Inside This Issue
· First-Half Review: More Supply Chain Pain
· Norfolk Masterstroke? NS Hopes New Plan Will Help It Expand
· Union Pacific Feeds the Chickens: An Update from Foster Farms
· An Industry Classic: Rush Loving Jr.’s “The Men Who Loved Trains”
Track Talk
“The U.S. chemical industry is one of the largest freight rail customers, shipping more than 2m carloads per year, and the ongoing expansion of U.S. chemical manufacturing means our transportation needs will continue to grow.”
-The American Chemistry Council
The Latest
· We’ve reached the second half of 2022 and still, major supply chain headaches continue. General Motors said last week it had 95,000 vehicles built but missing components because of the semiconductor shortage. These are vehicles GM is holding in inventory rather than shipping to dealers. And make no mistake, that’s lost revenue for railroads, whose auto-related shipments are still running slightly below last year’s levels, according to the latest AAR carload data. Last year, keep in mind, saw big gains from 2020, when production was momentarily suspended because of the Covid outbreak. But auto shipments for this year’s first half were down about 22% from the first six months of 2019, which itself was a year plagued by tariffs and other market headwinds.
· North America’s economy is short of many things these days. Not enough semicons. Not enough cheap energy. Not enough housing. And not enough labor. Railroads are all too familiar with that, struggling to meet demand with current levels of staffing. Rail shippers fumed throughout the first half of 2022, often taking their complaints to the STB. As the second half of the year begins, the four largest Class I railroads in the U.S.—BNSF, UP, CSX and NS—are promising that service will improve once an aggressive hiring and training initiative takes full effect in the coming months. Kansas City Southern, faring better operationally, is focused on its takeover by Canadian Pacific, pending STB approval. CP itself, along with Canadian National, had a smoother second quarter than first. But their big wildcard for the second half is the upcoming Canadian grain harvest—last year’s harvest was a disaster, resulting in many millions of dollars of lost revenue for Canada’s railroads.
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