Another Supply Chain Disruptor
Grain shipments on some railroads could stop as early as tomorrow, two days ahead of the possible rail strike, reports Tyne Morgan for Farm Journal. “As the country’s two largest rail unions remain at odds with rail companies, a rail stoppage is growing more likely,” she writes at AgWeb.com.
Ag lobbyists were on Capitol Hill Monday, reminding legislators of the economic implications a rail strike would have on the entire economy. Max Fisher, National Grain and Feed Association chief economist, says the group is getting Congress ready to act if they need to stop a rail strike starting Friday, Sept. 16. “The railroads are already stopping shipments of certain commodities such as hazardous materials, chemicals, etc.,” Fisher told Farm Journal. “We’re hearing grain shipments on some railroads could stop as soon as Wednesday.”
“The railroad industry can be considered an oligopoly and for many captive shippers it is actually a monopoly since they are serviced by only one railroad,” writes David Huskar for Seeking Alpha, an online investor’s community. “For example, two-thirds of coal shipped by rail is captive to a single railroad,” he adds. “With over 90% of rail traffic shared among the four rail carriers (Union Pacific and Burlington Northern (BNSF) west of the Mississippi and Norfolk Southern and CSX east of the river) and healthy competition mostly eliminated, railroads enjoy enormous pricing power.”
Striking rail workers offer another reminder of supply chain uncertainty when there has been much concern already with a global pandemic and war in Ukraine. With a rail system in the hands of just a few rail companies and union players, there’s little slack in the chain.
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