Overall Network and Regional Service Update from Beth Whited, CMO

Announcement Number: CN2018-10
Categories: General Announcements
Posted Date: April 27, 2018

To Our Customers,

As we work diligently to resolve our network service challenges, we know it’s important to keep you apprised of our progress and areas of opportunity. Below is our latest network and regional service update. We will continue to provide regular updates as we work to resolve the inventory and velocity issues facing our network.

Overall Network Update

Overall, our key operational metrics are trending in the right direction. However, we still have work remaining to restore our network to normal levels. One area in which we’re seeing improvement across the network is operating inventory. We’ve been committed to reducing inventory levels, as these reductions have positive impacts on velocity. Compared to our peak, our current operating inventory shows an 11 percent improvement, indicating we are a little more than half way to our inventory reduction target.

People are a critical resource for clearing the congestion. We continue to train and hire new employees. Our train, engine and yard (TE&Y) workforce was up eight percent in the first quarter, driven primarily by an increase of approximately 800 employees in the training pipeline. Moving forward, we will be graduating an average of 200 trainees per month.

Ensuring we have sufficient crews will continue to be a key focus. We are in the process of evaluating and implementing a series of initiatives designed to increase our supply of crew resources, including increasing hiring bonuses in select hubs with the greatest sourcing challenges.

We also continue to add locomotives into the fleet; we have approximately 225 high-horsepower locomotives in storage that we are in the process of returning to service. We are modifying repair schedules in order to bring these locomotives back into service sooner. We have also entered into a short-term lease agreement for approximately 100 locomotives to provide additional surge capacity.

We will continue to be diligent about operating inventory control, resource allocation and identifying additional adjustments to improve our service network wide.

Service Update by Region

Northern Region
The Northern Region has seen positive improvements. Inventory is down, dwell time has decreased and velocity has increased. We are currently developing strategies to preserve these improvements as we begin track renewal projects next month.

Although this region has experienced severe weather events recently, the resiliency of our network allowed us to rebound quickly in the affected areas.

Western Region
Western Region velocity has increased and inventory has remained stable as heavy track maintenance continues across the region through the end of this month. This maintenance is critical for the safety of our employees, customers’ goods, and communities and supports consistent performance going forward.

Southern Region
While the Southern Region presents our greatest challenge, velocity has improved over the past few weeks. Inventory is also beginning to decline as we remain focused on improving our local switching performance and the fluidity of our operation. We are working closely with our customers to address congestion within our serving yards to ensure operations remain fluid for all customers.

To improve service in the Southern Region, we have been devoting more crews and locomotives to the area. Specifically, we have added crews in the Houston hub, including at Livonia, Beaumont and Houston. In addition, we have added drivers to transport crews to and from trains in order to maximize the utilization of our existing crew base.

Renewal Projects
We continue to invest in our network through track renewal projects. These projects will contribute to the long-term health and performance of our network.

Several large-scale maintenance projects are wrapping up, which should have positive effects on velocity in the associated regions. These include:

  • Tie replacement on the main line that runs between Chicago and Laredo, Texas
  • Tie replacement between New Orleans and Livonia, Louisiana
  • Ballast renewal on 60 miles of the Sunset Route in the Southwest
  • Tie replacement on the La Grande subdivision in Oregon, which will be complete this month
  • Tie replacement between El Paso and Dalhart, Texas, through New Mexico, which will be complete in early May

In May, we will be initiating the 2018 track renewal program across the central corridor from Green River, Wyoming to Chicago. While these maintenance-of-way projects may cause some natural headwinds, they are important investments in operating a safe and efficient railroad.

More to Come
We will continue to provide updates as we make progress on our network service challenges. As always, we appreciate your business.


Small | Beth - Web Sig, Small

Beth Whited
Executive Vice President & Chief Marketing Officer