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In a surprise, UP shuts down Cold Connect reefer service

By Bill Stephens | May 10, 2020

Company had used service to pursue return of perishable business to rails

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Cold_Connect_Lassen
A Union Pacific Cold Connect refrigerator train hurries though Lombard, Ill., en route to its handoff to CSX Transportation in Chicago on March 18, 2018. UP will shut down the Cold Connect operation. (Trains: David Lassen)

OMAHA, Neb. — Union Pacific has pulled the plug on its innovative Cold Connect reefer service, which the railroad had touted as a way to return long-lost perishables business to the rails.

The service linked growers in California and the Pacific Northwest with consumers in the Northeast and New England via a mammoth refrigerated warehouse in Rotterdam, N.Y., located on CSX Transportation near Albany, N.Y.

Cold Connect, part of UP’s Loup Logistics subsidiary, will be shut down permanently after the last loads arrive and are distributed, UP said in a statement. Shippers and Cold Connect employees were notified on Friday.

“This decision was not made lightly,” UP said in a statement. “Since acquiring the Railex assets in 2017, employees diligently worked to grow volumes and create a platform for the future; however, with COVID-19 impacting volume and truck prices, it is no longer sustainable to continue operations.”

UP’s decision stunned independent analyst Anthony B. Hatch. “It greatly surprises me that a railroad with a sunk investment in the reefer supply chain would exit this line of business, which should be so vital (truly essential, no?) during this crisis and we think, like Canadian National, for example, offers such growth potential after the pandemic,” he says.

Before the railroad adopted its Precision Scheduled Railroading operating model in October 2018, UP had been considering expanding the Cold Connect network to include new warehouses in Arizona, Texas, Chicago, Atlanta, Florida, and Mexico.

In January 2020, Kenny Rocker, UP’s executive vice president of marketing and sales, noted that the railroad had gained market share in food and beverage shipments. And as recently as March, Chief Financial Officer Jennifer Hamann told investors that UP’s more consistent merchandise service allowed Cold Connect to better compete with trucks for temperature-controlled food and beverage service.

In January 2017, UP purchased Railex, the refrigerated food and beverage logistics provider that filled reefers for a decade. UP dubbed it Cold Connect and increased service to five days per week, up from three. The reefer trains rated high-priority Z-symbol status and departed Tuesday through Saturday from terminals in Delano, Calif., and Wallula, Wash.

The trains were combined in Wyoming, interchanged with CSX in Chicago, and unloaded at the Rotterdam terminal Sunday night through Thursday night, with trucks making final-mile delivery to cities across the Northeast and New England.

The traffic was shifted into the merchandise network last year, however, as UP blended unit-train traffic into manifest trains.

In a way, the reefer service was a blast from the past with a modern twist. The reefers often carried less-than-carload shipments for multiple customers, while UP provided shippers with real-time GPS-based tracking visibility on each pallet, whether it was on the train, a truck, or in the warehouse.

With door-to-door delivery in seven or eight days, depending on origin, the Cold Connect service was better suited for traditional reefer-car commodities such as hearty vegetables plus canned goods, cheese, wine, and beer.

But that had been changing. It takes a truck two days longer to make a coast-to-coast perishables run thanks to the 2017 electronic logbook requirement that enforces truckers’ hours of service rules. And that makes reefer-car service more competitive. “With the changes in the trucking market, we feel significant opportunity remains in the fresh produce markets,” Brad Thrasher, UP’s vice president of marketing and sales for agriculture products, said at the railroad’s 2018 Investor Day.

“This network is not only fast enough to open up opportunities to handle the more perishable products that don’t traditionally move by rail, but it also provides a faster and more reliable ride to our traditional customers that is attracting growth from them,” Thrasher said at the time.

Some of UP’s reefers are equipped with filters that can extend the shelf life of more perishable commodities such as fruit, which UP said would allow it to gain additional volume. And UP had been considering adding intermodal ramps at Wallula and other locations to expand the reach of Cold Connect.

The service also at one point enjoyed the rarest of commodities: Backhaul moves of hard cider, beer, and wine from Rotterdam to West Coast destinations. That made the round-trip economics more attractive than running empty miles back to the West Coast.

UP late last year took delivery of the first of 300 new refrigerated boxcars. They feature improvements such as hybrid refrigeration units, double-sealed doors, and customized air distribution pressure to better preserve food.

But despite the new cars, UP’s reefer fleet continues to shrink. The railroad’s industry-leading reefer fleet is down 23% over the past five years, according to the railroad’s annual reports.

25 thoughts on “In a surprise, UP shuts down Cold Connect reefer service

  1. Oops! It should be “was NOT making any money…With the virus they may also have lost a major customer (or two). The lockdowns are putting a lot of factories and companies out of business, and NYC was badly hit.

