Union Pacific Says Covid-19 Left Railroad Understaffed

Date: Friday, January 21, 2022
Source: The Wall Street Journal

Union Pacific Corp. UNP +3.08% said it was caught off guard by the number of workers absent because of quarantines and getting their vaccines, which led to fewer on-time trips and other deteriorating operating performance in the fourth quarter.

Chief Executive Lance Fritz said that the railroad company had been planning for the Covid-19 pandemic to have a smaller impact as the months progressed and felt that it had enough workers and resources to overcome any lingering effects.

It didn’t anticipate the time off workers would need to get vaccinated, or the hundreds of employees out on any given day because of infection or having been exposed to the virus. “I look at that and I think, ‘Shame on us,’ ” Mr. Fritz said Thursday on a quarterly earnings call. “That’s a risk factor that we did not adequately plan for.”

Corporations around the world have continually adjusted their plans and assumptions throughout the pandemic, as Covid-19 brought operations to a near standstill and activity resumed in fits and starts. As vaccine requirements and new variants emerge, leaders have been tested with how to plan for everything from staffing needs, production levels and customer demand.

The lack of crew members took a toll on the railroad’s operating performance. The number of miles each car traveled in a day, which is a measure of asset utilization, fell to 197 in the fourth quarter compared with 223 a year earlier. On-time delivery rates for intermodal trailers, which transfer from rails to trucks, fell to 78% from 83%. For other cargo, it fell to 58% from 74%.

“Crew availability means you can’t launch your traffic on demand, you can’t land it on demand,” Mr. Fritz said in an interview. “Things get out of cycle, get out of their schedule and then it starts snowballing.”

CSX Corp. has also faced staffing issues due to a combination of difficulty attracting new workers and existing ones staying home because of Covid-19 infection or exposure. It has been offering $3,000 referral bonuses to existing workers for recommending new hires.

CSX added 150 transportation employees in the fourth quarter and said it is on track to add 300 more in the coming months.

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