Union Pacific (NYSE: UNP) is shifting how it categorizes commodities for its sales and marketing efforts.
Effective Jan. 1, 2020, Union Pacific (UP) will consolidate its business groups from four to three: bulk, industrial and premium, the company said on Dec. 10.
Coal, petroleum coke products and agricultural products will form the bulk business group, while liquefied petroleum gas (LPG), petroleum and sand products will move to the industrial business group. The premium group, which consists of UP’s automotive and intermodal segments, will remain as is.
Coal, LPG, petroleum, petroleum coke and sand have been part of UP’s energy business group.
“This new structure will allow us to better serve our customers while helping Union Pacific remain agile to market conditions,” said Kenny Rocker, UP’s executive vice president for marketing and sales.
Earlier this fall, UP also announced changes to its sales and marketing teams.
UP’s category shifts come as the railroad has seen lower rail volumes in 2019, just like its peers, and as the company implements Unified Plan 2020, its version of precision scheduled railroading.
UP executives said at recent investor conferences that the railroad plans to develop its domestic intermodal business, as well as take advantage of steady auto demand, the impending boom in plastics production and potential growth in residential and industrial construction.
“We think [domestic intermodal is] vastly under-penetrated in general by the rails and certainly by Union Pacific,” said Jennifer Hamann, UP’s incoming chief financial officer, at a Nov. 14 investor conference.
Marc
UP can improve customer service significantly if they answer their phones every year or so
Des
UPN has turned away business to implement a more streamline service. Customers have been forced to find alternative services to ship or adopt and adapt to the UP way of fining customers if unloading isn’t done within a specified time. For small companies who cannot meet the new requiremnts alternative ways to ship may be more profitable. UP’s direct competition has been the beneficiary with an uptick in carloading comparably. With its New business strategy it seems that the corporation should change it’s moto from Building America which for now contradicts it’s actions by pulling out of projects that have been planned and promised to communities, shutting down facilities that were the life line to many of its residents and laying off substantial portions of its work force. CEO Lance Fritz and COO Jim Vena along with UPs board of directors are all in on PSR which so far has mixed reviews. Employees at CN, who previously implemented PSR recently started to strike when shortages of goods across Canada forced the company to make a deal.
Black Lavender
Union Pacific has been making changes that have cost many if their loyal employees their jobs all for the sake of more profit and better stock prices. They have proven time and time again that money is more important than their employees and their customers.
Robert Stambaugh
I am not or never have been in marketing but I am a retired railroad employee. The railroad I worked for was the Denver and Rio Grande. Every day there was a train that was on duty around 6;30 pm. its symbol was 195 followed by the day of the month. It consisted of some freight but the main purpose was to take trailers to Grand Junction and Salt Lake City. The main customers were City Market, and U.S.P.S. I realize that at that time railroads were regulated but the model could be expanded. My understanding is the dividing line for profitability is 500 miles. Can that lessened to 250 miles? Another lesson I’ve learned is that when on a per unit basis, volume can make profits achievable. So I would encourage the Union Pacific to go after the domestic market for intermodal.