Well, I’m mostly a trucking guy, and since Reconex doesn’t move a ton of coal around (ask Santa), I can only offer a limited viewpoint.
My guess? There won’t be a strike. While the odds have risen since election season is over, no one wins in this potential strike, so congress will likely force a settlement — or, at minimum, kick the can much further down the road.
But if it does happen, a rail strike would suck.
How’s that for analysis?
More and more “trucks” move on the rail, and it’s easy to understand why — it’s far less costly to move freight over long distances on the rail vs. over the road, especially with every facet of trucking costs rising dramatically recently. Yes — LTL moves over the rail too.
Below is an interesting graphic showing the ton-mile share of freight across air, pipeline, rail, truck, and water. It’s hard to see the details, but you can see rail gaining share over the years quite easily — from around 20% to 30%.
So a strike would do a few things in very simple terms:
- Strand an enormous amount of freight already on the rails
- Drive truckload rates up and tighten capacity
- Raise costs on everything since so much “base” stock moves via rail
What is the impact on you specifically? More shipments will be late, truckloads will be harder to cover, and the rates will be higher when they are covered. Fortunately, we are in a situation currently where capacity is very loose, and rates have dropped dramatically from the peaks early in 2022 (charts below).
Right now, I expect some pressure on rates and capacity as some hedge their bets by moving some freight from rail to truck.
