Railway strike averted, but shippers remain concerned

Shippers across the country are breathing a sigh of relief as rail companies and union negotiators came to a tentative agreement to avoid a strike early this morning. After 20 consecutive hours of negotiations that stretched into the early hours, little was certain around what the results might have been. One thing that was certain however was the impact that such a strike would have on the supply chain and economy. One that would have cost as much as $2 billion a day.

Depending on how you measure it, railroads are responsible for moving between 28 and 43% of all freight in the country — a volume that will fall on trucks to pick up. In order to handle that volume, the Association of American Railroads (AAR) reports that it would take 467,000 long-haul trucks, daily, to haul what the railroads do. But with the trucking industry already managing increased volume while operating at a deficit of around 80,000 available drivers, “there simply aren’t enough trucks or truck drivers to handle that volume,” the AAR said in their report.

All week businesses have been scrambling to obtain adequate capacity in case of a strike, with some rail services preemptively suspended ahead of the strike putting further strain on the market. Should the rail network have shut down tomorrow, competition in the market would have been fierce. And if the timeline were simply pushed back? That could only push a potential strike deeper into the holiday season when the supply chain is already under added pressure.

“Merely delaying a possible strike through congressional action will simply exacerbate the concerns of consumers and industry,” said ATA President and CEO Chris Spear in a letter to congress. “A possible strike or lockout in October or November is arguably worse than one next week — although any disruption will cost the nation billions of dollars of lost productivity.” 

The fact that these situations were avoided is an incredible relief, and a great victory for the workers who will be seeing a 24% wage increase, improved working conditions and other hard earned improvements. However, after the impacts of COVID-19, crippling ransomware attacks, the war in Ukraine and now only narrowly averting a total rail shutdown, it also opened the eyes of many in the industry to the absolute necessity of having plans in place to prepare for an environment of increased large-scale disruptions such as this.

So what can shippers do to prepare? With so much uncertainty, the strongest recommendation is to understand the risks in your own supply chain, and be flexible with your options. While delivering on time is usually a top priority for trucking, in cases of a rail strike, both shippers and their customers need to be prepared. 

“Shipwell has had a lot of activity from customers looking for advice on navigating the potential strike, especially those needing to switch from intermodal to full truckload shipments,” said Shipwell’s VP of Logistics, Chris Preboth. “It's never an easy thing to consider having to change your strategy at the last minute, but when shippers have the right data, tools and options backing up their decisions it can have a huge impact on how successfully they're able to navigate situations like this.”

Even outside of a rail strike, every supply chain comes with risks — understanding them is key to keeping them running. Steps to better understand your own could include leveraging advanced analytics with built-in artificial intelligence and machine learning for improved predictive abilities. By pairing these tools with a digital twin of your supply chain, leaders can explore various “what-if” scenarios to determine risks and potential impact in order to develop solutions well in advance of any disruption.

To increase flexibility, shippers should consider extending their capacity network to include more options from multiple modes and carriers, especially as they look for ways to shift from intermodal to full truckload (FTL) shipments. In this way they can help to avoid or at least limit disruptions caused by carrier capacity shortages. Pairing this with end-to-end visibility and advanced analytics brings additional load optimization opportunities to increase efficiency through automated guidance on consolidation, efficient routing and more, reducing the number of both trucks and road miles needed to move shipments to their destination.

No matter what tomorrow brings, it always pays to be prepared, and Shipwell can help. For more information on how our technology can keep your shipments moving, schedule a demo today.