Rail employment drops again in December

Written by David C. Lester, Managing Editor
railroad workers

FreightWaves is reporting that Class 1 rail employment in December 2019, 131,486 workers, was the lowest number since January 2012. This data was provided by the Surface Transportation Board. These numbers represent a drop of 11 percent compared to December 2018, and a drop of 1.3 percent compared to November 2019.

Mike Upchurch, chief financial officer at Kansas City Southern, said “Our lower headcount and work hours (in the fourth quarter) are the result of train consolidations, reducing crew starts, hours worked, overtime recrews and deadheads, along with mechanical reductions due to a smaller fleet and some optimization of certain G&A (general and administrative) functions.”

Some are concerned that, if rail traffic grows faster than the industry expects (such as during 2014-2015 where crew levels were so low that loaded trains were left sitting on the mainline because crew hours had expired), there will be a shortage of crews and personnel to run the railroad.

Transportation analyst Bascome Majors, with the Susquehanna Financial Group, said that “Headcount reductions in a down volume environment have helped hold profits relatively steady by increasing margins against down revenues, but also carry the risk of coming up short on the people side of the capacity equation when volume growth inevitably returns.”

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