In 2022, railroad workers threatened a nationwide strike to protest low wages, lack of paid leave and other unfair labor conditions. While the strike was deterred, it caused many businesses to weigh the effects a strike could have on the nation's supply chain. What would happen if a railroad strike actually occurred? Many industries and businesses would be impacted, including the trucking industry.
Understanding the potential impact of a rail strike will help your business prepare.
Railroad cargo transportation and the trucking industry are connected through intermodal freight. Intermodal transportation services involve transporting goods using multiple transportation methods. Railcars are used to ship large loads of cargo, especially over long distances. Once a shipment arrives at a train ramp, drayage trucks take over and transport the shipment the rest of the way to a warehouse or the next leg of the cargo's journey.
For example, drayage companies with specialized trucks take a shipment to the train ramp, where it's loaded on a freight train and transported long distances. After the long haul, another drayage trucker takes the shipment from the ramp to its final destination.
Drayage shipping is a type of trucking that only involves transporting shipments short distances. Drayage companies rely on railroads to handle long-distance shipments. Drayage trucks finish the delivery.
A railroad strike would have a significant impact on various parts of the trucking industry. If your business relies on intermodal transportation, you should be prepared for these potential effects.
One of the biggest impacts of a railroad strike would be an increased reliance and demand on the trucking industry. As one of the only other ways to transport large amounts of cargo over land, trucking is the obvious alternative to train transportation. Especially for long-hauling, trucking is typically used for intermodal rail transport and drayage shipping. In other words, truck drivers transport freight containers shorter distances from the train to a warehouse.
If a railroad strike occurs, the demand for long-haul trucking as a replacement would increase significantly. Rather than shipping large shipments across the country via train, the shipments would need to be transported via truck. The current trucking industry would be incapable of withstanding the increased demand. The increased need for trucking would require hundreds of thousands more truckers in an industry already suffering from a labor shortage.
The lack of truck drivers would make it impossible to meet an increased reliance on trucking. Intermodal carriers would struggle to find more drivers to compensate for shipment overloads, likely leading to overworked existing truck drivers. Additionally, trucking companies would need to increase operations and personnel, thus increasing operational costs — something many intermodal shipping companies would be unprepared for.
Another factor to consider regarding the increased demand for trucking is the consequential increased demand for fuel. Cargo trucks are relatively inefficient regarding fuel consumption, especially when compared to freight trains. If cargo transportation suddenly shifted to trucking, fuel demand would be significantly impacted, likely driving up fuel costs and creating a shortage. Additionally, increased truck use would increase the amount of greenhouse gas emissions being produced. A higher reliance on trucking creates numerous supply and demand issues.
In addition to the need to meet increased demand, the trucking industry would also be tasked with transporting significantly more products. This creates various issues, as trucks can't carry as much as freight trains can. A single railroad car can carry the capacity of several semi-trucks and is designed to transport goods like grain or chemicals more effectively than a truck. If railroad workers went on strike, drayage freight truckers would lack the necessary equipment to handle the supply capacity of a freight train.
With less space to transport goods via trucks, it would take longer to move the same amount of product. Fewer goods being transported leads to two issues — port congestion and empty store shelves. Since trucks cannot transport the same amount of product, there would be a lot more cargo sitting at ports and intermediaries as trucks try to keep up. The backup would significantly strain ports and the supply chain as a whole. Shipments sitting at ports mean more delays, which translates to fewer products on store shelves.
While trucking companies will immediately feel the effects of a railroad strike and be deeply affected, all kinds of businesses will suffer from the inevitable delays and lower product supply. Many retailers have a few days' worth of supplies on their shelves, which means shelves will go empty while stores wait for shipments that are delayed at a port. With product shortages and increased demand, businesses will be forced to increase prices on the products they do have.
Some cargo, like chemicals, are mostly transported via train because it's safer to transport hazardous chemicals in a railcar than a truck. Businesses and industries that rely on such chemicals would be greatly impacted, especially if the necessary chemicals cannot be transported via truck. For example, water treatment plants rely on chlorine to purify water. Without shipments of chlorine, these plants will struggle to continue operation.
Many other types of businesses will experience similar shortages, delays and other issues, all of which ultimately lead to revenue loss. In some cases, businesses may need to shut down, whether temporarily or completely, resulting in job losses for many employees. Meanwhile, drayage companies will take a hit, trying to compensate for the rail strike damage.
Since drayage trucking only involves filling the shipment gaps between the railroad and the final destination, they'd be out of work with the railroad shut down. To maintain operations during a rail strike, drayage companies may have to find ways to adjust to long-hauling to avoid shutting down.
Partnering with the right drayage provider is crucial regarding supply chain disruptions. You need a drayage company that is flexible no matter the market or situation. At Dr. Drayage, we understand the value of your shipments and the importance of getting them where they need to go on time. With over 25 years of experience, we can help your business plan shipments to optimize transportation methods. Our drayage and intermodal freight trucking services are reliable to keep your shipments moving.
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