SPRB Updates - 2008
December 11, 2008
Dear Valued Customers and Business Associates:
As we approach the end of 2008, favorable weather conditions across the west and central part of the country, along with excellent train velocity, are contributing to smooth coal deliveries. For example, Union Pacific loaded 1,141 SPRB trains in November, or 103.5% of NCTA demand, and an average of 38.0 trains per day. November’s performance exceeded our year-to-date average of 36.1 trains per day and caps a five-consecutive month all-time record for Union Pacific SPRB loadings, eclipsing the prior five-month record from August through December of 2007 by 148 trains or 2.6 percent. Our network is currently supporting an annualized pace of 214 million tons of SPRB coal based on average performance over the past five months. We also set a tonnage record per train of 15,600 tons out of the SPRB during the month of November and the fifth month in a row we loaded in excess of 15,500 tons per train.
On the Joint Line, a total of 2,178 trains were loaded in November, producing an all-time record for any month of 72.6 loaded trains per day. Eighty-four trains were loaded on the Joint Line on November 30, also an all-time record.
Year-to-date through November, Union Pacific has loaded 469 more SPRB trains than last year, an increase of 4.0%. On the entire Joint Line, 932 additional trains were loaded compared to 2007, an increase of 4.3%.
November coal loadings out of Colorado and Utah were 289 trains, exceeding NCTA demand by 0.3 trains per day. NCTA demand for the month had been adjusted downward as a result of coal production issues.
As 2008 comes to a close, we thank you for your business and the cooperation you have all provided to help make our coal supply chain a continued success. It would not be possible to achieve the growth and operational results without loyal customers and a strong commitment to improving throughput. As always, we appreciate your support and ideas for improving the services and value we offer our customers.
While we are thankful for ending the year on a positive note, we share our concern for the many Americans who have lost jobs due to the economic events unfolding over the last 90 days. May 2009 bring broader peace, great wisdom from our new presidency and his administration and better economic times ahead!
Have a happy holiday and a wonderful new year!
Sincerely,
November 11, 2008
Dear Valued Customers and Business Associates:
Union Pacific loaded 1,135 SPRB trains in October for an average of 36.6 trains per day. This exceeds our year-to-date average of 35.9 trains per day and sets an all-time loading record for any October. In fact, this October caps a four-consecutive month all-time record for Union Pacific SPRB loadings, eclipsing the prior four-month record from August through November of 2007 by 98 trains or 2.2 percent. Our network is currently supporting an annualized pace of 214 million tons of SPRB coal based on average performance over the past four months. We also exceeded 15,500 tons of SPRB coal per train for the fourth month in a row.
On the Joint Line, a total of 2,149 trains were loaded in October, an average of 69.3 loaded trains per day.
Year-to-date through October, Union Pacific has loaded 487 more SPRB trains than last year, an increase of 4.7%. On the Joint Line, 870 additional trains were loaded compared to 2007, an increase of 4.4%.
October coal loadings out of Colorado and Utah were 333 trains, exceeding NCTA demand by .4 trains per day.
Supply and demand projections for the remainder of the year continue to look good, and loading levels near those achieved in the third quarter are expected to continue. Our train velocity and cycle-time performance for coal are supporting increased coal deliveries with fewer assets. We remain committed to improving train size and productivity and are looking ahead at development of new technologies such as electronic controlled brakes, electronic train arrival notification and other initiatives. We appreciate the continuing efforts of our customers and the mines and terminals to reduce delays in loading and unloading. This helps all participants in the logistics chain by improving throughput. As always we appreciate your support and ideas for improving the services we offer our customers.
If you have any specific questions, concerns or suggestions, please feel free to contact your Union Pacific account manager.
Sincerely,
October 7, 2008
Dear Valued Customers and Business Associates:
During September, Union Pacific was presented with weather and flooding events on segments of our system east of Kansas City as Hurricane Ike moved inland and north. Our operations were temporarily hampered in this area and I am pleased to report that our system has returned to normal.
