Union Pacific, Illinois Agree on High-Speed Passenger Rail Plan

Bloomberg / Business Week

Union Pacific Corp., the biggest U.S. railroad, and the state of Illinois agreed to begin construction of the first U.S. high-speed passenger rail route created with economic-stimulus money.

The company was among freight railroads operating in the U.S. that balked at May guidance from the U.S. Federal Railroad Administration that spelled out relationships between them and operators of high-speed passenger service on their tracks.

“Today’s announcement will create hundreds of jobs and is a major step towards making high-speed rail a reality in Illinois,” Governor Pat Quinn, a Democrat, said today in an e- mailed statement. “When the corridor is completed, travelers will be able to move from Chicago to St. Louis in under four hours.”

The Chicago-St. Louis route received $1.1 billion from last year’s $787 billion economic-stimulus package to help create faster passenger rail service. Illinois is the home state of President Barack Obama and U.S. Transportation Secretary Ray LaHood.

Union Pacific Chief Executive Officer James Young said the May U.S. guidance led the Omaha, Nebraska-based railroad to “basically stop” the project on the Chicago-St. Louis line. Since then, Young and other railroad executives met with LaHood about their concerns.

Rail and Illinois concrete contractors are due to begin work in September.

Union Pacific Gains Steam With Shipping Record

Forbes

The nation's second largest railroad rides an intermodal shipment high, as railroads get boost from Buffett.

Union Pacific Railroad Corp., the second-largest railroad by revenue, chugged through the recession and set a new record for intermodal shipments in 2009. Intermodal is industry talk for freight that's moved by more than one transportation type -- over see, land and air.

"More and more customers are recognizing the value Union Pacific ( UNP - news - people ) brings to their businesses," said John Kaiser, Union Pacific vice president and general manager of its intermodal business.

Union Pacific said it made 1.25 million domestic intermodal shipments last year, besting its previous record of 1.2 million shipments in 2007.

In addition, for the second consecutive year, Union Pacific and UPS ( UPS - news - people ) achieved a "perfect peak season" by delivering 100% of UPS peak season freight without a sort failure. The UPS peak season runs from the Tuesday following Thanksgiving through Christmas Eve.

"It takes coordination, communication and excellent shipping software from the UPS and Union Pacific teams to achieve the level of performance we attained during the 2009 UPS peak season," Kaiser said.

Billionaire Warren Buffett, chairman of Berkshire Hathaway Inc.  ( BRK -  news  -  people ), divested the firm's equity stakes in Omaha, Neb.-based Union Pacific and rival Norfolk Southern Corp.  ( NSC -  news  -  people ) of Norfolk, Va. , as part of his $26 billion purchase of Fort Worth, Texas-based Burlington Northern Santa Fe Corp.

“We want Union Pacific to do well, too,” Buffett told Burlington Northern workers last month. “There’s going to be four big railroads that are moving around more and more goods. So it’s, it’s a good business.” The fourth is Jacksonville, Fla.-based CSX Corp.  ( CSX -  news  -  people ), which is scheduled to release its earnings Jan. 19.