The Union Pacific Railroad has said that its West Coast business may shut down April 1 as it faces a $1.3 billion a year shortfall.
At issue: Union Pacific is asking customers to make bigger fuel savings than they are now, which is reportedly stoking concern about large trucks disrupting freight flows. Union Pacific has received $1.6 billion in federal assistance since 2008, when the recession started, but The Wall Street Journal reported that the Federal Railroad Administration slashed more than $1 billion from its current funding plan last month. The railroad told The Journal that the $1.6 billion it had received was insufficient to meet its needs, arguing that around $6 billion in deferred maintenance needs to be done.
The Times' Ritu Chandran summed up the issue in an article Wednesday:
Meanwhile, trucking companies and the trucking industry's trade group contend that lowering fuel costs will lead to fewer truckers, not more, if railroads are encouraged to offer discounts to freight customers that refuse to make such savings. David Osiecki, a senior vice president at the American Trucking Associations, said freight consumers get a bigger bang for their buck when railroads and trucking companies pay what they say is their true costs for fuel. "Basically, that's the competition" he said. "They should charge the market rate and give the customer incentive to drive this commodity cheaper." Mr. Osiecki said the investment necessary to keep up with past infrastructure upkeep and upkeep has slowed because of federal and state funding that critics say is inadequate.
WCS, a trucking company in Alberta, has started to offer substantial discounts to customers that use Union Pacific to haul freight from the rest of the country to local ports — another signal that the railroads are willing to provoke more tension with the trucking industry over fuel-saving issues. It's a controversial strategy, one that has already caused problems in the pipeline industry.
These tensions are not necessarily new to the trucking industry. In a TIME investigation last summer, the author found that trucking companies were already cutting corners on training and insurance in order to avoid outages.