IN TEXAS ABOARD UNION PACIFIC’S BIG BOY TRAIN — Jim Vena wants you to have a kolache.
In fact, the chief executive of Union Pacific, the largest U.S. railroad, wants everyone to have the Czech-Slovak fruit-filled pastry (pronounced ko-LA’-chee). “There’s one over there with your name on it,” he tells a visitor.
So it’s hardly by chance, then, that the day’s portion of UP’s Big Boy steam locomotive tour begins in West, Texas. (The name of the town causes some confusion, located as it is in the northeastern portion of the state. West is actually named for its first postmaster, Thomas West.) West is home to the state’s largest Czech population and boasts not one but two Czech bakeries. So kolaches all around!
“I think we have the railroad in a good place,” Vena says as Big Boy’s crew whistles off and eases out of West eastbound toward Fort Worth. The crowd surges at trackside, recording the moment with their phones and waving to the train. Vena waves back.
“You don’t win with customers if you have bad service. Some shippers want reliability and some want speed, and some want both. We want to go into the marketplace and grow our business. It’s about operational excellence.”
This day it’s not just mad railfans and Czech Texans who go out in the midday sun. It appears that West’s entire population of 2,531 has turned out to greet the 4014, called by its thunderous whistle. A total of 25 of the articulated giants were built by the American Locomotive Company for UP between 1941 and 1944 to haul freight over the Wasatch Mountains between Utah and Wyoming, the largest of all steam locomotives weighing a million pounds with tender, more than a 747 jetliner. Believe everything you’ve heard about the steam, smoke and steel; Big Boy is as close as a machine gets to a living thing. Spectators have gathered by the tens of thousands on Big Boy’s summerlong tour throughout UP’s western territory, including 60,000 in Chicago.
Converted in UP’s 2019 restoration to burn oil instead of coal, the gleaming Big Boy pulls a train of vintage passenger cars in UP’s iconic Armour Yellow and Harbor Mist Gray that have been similarly restored and meticulously maintained by the railroad’s shops in Cheyenne, Wyoming. It’s a spectacular show of raw railroading that in its prime helped power America to historic heights of postwar industrial and economic might, and a reminder that railroads continue to have the power to stimulate the American imagination.
Intentional or not, the spectacle stands in stark contrast to other Class 1 railroads, controlled by hedge funds looking not to build empires but to squeeze ever-more efficient operations toward next quarter’s profits in the face of moribund freight while mostly conceding active capture of new business to trucks. The Union Pacific (NYSE: UNP) board, it should be noted, is not controlled by hedge funds or private equity.
What better setting, then, for Vena to lay out his vision for the company and where he believes the railroad is headed in the coming years.
This is the second time Vena has marked up as CEO, having served from 2019 to 2021 before returning in July 2023 to succeed Lance Fritz. Vena is the exception to what once was common among Class 1 leadership, a true railroader who first hired on as a brakeman with Canadian National Railway (NYSE: CNI) and moved up to locomotive engineer before capping four decades at the company as executive vice president and chief operating officer. Vena’s wife, Karen, once hired out as summer relief on the railroad, and his two sons took their turns — one as a locomotive engineer — before moving on to other pursuits.
In an interview with FreightWaves from the dome car where sweeping views beckoned prior generations, Vena is reflective and realistic. He has been a proponent of precision scheduled railroading (PSR) with its efficient focus on fewer but longer trains and ever-lower operating ratio — up to a point.
“Operating ratio is not a goal,” he says, “it’s a result of what you can do and how you do it. Union Pacific can grow, even with an 18-20% drop in coal volume, even if it’s a small amount of growth. I am comfortable we can grow even if that growth in, say, carloads is 1-2%. We want to take a little more slice from trucks; we don’t need all of it, maybe more in bulk freight.”
There is some sentiment that the Class 1s may have wrung all the savings out of the current state of operations and that management layoffs, higher rates and slower train speeds can spur the next round of cost savings. Vena flatly disagrees.
“It’s never good to slow train speeds to decrease maintenance needs. We spend $2 billion a year on railroad maintenance of way, not capping train speeds. I don’t listen to the analysts but I listen to the shareholders. We pay a decent dividend. We have alway figured out how to move forward and make a return to investors.”
In its most recent weekly report through last Saturday, carloads fell 2% year to date from 2023 while intermodal was ahead 8% for a modest combined gain of 2% from the same period a year ago.
The train continues to roll past harvested fields, grain elevators and endless tall grasses. Big Boy whistles through small towns, turning the prosaic into performance as crowds jam local roads for a glimpse of the railroad. The medium is quite clearly the message.
“We’re building a long-term, lasting company,” Vena says. “We want to build on what we’ve done before. We are about long-term profit, not short-term-focused. I’m not here for just a year. We want to bring in new growth, invest for growth and never sacrifice safety.”
