Could one reason be that its for the same reason that the more established companies did not fall as much when supply chain congestion was greatly alleviated - they were already locked into long term contracts, and they did not have much additional capacity? (Although mom-and-pops were affected much then, and may benefit now?) In addition to what @jjcox82 mentioned above about unions respecting picket lines?
As for the politics of it, one possibility is WH might sit back for a bit, and then come in later for the glory as a successful mediator. And since midterms are coming up, unions will likely use that as an opportunity to extract more concessions. It doesn’t seem to be in anyone’s benefit to have this end too soon.
Teamsters is the truck drivers union longshoremen are the port unions. I was simply using those terms as a point of reference. Will link some information below in regards to that.
“The Transportation Communications Union and the Brotherhood of Railway Carmen, which also fall under the IAM umbrella, said Wednesday afternoon that their members had ratified tentative agreements. Yet both are unlikely to cross picket lines for other unions that may take a different path — upping the pressure on politicians to solve this problem before a federally mandated cooling-off period ends at 12:01 a.m. ET Friday.”
They can in fact cross if they so choose. However a majority of unions will back each other. I grew up in union family in the CAT area during all their strikes. In the 90s.
Just trying to figure out plays here obviously UNP is one. With CSX and NSC
IYT ETF three of its top holdings are above mentioned rail stocks making up over 30 percent of its holding. But also has substantial UPS which could hold it up some.
Natural Gas UNG jumped 8% today on anticipation of demand moving from coal to gas for power generation. It may be too late to ride that up, but we might be able to ride it back down. If UNG goes flat tomorrow, I will assume that the strikes are mostly priced in and look for a put entry ~2 weeks out because I would be really surprised if the strike lasted more than a week.
I think timing this could be risky, though, especially with the other news in the world that affects Natural Gas.
Anything else? Lumber seems multimodal… doesn’t it require rail for at least some part of the trip?
Most grain exports from the US are shipped by barge down the Mississippi, but some is transported by rail to the western US ports and to the east coast states for their livestock industry. Could be a short term black swan for grains.
There is a large BNSF terminal close to my work that is a major hub for Tesla deliveries. They are picked up by car haulers there and then delivered to surrounding cities. Sucks that there isn’t a play with them since they are owned by Berkshire Hathaway.
Another funny thing is that an article came out a month ago claiming how the port in Mobile, AL set a new record for amount of containers shipped in July. The bulk of those being shipped out by railway with Norfolk Southern, CSX, and Union Pacific being the primary transporters. Ports still haven’t fully recovered from Covid I don’t believe, so I’m curious how a strike is going to affect that.
BNSF, the railroad owned by Warren Buffett, has sent this letter to Congress urging them to pass legislation that would force rail workers to adopt a contract that contains ZERO paid or unpaid sick days.
This is a good point. F I know ships bronco sport Mach e Maverick all out of Mexico via rail car. This would be a large expenditure to move on the fly to start hauling via car hauler at 5 dollar diesel. So likely they would sit.
They also run the Edge out of Canada and some of the F-150 in Michigan to a rail yard in Chicago.
All automakers ship via rail all over the US and that’s a hard adjustment to make in the event they can’t utilize rail. This is all coupled with years worth of back logged demand. Can’t be helpful for inflationary issues.
it would wreck havoc. one of the key issues right now in the NE and possibly other places is container storage at the port. there isn’t any available, so there’s a complex and confusing day-by-day rule system for which containers are allowed to be returned to the port and which aren’t that affects empty and full returns. this means chassis AND containers sit for longer than they have to and may even incur extra fees since chassis are daily rentals and containers usually only get about 30 days of free use.
throw in the rail lines refusing to help and aunt marsha is going to be real pissed the Cheap Plastic Crap store is out of Cheap Plastic Crap
Something else to think about that moves significant volume by rail which helps keep trucks off the roads. Truck drivers are also in short supply and rail based disposal has been a significant combattant of that.
If the rails stop, lots of shit gets real bad real fast beyond the supply chain.
rail disruptions could then trigger longer “mooring?” time for container barges off the coast on the Atlantic,etc? What used to be thousands a day to “park” your barge is now tens of thousands a day. If you can’t offload these containers to rail… well, that doesn’t sound too great.
a lot of raw fertilizer moves by rail too but with growing season after the peak I’m not sure the impact on fall/winter fertilizer shipping
In regards to rail contract. The agreement reached was at national level. It will take few weeks to get the details out to the local unions and the members. Then a few weeks to tally and count the votes.
This is largely similar to the same thing DE went through tentative agreement was reach by national and then 10000 workers went on strike after seeing the details.
One thing I heard on radio today was the union was asking for 7 sick/personal days. The arbitrator recommended 1. The national union agreed to this. This is largely one of the biggest sticking points to the negotiation. That’s a pretty substantial concession. Wouldn’t be least bit surprised for this to not be the end to this saga.
Summary: Inbound cargo still falling, spot rate falling compared to contract rates, transported volume is low, we don’t see the usual Q4 (holiday season) bump, companies that use freight carriers will squeeze their rates as much as they can.
Logistics folks, how much of this do we think is priced in already? (@jjcox82 , @Iloveyou )
Resurrecting this thread as looks like major trucker tickers are at or near multi-year lows, and there are signs of life.
Comparing XTN, the SPDR transportation ETF with JBHT, KNX and SNDR. There are differences between these that I don’t quite understand, so hoping someone with familiarity with the industry can pitch in. XTN, KNX and SNDR are showing double bottoms.
