America has averted a rail strike, but the industry is far off track

  • 📰 TheEconomist
  • ⏱ Reading Time:
  • 70 sec. here
  • 3 min. at publisher
  • 📊 Quality Score:
  • News: 31%
  • Publisher: 92%

United States News News

United States United States Latest News,United States United States Headlines

With little storage capacity or inventories to spare, coal mines, ethanol plants and carmakers would have been hit badly by a strike; grain exports would have ground to a halt

. On September 15th, after nearly three years of negotiations, America’s big railway firms and unions tentatively agreed on new contracts. Without a deal, workers would have been free to strike and firms to impose lock-outs starting the next day. The consequences to industry and agriculture would have been severe: rail accounts for more than a quarter of America’s freight transport.

Railway workers complain of burnout; their number is down by a tenth since late 2019. But the losses predate the pandemic. In the past six years the big carriers cut 45,000 employees, or 29% of staff. Cost-cutting and price increases have sent the big firms’ operating expenses as a share of revenue down from 83% in 2004 to the high-50s today, even as rail volumes barely budged and truckers took more market share. In 2020 trucks moved 46% of freight, up from 37% in 2010.

Investors like the industry’s juicy profit margins—an index of rail firms has far outpaced the broader market—but shippers and regulators are stewing. When carriers lose workers, networks slow down, requiring even more people to move the same amount of freight, says Rick Paterson of Loop Capital Markets, an investment bank. Throughout the pandemic the number of trains delayed at least six hours has rocketed; meanwhile earlier this year train speeds reached their slowest in five years.

Better service will require firms to increase reserve crews. Investors will dislike that, for it will crimp margins. And training rail workers takes at least six months, so the problem will not be solved quickly. But in the long term better service would enable railway firms to take back market share from truckers. That would be good for the environment too, as moving goods by rail emits less than by road.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.

Wow, and the public was led to believe that there is a 'supply' problem?! Looks like a profiteering scheme?! Just how many industry had experienced this! Will the Economist please write about that!

We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 6. in US

United States United States Latest News, United States United States Headlines