Hundreds of locomotives are sitting idle in Southern Arizona β a stark illustration of the impact of the energy marketβs recession on the railroad industry.
Nationwide, about 1,400 Union Pacific locomotives β more than 16 percent of the companyβs fleet β are parked in various staging areas off the main line.
βThe 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,β 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.
βThey just all of a sudden appeared and theyβre still there,β said George Scott, executive director of the Southeast Arizona Economic Development Group. βWe hope business gets better soon.β
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.
βThe 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,β 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.
βCommodity cycles have been with us forever,β Weinstein said. βIf Chinaβs economic growth picks up and if India liberalizes its economy, prices will improve. Thatβs the world of economics β there are many variables.β
Union Pacific officials are keeping an optimistic outlook.
βWeβre waiting for demand to meet supply,β said Justin Jacobs, a spokesman for the railroadβs Arizona region. βThe big thing to note is that we are ready to support our customers β¦ and available.β