Rail companies BNSF and UP reach agreement on dispute regarding Salt Lake City intermodal services
### BNSF Railway's International Intermodal Service Agreement with Union Pacific: A Developing Saga
A significant development is unfolding in the rail industry, as BNSF Railway and Union Pacific (UP) navigate a dispute concerning a new intermodal service between Southern California and Salt Lake City. The service, which aims to facilitate international double-stack trains for customers such as CMA CGM, was expected to start last week but has been delayed due to the ongoing disagreement.
The crux of the issue revolves around trackage rights and operational procedures. UP has expressed concern about the need for additional train crews to manage the new service, and argues that BNSF must adhere to a directional running pattern, which would involve eastbound trains using the Southern Pacific route via Donner Pass, triggering a cost-sharing provision for clearance improvements.
BNSF, on the other hand, has requested the usage of the former Western Pacific route through the Feather River Canyon in both directions. The company argues that the trackage rights agreement stipulation regarding funding clearance work applies only to hi-cube domestic double-stack containers, not to the international containers the new service would handle for liner customers CGM CMA and Mediterranean Shipping Co.
In an attempt to expedite the service, BNSF has requested an emergency order from the Surface Transportation Board (STB), citing the need for immediate action to fulfill customer commitments. However, UP counters that BNSF failed to follow contractual procedures and that the dispute can be resolved through normal arbitration processes.
The STB has ordered the railroads to participate in a technical conference on July 15, but details about the deal, such as the route the trains will take and the number of trains per week, have not been disclosed in the filing. The resolution may involve arbitration to address the payment of clearance costs and operational planning issues.
Meanwhile, BNSF has reached a tentative agreement with the Transportation Communications Union (TCU) covering intermodal employees, which includes wage increases and vacation benefits. This agreement, however, is separate from the trackage rights dispute.
The STB plays a pivotal role in resolving railroad disputes, including those related to merger conditions and service obligations. The Board has previously addressed service questions arising from the Union Pacific-Southern Pacific merger. As the situation evolves, it remains to be seen how the current trackage rights dispute will be resolved.
The ongoing tractage rights dispute between BNSF Railway and Union Pacific has implications in both the rail industry and finance, as the resolution could significantly impact the profit margins and service delivery promises made to customers like CMA CGM.
The dispute also raises questions in the business and transportation sectors, with both rail companies engaging in negotiations with regulatory bodies like the Surface Transportation Board (STB) to reach a decision that considers operational procedures, costs, and service obligations.
