Union Pacific (UP) seems to be using embargo tactics on portions of rail lines in the Midwest, raising concerns with the Surface Transportation Board (STB). Note that “embargoes” are when a rail carrier halts traffic on a particular section of rail line.
UP’s Use of Embargoes
At the beginning of 2023, UP began halting traffic in Iowa, Minnesota, and Wisconsin. The company cited severe weather events and arctic temperatures as reasoning for its move. The original restriction of traffic was set at 14 days, but UP extended it for most of January. This seems to have been an embargo, as lawmakers and regulators have noted.
Embargoes are nothing new for UP. According to the STB, the railway declared 27 embargoes in 2017 and over 1,000 embargoes in 2022. While embargoes are typically meant for dealing with natural disasters and circumstances out of a railway’s control, UP seems to have used them to address even typical weather circumstances.
Surface Transportation Board Chairman Marty Oberman said that regulators have seen an increasing use of embargoes as a way to control congestion not caused by natural disasters or circumstances outside of a railroad’s control. “It is really becoming a major concern,” the chairman said during a moderated conversation at the Midwest Association of Rail Shippers Winter Meeting in Illinois. “And it hasn’t stopped.”
One significant concern with the most recent embargoes is that it is harming agricultural producers. Foster Farms, for example, told the STB that embargoes had at one point left the company no choice but to stop feeding its dairy cows due to critically low supplies of corn.
A group of eight congressional lawmakers representing the upper Midwest petitioned the STB in January to direct Union Pacific to lift its embargoes. The lawmakers stated that winter temperatures were not abnormal for this time of year, and that the railroad had successfully navigated similar weather events in the past. According to the lawmakers: “The delays resulting from Union Pacific’s embargo and subsequent inadequate service for their customers is unacceptable.”
Our firm will continue to monitor this story and will report back with updates.
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