The potential for labor-related disruptions came back to the forefront this week as yet another union voted down the tentative agreement reached with the carriers last month.
This week, the Brotherhood of Railroad Signalman joined the Brotherhood of Maintenance of Way Employees in voting down the agreement and starting a 30-day cooling-off period.
While a labor disruption is not imminent and several unions still have outstanding ratification votes, the vote by the signal union does ratchet up the likelihood of a work stoppage.
It is heard that the votes among other operating crafts were going to be close and the more unions that reject the tentative agreement, the higher likelihood that other unions will follow suit.
The deadline for the two largest unions, the Brotherhood of Locomotive Engineers and Trainmen and the SMART-Transportation Division are not due until early November. But shippers will likely need once again to make contingency plans in the event of a rail work stoppage.
Even if the stoppage lasts only a few days, it will likely take the carriers weeks to recover. Also, any stoppage will occur during a lame-duck Congress after the midterm elections, possibly making it a slower process to get back to work legislation through Congress, especially if the Senate needs to run out its entire clock before proceeding to vote on it.
Intermodal volumes are holding nearly flat with last year’s levels with no sign of a fall peak. This is not unexpected as the combination of lingering inland rail terminal congestion and a diverting of cargo to east and Gulf coast ports amid labor uncertainty at the west coast ports holds back intermodal volumes.
Carload volumes have increased in the last few weeks as coal and grain volumes have supported carloads. While coal is not back to the 83,000 carload level it achieved earlier in the year, it has increased to 76,000 carloads in the latest week as utilities restock ahead of the winter burn season.
Grain is also a bright spot as the harvest pushes volumes through the system to their highest level in two years. Canadian volumes have delivered the most growth, while U.S. volumes are likely to benefit for months into the future as headwinds on the Mississippi river limit barge movements on the water.
The Surface Transportation Board remains highly active, and this week extended by six months the amount of time that carriers must continue to report detailed service metrics.
Rail service remains the number one priority at the agency and service is holding below historical averages. Normal seasonality and a lack of sustained progress in hiring across the industry suggest rail service will continue to struggle for many more months.
The agency is also looking longer term and announced the release of a report from Christensen Associates that examines potential alternatives to the board’s Uniform Rail Costing System. This is the system that determines carrier costs and underpins rate cases and other agency functions.
For many years, several industry groups have derided the URCS system as not accurately representing carrier costs, leading to inflated rates for shippers. The new study is the first step in potentially replacing URCS with a new system to determine carrier costs.
The board invited comments on the report that will be due early next year with replies due in May 2023.
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