Frequently Asked Questions
- Intro
- Which specific line segments are included in the Force Majeure notice?
- How does coal dust damage track?
- What is UP doing to restore the track?
- UP’s May 18 notice states that the Force Majeure will continue until normal operations are restored. What do you mean by 'normal operations'? When do you expect to return to 'normal operations'?
- What impacts to train cycle times should we build into our coal delivery plans for the remainder of 2005?
- How is UP allocating trains moving to or leaving the Joint Line?
- How will UP adjust the number of trainsets allowed in SPRB service?
- How is UP handling plants with smaller inventories in comparison to other plants with larger inventory levels or those that have taken steps to conserve inventories to ensure peak period requirements can be met?
- What is UP doing to eliminate or abate the conditions that caused the claimed Force Majeure?
- Why didn't UP announce termination of its the Force Majeure event at the same time as BNSF Railway?
Intro
Union Pacific notified its Southern Powder River Basin ("SPRB") customers that beginning May 11 it encountered a Force Majeure condition impacting service to all mines in the SPRB. The initial cause was a severe snowstorm on May 11 followed by successive derailments on May 14 and May 15.
We have provided a number of updates about the conditions of the track BNSF and UP use to serve SPRB mines ("Joint Line") and the effect on SPRB train operations. We will continue to do so when there are developments to share.
Some customers have asked questions about the Force Majeure announcement. We thought all of our customers would find it useful to have answers to these questions.
Which specific line segments are included in the Force Majeure notice?
The track conditions affected service to all mines on the Joint Line. The derailments occurred between Coal Creek Jct. and Shawnee Jct. Inspections in the wake of the derailments revealed unstable track conditions due to the accumulation of coal dust combined with unusually heavy precipitation. Muddy ballast and poor drainage on the Joint Line resulted in broken ties, out-of-gauge rails, undermined switches and damaged track structure on bridges. BNSF, the railroad charged with the responsibility for maintaining the Joint Line, issued extensive slow orders to prevent similar derailments and initiated emergency repairs. This chart reflects how extensive the slow orders were on a typical day.
The slow orders and track restoration work have reduced train velocity and line capacity on the Joint Line. Operations of SPRB coal trains beyond the Joint Line are also affected because the disrupted Joint Line operations cause bunching of trains and delays of empty trains for another load with corresponding effects on cycle time, crew availability, and equipment utilization.
How does coal dust damage track?
The coal dust in the Joint Line roadbed prevented the proper drainage function of the ballast when coupled with higher than normal rainfall and snow. The impaired drainage caused the rail level to become uneven and the surface of the ballast to degrade. When the roadbed does not properly support the track, the passage of coal trains breaks concrete ties and that in turn causes the rail to spread apart. Switches and bridges also sustain more damage. Such damage caused the derailments on May 14 and May 15 and the issuance of slow orders. These photographs illustrate the nature and extent of the damage.
What is UP doing to restore the track?
BNSF is solely responsible for performing the maintenance and repair under the Joint Line Agreement. Nonetheless, UP made gangs, equipment, and materials available to assist BNSF in this effort, given the exceptional circumstances. Due to BNSF's labor agreements with its unions, however, the railroads were unable to deploy all of the resources that UP offered.
UP’s May 18 notice states that the Force Majeure will continue until normal operations are restored. What do you mean by 'normal operations'? When do you expect to return to 'normal operations'?
"Normal operations" are operations unaffected by a force majeure condition. In June, our daily train count was 12% below levels before May. Daily train counts in July, while improved, remain below the number attainable if this extensive maintenance were not required. The shortfall has been exacerbated by intermittent loading problems at more than one of the Joint Line mines.
BNSF has begun extensive maintenance and track repair under a maintenance plan. This slideshow (PDF File) describes the maintenance plan including the dates and description of the work to be performed. We anticipate that maintenance and repair work under the plan will continue until sometime in November 2005, when it will be suspended for the winter months. Some maintenance and repair work under the plan may be carried over into next year. As time passes, we will be in a better position to advise our customers regarding the anticipated timetable for completion of the work and the impact on train operations. We do not expect to be able to operate the Joint Line unencumbered while major repairs continue.
The time frame for completion of the maintenance and repair may be affected by weather conditions, since freezing weather may require an earlier cessation of undercutting. UP will terminate the Force Majeure condition on the Joint Line when those causes beyond UP’s control have been removed and no longer prevent UP from carrying out its obligations under its contracts and Circular 111.
What impacts to train cycle times should we build into our coal delivery plans for the remainder of 2005?
A starting point is the difference in average cycle times you have experienced before and after the occurrence of the Force Majeure event. The past six weeks reflect recovery from two derailments but the imposition of numerous slow orders and maintenance curfews. Now that BNSF has begun the extensive rehabilitation work, we still face maintenance curfews and slow orders each week through November. We expect that the curfews will be planned to minimize disruptions. However, train speeds on the Joint Line will be slower than normal and fewer trains will be able to load each day. The restricted capacity of the Joint Line and disrupted operations also slows and interrupts the flow of empties back to the SPRB.
How is UP allocating trains moving to or leaving the Joint Line?
BNSF dispatches the Joint Line and is responsible for assigning loading slots and directing train movements to the mines in a way that allows each carrier to achieve its NCTA-determined share of the coal demand. Both railroads will be proportionally affected by restricted loadings at Joint Line mines. UP plans to allocate loading slots proportionately among our customers based on the tons supplied by receivers and producers through the NCTA planning process. Day-to-day operating issues will likely prevent us from achieving that target with precision. Overall, we expect the allocation to average in the range of 80-85% of NCTA demand based on the rehabilitation plan. If we are able to sustain the progress made during the first three weeks of July, however, we may be able to adjust the allocation upwards.
How will UP adjust the number of trainsets allowed in SPRB service?
The beginning point will be a comparison of actual train loads received by a customer relative to NCTA targets as described in #6. In the interest of maximizing coal deliveries and protecting the fluidity of the SPRB network for the benefit of all customers effected by this Force Majeure, UP may also consider utility outages (planned or unplanned), mine shutdowns, loading and unloading disabilities, congestion, and delays in accepting and unloading trains.
How is UP handling plants with smaller inventories in comparison to other plants with larger inventory levels or those that have taken steps to conserve inventories to ensure peak period requirements can be met?
Since the Force Majeure event derailments and track damage in mid-May, UP has communicated frequently with its customers regarding the severity and the anticipated duration of the disruption to enable you to adjust your operations and make alternative arrangements. We will continue to provide information so that you can plan responsibly. We will also work with you to identify and to remove obstacles to the efficient transportation of your coal. UP cannot mange a customer's inventory. Giving priority to those who fail to manage inventory would be counter productive. Only our customers have the expertise and knowledge of their complete supply options and demands necessary to manage their inventories. UP will perform its transportation function to the best of its ability during this period of high demand and constrained capacity. As we explained in the previous two answers, we anticipate moving approximately 80% to 85% of our customers' demand, subject to variation due to problems at the mines, receivers, or along the route.
What is UP doing to eliminate or abate the conditions that caused the claimed Force Majeure?
UP is supporting BNSF's program for removal of coal dust from approximately 100 miles of roadbed and the replacement of approximately 14 miles of ties and track. UP and BNSF have jointly retained consultants to help determine the primary causes of the coal dust accumulation in the roadbed and recommend abatement measures.
Why didn't UP announce termination of its the Force Majeure event at the same time as BNSF Railway?
UP makes its own independent determinations regarding notice and termination of force majeure conditions. UP cannot speak for or make decisions for BNSF.