Rhonda Ferguson, CLO of Union Pacific, discusses her legal team’s role in a highly regulated industry facing significant technological change.
CCBJ: The railroad industry seems to be going strong right now, in no small part due to a capacity crunch. Tell us a bit about the business factors that are driving UP’s performance this year, including the capacity shortage and strong rates.
Rhonda Fergus: Rail shipments increased 3 percent year-to-date as certain commodities grew including intermodal, sand, industrial chemicals, forest products, metals, grain and petroleum products. As underlying markets created growth opportunities, truck capacity constraints converted truckloads to rail, resulting in marketplace value pricing opportunities.
UP and other freight carriers also face significant headwinds, including sluggish auto production, uncertainty over NAFTA, coal’s continuing disfavored status, and the impact of disruptors such as Uber Freight, Convoy, Tesla and the ubiquitous Amazon. How is UP dealing with these challenges and what does that mean for the law team?
We closely monitor macro-economic, policy and technology challenges. Union Pacific’s diverse business mix allows positive growth markets to outweigh challenges in other markets. Innovation is a core Union Pacific business function, and we continuously explore technology opportunities, requiring Union Pacific’s legal team to be nimble, adaptive and creative.
Freight transportation, a key link in global supply chains, is a highly regulated sector. Experts say to realize the full benefits of new technologies, where railroads have lagged somewhat, a paradigm shift in regulation must occur that includes modernization of regulatory processes. Tell us about the regulatory environment and where you think it needs to go.
Union Pacific works closely with regulators including the Federal Railroad Administration and the Surface Transportation Board. We encourage balanced approaches to valid regulatory goals, minimizing market disruptions and efficiency decreases, encouraging reinvestment and decentralizing implementation. Exploring performance-based rail safety standards can achieve more effective solutions than command-and-control regulation. It is important for agencies to evaluate the cumulative effects of new regulations against the backdrop of the overall regulatory landscape before acting. Considering performance standards and cumulative impacts during the regulation proposal process would modernize the regulatory arena for the 21st century.
One industry observer predicted that 2018 would be a watershed year for technological advancement by the industry as it embraces the Internet of Things, cloud computing, and Big Data analytics more than before. In addition, comprehensive software systems – Transport Management Systems – seem to hold great promise for increased efficiency in operations. What impact is this having on your department?
Union Pacific’s legal department leverages technology to improve productivity and efficiencies. We depend on technologic exponential power through e-discovery tools, electronic contract signature processes, online training tools, and data analytics in outside counsel selection and spending. Our team cannot ignore powerful technologies transforming law practice. We also anticipate and prepare to address complex issues as rail transportation technology solutions are developed.
Rhonda Ferguson is executive vice president, chief legal officer and corporate secretary at Union Pacific. In this role, she oversees all aspects of the company’s legal affairs including commercial transactions and litigation, regulatory matters, labor and employment. Ferguson also leads the company’s compliance and ethics program, and risk management initiatives.
Published September 7, 2018.