The Effects of A Rail Strike On The Trucking Industry
Brace on for an impending rail strike!
While problems with the supply chain have become more common in the trucking business over the last several years, a rail strike in November would place significant pressure on goods delivered by truck.
Shares of the iShares Transportation Average ETF (IYT), which holds railroad companies including Union Pacific Corp. and CSX Corp., dipped on Wednesday, adding to the ETF’s almost 4% loss for the week.
About sixty thousand union members, including train operators and engineers, are planning to go on strike. Nearly 30 percent of the nation’s freight is moved by rail, so a strike by conductors and engineers would soon put the system to a halt.
Imbalanced Trucking Routes
Railroads remain an essential aspect of the American transportation sector, despite the fact that they no longer employ nearly as many people as they did in the past. Over 324,000 containers are transported each week by rail. Overselling and an imbalance in freight capacity would result directly from a train strike.
Trains are used to transport commodities from the ports to the major distribution centers. Trains are designed to transport bulk materials like grains, chemicals, and coal. You can fit the equivalent of three to five semi-trucks in a single rail car. As a result of a rail strike, an extra 200,000 tanker truckloads per week would be needed to transport chemicals.
The American Trucking Associations, another business group, warned in a letter to senators last week that they would need to be prepared to intercede if products supplied by train were to be transported by truck instead. It also said that a train breakdown would “cause chaos in the supply chain and add to inflationary pressures everywhere,” citing the trucking industry’s lack of 80,000 drivers.
Find Ways to Increase Trucking Capacity Immediately
Since many ports are already at capacity, the prospect of having to rely more heavily on trucks to make up for the decline in rail freight would be disastrous. Companies that depend on shipping should take all necessary measures to prepare for another big interruption, such as a possible rail strike. For this reason, many companies are turning to freight procurement automation.
Shippers are able to respond more swiftly to shifts in the freight industry because of automation technology’s improvement of inefficient transportation management operations. Now, whenever it’s most necessary, shippers may quickly and easily find available, compliant truckload capacity based on a shipper’s own assets. If contracted carriers start rejecting shipments or if spot prices start to skyrocket, automated systems may help shippers get access to extra capacity. AI finds the most cost-effective and reliable carriers based on the details of each shipment to make sure deliveries are made on time and at market rates.
Act by Making Data-Driven Determinations
Understanding how to adapt in the face of disruption requires a comprehensive picture of the supply chain. There are several data gaps in transportation management, according to logistics experts.
Some forward-thinking shippers have started to demand data openness from 3PLs. Shipping companies may better prepare for disruptions by knowing which carriers are likely to be overrun and which ones will help keep products moving if they have access to important facts about carriers, including cost, acceptance, and OTD percent history. With a potential train strike, it’s best to be proactive. If shippers have access to the correct information, they will be able to see patterns and have a leg up on the competition.
A rail strike, even if it lasts just a few days, could throw several major supply networks into chaos, and it may take weeks, if not longer, to restore things to normal.
Vineyard Brokerage: With you every mile of the way
When you need actual trucks and sensible answers, you can count on Vineyard Brokerage. Yes, we will assist you if another supplier fails to deliver your load. However, we are also the reliable logistics supplier you rely on day after day, load after load, to keep your company running smoothly. Because we are devoted to fostering long-lasting partnerships, our consumers continue to have faith in us. Vineyard brokerage is the way to go.