a definiution: "...Force majeure refers to unforeseeable circumstances that prevent a person or company from fulfilling a contract. The term means ‘superior force.."
The following is aC&P, from a letter from CF industries to Union Pacific RR in regards to their rail shipments out of ther plants in Louisiana and Iowa.
letter linked @ https://www.cfindustries.com/newsroom/2022/union-pacific-shipping-restrictions
FTA:"...CF Industries ships to customers via Union Pacific rail lines primarily from its Donaldsonville Complex in Louisiana and its Port Neal Complex in Iowa. The rail lines serve key agricultural areas such as Iowa, Illinois, Kansas, Nebraska, Texas and California. Products that will be affected include nitrogen fertilizers such as urea and urea ammonium nitrate (UAN) as well as diesel exhaust fluid (DEF), an emissions control product required for diesel trucks. CF Industries is the largest producer of urea, UAN and DEF in North America, and its Donaldsonville Complex is the largest single production facility for the products in North America.
“The timing of this action by Union Pacific could not come at a worse time for farmers,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “Not only will fertilizer be delayed by these shipping restrictions, but additional fertilizer needed to complete spring applications may be unable to reach farmers at all. By placing this arbitrary restriction on just a handful of shippers, Union Pacific is jeopardizing farmers’ harvests and increasing the cost of food for consumers.”
On Friday, April 8, 2022, Union Pacific informed CF Industries without advance notice that it was mandating certain shippers to reduce the volume of private cars on its railroad effective immediately. The Company was told to reduce its shipments by nearly 20%. CF Industries believes it will still be able to fulfill delivery of product already contracted for rail shipment to Union Pacific destinations, albeit with likely delays. However, because Union Pacific has told the Company that noncompliance will result in the embargo of its facilities by the railroad, CF Industries may not have available shipping capacity to take new rail orders involving Union Pacific rail lines to meet late season demand for fertilizer..."
Things should start geting really interesting and possibly the American Public (and politicans) will get a healthy dose of "Tne Law of Unitended Consequences"???
Let me get this straight: UP takes no interest in shippers with too low, or too irregular, a shipping pattern. Now it intends to threaten embargo against shippers with too high, or too regular a shipping pattern. Remind me if UP was one of the carriers trying to impose 'punitive' excess demurrage or detention, including slow intermodal transfer in congested facilities.
Gee, who would have ever anticipated that seven decades of anti-competitive merger would yield entities immune to market forces that otherwise might correct their "excesses"?
Convicted One Gee, who would have ever anticipated that seven decades of anti-competitive merger would yield entities immune to market forces that otherwise might correct their "excesses"?
Nailed it in one.
charlie hebdo Convicted One Gee, who would have ever anticipated that seven decades of anti-competitive merger would yield entities immune to market forces that otherwise might correct their "excesses"? Nailed it in one.
Euclid charlie hebdo Convicted One Gee, who would have ever anticipated that seven decades of anti-competitive merger would yield entities immune to market forces that otherwise might correct their "excesses"? Nailed it in one. Why would a company that wanted to eliminate competition to get more business from their competitors throw business away?
Insufficient workforce?
Marginal costs exceed the marginal revenues?
They wanted to eliminate competition so that they could set rates where ever they wanted. The goal is maximize profits, NOT maximize traffic levels. UP's gross and revenue ton-miles are about 2/3's of that for BNSF, yet they make more money than BNSF. These stats were at parity in late 1990's. Whether you like the playbook or not, it certainly is working for UP and their shareholders.
PSR has excerbated things on UP, but looking back at the traffic and rate data over the past 20+ years, it is evident that UP has been intentionally pricing itself out of markets for a long time. I understand the thought process, especially after the meltdown in the late 1990's and the near meltdown in 2006. UP had to shed traffic to stay fluid. The long-term implications of this behavior, however, definitely could have a very negative effect on the growth of the US economy.
EuclidWhy would a company that wanted to eliminate competition to get more business from their competitors throw business away?
To assure first choice of "low hanging fruit".