  2. Mister Dahlsten: Now there’s an interesting thought. A 20 foot container (1 TEU) with refrigeration unit operates on 480V 3ph 50/60Hz. They are designed this way so they can be powered while aboard ship, by the ship. Is this specification compatible with head end power (HEP)? If so, how difficult and expensive would it be to wire up a set of flats so they had HEP? Cheap reefers, anyone? … the usual disclaimer, but leave the reefers on the side table …

  3. You know ANNA, this may “shock” you, after all these years I don’t know if passenger HEP is 3-phase or single phase. Me of all people should know the answer to that but I don’t. Anyone ?????

  4. Mister Landey: It’s 480V 3ph 60Hz in the US. https://en.wikipedia.org/wiki/Head-end_power. Current might be an issue, but for longer trains one could insert remotely controlled power cars. Anyway, it would be a low-cost low-tech alternative to dedicated refrigerator cars, assuming UP would ever want the business back. I dunno about CSX, their erstwhile forwarding partner – I have no clue as to what their management is thinking. But if UP doesn’t want the business, perhaps BNSF might … as long as the produce gets to the other end in reasonably good shape at a competitive price, I don’t think the shipper will really care who the carrier is. But I could be wrong. Usual disclaimer, the jails are made of tin, and you can walk right out as soon as you are in.

  5. ANNA — Is it 480 vac delta or is it 480Y/277 vac ? (Or I could punk the Canadians by asking if they use 600Y/343 vac but likely not.)

  6. Why 20′ Refrigerated containers? Why not 53′ Refrigerated containers like they use in Canada, that are owned and run by both carriers(CN and CP)? Oh, that’s right, Canada has a two tier weight system for the road network, summer weights and winter weights.UP owns the warehouse in Rotterdam, NY as well under the Loup Logistics banner, what they should’ve considered is partnering with one of the nationwide Refrigerated OTR companies, so just talked to any OTR company about a strategic partnership. I’m sure even JB Hunt would’ve been interested.

  7. Funny. In the 1970’s, operating ratios were sky-high and the industry was hemorrhaging money. Deep service and infrastructure cuts were required to save the industry from total collapse.

  8. I think this is fallout from Amazon buying Whole Foods, not PSR. UP would be stupid to invest in a network to move food while a major customer (Whole Foods) is moving its shipments onto its own (Amazon) transportation network, which is already hauling freight in self-driving trucks. Walmart also has its own transportation network with 6,000 trucks.

  9. In the past, when Railex sent a train from Wallula to Rotterdam, it was 50 reefers per train. While some were the older type 57′, 1970’s era, converted to the newer truck type reefer units, most are the newer type larger capacity rail cars. Will their capacity fit in a 53 foot container? I don’t know California well. The refrigerated warehouses are at Wallula, rural Washington State. From Wallula, where do you lift containers at the numbers needed onto rail cars? If you are talking UP, Hinkle 35 miles away, a yard they just closed? Would they be willing to convert for the volume? The next choices would be the Dalles 150 miles west, Spokane 150 miles northeast or Portland 215 miles west? All are in the wrong direction from New York. You could argue that the business could go to BNSF in Pasco (former NP), about 25 miles away. Again would it warrant the capital cost to increase Pasco’s lift capacity? At about the same time Railex started, a different firm attempted to create a container reefer service on BNSF out of Quincy or Ephrata, WA. It was short lived and the firm sued BNSF for failing to actually providing timely delivery to eastern markets. I do not know the specifics of the case nor the merits of the argument. I just know it happened and the service died in its infancy. I fear that produce delivery from eastern Washington is no longer a railroad activity. Sad for the farmer and the railfan.

  10. Anna – In delta configuration, “if one phase gets knocked out you will still derive power, albeit at reduced capacity,…” Does this mean reduced voltage? You are above my pay grade here, but it sounds like I now know why the stator motors on amplidyne booster-inverters frequently burned out in Penn Central’s dying days when passenger cars were plugged into standby power of 220v 3-phase – One leg was dead. Am I following, or not? George

  11. Mister McFarlane: You can go 53 foot if you wish. This is a thought experiment, not a business proposal. And Mister Landey: From what I understand, delta. Yes, I know the difference. Once again, this is a quibble. We are kicking around ideas here, not generating engineering drawings.

  12. Mister Pins: You are, and if I remember the figure correctly from what I learned in A School, it is 57 percent of normal voltage. This might explain what you saw with Penn-Central, I couldn’t say. My experience with amplidynes was in the arena of servo systems and I will tell you that they don’t like it when they lose a phase.

