Disappearing 'ghost trains' is a good sign for the economy
By John Hollenhorst
NORTHERN UTAH -- All across the West, "ghost trains" are vanishing.
Thousands of railcars and locomotives that stood idle -- in some cases for several years -- are getting back in service. It's a strong indication the economy is waking up.
Billionaire Warren Buffet, who now owns a railroad himself, recently said railroad shipping is the most important statistic for predicting where the economy is going. By that measure, the economy seems to be coming out of The Dead Zone.
"We've seen a 10 to 15 percent increase in the amount of (freight) containers moving, just through Utah," said Dan Harbeke, director of public affairs for Union Pacific, the nation's largest railroad. "That's a strong sign for the Utah economy (and) for the broader economy at large as well."
A year ago, a good example of a "ghost train" sat on a siding in the remote desert 60 miles west of Salt Lake City. There were 200 boxcars representing $12 million worth of hardware, parked in the desert and going nowhere.
The railroad industry uses the term "in storage" for boxcars and locomotives that sit unused. It essentially means there isn't enough business to keep them moving. Railroad companies park the railcars and engines on sidings in out-of-the-way places where they won't interfere with moving trains.
In Spanish Fork, a train stretching a mile-and-a-half with 130 refrigerator cars sat unused for three years. It became a target for vandals, arsonists and graffiti artists. It finally disappeared just over two weeks ago as the refrigerator cars were put back in business.
The ghost train in the desert is gone, too. The 200 boxcars that were parked on the Marblehead siding in Tooele County are now back in service.
Across 23 states, Union Pacific trains are picking up steam, giving a hint of significant economic recovery as they carry raw materials to industry and products to consumers. The company's freight revenues had a major recovery last year and the trend continues into this year.
"We finished 2010 about 10 percent up," Harbeke said, "and we're up about 10 to 15 percent now over 2010."
At the depth of the recession two years ago, Union Pacific had a huge capital asset wasting away. An average boxcar is worth $60,000. A locomotive is valued at $2 million. In June of 2009, the company had 2,100 locomotives sitting idle. Today, that number has dropped to 900. During the same period, idle railcars dropped from 71,000 to 28,000. In Utah, alone, idle railcars dropped from 3,100 to 1,300.
In the last year, Union Pacific was able to bring 3,500 employees back to work.
The slump two years ago also forced Union Pacific to put 5,000 workers on furlough. "Since that time," Harbeke said, "in the last year we brought back 70 percent of those employees, back to work."
In the year just ended, Union Pacific posted the biggest profit in its history, a history that reaches back to Golden Spike days in the 1860s.
Company officials attribute part of their record profits to the improving economy, a portion of it to new efficiencies within the operation and some of it to business customers switching from other forms of shipping.
"We can move one ton of freight 500 miles on one gallon of diesel fuel," Harbeke said, "and that translates to cost savings" for customers.
The apparent financial recovery does not seem to be confined to any particular part of the economy. Union Pacific hauls thousands of different commodities ranging from coal, steel, lumber and chemicals to finished products for the consumer market.
"We've seen a steady increase across, not just one sector of our business," Harbeke said, "but all sectors."
But it won't ever happen on my income.