Preparing for a Potential Strike

The prospect of a nationwide rail strike is already shaking up freight shipping

Sep 13, 2022

Welcome to the 14th edition of The Fifth Wheel with Bill Cassidy, an occasional look at a particular aspect of trucking or transportation that’s on my mind or in the news or just caught my eye. Something of a reporter’s notebook, something of a column. I’ll also post occasional insights and reflections on one of my favorite topics, transportation history.

The impact of a potential nationwide rail strike is already hitting shippers days before the Sept. 16 deadline for an agreement between the Class I railroads and their labor unions. It’s not the potential for a strike alone, but the railroads’ plans to halt operations ahead of the deadline that pose an immediate threat to freight flows.

My colleague Ari Ashe, senior editor for intermodal rail at The Journal of Commerce, has been all over this since the railroads announced they would start shutting down intermodal operations at midweek, or sooner, as talks continue behind the scenes between the railroads and labor to avoid a rail strike early this Friday.

Here’s his latest coverage from JOC.com:

Pressure building in Washington to avert rail strike (Tuesday, Sept. 13)
Talks continue as railroads plan to halt operations (Monday, Sept. 12, 2022)
US railroads to begin cutting service as deal with biggest unions remains elusive (Friday, Sept. 9, 2022)

Also, you should follow Ari on LinkedIn, where he’s posting updates between stories, and on Twitter. He posted earlier today on both sites that Norfolk Southern pushed back the deadline for intermodal loads before a shutdown to 12 pm Wednesday.

And don’t forget his Substack newsletter, “Please Haul My Freight.”

The uncertainty surrounding the potential strike is shaking up shipper plans for this fall. This is what the National Industrial Transportation League (NITL), a shipper organization founded in 1907, said in a letter to Congress Monday:

NITL members are being drastically affected by such uncertainty including having to plan and prepare for possible commodity embargoes now. This is particularly difficult for NITL members who ship a wide array of commodities for manufacturing, assembling, or processing ranging from chemicals to solvents, to pulp and paper, to grains and produce, to electronics and consumer goods, to building materials and industrial applications, to health care products and safety enhancement materials.

Mike Regan, chief relationship officer at TranzAct Technologies and a long-time member of NITL’s board of directors, says rail shippers are scrambling. “Shippers are moving to lock up assets,” he said. “We’ve been advising them, anything that can ship immediately, such as parts that are critical, get it out now if you can.”

As of Tuesday, neither DAT Freight & Analytics nor Truckstop.com had seen evidence of rapid spot market price increases that would signal freight shift from rail to truck — but it is still early in the week.

“I’m anticipating some inflationary pressure this week in the spot market on those high volume lanes where truckload competes with intermodal,” regardless whether the strike takes place or not, Dean Croke, principal analyst at DAT, told me Tuesday.

The truckload spot market has excess capacity, but it’s not clear how much rail freight — intermodal or railcar — it could absorb. Even after a steep spot market correction, “load volumes are still about 20 percent higher than they have historically been,” Brent Hutto, chief relationship officer at Truckstop.com, said Tuesday.

“Spot capacity may not be tight, but it isn’t exactly loose either,” he said.

And both Croke and Hutto said truckload contract capacity remains tight. “Contract rates are still flatlining,” Croke said. “New contract rates coming into routing guides are decreasing, but not anywhere near the level spot rates have decreased.”

Converting large amounts of intermodal or railcar freight to truck on short notice would be a messy business, indeed. And some freight won’t convert easily or at all. Shippers may decide to simply hold some shipments for now.

If you’re dealing with these issues, and can talk about them, let me know.

Appreciation: This week (Sept. 12-17) is Truck Driver Appreciation Week, an opportunity to recognize and thank truck drivers for all they do. Truck driving is a difficult and dangerous and largely unappreciated job, and always has been. These photos from the Library of Congress hark back to an earlier era, but the determination and sense of civic duty and service these drivers showed in the 1940s still runs deep in trucking, as we saw during the COVID-19 pandemic.

Drivers should feel more appreciated this year. According to the American Trucking Associations (ATA) latest driver compensation survey:

The median truckload driver earned more than $69,000 last year — an 18 percent increase from the previous survey.
More than 90 percent of truckload fleets raised pay in 2021, with the average increase hitting 10.9 percent.
Every less-than-truckload (LTL) fleet surveyed raised driver pay in 2021, with the median LTL truck driver wage hitting $73,000 a year.
The median salary for drivers at shipper-owned private fleets hit $85,000 a year.

Median of course means a mid-point, so some drivers make less than $69,000 a year, and some make more. But ATA’s figures represent progress.

So thanks to all truck drivers, this week and every week. But remember, drivers deserve more than thanks.

Here are some recent stories from myself and my colleagues at JOC.com:

US manufacturers producing higher truck volumes (Cassidy, Sept. 12)
MyCarrier rides growing LTL needs to new funding round (Johnson, Sept. 13)
US Xpress reorganizes, emphasizing contract business (Cassidy, Sept. 8)
US transport hiring rises, but not at warehouses (Cassidy, Sept. 2)

JOC INLAND: If you enjoy The Fifth Wheel, please attend the JOC Inland Distribution Conference from Sept. 26 to Sept. 28 at The Westin Chicago River North.

Any opinions in this blog represent the author’s views, not the Journal of Commerce, IHS Markit, or S&P Global.

Thanks for subscribing to this newsletter. For those that don’t know me, I’ve been the senior editor for trucking and domestic transportation at The Journal of Commerce and JOC.com since 2009. Before that, I spent 13 years as managing and executive editor at Traffic World, a weekly magazine once owned by the JOC. I got my start in this business with Fleet Owner, a monthly magazine then owned by McGraw-Hill.

I can be reached at bill.cassidy@ihsmarkit.com, on Twitter at @willbcassidy, and on LinkedIn.