Wednesday, September 28, 2022
HomeU.SSan FranciscoIndustry ready for rail strike, from car makers to refiners

Industry ready for rail strike, from car makers to refiners

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Car buyers may not get a vehicle on time, service on commuter rail lines may be disrupted, and shipments of everything from oil to animal feed may be damaged.

These are just a few of the wide-ranging effects American railroad workers have on the nation’s industries and economy. If railroads and unions cannot resolve their differences, there may be a strike early Friday before the walkout deadline.

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Here’s how some industries are assessing the potential impacts and preparing for a possible halt.

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auto industry

Michael Robinett, executive director of S&P Global Mobility, said that almost all new vehicles that travel more than two hundred miles from the factory to their destination are shipped by rail because it is more efficient. So it is almost certain that new vehicles coming to the US from Mexico or other countries will be delayed, he said.

“It’s not like there’s extra truck capacity to carry all the vehicles that railroads can’t carry,” Robinett said.

Automakers may also face hurdles in making vehicles, as some of the bulk of the parts and raw materials are transported by rail. But Robinette said automakers will do a lot more to get parts to keep their factories running as much as possible.

Mike Austin, senior mobility analyst at Guidehouse Research, said the strike could make new vehicles even more scarce, driving prices above current record levels. This could lead to inflation “because other goods are not moving through the rails.”

Stelantis CEO Carlos Tavares said Wednesday at the Detroit Auto Show that his company would apologize to customers because their orders may not arrive on time.

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come

The Metra commuter rail service operating in the Chicago area said Wednesday that it would suspend operations on four of its 11 lines on Friday if work halts. Some disruption on those lines will begin after rush hour Thursday night. In Minnesota, operators of a commuter rail line carrying workers along a densely populated corridor from Minneapolis to northwestern suburbs and towns warned that service could be suspended as early as Friday.

David Jackson, spokesman for the regional transit agency Sound Transit, said that in the Puget Sound area of ​​Washington state, any strike would result in the cancellation of rail service until workers return to work. Officials said some Caltrain riders in the San Francisco Bay Area may be affected by the rail strike.

The Maryland Transit Administration warned this week that the strike would mean immediate suspension of service on two of its three MARC commuter rail lines.

Meanwhile, Amtrak said all long-distance trains have been canceled starting Thursday to avoid possible passenger disruption along the way.

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energy

The strike could have a significant impact on the energy industry, and harm consumers who are likely to pay more for gasoline, electricity and natural gas. Refineries may have to stop production if they can’t get the delivery they need, or if they don’t have access to rails to ship gasoline.

No one wants to risk leaving flammable chemicals stuck on railway tracks if there is a strike. That’s why the railroad began cutting off dangerous goods shipments on Monday to protect that dangerous goods.

According to AFPM, roughly 300,000 barrels of crude oil is transported daily by rail, which can supply approximately two medium-sized refineries. And about 5 million barrels of propane, which represents a third of US consumption, are moved monthly by rail, the group said.

According to S&P Global Commodity Insights, about 70% of the ethanol produced in the US is shipped by rail, and ethanol accounts for about a tenth of the volume of US gasoline. The group said about 75% of coal was moved to electric utilities in the first half of 2022.

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agriculture

According to the National Grain and Feed Association, livestock producers can notice problems almost immediately if a shipment of feed ends abruptly.

Meat and poultry groups noted their reliance on rail for the shipment of feed and called for a speedy resolution of the rail dispute. Tom Super, senior vice president of the National Chicken Council, said that every week, the country’s chicken industry receives about 27 million bushels of corn and 11 million bushels of soybean meal to feed chickens.

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retail

Experts say retailers have been shipping merchandise earlier in the season in recent months to protect themselves from potential disruptions. But this buffer will only slightly reduce the impact from a railroad strike, which is underway during the crucial holiday shipping season, said Jesse Dankert, vice president of supply chain at the Retail Industry Leaders Association, a retail trade group that operates more than 200 retailers. calculates. Like Best Buy as its members. She noted that retailers are already feeling the impact of the uncertainty as some freight carriers are limiting services.

Dankert noted that retailers, given the slowdown in shipments, are now making contingency plans such as turning to trucks to pick up some slack and planning to use up some of the excess inventory it has in its distribution centers.

But she said there are not enough trucks and drivers to meet their needs. He said this shortfall will only drive up costs and worsen inflation.

“As we’ve seen over the past two and a half years, if there is a breakdown anywhere along the supply chain, a link falters, you see the ripple effect happen very quickly and those effects spread from there,” Dunkert said. Told.

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