Despite the impact of Hurricane Ike, Union Pacific loaded 1,106 SPRB trains in September, generating an average of 36.9 trains per day and exceeding our year-to-date average of 35.8 trains per day. In fact, this September caps an all-time record quarter for Union Pacific's SPRB loadings, eclipsing fourth quarter 2007 loadings by 104 trains or three percent. Our network is currently supporting an annualized pace of 215 million tons of SPRB coal based on third quarter performance. We also exceeded 15,500 SPRB tons per train for the third month in a row.
On the Joint Line, a total of 2,133 trains were loaded in September. For the month, the Joint Line averaged 71.1 loaded trains per day, which was an all-time high.
Year-to-date through September, UP has now loaded 468 more SPRB trains than last year, an increase of 5.0%. On the Joint Line, 770 additional trains were loaded compared to 2007, an increase of 4.4%.
Loadings in Colorado and Utah in September were 302 trains, meeting NCTA demand, which had been adjusted to account for coal production issues at a few of the mines.
We now enter the fourth quarter of a year that will probably set a new all-time annual record for loadings. Supply and demand projections for the remainder of the year continue to look strong, and loading levels near those achieved in the third quarter are expected to continue. Our investments in the Joint Line and throughout our coal network continue to pay dividends in terms of train velocity and throughput, and several customers have told us they are experiencing excellent service. We appreciate the continued support of the utilities, mines and the river terminals to keep load and unload times to a minimum. We look forward to more progress and as always we appreciate your support and ideas.
If you have any specific questions, concerns or suggestions, please feel free to contact your Union Pacific account manager.
Sincerely,
September 2, 2008
Dear Valued Customers and Business Associates:
With the summer months essentially behind us, I am pleased to report that we have achieved two back-to-back months of record loadings in the SPRB.
In August, Union Pacific loaded 1,190 trains in the SPRB, an all-time monthly high for total trains loaded. The previous high was 1,174 trains loaded in July 2008. On Sunday, August 10, UP loaded 50 trains in the SPRB, an all-time record for one-day train loadings. The previous high was 46 trains loaded on November 29, 2007. For the month, we loaded an average of 38.4 trains per day. Total SPRB tons shipped via Union Pacific was 18.7 million, also an all-time monthly record.
On the Joint Line there were 2,197 trains loaded in August, with 81 loaded in one day on August 16. For the month, the Joint Line averaged 70.87 loaded trains per day. These three measurements are all-time records.
Year-to-date through August, Union Pacific has loaded 476 more SPRB trains than last year, an increase of 5.8%. On the Joint Line, 698 additional trains were loaded compared to last year, an increase of 4.5% over 2007.
Loadings out of Colorado and Utah achieved 322 trains, just three trains short of the NCTA demand, which had been adjusted to account for coal production issues at a few of the mines.
Union Pacific is loading coal in the SPRB at an annualized pace of 220 million tons, based on performance in August. Our investments in the Joint Line and throughout our coal network are enabling us to achieve our record loading performance and are paying dividends in terms of our coal train velocity and throughput. Productivity remains a key initiative and we are continuing our work with you to increase train size and to reduce train dwell at North Platte, the river terminals, the mines and at the utilities. We look forward to more progress and we appreciate your support and ideas.
If you have any specific questions as we move forward, please contact your Union Pacific account manager.
Sincerely,
August 4, 2008
Dear Valued Customers and Business Associates:
We now have the first month behind us following the devastating Midwest flooding the railroad experienced in early June. While we are still undergoing an aggressive track maintenance program in the flood-impacted areas, I am pleased to report that our service is back to pre-flood levels.
In July, Union Pacific loaded 1,174 coal trains in the SPRB, which was an all-time record high for any month. We loaded an average of 37.9 trains per day. Total SPRB tons shipped via UP was 18.2 million, which was also an all-time monthly record. In fact, we loaded 11.6% more trains in July of this year than in July 2007. For the year-to-date period, we loaded 404 additional trains, or 5.7% more than in 2007.
Joint Line loadings were also at an all-time high for any month at 2,136 trains, and, year-to-date, are 4.1% ahead of last year.
Loadings in Colorado and Utah came in at 343 trains, slightly higher than NCTA demand, which had been adjusted to account for coal production issues at a few of the mines.
