A positive economic environment continues to present growth opportunities for surface transportation companies, despite overhanging trade-related uncertainties.
One of the biggest changes as we enter 2019 is ratification of the United States-Mexico-Canada Agreement (USMCA), which maintains strong trilateral partnerships. The trade agreement is a critical development for integrated supply chains and transportation companies, including Union Pacific. We move 70 percent of US rail shipments across all six gateways to Mexico and have a first-hand view of the three countries’ interdependency. The USMCA renews confidence in strong cross-border trade that keeps trains and trucks moving.
The US-China trade dispute poses a continued risk, making it increasingly difficult to do business in a competitive global marketplace. American farmers whose soybeans were destined for China illustrate how tariffs can cripple profitable markets and alter trade flows. We urge officials to have productive discussions without penalizing businesses in both countries.
Trains and trucks continue moving products as consumer and industry confidence remains strong. Increased demand and near record-low unemployment make it difficult to keep up with new business. The driver shortage and electronic logging device (ELD) reporting will likely result in continued tight truck capacity. Railroads are well-positioned to convert truck loads onto trains, potentially increasing domestic intermodal shipments by rail.
Maximizing resources and operating efficiencies can help alleviate increased demand pressures. In 2019, Union Pacific will continue implementing Unified Plan 2020 to provide customers with safe, reliable and efficient service. We’ve seen increased employee productivity in rail terminals, as well as a 10 percent terminal fluidity improvement since implementation began in October. Union Pacific is working with customers as we streamline our network, helping us open capacity and new opportunities.