Convicted One Euclid Why would a company that wanted to eliminate competition to get more business from their competitors throw business away? To assure first choice of "low hanging fruit".
Euclid Why would a company that wanted to eliminate competition to get more business from their competitors throw business away?
Low hanging fruit at a high price point, with the customer having little option but paying the price.
Never too old to have a happy childhood!
BaltACDLow hanging fruit at a high price point, with the customer having little option but paying the price.
Precisely!! Once the competition has been either assimilated or eliminated, then the surviving entity is in better shape to dictate terms to the customer...pick whichever fruit is the most appealing
Convicted One BaltACD Low hanging fruit at a high price point, with the customer having little option but paying the price. Precisely!! Once the competition has been either assimilated or eliminated, then the surviving entity is in better shape to dictate terms to the customer...pick whichever fruit is the most appealing
BaltACD Low hanging fruit at a high price point, with the customer having little option but paying the price.
I do find it amusing that UP features that they can't handle all the traffic the customers want to ship even at the high price point.
UP is failing Robber Baron 101.
Typically when a company has more demand than they can serve, they raise the price.
BaltACDeven at the high price point.
I don't have adequate data to make an informed observation. But I suspect they are operating at a level they have determined to provide an optimal return for the level of spending they are willing to ante up? Something just shy of where diminishing returns become a factor, perhaps?
BaltACD Convicted One Euclid Why would a company that wanted to eliminate competition to get more business from their competitors throw business away? To assure first choice of "low hanging fruit". Low hanging fruit at a high price point, with the customer having little option but paying the price.
Thanks to Chris / CopCarSS for my avatar.
EuclidTypically when a company has more demand than they can serve, they raise the price.
Typically they will 'milk' the traffic for every possible penny - not reduce the traffic level.
Murphy SidingAnother possibility is that UP is just using this as a tool to raise prices. (I wrote weapon first, but that seemed too harsh-or too obvious). Think about how we have an annual news of a "shortage" of turkeys, Christmas tress and eggs at strategic times of the year-every year.
You mean to falsely predict a shortage in oder to drive up demand from customers that want to get ahead of the prediced shortage?
So anyway, I'm trying to imagine how I would feel if I were on the receiving end of such a threat?
Here we are in the most prosperous nation on the planet, operating under an economic model dependent upon constant growth for success. And here allasudden one of my trade partners puts me on notice that my slice of the American dream has just been capped.
It's hard to imagine any one railroad trying to pull off such a stunt back in the pre-consolidation days....but now what practical alternatives are there?
And in line with the O.P. 's main premise that this be an industry wide dilemma...I think it is. Norfolk Southern or CSX could easily hide behind force majeure protections where UP is a connecting road with their provided services.
Perhaps Farce Majeure is a more appropriate descriptor?
Metering as described here is really nothing new and has been going on for years across all sectors of the transportation industry. It's a short term measure to deal with spikes in volume. Once volumes normalize the metering will come back off.
Does anyone know how many locomotives the UP currently have in their 'dead lines'? How many locomotives are 'stored servicable'? How operating employees have been furloughed in the recent past?
In line with PSR, shortages of locmotives and employees are normally 'self inflicted' damages for the companies adopting PSR.
EuclidSo the only possible explanation is a demand surge. That is what makes the problem sudden. Adopting PSR was not a sudden process.
PSR eliminated any slack in the line the RRs had (extra men/engines/tracks/yards). That's why they're struggling. And they can't just say "poof" and have 1000 people show up at a hiring session anymore.
Years of making the jobs miserable have caught up to them.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.
I understand why and when manufacturers are forced by conditions to put customers on allocation. It just seems that when railroads do it, they are expert in knowing how to really alienate customers in doing it. They show no evidence of people skills or trade skill.
zugmann Euclid So the only possible explanation is a demand surge. That is what makes the problem sudden. Adopting PSR was not a sudden process. PSR eliminated any slack in the line the RRs had (extra men/engines/tracks/yards). That's why they're struggling. And they can't just say "poof" and have 1000 people show up at a hiring session anymore. Years of making the jobs miserable have caught up to them.
