Union Pacific CEO Fritz Talks NAFTA In New Orleans
Union Pacific Railroad chairman, president and CEO Lance M. Fritz manages $19.9 billion in operating revenue, $7.2 billion in operating income, 51,500 total track miles, 6,512 total locomotives, 34,833 total freight cars and 42,919 employees, according to the railroad’s most recent investor information.
The principal operating company of Union Pacific Corporation (NYSE: UNP), Union Pacific Railroad is one of America’s most recognized companies. By connecting 23 states by rail in the western two-thirds of the country, the railroad provides a critical link in the global supply chain.
In Louisiana, the railroad serves three ports in Lake Charles, Baton Rouge and New Orleans. Union Pacific uses the Huey P. Long Bridge to cross the Mississippi River at New Orleans, operates an intermodal facility in Westwego, has freight classification yards in Alexandria and Avondale, a major classification yard in Livonia and rail yards in Shreveport and Monroe.
Recent statistics show the top commodities shipped and received through Louisiana’s ports are industrial chemicals, plastics, intermodal-wholesale, petroleum products, paper, coal and assembled cars.
Tonight, Thursday, March 1, CEO Fritz will be the keynote speaker at the Union Pacific CEO Briefing at the World Trade Center New Orleans, 1350 Port of New Orleans Pl., from 5:30 p.m. – 7:30 p.m., and share his perspective about the current NAFTA negotiations and the importance of international trade.
Fritz gave Biz a preview:
Leslie Snadowsky: Regarding the future of NAFTA, how will New Orleans be affected positively or negatively?
Lance M. Fritz: There is a lot of growth in the New Orleans area that depends on international trade. Case in point is the Port of New Orleans, which is building a second container terminal to grow cargo volumes and increase economic impact statewide. Growth and jobs for Louisiana and America increasingly depend on expanding U.S. trade. NAFTA plays a significant role in this.
LS: What are the biggest pros of NAFTA succeeding and the biggest cons if it fails?
LF: With roughly 40 percent of Union Pacific’s business originating or terminating outside the United States, we are very familiar with NAFTA. Under NAFTA, trade with Canada and Mexico rose nearly fourfold to $1.1 trillion in 2016. Those countries now combine to buy more than one third of all U.S. merchandise exports. Trade with Canada and Mexico supports nearly 14 million jobs, with nearly 5 million of these jobs supported by NAFTA.
Exiting NAFTA would mean increasing tariffs, which would increase costs for consumers and businesses. About 60 percent of U.S. imports are intermediate goods for U.S. production, so raising costs through what will be functionally higher taxes on production would make U.S. businesses less competitive — thwarting tax reform’s goal of allowing people and businesses to invest their money as they see fit.
LS: If you could create your own version of NAFTA, what would it include?
LF: NAFTA does need to be updated. It should include strengthened provisions on the environment and labor, as well as address e-commerce and cross-border data flows. It should include a negotiation clause instead of a sunset clause to help businesses have more certainty for long-term planning and investments, and we need to focus on mending the dispute-settlement process.
LS: Why is New Orleans such an important port city for Union Pacific?
LF: Since its inception, New Orleans has been a critical port city for the United States, providing access inland via the Mississippi River and globally via the Gulf. Union Pacific’s infrastructure provides our customers with access to this important city. New Orleans is one of the few gateways where all six Class 1 railroads come together, interchanging our customers’ freight as we deliver the goods and materials American families and businesses use daily.
LS: It seems you’re optimistic about the current state of the economy and the recent tax reform law. How do you plan to grow Union Pacific in the next five years, and do any plans involve New Orleans or Louisiana?
LF: Union Pacific invested nearly $800 million in our Louisiana infrastructure since 2012. Louisiana is experiencing a petrochemical industry renaissance, with billions of dollars being committed in oil refining and plastics production in the Gulf. We will continue to stay close with our customers as we work to understand and support their freight transportation needs. For example, a large wood pellet company recently decided to relocate its headquarters to Louisiana, due in part to its new access to the Mississippi River by way of the Port of Baton Rouge, so it can more easily ship its product to the global marketplace. Access to the port was made possible by our rail infrastructure.