Intermodal Traffic Decline
Intermodal traffic declined significantly on a sequential basis in the latest week with nearly all of the decline coming from weaker volumes on the western U.S Class I carriers. This is one of the downstream effects of shippers working to avoid the potential disruptions coming to west coast ports.
A recent job action by clerks at the Port of Oakland that shut the port down for two days suggests that there will be increasing disruption at the west coast ports in the weeks and months ahead.
Dockworkers at the west coast ports have been without a contract since July and there appears to be no imminent resolution as the two sides squabble over jurisdictional issues. The longer the two sides go without an agreement, the more likely disruptions become.
Many shippers have already diverted cargo to ports on the east and Gulf coasts and will likely continue to do so and potentially increase the rate at which they do so in the wake of the Oakland disruption.
This could be part of what is holding back western railroads’ intermodal volumes along with frustration over ongoing weak service levels that have continued for two years.
Railroad Stike Update
Rail-related labor disruptions were pushed out over the last week as the Brotherhood of Maintenance of Way Employes voted to extend their cooling-off period into December as a way of harmonizing the date for any work stoppage with other rail unions.
The maintenance of way employees were the first to vote down their tentative agreement and start the 30-day cooling off period that was negotiated with the tentative agreements in September. If the union had not agreed to push out its cooling-off period, a strike could have occurred as early as next week.
The industry should know in the next week or so the fate of ratification votes from the two largest rail unions, which will help determine how likely a strike is in December. Shippers, though, need to start making contingency plans in case a stoppage does occur in roughly four weeks.
It remains unclear if a deal can be reached between the carriers and all the unions and if Congress would act preemptively to head off a strike. Congress is unlikely to act before any stoppage occurs.
Carload Volumes Are Up
Overall rail carload volumes bounced back in the latest week after declining sharply two weeks ago. The bounce-back in volumes largely resulted from strong U.S. grain volumes as the harvest proceeds.
Grain traffic should benefit from the ongoing tow size restrictions and low water levels on the Mississippi river as growers and elevators seek alternate means for getting their grain to market. It does not appear that water levels will return to normal before the upper Mississippi closes to navigation during the winter. That leaves those shippers with no alternative but to move product by rail.
Economically sensitive freight has essentially been flat over the last several weeks as some categories increases are offset by declines in other areas.
See how your organization can capitalize on the power of actionable intelligence by clicking below:
