Riding the Rails to a Price Hike?

Consumers will be hit with higher prices for a wide range of merchandise because of the massive delays in Union Pacific railroad shipments at the ports of Los Angeles and Long Beach, a federal official warned Wednesday.

Containers of cargo that usually would be unloaded once and then moved out by railroad now are being shifted from five to seven times within the region because of the backlogs, said Gus A. Owen, vice chairman of the federal Surface Transportation Board, which has declared a transportation emergency in the West and held hearings on the problem Wednesday.

The cost of the additional handling, $75 for each additional move, “will be passed to consumers,” Owen said.

With trains delayed from the Pacific Northwest, some operators of Christmas tree lots in the Los Angeles area have complained that they have not gotten their deliveries, Owen said at a board hearing called to assess the congestion problem.

The board is to decide today whether to extend its 30-day emergency order allowing competitors of Union Pacific access to the giant rail system’s tracks in the Houston area, where the backlog of locomotives and freight is at its worst.

The delays throughout the Union Pacific system originated at the Houston rail yard and have rippled across the railroad’s entire network, from the West Coast ports to the coal regions of the Rocky Mountains and the Midwestern grain belt.

Delivery times have doubled for goods moving in and out of the ports of Los Angeles and Long Beach, leading to the worst rail traffic jams and delays in 35 years, Kenneth Koss, director of the rail safety and carriers division of the California Public Utilities Commission, told the hearing in Washington.

Both Owen and board chairwoman Linda Morgan seemed deeply skeptical of claims by Union Pacific executives that the rail traffic crisis is easing.

“We are hearing from users of the system that the situation is not resolved,” Morgan said. “Are they all wrong?”

But a combative Dick Davidson, chairman and chief executive officer of the Union Pacific Corp., told the board, “We have cleared the decks of the backlog and congestion.”

Davidson conceded that Southern California is the toughest problem for his railroad. “Traffic levels are high and congestion is tight,” he said. “That is the area where we need the most improvement.”

His tone, however, was unapologetic, and he accused the railroad’s critics of misrepresenting Union Pacific’s problems.

“The California Public Utilities Commission is simply dead wrong in saying that there are UP shipping containers backlogged in the Los Angeles and Long Beach ports,” he said. “Those backlogs are gone, and the witnesses at [the commission’s] recent hearings in California testified that they’re gone.”

But from the commission’s viewpoint, significant problems remain unresolved.

The crews of Union Pacific and Southern Pacific--which merged with Union Pacific last year--are often still working separately, Koss said. “In some cases, there is equipment without staff and other times it is the opposite,” he said.

The Public Utilities Commission, as well as the state Agriculture Department and Caltrans, want the federal transportation board to extend its emergency order, Koss said.

“Union Pacific is making tremendous efforts that are starting to work, but California is still being shortchanged,” he said.

Davidson lashed out at his competitors. He told the board, for instance, that Kansas City Southern Railway is “just plain not telling you the truth” about which rail carrier is responsible for blocked sidings on a line in Louisiana. He also disputed a claim by the Burlington Northern and Santa Fe Railways about whose trains are blocking railroad sidings.

The rival railroads, by claiming delays are still rampant, are trying to grab business from Union Pacific, he said.

The transportation board’s emergency order on Oct. 31 allowed other rail carriers to handle some Union Pacific traffic to relieve congestion in the Houston area. The other railroads are using Union Pacific tracks to move the merchandise.

“Lewis and Clark could not get through Houston in the past month,” said Larry Fields, head of the Texas Mexican Railway Co., which was given an expanded right to handle rail traffic in Houston.

Owen chastised the railroads for blaming each other. “There’s so much business . . . but you fight each other on a continuing basis,” he said.