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Union Pacific to reorganize
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August 20, 1998: 2:57 p.m. ET
Rail system decentralizing operations to cure traffic congestion, CNNfn learns
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NEW YORK (CNNfn) - In response to complaints from customers and employees, Union Pacific Corp. plans a sweeping transformation of the railroad to decentralize its operations in the wake of unprecedented systemwide traffic bottlenecks, CNNfn learned Thursday.
Union Pacific will abandon its centralized operating system and give more authority to regional managers, according to a letter from Union Pacific Chairman and Chief Executive Dick Davidson sent to customers and obtained by CNNfn.
The development represents an effort by the Dallas-based freight hauler to adopt a management structure similar to that other competing rail companies already have in place.
"Our customers want responsiveness and focus, and these changes put the authority where it needs to be, in the field where service is provided," Davidson wrote. "Our goal is a return to excellent performance by simplifying our processes and becoming easier to do business with."
The unparalleled logjams currently experienced throughout the nation's rail freight system are a product of the stronger U.S. dollar, which has caused imports -- particularly from Asia -- to rocket to record levels.
For example, imports from Asia into the nation's busiest port, Long Beach, Calif., increased 13.4 percent in June from a year earlier while Los Angeles, the nation's second-busiest, experienced a 19 percent rise.
But Union Pacific, in particular -- which serves more West Coast routes than rivals such as Norfolk Southern Corp. -- has been plagued by service delays caused by problems stemming from last year's merger with Southern Pacific Transportation Co.
Those traffic problems have been reverberating through the company's financial results. "We've been working on a number of things to improve our service, and that has a cost," company spokesman John Bromley was been quoted as saying.
In addition, Union Pacific has been forced either to reimburse or pay damages to key customers. Most recently, the railroad took a $155 million charge to cover these reimbursement costs.
Shares of Union Pacific (UNP) were up 7/16 at 38-7/16 in Thursday trading on the New York Stock Exchange. 
-- by correspondent Casey Wian
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Union Pacific
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