The Journal of Commerce (JOC) reports that rail giant BSNF’s on time performance was up from only an estimated near 60% to a much improved 77% this last quarter. Union Pacific stated at the JOC Intermodal Distribution Conference in September that their long term goal was 80-85%. While those would be improvements for both carriers, 85% on time performance is the benchmark that intermodal companies have cited as the bare minimum to sell rail services to shippers – a benchmark that neither carrier currently meets.
Reports from LA/LB, STL, and other ports are showing that rail congestion is easing, but we’re not seeing improvement on container movement times.
Analysts say that equipment availability is one of the biggest issues in resolving congestion, and they also say that coupled with the volume of cargo, it’s slowing container turnaround times, completely discounting that rail carriers have failed to step up to meet demand. It’s not only an equipment issue, it’s a labor issue, it’s an infrastructure issue, it’s a failure to act as a keeper of public trust as a utility when they’ve failed in equipment upkeep, failed in staffing, and failed to strategize to meet the needs of the American people.
Threats of a strike in September had rail execs, among others, speaking about how the strike would impact the American economy and could possibly cost upwards of $2 billion dollars a day. To be sure, if a strike of their workers could cripple our economy, they are no longer a private business beholden only to profits, but in essence, a public utility. Especially since a federal judge must give approval for the workers to strike.
The possibility of a rail strike once again looms dark on the horizon. Union President Tony Cardwell had this to say: “Railroaders are discouraged and upset with working conditions and compensation and hold their employer in low regard. Railroaders do not feel valued. They resent the fact that management holds no regard for their quality of life, illustrated by their stubborn reluctance to provide a higher quantity of paid time off, especially for sickness.”
Some of the hardest hit areas would be perishables/food and energy. A whopping 70% of US produced ethanol is moved by rail. That’s 10% of gas. Pete Meyer, head of grains and oilseeds analytics for S&P Global Commodity Insights, said, “A rail strike would pose a large impediment to the movement of both grain and required fertilizers for fall applications, after harvest.” The cherry on this sundae is that in reaction to the situation, the Fed is likely to raise interest rates yet again sending inflation even higher.
RS Express will continue to monitor the situation and report developments as they affect our customers. In these uncertain times, one thing you can be certain of is that RS Express will continue to strategize and plan around these supply chain challenges to keep your cargo moving and keep your service promises. Reach out to us today to learn more.