  13. Per the Panama Canal Railway website they have Ten F40 Locomotives acquired from Amtrak. They are rated at 3250hp and have ‘head-end’ power, which allows PCRC to supply electricity not only to their passenger coaches but also to reefer containers on their intermodal trains.

  14. Does anyone know when the last train will be arriving at Rotterdam? How about the symbol CSX had used for these trains?

  15. When I lived in Omaha I’d sometimes catch the intermodal trail leaving CB IA. It usually carried quite a few 40′ K-Line reefers. I heard they were loaded with Blue Bunny ice cream bound for Japan & green hides for Chinese sneaker factories. Anyhooo…. there would be one container housing a generator with cables running to the loaded reefer boxes.

  16. Another example of short-sighted rail management. Killing a service which a UP Executive VP touted in January 2020 as something which enabled the railroad to gain market share in food and beverage shipments.. Abandoned new equipment bought in 2019, lose $$ by abandoning a business & property bought for millions in 2017, layoff hundreds of workers & help create a fresh food shortage in New York & New England States. No wonder Trains Magazine newswire reported today that UP traffic was down 22 %. 🙁

  17. Mister Erickson: Pretty much what I proposed. Mister Landey: Confirmed, it is delta, phase rotation is right handed. There is a technical specification . Section 4.2.1 calls for a 3 wire ungrounded system, so it cannot be a wye configuration which is four wire and involves a neutral (4.2.1). There is an 800 amp continuous rating per bus (4.2.2) but you can have two busses per car, (4.5). Phase rotation is right-handed as specified in Section 4.4. For those reading this who do not have a background in electrical engineering, three phase current involves three conductors, each carrying a sine wave, and 120 degrees apart from each other. There are two ways to hook it up. You can have a delta configuration, with the phases tied in a triangle, in which case there is no explicit neutral. This is done in mission-critical applications such as marine applications, where if one phase gets knocked out you will still derive power, albeit at reduced capacity, from the other two phases. Or, you can have a wye configuration where all the phases are tied together at one point, designated the neutral, and the phases look like the letter “Y”. However this requires a four wire distribution. Clever use of transformers and wiring allow conversion from wye to delta configuration. The sense of rotation is important as well. A right-handed rotation has the phases sequenced A-B-C, and if you look at the phasor (not phaser, this is not Star Trek) it will rotate clockwise. If you flip any two phases you will have a left-handed rotation and it will rotate counterclockwise. Three phase was developed by Nikolai Tesla and is important because it is the simplest system which can project a rotating magnetic field. Now if Kalmbach staff would fix their forum I wouldn’t have to make this so unreadable. The usual disclaimer, and remember always that alarm technicians do it with ball traps.

  18. You only need a neutral wire if you want to take a single phase off a star(wye) wired 3 phase supply. If running as 3 phase , the neutral cable is not required , or carries no current. Amtrak has 3 phase wires down one side looped at the rear of the train to come back up the other side. an extra wire has longer pins at the plugs , if that circuit breaks , it cuts the contactors on all the power wires.

  19. Hopelessly interesting. I’ve gone through these comments a few days later. Volume of business down low enough to require operating at losses, of course WHAT sort of losses are those? I once read there were 26 separate RR cost “systems”. What was happening to the total distribution “system” with Amazon taking over Whole Foods (groceries for rich snobs basically; I can’t justify the expense) and other things was caught by only a few. I now see VERY few reefers into Boston; got to look at “maps” to see where this place is/was in Rotterdam NY. Reminds me of LCL traffic that disappeared, milk, virtually everything in northern NE disappeared. This says nothing about having fewer trains available to both watch and serve the public which is why you have railroads. Re-regulation won’t solve the problem but only bleed the industry as it did 1887-1980 and probably beyond. Interestingly hopeless.

  20. Ok so how does the produce get from Calf and Wash State by truck ? this means more trucks on the road cause 1 railcar of produce equals 5 or so trucks , this is wasteful , I live in Rotterdam and in the beginning unit trains would arrive to the Railex facility with UP engines several times a week , they would get unloaded and run right back to the west coast as a unit train with 100 cars usually . Now since PSR was implemented they come in drips and drabs maybe 10 – 15 cars at a time , once unloaded they are set on the side in the local yard for a day or so until they are sent to Selkirk Yard to lash up with other freights going back west . This is wasteful the crews have to handle these cars 3-4 times before they leave for the west coast from Selkirk . The unit trains were more efficient back and fourth in one shot from the east coast to the west coast simply put.

  21. The worst thing UP. did was buy the Railex facilty in Rotterdam NY. should have left well enoff alone and let Railex run as a separate company , this way all the people might still be employed instead of getting let go , UNION PACIFIC you screwed up simply put!

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