Rail Service Issues Heating Up - Old themes re-emerge, unfortunately: The tenor of the second ASLRRA (short line) regional last week in Louisville was so, so different than the first. This one, In L’ville, the talk was all about rail service, particularly in the east/southeast. And, what about the service? What was the thinking? One description: “criminal.” OK, that’s a strong word, but you get the idea. And don’t think that perception, as discussed in L’ville, won’t impact the decision on the KSU deal as discussed in their hometown….
Now, one never expects to hear sunny talk from rail shippers (and here I classify shortlines as shippers or partners) – but this was extraordinary. And reminiscent of bad old days that I had expected changed investment themes (above), big Capex, increased tech spends, and the successful implementation of PSR would put into the past. We can say this – without PSR implementation in the US in 2017-19, 2020 would have been a whole lot worse.
But perhaps the rails weren’t able to get enough distance from the pandemic effects to develop the resiliency/redundancy necessary in a world facing supply chain issues everywhere. But with storm clouds gathering in DC, this has to be put right - and fast – as it puts railroads in (and on the wrong side) of the debate over globalization, supply chain resiliency, JIT vs. JIC, etc. Simply saying it’s a supply-constrained growth story, or blaming Covid, or drayage, or weather (see chemicals) – ain’t gonna cut it, not when the STB Chairman can say – publicly – “PSR is failing shippers. That’s simply a fact.”