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UP may be back on track
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April 3, 1998: 3:05 p.m. ET
As backlog eases, Union Pacific may end rail traffic embargo at Laredo
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NEW YORK (CNNfn) - Union Pacific Railroad Co. said Friday it may lift its week-long embargo on southbound traffic headed to Mexico in the very near future thanks to faster cargo inspections by Mexican officials.
In a letter to U.S. agriculture officials Friday, Chairman and Chief Executive Officer Richard Davidson said the railroad is hopeful it can lift the embargo to southbound traffic through its Laredo, Texas, gateway "in the very near future."
Union Pacific spokesman John Bromley, crediting the Mexican government for being a little less stringent with its inspections, said that an end could come within a matter of days.
Union Pacific, the nation's largest rail company, began the embargo last Saturday to clear bottlenecks of more than 5,500 cars, of which about 2,000 are grain cars.
Davidson met Tuesday with officials from the U.S. Department of Agriculture, which has worked with Mexico to speed up inspection of farm products entering the country.
Traffic to Mexico has ballooned since the North American Free Trade Agreement was passed in 1991, reducing rules on international commerce between the United States, Canada and Mexico.
Bromley said Union Pacific, which handles about 60 percent of all cargo shipped south-of-the-border by rail, has seen its traffic nearly double since 1991.
The backlogs at Laredo have been a blow to shippers of all stripes, including retail, chemical and agricultural companies.
"Nobody wants the congestion to end more than the shippers," said Ed Emmett, president of the National Industrial Transportation League, a trade association of 1,500 shippers.
Emmett said he didn't know precisely how much money shippers have lost during the embargo, but losses could run in to the billions of dollars.
Many shippers are angry Union Pacific has given preference to cargo carried in intermodal containers, which can be transferred to trucks, while commodities like grain are halted.
But more than a backlog to Mexico, Emmett said, shippers fear the system-wide clog within the United States may lead to an embargo in the domestic network.
"What we are hearing -- and we hope it is true -- is that internal operations are improving, and they won't have to go on a wider embargo," he said. "I suspect that would even get the White House involved."
Shares of Dallas-based Union Pacific (UNP) were up 11/16 at 58-1/4 in New York Stock Exchange trading in the early afternoon Friday.
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