Under PSR, Union Pacific has idled some 500 locomotives out of its fleet of more than 7,000, but Vena notes that 200 are being rebuilt. “We want to be smart in our use of locomotives, use them in a smart way. We can carry all those extra locos but that means they are ready to go, serve as a buffer [when they are needed]. We want to invest where we think the growth is.
“That’s what I mean by operational excellence.”
In Texas, growth is the operative word. In the past five years, domestic migration boosted the statewide population by 5% to just over 30 million, and forecasts say that could go as high as 44 million by 2060. The Dallas-Fort Worth metroplex is one of the fastest-growing metropolitan areas in the U.S., adding 1.2 million residents in the past decade while the population soared by 20% since 2010.
Development by Omaha, Nebraska-based UP in and around Dallas leverages growing import container traffic from Asia flowing through the Port of Los Angeles-Long Beach complex. In a prescient move, the Dallas Intermodal Terminal (DIT) was built in 2004 on UP’s Ennis Subdivision 20 miles from the city. It has capacity of 4,000 chassis parking spots on 300 acres, all for international containers. Union Pacific operates two double-stack trains per day to and from the West Coast as well as northbound service from Mexico to DIT through its intermodal ramp at Port Laredo. The terminal’s fleet of Mi-Jack rubber-tired gantry cranes typically handle trains up to 13,000, and as long as 17,000, feet. A single UP employee manages the facility with 80-100 contract workers depending on traffic.
To speed operations, UPGo, a drivers’ mobile app automates ingating at the rate of 22 to 24 seconds per truck. The railroad has converted better than 90% of drivers to the app, and assistance is available at a phone kiosk connecting to UP’s gate operations base in Chicago, which covers about half of the railroad’s terminals.
In Dallas, FlexiVan, TRAC Intermodal and DCLI provide 20- and 40-foot chassis pools. While volumes are confidential, Evergreen Marine Corp. is the leading ocean container line at DIT, and retailer Hobby Lobby a major consignee. Analytics are increasingly used to aid planning, particularly since the COVID pandemic.
With multiple highway connections, the rural countryside surrounding DIT has been ripe for development, and the warehouse and distribution center ecosphere has expanded dramatically in the 20 years since it opened.
One of the largest is Prime Pointe Industrial Park, a 3,000-acre inland port adjacent to DIT developed as capital co-investment among UP, local developer Mike Rader and the community of Hutchins.
The park is served by UP with industry tenants ranging from aerospace and beverages to plastics and food. Earlier this year, restaurant operator Chick-fil-A Supply opened a 300,000-square-foot distribution center processing, among other items, frozen french fries arriving by the refrigerated carload destined for 225 of the chain’s restaurants.
Plastic packaging maker Katoen Natie opened a 250,000-square-foot manufacturing plant in 2018, receiving plastic pellets by rail and shipping out export containers of film for packaging via UP’s Dallas to Dock premium intermodal service. The Belgium-based company has two leased switcher locomotives and trackage for 250 covered hoppers. The facility has already been expanded and has a planned footprint of up to 2.5 million square feet.
Union Pacific has switched 10,000 railcars and 38,000 containers since Prime Pointe opened in 2018.
Back on the train approaching Fort Worth, a stream of freight trains greet Big Boy as it steams toward the famed Tower 55 junction. “There’s your centerbeam [flatcar], Jim,” says a UP executive, watching carloads of wrapped building products pass by on open cars. Railroad employees stand trackside in yellow safety vests, waving and recording Big Boy’s passing.
While hiring remains an issue for railroads and other heavy industries, Union Pacific — which runs through 700 communities throughout its operating map — boasts a 90% employee retention rate over a six-year period. At the same time, Vena sees the need for changes in the workplace to help modernize operations but emphasizes they will only be realized in concert with the carrier’s unions.
“There are definitely some antiquated work rules if you check the [union contract] agreements,” says Vena. “We want to make changes that will provide better service, such as at terminals where train crews can only work in one direction. We are talking about tweaks to the rules that union leadership understands. We’ll [Union Pacific] have to pay for it, and I have no problem with that. Employees want more time off? Let’s negotiate it.”
On a micro level, the railroad is deploying new technology to help integrate new hires, such as 3D printing full-size railcar couplers for training. (Replacing a broken coupler knuckle can mean a 90-pound lift for a crewman out in the field.)
The macro view finds a development group within UP monitoring new opportunities for technology, applying AI to data processing and in areas such as trucking and last-mile processes. The company was an investor, Vena says, in autonomous truck tech developer TuSimple prior to its leadership issues. He also said UP representatives have visited Australia to get a look at mining giant Rio Tinto’s autonomous AutoHaul trains. Says Vena, “We’re always open to that.”
Now in Fort Worth, the Big Boy special eases to a stop and the crew blue flags for the night. A few visitors climb up to inspect 4014’s cab, which is hotter than a sauna. Vena is flying on to Houston while Big Boy has a few more weeks on tour before returning to Cheyenne where crews will drop its fire and attend to maintenance for the winter.
“I’d like to run this train on tour every year,” says Vena, smiling.
Find more articles by Stuart Chirls here.
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