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Railroads need to put in more money and build closer ties with residents of freight hubs like Chicago, officials say

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Alan Shaw came to Chicago last week to play himself as a reformer.

At Midwest Shippers Conference, Norfolk Southern chief executive announces Wall Street-inspired job cuts that helped deliver resilience, growth and hog national railroads during COVID-19 pandemic promised to withdraw from

But the show needed to spotlight another thorny issue: the railroad stall campaign to double the size of the largest intermodal freight yard on 47th Street and the Dunryan Freeway.

Aldo, an hour before he spoke on Wednesday. Janet Taylor, 20, once again blocked the City Council vote on a $150 million expansion.

The next day, one of the nation’s most influential federal rail regulators announced that Norfolk Southern and its peers had failed to grow over the past 15 years, allowing polluting trucks to carry more freight. blamed the merchant.

A tumultuous week stands as an apt metaphor for the state of railroads in the United States and the role of Chicago and its suburbs as the largest freight hub. These are key battlegrounds as the US struggles to determine what sustainable growth means and whether it is possible.

“It’s been an enduring theme,” said Tracy Robinson, chief executive of Canadian Railways. increase.”

Speaking at a shippers conference in the western suburbs of Lombard, Robinson described the Chicago area as “the railroad hub.”

Norfolk Southern portrays the expansion of the 170-year-old Inglewood Yards as a much-needed injection of jobs and investment in downtown Chicago.

But by demolishing hundreds of homes and exposing people to overcrowding and increased truck pollution, the railroad has sparked protests, lawsuits, and hurt feelings.

Taylor said he hopes an agreement with Norfolk Southern will be reached and the vote will go ahead when the city council meets on Feb. 1, just weeks before Chicago elects a new mayor and city council. rice field.

“This is a $59 billion company,” said Taylor, referring to the railroad’s stock value. “They evacuated 400 of her households. The community has a right to say they want access to those jobs and can get those contracts, and I will make sure it happens.” increase.”

Norfolk Southern began buying expansion properties shortly after the 2008 financial collapse.

This 15-year narrative raises ongoing questions about whether and whether railroads can and do know how to expand in the communities where they currently operate, even if it breaks Wall Street’s cost-cutting ethos. is throwing

For Marty Overman, chairman of the Federal Surface Transportation Commission, money is the key to decongesting Chicago. He said railroad companies aren’t spending enough at a time when profits are soaring.

Overman, a former Chicago alderman and chairman of Metra, said the city took an important step in 2003 by organizing a public-private partnership. create (Chicago Regional Environmental and Transportation Efficiency Program) can help address congestion.

the group is spending $380 million For the bridge near 75th Street and Damen Avenue in West Inglewood, dozens of Metra and freight trains, cars, trucks and pedestrians don’t have to change before they pass each day.

After nearly 20 years to 2021, CREATE has raised $1.6 billion of the $4.6 billion needed to complete 70 eligible projects. Oberman said the railroad company donated only a quarter of what he raised. The rest came from federal, state, and city funds.

“As a taxpayer, this is frustrating,” Oberman said in an interview. can and should.”

Alan Shaw, President and CEO of Norfolk Southern at the Midwest Association of Rail Shippers, January 18, 2023.

The show’s newfound reticence over staff cuts may sound like common sense to many. But when he presented the idea to investors last month, Trains magazine columnist Bill Stevens wrote that he was a given. standing ovation.

This is because for the past decade, the strategic thinking of U.S. railroads has been dominated by a concept called “exactly scheduled railroads.”

This approach means keeping operating costs as a percentage of revenue as low as possible.

Seven major U.S. railroad companies laid off 29,000 jobs between January 2016 and February 2020. speech by Oberman in November.

This was just before COVID-19 disrupted global supply chains. The railroad continued to be cut even after that. By the end of 2021, he has lost an additional 13,271 jobs, Oberman said.

This second reduction saved approximately $4.8 billion in labor costs. But when they were happening, railroads spent nearly $60 billion on share buybacks and dividends at the height of the pandemic, Oberman said.

Meanwhile, their service was “falling off a cliff,” he said.

Overman used one of the leading measures of service crisis in his speech. In so-called ’embargoes’, rail companies can decide, often at the last minute, to suspend service to certain customers for days or weeks.

These are primarily aimed at small and medium-sized shippers and are aimed at large retailers such as Walmart rather than industry giants such as JB Hunt or Hub Group.

Rail companies announced 140 embargoes in 2017, Oberman said. In the first nine months of 2022, they have declared his 1,115.

Things got so bad that in June Overman and the Board of Transportation ordered Union Pacific to run a grain train for one of the West Coast’s largest poultry producers. Livingston, Calif.-based Foster Farms was about to euthanize millions of starving chickens.

Chickens weren’t the only victims, Oberman said. The United States may have lost hundreds of billions of dollars in economic activity, he said, adding that it’s hard to say exactly.

