are considering charging Union Pacific for
 lost cargo and other costs. (The railroad has
 declined to comment on any potential liability.)
 The company, a unit of French firm L'Air Liquide
 SA, recently shipped 15,000 gallons of liquid
 argon from Houston to southern California in a
 specialized insulated rail car that resembles a
 big thermos bottle. But by the time the shipment
 had wound its way through a series of logjams
 and arrived 21 days late, there was almost no
 cargo to unload: 90% had evaporated in the
 container, where temperatures are kept at minus
 300 degrees Fahrenheit. "Obviously, the customer
 was pretty let down," says Joe Cacciotti,
 product-supply manager for Air Liquide.

 Few companies, though, have experienced what
 Elgin Cotton Oil Mill Inc. has endured. The tiny
 company operates a grain elevator and processes
 cottonseed oil for snack-food makers out of its
 plant in the central Texas town of Elgin. The
 family-owned business has dispatched 20 carloads
 of grain on Union Pacific this year. "I don't
 think there was a normal deal on any of them,"
 says manager Brian Lundgren.

 First, Elgin struggled to get empty cars from
 Union Pacific to load its grain; six of them
 took a month to arrive even though they all came
 from Texas. One showed up on the company's rail
 spur with no doors on the bottom -- useless for
 loading -- and another pulled up with an entire
 carload of wheat that belonged to someone else.
 After the empty cars were filled, they were left
 standing twice: once for ten days on the
 company's grounds waiting for pick up and
 another inexplicably for three weeks at a rail
 yard 15 miles away.

 The delivery still hasn't reached Louisiana. Mr.
 Lundgren tells an even more frustrating tale of
 watching his own freight car on Union Pacific
 tracks barreling past his office. A few days
 later, he saw it pass again in the opposite
 direction. "It's like watching volleyball," he
 says. "The car went back and forth."

 As a short-term solution, Union Pacific has been
 trying to shift some of its business to its
 competitors, including rival Burlington Northern
 Santa Fe Corp., the nation's second-largest
 railroad. But Burlington Northern says it can
 only do so much, because it shares some of Union
 Pacific's most congested tracks in the Gulf
 Coast region. And the two railroads don't agree
 on how to untangle the bottlenecks anyway.
 "There's no evidence they are really working
 together," says Ed Emmett, president of the
 National Industrial Transportation League, which
 represents more than 1,200 customers of truck
 and rail companies.

 All of which leaves Mr. Shineberger still
 looking for all that tire soot in car No.
 FURX6022. By his count, the car has stopped 14
 times in Louisiana and Arkansas, and has yet to
 cross the Tennessee border. On Friday, a month
 and a day after the car's departure, he vowed to
 call up Union Pacific. "I'm going to ask what
 they're doing with this car," he says, "and
 would they please, please get it to its
 destination."


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