Customers were notified early May 8 that Union Pacific (NYSE: UNP) was ceasing operations of its multimodal service Cold Connect, which offered end-to-end transportation service for refrigerated loads.
UP spokeswoman Kristen South confirmed the closure, citing sluggish market conditions as a result of the coronavirus pandemic.
On “Friday, May 8, we notified employees that Cold Connect, a Loup Logistics service that moves refrigerated products from the West Coast to Union Pacific’s warehouse in Rotterdam, New York, will permanently close and most Cold Connect-related positions have been eliminated. This decision was not made lightly,” South said.
Customers “were notified that Friday was the last day we accepted inbound orders. Our intention is to deliver on all product in transit, until it meets its final destination. A reduced staff will temporarily remain in position to execute these final commitments,” South said.
UP purchased the assets of Railex, a refrigerated rail and cold storage distributor, back in January 2017 to strengthen its presence in transporting fruits, vegetables and other temperature-sensitive cargo by rail. The purchased was viewed by some as a way to take market share in the refrigerated business away from truck, which at the time was facing a tightening market.
But a Cold Connect representative told FreightWaves that low freight rates and consumers moving toward purchasing shelf-stable items, like canned goods, rice and beans instead of fresh produce amid the coronavirus pandemic, contributed to declining sales.
“Since acquiring the Railex assets in 2017, employees diligently worked to grow volumes and create a platform for the future; however, with COVID-19 impacting volume and truck prices, it is no longer sustainable to continue operations,” South said.
Loup Logistics, a UP subsidiary, arranged door-to-door transportation services of refrigerated goods using its Cold Connect platform that allowed trains to load and unload shipments of produce, wine, frozen foods and dairy products through its cold storage and distribution facilities in Delano, California, Wallula, Washington, and Rotterdam, New York.
The company had hoped to significantly grow the Cold Connect platform by moving more fresh produce from truck to rail in 2020, according to Kari Kirchhoefer, vice president of Loup, in an interview with Inside Track in late 2019.
“We’re building a truck on each end, using warehousing to mix multiple fresh produce commodities — like carrots, onions and potatoes — and deliver to market in a timely manner,” said Kirchhoefer. “To the customer, it appears as a truck on both ends and they don’t know it moved via rail during its journey.”
According to UP’s website, the Delano site and Wallula site each offered expedited service via UP to Northeast destinations. UP partnered with CSX (NASDAQ: CSX) to provide service at Rotterdam.
Joanna Marsh, FreightWaves’ staff writer, contributed to this report.