And container shipments over 500 miles grew 20 percent faster by truck than by rail, releasing even more carbon dioxide into the atmosphere, Oberman said.

Oberman said he is considering tougher restrictions on the embargo. This is especially true when the cause is excessive redundancies.

But he also acknowledged that the recent “evolution” on Wall Street is more supportive of long-term investment in rail workforce and equipment.

He said he was encouraged by the show’s promise not to lay off workers immediately when sales falter.

He applauded the CEOs of BNSF, CSX and Canadian National for making similar statements. He said he hadn’t heard the same thing from Union Pacific.

in him December speechShaw reassured Wall Street that there was a lot of frugality left in Norfolk Southern’s corporate DNA.

He also tried to convince investors that job cuts were in pennies and could be ridiculous.

Shaw gave the following example: Railroads could save about $35 million a year by cutting his 5% of engineers and conductors when sales plummet. But these days, he said, only 45% of furloughed workers will return when the economy recovers.

At that point, Norfolk Southern will have to spend $10 million to hire and train a replacement, Shaw said. Railroads could also suffer $760 million a year in increased operating costs and lost revenue opportunities, he said. “For us, resilience is an investment in long-term shareholder value,” Shaw said.

However, being rooted in the densely populated areas of the East Coast and Chicago, it will be difficult for railroads to expand their physical footprint.

Norfolk Southern began buying property for its 47th Street expansion 15 years ago, but the railroad won’t remove the last homeowner through a court-sanctioned eviction until 2021.

And the area’s alderman, Taylor, blocked City Council votes on the expansion for six months starting last year.

Mr Taylor said it was unacceptable that only five employees recruited from five Southside postal codes since 2014 remained on active duty in November, according to Norfolk Southern.

Norfolk Southern spokesman Connor Spielmaker said this did not include workers previously hired. Does not include contractors or truck drivers.

In some rail yards, the number of contractors outnumbers the number of direct rail employees by an estimated three to one, said President Jason Hilsenbeck. LoadMatch.coma Naperville company that helps drivers find cargo to carry.

Hundreds of truck drivers drive in and out of large yards like 47th Street every day, and in Chicago, many of these are black and brown residents of nearby communities, he said.

Spielmaker told the Tribune that Norfolk Southern “in addition to comments published in your newspaper and publicly through multiple public meetings, will continue to build this project, plus the additional work that will be brought in upon completion.” , affirmed our commitment to hiring a diverse range of contractors.” “

According to Spielmaker, the expansion creates an $85 million contract opportunity. But the railroad cannot start bidding until the city approves the transfer of the streets and alleys needed for the expansion, he added.

Norfolk Southern 47th Street Intermodal Yard on January 6, 2023.
On December 21, 2022, land was cleared for the Norfolk Southern expansion south of 59th Street in the Englewood neighborhood.

Mayor Lori Lightfoot backed the expansion, saying after decades of job losses at the factory, the city could support the remaining businesses by offering land at a low cost.

The Chicago area is already facing some of the worst traffic congestion in the country, according to Inrix, a Seattle company that specializes in analyzing traffic data.

It is in this rush that all seven major US railroad companies are expanding their intermodal yards in the Chicago area.

Union Pacific is doubling the size of its Joliet terminal, and in response the city’s warehouse-friendly city council container taxaccording to a Herald-News report.

In the western suburbs, Elgin and other cities are fighting over a proposed merger of Kansas City Southern and Canadian Pacific. According to Mayor Dave Kaptain, the merger will take him from three to 12 freight trains a day passing through Elgin, doubling his length to 12,000 feet. am. This is in addition to the 40 passenger trains per day.

To increase, Elgin is researching ways to eliminate road-level intersections that cars, trucks and trains must share.

One option is a 1.5-mile railroad bridge through the town center at a cost of $1 billion. This, he said, is far more than his $10 million in compensation the railroad provided to Elgin and his seven neighboring communities.

“We were told by politicians that a merger would be good for the economy,” said the captain. “But the railroad doesn’t stop here, even to buy donuts.”

Anthony Hatch Wall Street Independent Analyst, Five years ago, investors said their focus was mainly on job cuts. Today, they are more likely to back Shaw and other executives who drive growth, he said.

As for Chicago, he said residents need to accept not only the benefits, but also the pains, of living in the nation’s freight hub.He said these included work and the fact that trains would burn up when crossing open farmland. One third Fuel per tonne of cargo as a truck.

“Intermodal trains are great for the country, the environment and our tax base,” Hatch said. “But nodes that are hubs see more traffic.

“If Chicago isn’t congested, it means the economy is in trouble, which means nobody’s building anything anywhere.”

Contributed by Alice Yin of the Chicago Tribune.

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Written by Natalia Chi

Chicago Popular; Chicago breaking news, weather and live video. Covering local politics, health, traffic and sports for Chicago, the suburbs and northwest Indiana.

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