We expect that 2008 will be a record year for coal production in the Powder River Basin and we solicit your support to continue to minimize loading and unloading delays. Our goal is to continue with July's level of performance to maximize rail productivity and make up for as much of the loadings lost during the May production issues and June flooding as is possible, through the balance of the year. So far, we have a great start with July's performance and average SPRB loadings for the first three days of August of just under 40 trains per day.
We thank you again for your support and cooperation. If you have any specific questions as we move ahead, please contact your Union Pacific account manager.
Sincerely,
July 18, 2008
Dear Valued Customers and Business Associates:
As you are aware, the past several weeks presented the Midwestern railroads with enormous operating challenges resulting from severe and widespread flooding. We are still experiencing some residual train congestion south of St. Louis and in Southern Illinois, but we are seeing improvement each day. Our Engineering personnel are inspecting every mile of track and signal systems that were impacted by flooding and conducting maintenance work to restore the integrity of our underlying roadbed, where warranted. This work will require 3-4 weeks to complete and may result in some delays to trains serving the river terminals and customers south of St. Louis.
In the SPRB, July loadings month-to-date are currently at 96.2 percent of NCTA demand despite the flood challenges we were still facing early in the month and ongoing recovery efforts. We are on-pace in July to load 1,171 trains in the SPRB, which would be an all-time record. While a couple of producers in Colorado are still working through some production issues, our Colorado/Utah loadings are meeting scheduled demand for the month as well.
We thank you for your understanding and patience as we addressed the damage Mother Nature brought upon us. Most importantly, we wish to express our concern for those employees, customers and families that were impacted by the flooding or lost homes and businesses. Midwesterners are a resilient group and we know that better days lie ahead.
I would like to solicit your support in the months ahead to work together with us to minimize load/unload times, so we can cycle the coal fleet as efficiently as possible and make up as many of the lost loadings as is possible through the remainder of the year. If you have any specific questions as we move ahead, please contact your Union Pacific account manager.
Sincerely,
June 16, 2008
Dear Valued Customers and Business Associates:
As you have heard, the Midwest has been experiencing severe and widespread flooding. At Cedar Rapids, Iowa where our east/west main line crosses the Cedar River, the river crested June 13 at 31.1 feet, which exceeded the previous crest of 20.0 feet reached in 1851. Track outages have also occurred west of Des Moines, on the Des Moines-Kansas City line and the River Subdivision in Missouri. Other carriers in these states are also affected, limiting our ability to detour on alternate routes.
While the water levels are currently receding in Iowa, tracks remain under water in multiple locations. Water levels are still rising at downstream river points in Illinois and Missouri. UP Engineering forces are inspecting and beginning work to restore track and bridges as the receding water permits, but the extent of the damage and the necessary repairs will not be known until after they have access to all damaged lines and facilities.
On June 13, Union Pacific issued an embargo and permit application process which covers most traffic moving between points west of Beverly, Iowa (just west of Cedar Rapids) and east of Beverly, Iowa. The embargo excluded coal because Union Pacific had previously declared a Force Majeure effective June 8 for all coal shipments moving through Iowa. We have continued to load and move coal trains to the extent possible although transit times are longer due to rerouting and trains held.
Please be assured we are doing everything possible to continue to move coal wherever possible and to resume normal operations of our coal fleet through this area. We will keep you updated as this situation changes. If you have any specific questions, please contact your Union Pacific account manager.
Sincerely,
May 29, 2008
Dear Valued Customers and Business Associates:
I would like to take this opportunity to update you on Union Pacific Railroad's progress since the beginning of the year, describe how process improvements have helped increase our ability to deliver your coal, and report on our accomplishments associated with implementation of the 2006 CANAC recommendations for Joint Line capacity.
SPRB Loadings
Union Pacific Railroad loaded SPRB coal trains at a record level during the first four months of 2008. Our SPRB train loadings through April were 6.5% ahead of 2007, despite four derailments and the related disruptions in January, the impact of severe weather early in the year, coal production issues and spring flooding in the area of St. Louis and south.
For the month of April, Union Pacific loaded 1,047 trains compared with 980 trains in April 2007, an increase of 6.8%. Total tons transported by UP grew by 7.6% as train size increased.
