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Rail headcount levels in June reached a fresh low for 2020 as U.S. rail volumes were still recovering from the coronavirus-induced traffic declines from earlier in the spring.
The number of employees working for U.S. operations of Class I railroads in mid-June totaled 116,128, an 18% drop from June 2019 and a 2.3% decline from May 2020, according to data that the railroads submitted to the Surface Transportation Board (STB).
June’s total is the lowest not only for 2020 but also since January 2012, the earliest date for which FreightWaves has data. Headcount declines were across all employment categories: executives, office and staff assistants; professional and administrative; maintenance of way and structures; maintenance of equipment and stores; transportation (other than train and engine); and transpiration (train and engine).
Within June’s overall total, headcount for train and engine employees, a category that tends to be more sensitive to market demand for rail, was 42,536 workers, a 28.6% decline from June 2019 and a nearly 2.6% drop from May 2020.
Another category that experienced a steeper decline year-over-year was headcount for maintenance of equipment and stores. June’s headcount was 19,985, a 21.2% decline from June 2019 and a 6.1% decline from May. Employees within this category are responsible for supporting a railroad’s operations in the yard office and its mechanical shops, as well as other office locations.
Why headcount is down
The dwindling headcount comes as the Association of American Railroads reported earlier in July that freight loadings by the end of June improved by about 60,000 carloads and intermodal units weekly over where they were in late April. April is the time frame when numerous states imposed lockdowns to squelch the COVID-19 pandemic.
U.S. rail traffic for June totaled 1.8 million carloads and intermodal units, a 14.3% decline from June 2019. Carloads slipped 22.4% year-over-year while intermodal units were off by only 6.6%.
June’s headcount declines also come amid all-time-low railcar utilization rates — hovering around 50%, according to some estimates — and reports by the railroads themselves that they have parked locomotives and railcars amid the pandemic-induced downturn in rail volumes.
Reducing headcount has also been a means to reduce labor and operational costs, with some furloughed employees returning as capacity needs grow.
Rail manufacturer and lessor Greenbrier (NYSE: GBX), whose employee figures aren’t submitted to STB, said recently that it idled production capacity at sites across North America, including its flagship manufacturing facility in Portland, Oregon, amid poor market conditions brought about by the coronavirus pandemic and the recession. The company also eliminated a “wide range” of administrative positions in its business units and corporate departments so that it could continue operating. Overall, the company shed 1,600 employees in North America between April and June.
Meanwhile, Kansas City Southern (NYSE: KSU) said last Friday that it underwent precision scheduled railroading measures in the second quarter to cut costs amid lower rail volumes. The railroad expects some of those measures to be permanent. About 20%-25% of employees in Kansas City Southern’s U.S. operations are also on furlough, with mechanical staffing down by about 14% since last June, the railroad said Friday.
This article first appeared on s29755.pcdn.co
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