Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

US unions call on railroads to halt buybacks, ditch lean operating model

Published 04/21/2023, 03:42 PM
Updated 04/21/2023, 03:47 PM
© Reuters. FILE PHOTO: A general view as members of the U.S. Environmental Protection Agency (EPA) (not pictured) inspect the site of a train derailment of hazardous material in East Palestine, Ohio, U.S., February 16, 2023. REUTERS/Alan Freed
CSX
-
UNP
-
NSC
-
AIR
-
KSU
-
CP
-

By Amna Karimi

(Reuters) - U.S. labor unions called on railroad operators to halt all stock buybacks until they improve safety and abandon their lean operating model, which regulators and shippers say has led to deterioration in the quality of service.

The unions have blamed Precision Scheduled Railroading (PSR), a concept that encourages running longer trains on fixed schedule with lesser staffing, for worsening working conditions for employees, while shoring up profit for railroads.

Railroads, however, say PSR helps provide predictable and consistent service to customers.

U.S. railroads, crucial in connecting large swathes of the country, have come under fire after a Norfolk Southern (NYSE:NSC) train carrying hazardous materials derailed in East Palestine, Ohio in February, resulting in the release of over 1 million gallons of harmful pollutants.

Last month, Senate Majority Leader Chuck Schumer urged a federal investigation into safety practices of all seven major freight railroads - Norfolk Southern, BNSF Railway, CSX (NASDAQ:CSX), Union Pacific (NYSE:UNP), Canadian National, Canadian Pacific (NYSE:CP) and Kansas City Southern (NYSE:KSU).

Schumer said over the past five years, freight rail companies have had "over 26,500 accidents and incidents and 2,768 deaths, all while cutting roughly 20% of their workforce".

A spokesperson for the Association of American Railroads (AAR (NYSE:AIR)) on Friday defended the industry's safety record.

"Any suggestion that railroads fail to invest appropriately, and that this, in turn, is related to a negative safety record, is categorically false," the AAR said on Friday.

© Reuters. FILE PHOTO: A general view as members of the U.S. Environmental Protection Agency (EPA) (not pictured) inspect the site of a train derailment of hazardous material in East Palestine, Ohio, U.S., February 16, 2023. REUTERS/Alan Freed

The AAR added that railroads' capital spending as a percentage of revenue was 18.4% from 2012-2021, six times that of an average U.S. manufacturer.

The 14 rail unions, which represent more than 100,000 freight rail workers, said on Friday the six publicly traded railroads spent over $165 billion in buying back stock since 2015, a number that is at least $46 billion more than what they have invested in safety.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.