The Joint Line supported a combined railroad average of 65.7 trains per day for the month of April, compared with 62.7 trains per day experienced during April 2007.
Coal production issues at the mines during the first four months of 2008 accounted for 182 missed train loading opportunities, of which 140 were attributed to weather. These figures compare with 381 missed trainloads in 2007 that were due to mine issues, an improvement of 199 trains over the same period last year. During this same time period, Union Pacific missed 158 loaded trainloads, mostly associated with weather and the recovery from derailments that occurred in Wyoming and Iowa during January 2008. Union Pacific missed 199 loaded trains last year during the first four months, which represents a 41 loaded train improvement year-over-year.
For the month of May, we are on a pace of 1,049 trains which is comparable to April and about 9.5% more than in May 2007. This is after a very wet week in the Basin beginning May 22 when six inches of rain fell in a short period, flooding mine pits and turning haul roads into mud. We missed 74 loadings due to mine production shortfalls in the 6 days from May 22-27.
Colorado and Utah
Union Pacific shipped 346 loaded coal trains out of Colorado and Utah in April, an average of 11.5 trains per day and satisfied 100% of NCTA demand. Demand for Colorado and Utah coal has increased recently due to rising prices and reduced availability of eastern coal, as well as a strong export market.
Process Contributes to Increased Coal Deliveries
Union Pacific set a new record for coal train size out of the SPRB during the first four months of 2008, loading an average of 15,378 tons per train. This compares with 15,259 tons per train in the same period of 2007. The .8% increase in train productivity means our customers get more coal with each train delivered and we make better use of our track resources. The improvement represents the equivalent of 8 additional coal trains per month. Most of the low hanging fruit has been picked, and further gains in train size are beginning to require added infrastructure. We continue to work with several customers to increase our joint capability to improve productivity.
We continue to make great strides forward with our Flexible Loading Improvement Program (FLIP). For the first four months of this year, Union Pacific Railroad generated 225 additional SPRB trainloads of coal through the FLIP Program and in cooperation with those mines that were able to exceed their production targets on any given day. We now have over 70% customer participation in our FLIP program. Customers who participate in FLIP allow UPRR the flexibility to divert empty trains between their coal suppliers who have immediately available landing spots upon train arrival on the Joint Line.
Capacity
Most of the 2006 CANAC recommendations for adding new rail capacity on the SPRB Joint Line have been completed. First, the entire 102-mile Joint Line is now all triple track, from Caballo Jct. on the north end to Shawnee Jct. on the south end. Logan Hill's fourth main line was completed last fall, with crossovers being installed through the first half of 2008. While BNSF and Union Pacific originated a record 358.8 million tons on the Joint Line in 2007, these capacity projects have already increased coal hauling capacity on the Joint Line to approximately 400 million tons, leaving headroom for future growth.
Based upon future tonnage projections provided by the mines, CANAC also recommended adding 24 additional train landing spots at the mine properties along the Joint Line. At this time, five of the new landing spots are already in place, seven are in progress, and seven spots are in the planning stage.
Union Pacific spent a record $985 million on coal-related capital investments during 2007 and 2008 is expected to be another year of strong capital investments focused on adding new coal hauling capacity and improving handling, safety and efficiency. For example, Union Pacific is moving forward with the installation of Centralized Traffic Control on the coal corridors in eastern Nebraska and western Iowa, which will add additional capacity by improving train flow and train meets and passes. A third main track is being constructed on Myles Hill near Scottsbluff, Nebraska on the Powder River Sub, and a Bill, Wyoming by-pass and yard expansion project are in the works along with many other initiatives, which will provide added coal train handling capacity in Kansas, Missouri and Illinois and south.
Looking Forward
As we move into summer, we are encouraged by the commitment and cooperation of our coal chain partners to meet the everyday challenges we face. We must continue to work together to strive for continuous improvement and focus on mitigating the many variables that can disrupt coal production, transportation and unloading performance. Our goal is to continuously improve the reliability of the coal supply chain in order to meet the expanding needs of those who rely on coal-generated electricity.
We appreciate the cooperation you have provided that has enabled Union Pacific to make continued progress and we look forward to working with you to find other opportunities to improve our collective operations.
Yours Very Truly,