Oklahoma railroad traffic slows with economy

by JORDAN GREEN for oklahoman.com

Like cars in a parking lot, dozens of idled locomotives are sitting in a railroad yard along Interstate 235 in Oklahoma City, waiting for the day when they’ll once again haul loads of freight from coast to coast.

Those locomotives, which belong to the BNSF Railway Co., are being stored until rail traffic volumes in the United States return to pre-pandemic levels.

Rail traffic volumes across the U.S. have dropped dramatically since the coronavirus pandemic began. The demand for shipments of automobiles, food, electronics, and other commodities carried by railroads has waned as businesses close and consumers stay home. The need for locomotives has also decreased, as shown by the number of idled locomotives parked in Nowers Yard in Oklahoma City.

The American Association of Railroads, which tracks shipping data from railroads across the U.S., reports that railroads hauled roughly 481,000 carloads of freight and intermodal units for the week ending July 25, a drop of almost 10% compared to the same week in 2019.

Intermodal units are railroad cars that carry semi-truck trailers and storage containers, allowing products to be moved between various modes of transportation. Intermodal shipment volumes were down by 2.4% compared to the same week in 2019, while shipments of regular freight cars were down by almost 18%, the association reported.

Overall, total U.S. rail traffic for the first 30 weeks of 2020 was down by 12.7% compared to the first 30 weeks of 2019.

Ben Wilemon, a spokesman for BNSF, declined to tell The Oklahoman how many locomotives are in storage in the Oklahoma City yard. He also declined to say how many carloads of freight the company has hauled through the Sooner State since the pandemic began.

At least 30 locomotives are visible in the yard.

BNSF Railway locomotives are parked in a rail yard near Interstate 235 just north of NW 23 in Oklahoma City. [Bryan Terry/The Oklahoman]

“The rail industry as a whole has felt the effects of COVID-19 much like the rest of the global economy,” Wilemon said. “We strategically store equipment around our network to be ready to move freight when volumes return.”

BNSF shipping data for the week ending July 25 shows that the company’s total carloads were down by more than 20% compared to the same week last year. The company’s second quarter financial results will be released to the public Aug. 8 on the company’s website, https://www.bnsf.com.

Union Pacific Railway’s second-quarter results, released July 23, also showed a downturn in freight volumes. The company had a second quarter profit of $1.1 billion, a decrease of 24 percent from the second quarter of 2019.

In 2019, the top commodities Union Pacific shipped out of Oklahoma were construction materials and agricultural products. The top commodities the company shipped into the state were automobiles, coal, industrial chemicals, and construction materials, the company said. Union Pacific supported 2,988 jobs and had a payroll of roughly $34 million in Oklahoma in 2019.

It’s unclear exactly how many Oklahoma railroad employees have been laid off or have lost wages due to the pandemic’s economic impact.

“The Second Quarter proved very challenging as we faced a volume decline of 20 percent due to the economic impact of the COVID-19 pandemic,” Union Pacific President and CEO Lance Fritz said in a news release.

“Demonstrating the transformation our Company is experiencing through the implementation of Unified Plan 2020, we were able to largely mitigate the impact of that volume loss. Our dedicated employees are feeling a very real impact from this pandemic, making tangible sacrifices. Despite this adversity, they continue to make strides to improve the safety of our railroad, while providing our customers an uninterrupted, enhanced service product.”

Raquel Espinoza, a spokesperson for the company, said Union Pacific is operating a smaller number of locomotives because of the downturn in freight traffic, but company officials remain hopeful that freight volumes will increase as the economy reopens.(Story continued below…)

Small railroads weather the storm

While freight volumes are down on larger U.S. railroads, smaller railroads have been affected differently from their nationwide counterparts.

“From a business standpoint, I can’t tell you that we’ve actually had any impact directly from COVID,” Judy Petry, president and CEO of Farmrail System Inc., told The Oklahoman. “Our problem is more that the energy sector is dead.”

No Farmrail employees have tested positive for the coronavirus, Petry said. The company has worked to minimize contact between employees, and has required employees to wear masks when they can’t practice social distancing.

No employees have been laid off, either. As a matter of fact, the railroad has never laid off any employees since the company formed in 1981, Petry said.

But company officials do hope to see growth in the energy and agricultural sectors in western Oklahoma — and soon. As a railroad serving the predominantly rural region of western Oklahoma, Farmrail ships commodities like grain from local elevators. The company also hauls frac sand for use in oil-field drilling operations.

“We like to say we’re on a two-legged stool in western Oklahoma,” Petry said. “One is agriculture, and the other is energy. Wheat harvest wasn’t all it was cracked up to be, and the oil field is down, so those two things combined are kind of a ‘one-two’ punch for us.”

However, shipments of grain and sand aren’t the company’s only sources of revenue. Farmrail leases space along its rail lines for larger companies and railroads to store unused rail cars, providing a stable stream of revenue for the regional railroad. Petry said about 2,000 cars are in storage along the company’s track.

Until higher freight volumes return, Petry said, the company will have to work through this economic downturn like it has done in the past: by being strong.

“In western Oklahoma, you need to be tough, and you need to be resilient,” she said. “We’ve lived through these downturns before, and we will live through them again. You just have to be able to be agile, and take it on the chin and come back.

“And western Oklahoma will. We have to find our new ‘normal’ again.”

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