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11/22/2022

Commentary: What to expect as risk of rail freight strike increases

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Spencer Shute
Spencer Shute

The impacts of the strike remain unchanged, with the likelihood of a strike occurring and the pressure on Congress to intervene have both increased. As a unified strike among the unions rejecting the deal appears to be an imminent threat, shippers are already working on contingency places to shift volume to avoid getting cargo stuck in the process.

The truckload market has been slowing down and the truck-to-load ratio is at its lowest point since the pandemic began, making the initial diversion of freight fairly easy to navigate. However, the current truckload market and demand on fuel cannot offset the volume that moves through the rail network on a daily basis. 

Shippers who act quickly will be able to avoid massive cost increase and limit disruption. Should a full-strike go into effect, the U.S. economy could be severely impacted right as we hit the holiday season and as we go into 2023.

Should a full-strike go into effect, the U.S. economy could be severely impacted right as we hit the holiday season and as we go into 2023.

Businesses are going to see rates increase quickly and capacity drop significantly. Automotive, fertilizer and food (primarily dry goods) companies move a significant portion of their volume via rail. Any strike could result in shutting down “The impacts of the strike remain unchanged, the likelihood of a strike occurring and the pressure on Congress to intervene have both increased. As a unified strike among the unions rejecting the deal appears to be an imminent threat, shippers are already working on contingency places to shift volume to avoid getting cargo stuck in the process.

The truckload market has been slowing down and the truck-to-load ratio is at its lowest point since the pandemic began, making the initial diversion of freight fairly easy to navigate. However, the current truckload market and demand on fuel cannot offset the volume that moves through the rail network on a daily basis.

Shippers who act quickly will be able to avoid massive cost increase and limit disruption. Should a full-strike go into effect, the US economy could be severely impacted right as we hit the holiday season and as we go into 2023.

Businesses are going to see rates increase quickly and capacity drop significantly. Automotive, fertilizer and food (primarily dry goods) companies move a significant portion of their volume via rail. Any strike could result in shutting down about 30% of the U.S. freight movement.

Spencer Shute is senior consultant at procurement and supply chain consultancy Proxima.

[Read More: CSA Q&A: Railroad strike could shut down 30% of freight movement]