Railroad transportation professionals have encountered a myriad of newsworthy obstacles in recent years. The Covid-19 pandemic, extreme port congestion, labor pool shortages, striking workers, aging infrastructure, and hazardous train derailments to name a few. The logistics industry is heavily dependent on railroad transportation, but forward-thinking professionals look for rail transportation alternatives in their contingency planning.
Railroad Concerns and Service Disruptions
- Labor: Labor concerns rank high on the list of transportation industry concerns and the threat of a railroad strike made national headlines. While fortunately averting the railroad strike, the industry is still navigating a labor shortage. According to Union Pacific, who represents one of the four (4) largest railroads, the company has successfully managed their labor pool in order to avoid service disruptions. “Over the past year, Union Pacific accelerated our hiring efforts and we have reached our goal of hiring 1,400 employees, of which nearly 1,000 have been trained,” the organization said in a statement published by CNN. (Isidore)
- Derailments: According to the Federal Railroad Administration, there were over 500 train derailments in the US in 2022. While many of these were minor, a few achieved national headlines such as the derailment in East Palestine, OH in early 2023. Even minor derailments are an inconvenience and result in delays and possible damage to products. Derailments may be caused by human error, weather related incidents, mechanical error, and sometimes aging infrastructure. Typically, derailments only impact a single rail line and alternative rail transport routes may be available.
- Aging Infrastructure: The need to address aging infrastructure, including railway infrastructure, led to the $1.2 trillion bipartisan Infrastructure bill passed in late 2021. Construction on aging infrastructure takes time to plan and alternatives must be coordinated. Construction and maintenance of infrastructure will impact both trucking and rail and are an important factor when considering alternative transportation and delivery routes.
It is important to note that these concerns are being addressed and showing signs of improvement. However, contingency planning is more important than ever. Industries that depend on railroad transportation should be prepared with a contingency plan which includes transportation alternatives.
What industries would be affected by a major railroad disruption?
Numerous industries would be affected by railroad disruptions. Industries that would feel the greatest effects of a potential disruption are:
- Chemicals, including transportation of chlorine for water treatment plants, components for plastic manufacturing, sulfur, and carbon dioxide.
- Commuters / Passenger Rail, both long and short distance passengers.
- Food industry, 30 percent of the nation’s packaged foods. (Funk)
- Agriculture, transporting corn, soybeans, and other commodities. “Our members rely on about 27 million bushels of corn and 11 million bushels of soybean meal every week to feed their chickens. Much of that is moved by rail,” said Tom Super, a spokesman for the National Chicken Council. (Funk)
- Retail transports online orders through shippers such as UPS and FedEx.
- Automobile industry, which transports 75 percent of new autos from the manufacturer are shipped via rail, which equates to approximately 2,000 carloads a day. (Funk)
- Energy industry transports 3.4 million carloads of coal and 60-70 percent of all ethanol movement. (“Freight Rail & the Energy Industry”)
For the nation’s economy to continue to grow and develop, rail transportation alternatives are an essential component of contingency planning. The NACD recently came out in support of efforts to improve the Railway Safety Act.
The Importance of having transportation contingency plans
In the event of a disruption in one or more rail lines, having transportation alternatives diminishes unwanted impacts, including financial losses and irate customers. A readily implemented contingency plan minimizes disruptions, enables companies to service customers, and provides a competitive advantage.
How would an interruption in rail service impact the trucking industry?
Over time, the number of enterprises which rely on freight transport has grown. Which means the supply chain’s reliance on railway and trucking has also grown. Trucking, while not as cost effective as railroads for transporting large quantities, is the primary alternative when rail service is disrupted. During large scale disruptions to rail transportation, companies seeking alternative transportation options need to be prepared for the following sudden impacts to the trucking industry:
- Demand for larger truck and trailer capacity
- Skyrocketing trucking demand along alternate routes
- Increased drive and labor demands
- Increased congestion
While demand for drivers and trucking would increase quickly in the event of a major rail disruption with advanced preparation, the industry will be ready. With equipment and infrastructure already in place, it’s the best transportation alternative to the nation’s railways.
How trucking can fill in during railroad disruptions
Trucking alone would not replace all of the demand which would result from a major rail disruption. However, it is currently the most viable transportation alternative for corporations and the supply chain. Therefore, those who prepare in advance will be ready and ahead of the competition.
How should industry prepare for a rail disruption? Be proactive and develop a contingency plan that includes rail transportation alternatives and develop a relationship with a reliable equipment provider. Start by communicating with Penn Intermodal Leasing and learn about the equipment leasing solutions we provide to keep your bulk liquid freight moving.
Sources:
- Cannon, Jason. “Not enough trucks to mitigate effects of rail strike.” Commercial Carrier Journal, 9 September 2022, . Accessed 11 May 2023.
- “Freight Rail & the Energy Industry.” Association of American Railroads, . Accessed 11 May 2023.
- Funk, JOSH. “A rail strike looms and impact on US economy could be broad.” AP News, 22 November 2022,. Accessed 9 May 2023.
- Isidore, Chris. “Freight railroad service is terrible, even without the threat of a strike.” CNN, 11 December 2022,. Accessed 9 May 2023.
