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Employee headcount at US Class 1 operations tumbles 17% in May

Norfolk Southern, CSX among those furloughing or laying off employees

Two workers next to a Union Pacific train. (Photo: Jim Allen/FreightWaves)

Rail employment in the U.S. Class I operations fell below 120,000 workers in May, reaching a new low as the railroads trimmed their workforce levels to match the steep declines in rail volumes.

May’s overall headcount among the U.S.operations of the Class I railroads totaled 118,880, a 16.9% drop from May 2019 and a nearly 4.5% decline from April 2020, according to freight rail data submitted to the Surface Transportation Board (STB). The total is the lowest since at least January 2012, which is the earliest date that FreightWaves has data available.

Of May’s total, headcount levels within the train and engine crew category, which tends to be more sensitive to demand for freight rail service, totaled 43,660, a whopping 25.7% decrease from 60,256 in May 2019 and a 10.3% decline from April 2020.

Data from the U.S. Bureau of Labor Statistics also show the precipitous drop in rail headcount. The totals in the SONAR chart below reflect rail headcount for both freight and passenger rail.

U.S. rail headcount levels for passenger and freight rail over the past year. The data is from the U.S. Bureau of Labor Statistics. (SONAR)

The COVID-19 pandemic contributed to the headcount declines, with sheltering-in-place mandates in April and May slashing rail volumes as citizens stayed at home. As a result, the Class I railroads sought to scale down operations to match lower demand through actions such as implementing fewer train starts and temporarily shutting down facilities with lower traffic.

Although rail volumes appear to have started to recover in recent weeks, a number of the railroads are mulling over to what degree they resume rail operations, particularly for facilities where traffic might’ve been historically lighter or where there might be perceived inefficiencies.

Should the railroads decide to keep some aspect of their pared-down operations, it could alter headcount levels even further in 2020. Additionally, the pace of how the Class I railroads call back furloughed employees is also likely to affect headcount totals over the coming year.

The uncertainty of how much further freight rail headcount levels could fall comes as some railroads recently announced plans to reorganize their operations partly because of precision scheduled railroading and also because the drop in rail volumes accelerated plans to curtail operations at some locations.

For instance, CSX (NASDAQ: CSX) said last week that it was folding its safety and facilities groups into the operations group later this summer – concurrent with the retirement of the head of those groups.

The reorganization comes as CSX terminated 86 employees, each of whom has been offered a severance package and other support to help with their transition, according to the company.

“Last week CSX announced the realignment of responsibilities to better reflect our business needs and to be more productive and efficient. The changes followed a careful review of our management organization that considered what work we should be focused on and whether that work resides in the right place in the organization,” CSX said. “The synergies achieved through these realignments unfortunately resulted in the reduction of some management positions across the company.”

Meanwhile, Norfolk Southern (NYSE: NSC) also said last week it would furlough some employees as a result of idling the Bellevue (Ohio) hump yard and transitioning to flat switching there.

Norfolk Southern (NS) said the idling of the yard and the new focus on flat switching “will allow for greater efficiencies and customer service” as NS rolls out its strategic operations plans. The business disruptions from the COVID-19 pandemic also accelerated the need to compensate for lower car volumes, NS said.

(Click here for more FreightWaves articles by Joanna Marsh)

Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.