DEERFIELD, Ill. — Union Pacific’s plan to begin metering traffic starting today will reduce fertilizer shipments and put crops at risk, a major fertilizer producer said.
“The timing of this Union Pacific action couldn’t come at a worse time for farmers,” CF Industries CEO Tony Will said in a statement. statement thursday. “Not only will fertilizer be delayed by these shipping restrictions, but additional fertilizer needed to supplement spring applications may not reach farmers at all. By imposing this arbitrary restriction on just a handful of shippers, Union Pacific is jeopardizing farmers’ crops and increasing the cost of food to consumers.
CF Industries has advised customers located on UP that railroad-imposed shipping reductions will result in nitrogen fertilizer shipment delays during the spring application season. The company has also informed customers that it will not be able to accept any new rail sales involving UP for the foreseeable future.
On April 8, UP told CF Industries it would have to cut shipments by nearly 20% as part of the railroad’s plan to ease congestion amid crew and locomotive shortages.
CF Industries said it will ask the Surface Transportation Board to intervene so that fertilizer shipments are prioritized.
“CF Industries’ North American manufacturing network continues to produce at a high rate to meet the needs of customers, farmers and consumers,” said Will. “We urge the federal government to take action to remove these Union Pacific rail shipping restrictions to ensure this vital fertilizer can reach American farmers when and where they need it.”
The fertilizer company said it was one of only 30 shippers facing restrictions aimed at unclogging the UP network. 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 regions such as Iowa, Illinois, Kansas, Nebraska, Texas and California.
Affected products include nitrogen fertilizers such as urea and urea ammonium nitrate, as well as diesel exhaust fluid, an emissions control product required for diesel trucks. CF Industries is the largest producer of all three products in North America, and its Donaldsonville complex is the largest production facility for these products in North America.
CF Industries says crop yields will be lower this year if farmers are unable to get all the nitrogen fertilizer they need. This will likely extend the time to rebuild global grain stocks and contribute to higher food prices, the company says.
UP sent an email to customers earlier this month outlining the railroad’s goal of removing 15,000 private cars from current inventory. UP removes nearly 3% of railroad-owned cars from the system. The railroad said it would work with customers to avoid plant closures and other potential negative impacts.
“Union Pacific is committed to proactively supporting our customers, and we are working with them to address the impact of multiple disruptive events,” spokeswoman Kristen South said. The railroad is taking several steps to address “national supply chain issues,” including adding 100 locomotives to the active fleet, training 450 new employees and more expected to graduate as chief of staff. train this summer and the relocation of 80 crew members to areas of high demand.
UP also says it is “working in partnership with customers to begin a measured approach in the coming days. This allows us to continue to serve all customers while simultaneously working on a backlog of cars, restoring our ability to handle volume – an approach we successfully applied last year with West Coast intermodal traffic.
Other shippers have complained about the restrictions, but none publicly like CF Industries.
The number of cars on the railroad has increased over the past 60 days and in the week ending April 8 exceeded 300,000 for the first time since 2018, when UP was in the midst of a operational funk that lasted over a year. The railroad is short on crew and power, and says it is aggressively hiring while removing locomotives from storage.
When a railway’s average train speed decreases and terminal wait times increase, transit times increase and service becomes more erratic. Shippers typically add cars to their fleet when rail service slows down, which tends to exacerbate congestion and delays.
The STB has ordered executives from UP, BNSF Railway, CSX Transportation and Norfolk Southern to appear at a hearing on service issues scheduled for April 26-27. [see “Federal regulators to hold hearings …,” Trains News Wire, April 7, 2022]. Board Chairman Martin J. Oberman blamed the service problems on job cuts related to Precision Scheduled Railroading and the industry’s focus on lowering operating ratios.