Hundreds of locomotives are sitting idle in Southern Arizona — a stark illustration of the impact of the energy market’s recession on the railroad industry.
Nationwide, about 1,400 Union Pacific locomotives — more than 16 percent of the company’s fleet — are parked in various staging areas off the main line.
“The combination of an energy market recession, low commodity prices, the strength of the U.S. dollar and generally soft global economy, as well as muted U.S. retail demand, have all contributed to overall market weakness across many of our business lines,” said Tom Lange, assistant vice president of corporate communications for Union Pacific.
Locally, the locomotives are parked near Interstate 10 and Marsh Station Road, near Benson. They began showing up about two months ago.
“They just all of a sudden appeared and they’re still there,” said George Scott, executive director of the Southeast Arizona Economic Development Group. “We hope business gets better soon.”
Energy economist Bernard Weinstein said the combination of low oil prices and the decline in coal use has had the biggest impact on the railroad industry.
“The energy business has very strong linkages to other sectors of the economy, and transportation is one of them because we have to move things around,” said Weinstein, associate director of the Maguire Energy Institute at the Cox School of Business at Southern Methodist University in Dallas.
In addition to the stagnation in the commodities industries, the strong dollar makes our exports more expensive at a time when the global economy has not fully recovered.
“Commodity cycles have been with us forever,” Weinstein said. “If China’s economic growth picks up and if India liberalizes its economy, prices will improve. That’s the world of economics — there are many variables.”
Union Pacific officials are keeping an optimistic outlook.
“We’re waiting for demand to meet supply,” said Justin Jacobs, a spokesman for the railroad’s Arizona region. “The big thing to note is that we are ready to support our customers … and available.”