Euclid So the only possible explanation is a demand surge. That is what makes the problem sudden. Adopting PSR was not a sudden process.
Wasn't an isntant poof. But a lot of cuts were made when traffic was slow.
And (at least locally) every time they cut jobs - a couple people said "forget this" and walked out.
They are running out of things to cut. The last Transportation Plan I think is a big part of what caused the current mess. It was put into place a little over a month ago. Among other things, it abolished some local city to city transfer trains, cutting out more jobs. Just more cars for the through trains to handle. Within a couple of weeks things were falling apart. There were other issues. The plan has been tweaked, but it seems like it still has some issues.
It may be anecdotal, but it seems like we are having more engine failures. The kind that either sideline completely a locomotive or keep it from being used as a lead engine or distributed power engine. This isn't really surprising since they decimated the mechanical department towards the beginning of the pandemic. Their largest diesel shop was closed (I think it's been reopened, at least partially if not fully) in the name of "safety" in the face of the pandemic, but really it was to reduce headcount. Many other smaller facilites also were closed or cut back. Now they are hiring for mechanical people again. I've heard some that were let go are hesitant to come back.
Zug's right. They've caused most of the current problems themselves. PSR plans on only so many trains, using so many crews, with nothing going wrong to throw off the balance. I myself don't think there's a large surge in manifest traffic and that's currently what's bogging down. The so-called surge is the plan breaking down because of issues, some of which I admit are beyond the railroad's control like weather. But mostly, they don't plan on equipment failures, they don't plan on recrewing trains. (Some trains regularly need being recrewed almost every day.) A little ripple in one place builds to become a tsunami across the rest of the region, if not entire system.
Our answer is to blame the customers. It's now a joke. When we see a train tied down, and we do, because yards are getting plugged, and they are, we say, "It's those darn customers' fault."
Jeff
How much crew shortage is caused by restricting use of available power in the name of fuel economy and crews dying on HOS chewing up a dogcatch crew and track space. Managment has focused on some things and forgotten that the job is to move freight. Then optimize costs. Not cut everything at the expense of moving the freight. And stop paying the CEO 224 x the average employee. No way are they worth more than 50 times what the cost of an employee that makes the mean yearly wage.
Electroliner 1935How much crew shortage is caused by restricting use of available power in the name of fuel economy and crews dying on HOS chewing up a dogcatch crew and track space.
Not much. Just getting to the holdout place a few minutes faster.
Eliminating jobs and expecting those remaining jobs to do 15 hours a work a day is what is causing crew shortages. Pay that is stagnant + rising benefit cost/reduced benefit level (expired contracts) is causing crew shortages. Attendance policies, same thing. Of the last ~ 24 people that hired out to work in my little terminal last 5 years - I think one stayed.
zugmann Electroliner 1935 How much crew shortage is caused by restricting use of available power in the name of fuel economy and crews dying on HOS chewing up a dogcatch crew and track space. Not much. Just getting to the holdout place a few minutes faster. Eliminating jobs and expecting those remaining jobs to do 15 hours a work a day is what is causing crew shortages. Pay that is stagnant + rising benefit cost/reduced benefit level (expired contracts) is causing crew shortages. Attendance policies, same thing. Of the last ~ 24 people that hired out to work in my little terminal last 5 years - I think one stayed.
Electroliner 1935 How much crew shortage is caused by restricting use of available power in the name of fuel economy and crews dying on HOS chewing up a dogcatch crew and track space.
Operating plans can make or break a railroad. In my 51 years I saw plans that made the railroad run in a fluid and efficient way. I have also seen plans that brought the plant to a grid locked mess - with both plans being implemented on relatively the same level of traffic.
I doubt UP is experiencing any uptick in the level of traffic that is being tendered to them that exceeds their historical levels - I feature PSR has pruned the manpower well short of what is necessary to efficiently handle the historic levels of traffic.
UP is shooting themselves in their feet with automatic weapons called PSR.
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