A container delivery truck drives toward a terminal at the Port of Long Beach in Long Beach, California.
Frederick J. Brown | AFP | Getty Images
Technology companies that supply semiconductor chips vital to the economy have begun shifting cargo shipments from railroads to trucks, coinciding with the national freight rail strike. The moves are underway, DHL Global Forwarding told CNBC, in an effort to avoid any pre-strike rail preparations that would force freight rail companies to prioritize cargo.
Tech cargo shipped in trucks includes semiconductor chips vital to the high-tech sector and the auto industry.
“It’s tech cargo coming out of California,” said Goetz Allebrandt, head of ocean freight for the Americas at DHL Global Forwarding. Alebrand said truck capacity is now higher than when the rail strike was first threatened in September as a result of fewer container ships arriving at US ports.
“There are more trucks and chassis, but that doesn’t mean there are enough trucks to carry all the rail cargo onto the trucks,” Alebrand said.
In accordance with federal safety measures, rail carriers begin preparing to strike Seven days before the date of strike. Carriers begin to prioritize the security and movement of safety-sensitive materials such as chlorine for drinking water and hazardous materials in rail winddowns.
Ninety-six hours before the strike date, chemicals are not transported. According to the American Chemistry Council, statistics from the railroad industry show that a 1,975 carloads down Number of chemical shipments during the week of 10 September when the railways stopped accepting shipments because of the previous strike threat.
The Association of American Railroads is expected to issue its planning steps similar to announced in September.
Alebrand said that while a customer’s cargo is not described as perishable or dangerous, it waits to be moved. On an average, it takes two to three days to clear one day’s backup. The September pre-strike containers that stayed for about 48 hours took six days to clear.
Delays caused by the rail strike will only add to the late charges shippers pay the railroads on late cargo.
“DHL Global Forwarding has advised customers of the serious impact that the rail strike could have on their operations, including delays and associated detention and demurrage fees,” Alebrand said. “Our first priority is to inform them about the situation so that they are prepared to risk the delay in receiving the goods,” he added.
DHL Global Forwarding is also considering container locations and, as a contingency, it is moving import boxes out of rail yards to the extent possible, and is reviewing all import and export flows using rail. Whether or not trucking is an option, Alebrand said.
Areas of concern for DHL include Dallas and Fort Worth, which receive cargo from the Port of Houston. Port of Houston has processed historic volumes of cargo business moves off the west coast Gulf ports and East coast The port feared a strike among West Coast port workers. The other inland port where DHL sees overcrowding is El Paso, a major destination for cargo moving in and out of Mexico.
“Congress is back in session next week,” Alebrandt said. “Now we wait to see what happens.”
If there is no agreement between the unions and the railway companies, then the rail strike may start from December 9. Congress can intervene by using its power through the Commerce Clause of the Constitution to enact legislation to prevent strikes or lockouts and to set the terms of agreements between unions and carriers.
