Rail/Intermodal
The prospect of a work stoppage dominated discussion among carriers and shippers over the last week ahead of a December 9 deadline for a walkout before Congress passed legislation imposing the terms of the tentative agreement reached in September on the four unions that had failed to ratify that agreement.
The House of Representatives this week passed two bills related to the strike: one that would impose the terms of the tentative agreement on the remaining unions and another that would add seven additional sick leave days to the tentative agreement.
The Senate passed the bill that imposed the terms of September’s tentative agreement on the unions that failed to ratify the agreement reached in September but failed to approve the added sick leave or to extend negotiations for 60 days.
President Biden signed the legislation on Friday. The White House had indicated that it was prepared to sign any version of the legislation that forestalled the strike, but Biden on Friday voiced support for adequate paid sick leave for all workers. The legislation ends any possibility of a full work stoppage, but questions do remain about productivity. It is possible that some of the unionized workforce decides to slow down normal procedures by working to rule or that a large number of employees exit the operating crafts in January after the back pay payment is made.
Volume
Carload and intermodal volumes behaved seasonally in the latest week that included the Thanksgiving Day holiday. The holiday week resulted in a sharp sequential drop in overall volume levels for nearly every commodity group and certainly occurred on an overall level. It is expected that volumes should recover quickly back to the levels they were at prior to the holiday, but it may end up being a slower recovery than normal. Shippers in the carload and intermodal sectors spent the week weighing the potential risk of a work stoppage by unionized employees next week and may have chosen to divert freight to truck or other modes coming out of the holiday until they were absolutely sure that Congress will pass legislation that would pre-emptively fend off a strike. The potential strike almost certainly led to reduced intermodal volumes over the last several weeks as shippers did not want to risk cargo being stuck across the North American rail system in the event of a work stoppage. It is likely that intermodal volumes only return to that level in the latest week, around 340,000 units per week coming out of the Thanksgiving holiday, and not the 360,000 carload level that has become the new normal throughout most of 2022. Starting next week, intermodal volumes could return to the 360,000-unit level once shippers shift back to their normal routings.
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