Rail employment headcount in October among the U.S. operations of the Class I railroads fell to its second lowest level in 2020, according to the latest data from the Surface Transportation Board.
U.S. Class I railroads employed 116,804 workers in October, which is 13.2% lower from October 2019 and 1.1% lower than September.
The declines come amid the deployment of precision scheduled railroading (PSR), an operating model that seeks to streamline rail operations, among almost all of the Class I railroads. The headcount decrease also occurred despite a 2% increase in U.S. rail traffic in October. Intermodal volumes rose 10% but carloads were down 6.6%, according to data from the Association of American Railroads (AAR).
The lowest total occurred in June, when headcount was 116,128. June’s total, which reflected the pandemic-related volume downturn, was also the lowest overall total since at least January 2012. January 2012 is the earliest data FreightWaves has available.
Meanwhile, the October headcount total among train and engine (T&E) employees was 46,749, which is 15.6% lower than October 2019 and 0.6% lower than September. Four months had lower T&E totals in 2020: May, June, July and August.
Headcount totals for T&E staffing typically reflect market conditions, with T&E headcount rising and falling on network capacity needs. But the railroads have also been deploying PSR, which seeks to streamline operations and costs.
As the railroads head into the holiday season, they are being mindful of how to manage their headcount volumes, especially since staffing totals tend to be lighter after the holidays and the COVID-19 pandemic is still creating some volume uncertainty.
“We are being very judicious in terms of how we’re bringing employees back on to the payroll,” said Union Pacific (NYSE: UNP) Chief Financial Officer Jennifer Hamann at the Stephens investor conference last week. “You are seeing us have a little bit higher cost per crew because … it’s better for us at this point in time to run a little extra over time, get a little bit more in terms of arbitraries versus actually adding that headcount back, especially as we’re going into the holiday season, when we know our volumes will fluctuate.”
Hamann continued, “We don’t want to be in a position where we’re bringing some people in off furlough and then have to turn around and furlough them again as we get into a seasonally lighter period of volume because once we bring that person off of furlough, we’re now going to be paying benefits for them for four months. And that’s not fair to them from a lifestyle perspective either, quite frankly. So we’re being very careful there.”