Preparations begin for a rail strike

AP Photo/Markus Schreiber

Rather than wait on negotiations to succeed – or fail – or for Congress to step in at the last minute, some industries are already starting to take matters into their own hands as far as the transportation of their products. They are beginning to shift what they can, where they can, from rail to delivery by truck.


Technology companies supplying critical semiconductor chips to the economy have started shifting cargo shipments from railroads to trucks with a national freight rail strike looming. The moves are being made, DHL Global Forwarding tells CNBC, in an effort to avoid any pre-strike rail preparations that would force freight rail companies to prioritize cargo.

The tech cargo being sent to trucks include semiconductor chips critical to the high-tech sector and auto industry.

The tech cargo is coming out of California, according to DHL’s Goetz Alebrand, and they’re trying to move it around hubs that still have some cargo jams, like Dallas.

…Alebrand said is a client’s cargo is not characterized as perishable or hazardous, it waits to be moved. On average, it takes about two to three days to clear up one day of backup. The September pre-strike containers that were held up for approximately 48 hours took six days to clear.

…Delays incurred by a rail strike would only add to the late charges shippers pay the railroads on late cargo.

While the strike date is set for Dec 9, the railways start shutting down from Dec 3 on in the case of transporting perishables, chemicals, etc.

This time around, the feeling is not quite as upbeat as when the Biden administration threw their premature victory party in September. A plea from over 300 business groups in late October, sent directly to the White House, begged President Biden to get personally involved and get this thing settled.


…A coalition of 322 business groups from a variety of industries signed off on a letter to President Joe Biden Thursday urging him to make sure the deals he helped broker last month get approved because a railroad strike would have dire consequences for the economy. All 12 rail unions must approve their agreements to prevent a strike next month.

As I’m sure they were disgusted to learn (about which I posted Wednesday), Biden couldn’t be bothered with the “personal” stuff. He hadn’t personally done a thing in the past two months.

This go-round, they’re cutting out the middleman and going directly to Congress. The National Retail Federation is calling on lawmakers to get in the mix…

…The National Retail Federation has put out a call for Congress to act and stop the strike. Mathew Shay, president and CEO of the NRF, said: “Millions of hardworking Americans rely on the freight rail system for their jobs and the economic security of our country.” Shay continued: “A nationwide rail strike during the peak holiday season will be devastating for American businesses, consumers, and the U.S. economy. American businesses and families are already facing increased prices due to persistent inflation, and a rail strike will create greater inflationary pressures.”


…with a coalition of hundreds of business groups joining that chorus, sending a letter to Congressional leadership.

Business groups are increasing the pressure on lawmakers to intervene and block a railroad strike before next month’s deadline in the stalled contract talks.

A coalition of more than 400 business groups sent a letter to Congressional leaders Monday urging them to step into the stalled talks because of fears about the devastating potential impact of a strike that could force many businesses to shut down if they can’t get the rail deliveries they need. Commuter railroads and Amtrak would also be affected in a strike because many of them use tracks owned by the freight railroads.

…“A potential rail strike only adds to the headwinds facing the U.S. economy,” the businesses wrote. “A rail stoppage would immediately lead to supply shortages and higher prices. The cessation of Amtrak and commuter rail services would disrupt up to 7 million travelers a day. Many businesses would see their sales disrupted right in the middle of the critical holiday shopping season.”

It’s not just Christmas shopping retail, either. If you take the above preemptive move by chip makers and tech types, and then look at what Nissan announced at the beginning of the month, the two together do not make for a warm economic fuzzy.


Nissan Motor Co’s (7201.T) U.S. arm said Wednesday that supply chain issues will force it to trim production this month at its Canton, Mississippi, assembly plant.

The Japanese automaker said it will cut some production days in November for its Titan and Frontier pickup trucks as well as its Altima sedan. The cuts, which were reported earlier by Automotive News, are expected to be similar in December. A memo to dealers seen by Reuters said the cuts were “due to supply chain disruptions related to ongoing semiconductor chip shortages in the industry.”

Sure – that makes sense. If you can’t get the parts, you can’t keep a production line going, so you cut back, right? BUT, when you get parts, you start ramping up, yes?

Weelll, that’s where the rest of the numbers in the article come in, and they are BAD.

…Nissan declined to specify how many units of production will be lost. Through Sept. 30, Nissan U.S. sales are down 31% to about 538,000.

The email to dealers said “Nissan’s total dealer inventory has more than doubled in the last 60 days and is up (about) 70% compared to the same time last year.”

If your national sales are off 30+% and your dealers have beaucoups inventory still sitting on their lots to unload, maybe those jobs aren’t coming back. That’s a cascade of bad news for everyone from the factory worker on out the parking lot to their hometowns.


It goes hand in glove with WalMart overtaking Amazon as the top spot for online bargain shopping!

…Searches for Black Friday discounts on Walmart surged 386% year over year, leapfrogging rival retailer Amazon, which last year ranked first in Captify’s survey of most searched retailers on Black Friday. This year, the world’s largest e-commerce company ranked fourth, behind Target and Kohl’s, respectively.

Retailers are battling for shoppers’ eyeballs and wallets at a time when the holiday shopping season is expected to be more subdued than in years past. Americans are expected to pull back on their holiday shopping this year as sky-high inflation squeezes their spending power.

Why not make it worse with a rail strike that no one in the White House seems to have – or wants to have – a handle on?

The sense of urgency on the part of the Biden administration and the cabinet members directly responsible for this is…palpable.

Nov 15 was the last time Secretary Pete tweeted anything about a train, and it was a party for the D.C. Metroliner extension.


I know you know. Malevolent clowns.

UPDATE: Welp, guess things were dire enough that Biden finally got personally involved – he’s calling on Congress to intervene. Do they react quickly and force their union supporters to stay on the job?

…”Congress has the power to adopt the agreement and prevent a shutdown,” he said in a statement. “Congress should get this bill to my desk well in advance of December 9th so we can avoid disruption.”

We’ll see.

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