There goes the supply chain again, jumping out of its hidey-hole to remind consumers and businesses how much they depend on the uninterrupted flow of goods, components, and parts. COVID taught Americans to appreciate the supply chain. Last week, threats of a freight railroad strike sent shivers down the spine.
The importance of the railroads to this economy can’t be overstated, John Drake, of the U.S. Chamber of Commerce, told the Los Angeles Times.
They “move 40% of the freight-ton-miles in this country,” he said. “One-third of all exports move by rail. If it’s grain, if it’s chemicals, if it’s cold, it’s moving by rail.”
America’s complex, integrated supply chain was taken for granted – in a good way – before COVID, because of its reliability and speed. Who marvels at plumbing … until it implodes? When toilet paper, paint, and a thousand other items disappeared from store shelves due to pandemic-related snafus, the public suddenly became aware of the economy’s daily reliance on ships, trucks, trains, and warehouses.
Rail was probably the least understood portion of the supply chain. To many people, freight trains seemed to be little more than background noise from the past – distant whistles and chugs – rather than the economic engines they are. Then over the course of just one week of tense labor negotiations, the threatened strike revealed rail’s contributions and the potential pain inflicted if trains were to stop running.
At the Port of Los Angeles, two-thirds of the goods offloaded from ships go inland by rail. Across the country coal, oil, chemicals, and agricultural products travel by rail. Shut down train service and trucks cannot pick up the slack. “There is almost zero available capacity in bulk or tanker trucking,” Craig Fuller of FreightWaves wrote on Twitter. “22% of the electricity in the U.S. comes from coal and the vast majority of that is shipped via rail. Cut off the railroads and most American cities will experience brownouts. …If we lose rail capacity, we face oil and gas shortages.”
Fuller noted that rail also transports chemicals used to treat drinking water. “There is little trucking capacity to pick up the slack,” he wrote. “Look no further than Jackson or Flint to see what life is like without clean drinking water.”
The Biden administration understood the stakes and put pressure on rail companies and labor unions to reach a deal before a Sept. 16 strike deadline. The two sides negotiated a tentative contract to keep freight trains moving, with both sides offering concessions on pay and working conditions.
Similar pressure seems likely to mount on shipping companies and West Coast dock workers to conclude their contract negotiations without work disruptions that could damage a fragile economy. Another major shock to the supply chain risks sending inflation even higher.
The country needs to keep moving forward — by truck, ship, air, and rail.
Read the complete Issue 19 of ChainMail here.
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