As a result of the looming rail strike threatening the U.S. economy, technology companies supplying critical semiconductor chips have begun transitioning shipments from railroads to trucks. Shortages of these types of chips have previously challenged automotive production at various times in recent years.
Fortunately for the suppliers, because fewer container ships are docking at U.S. ports, there is more truck capacity today than when news of a potential rail strike was first announced in September, explained Goetz Alebrand, head of ocean freight for the Americas at DHL Global Forwarding.
Despite the improvement, however, the supply remains insufficient.
“There are more trucks and chassis, but that does not mean there are enough trucks to move all rail cargo onto trucks,” according to Alebrand.
Federal safety measures mandate that rail strike preparations commence seven days before the strike date — which may be as early as December 9. That means disruptions can occur days before any official strike has begun as carriers prioritize moving security-sensitive materials, like hazardous waste. As a result, technology companies are taking action earlier than may seem necessary to avoid the challenge of finding alternative transportation methods during the preparatory period.
Provided a cargo container is not deemed perishable or hazardous, it risks being delayed during pre-strike periods. Not only that, one day of backup causes upwards of three days to clear up. In September, pre-strike containers were postponed for two days but took six to eventually clear.
“DHL Global Forwarding has advised customers of the serious impact that a rail strike could have on their operations, including delays and related detention and demurrage charges … Our first priority has been to make them aware of this situation so that they can prepare for the risk of delays in receiving the merchandise,” explained Alebrand.
As another precautionary measure, where possible, DHL Global Forwarding is moving import boxes out of rail yards. They are also reviewing potential trucking options should those boxes eventually need to be transported while a strike persists.
Dallas and Fort Worth have been identified as likely congestion hotspots during a rail shutdown. With trade transitioning away from West Coast ports, places like Houston are processing record volumes of cargo. As a result, cities like Dallas and Fort Worth experience the downstream impact of receiving freight from those locations.
To stave off a strike, the House of Representatives passed a bill on November 30 binding companies and their workers to an agreement brokered by the Biden administration in September. The following day the Senate sent the bill to Biden’s desk in an 80-15 vote.
A separate bill to mandate workers with seven paid sick days was also passed by the House, but the Senate refused to send that forward.
For his part, Biden warned Congress, “the economic impact of a shutdown would hurt millions of other working people and families.”
If a strike does occur on December 9, the stoppage could cost the economy a monumental $2 billion per day.
The brokered deal is one that was previously rejected by four out of 12 labor unions representing more than 100,000 freight carrier employees. It included a 24% salary raise, the most in over four decades, as well as a $5,000 bonus over multiple annual payments. In terms of health insurance, employees would bear a greater share under the proposed agreement. However, premiums would be capped at a 15% maximum.
If the strike materializes, roughly 7,000 freight cars will drop out of service in the country every 24 hours. The strike would impact 40% of all freight in the country, including three-quarters of all new car shipments.