The prospect of the first rail strike in the U.S. in 30 years had a lot of people worried. According to the Association of American Railroads (AAR), railroads carry 28 percent of all freight in the U.S., and a disruption to service would have cost more than $2 billion per day in lost economic output. All of that was at stake until a tentative deal was reached early Thursday between rail companies and rail worker unions — and could still be the reality if the deal falls through before it’s made official.
The U.S. has the most efficient freight rail network in the world. Seven major Class 1 railroads, 22 regional and 584 local and short lines operate 140,000 miles of track spanning the country. Rail is a very efficient way to move heavy freight, so it is widely used to transport car parts and finished automobiles, agricultural commodities, lumber, metal ores, coal — things that are bulky and must move over land. Rail transport is far more efficient than trucks.
According to the Association of American Railroads, trains moved 14.1 million intermodal shipping containers in 2021. This statistic is telling because it highlights how America is served by an integrated freight transportation network that combines water, rail and truck modalities. Cargo can shift between transport legs via intermodal containers.
Ocean-borne imports coming from Asia arrive on giant container ships at West Coast ports like Los Angeles/Long Beach (LA/LB) or the Northwest Seaport Alliance in Seattle/Tacoma. For destinations west of the Rocky Mountains, inbound containers generally get transferred to trucks, and for destinations east of the Rockies they are usually transferred onto intermodal trains for the trip to inland hubs like Joliet, Illinois, Dallas/Ft. Worth, and others. There is also a lot of cargo that enters via Atlantic or Gulf Coast ports as well, much of which also transfers to rail.
These intermodal trains move a lot of boxes at a time, usually in a double-stack configuration of one box on top of another. While the national average is around 173 boxes per train, some of the new longer trains coming out of LA/LB are as long as 12,000 ft (more than two miles long) and can carry as many as 450 boxes.
Replacing a single train with 450 trucks that would then have to be driven to the Midwest gives you a sense of the magnitude of a possible disruption in rail service. Not only would you need trucks and chassis, but you would need a lot of drivers. And multiple trains a day come out of each port. The Alameda Corridor, which connects the LA/LB ports to the national rail network averaged 30 trains per day in 2021. The American Trucking Association says that we would need 460,000 additional trucks daily to replace the capacity that a rail strike would take offline.
The strength of the American freight network rests in the facile transfer from one modality to another, depending on the destination and distances. The weakness of the network rests in its interlocking dependencies: take out one link and all other links are immediately impacted.
A rail shutdown would have caused havoc for major supply chains everywhere. The rail lines have already slowed down the acceptance of shipments because they don’t want to get caught with a lot of merchandise in the wrong places. This would have quickly backed up and blocked imports coming into the ports, since all rely on rail to move many of their containers to inland regions. It would have been a case of “here we go again” with long lines of ships waiting to unload, just as the problem was starting to get better.
Automakers would not be able to ship completed vehicles from their factories, so they would likely fill every available nearby parking lot and field. Construction materials would stop flowing, as would agricultural commodities. There just is not enough alternative capacity to move all the goods.
The other problem is after a work stoppage, even without a strike, restarting the network takes time. We’re already seeing commuter rail scramble to cope with trips canceled in anticipation of a strike. We have seen this before with airline networks, too, taking days to recover after even a brief storm shutdown. Starting up any network is complicated and slow work. We can’t just flip a switch and expect everything to start moving again, you have to do things in a prescribed sequence. So, while a full-blown strike has at least temporarily been averted, some economic damage has already been done.
Willy C. Shih is the Robert and Jane Cizik professor of management practice at the Harvard Business School. His research focuses on global manufacturing and supply chains. Follow him on Twitter: @WillyShih_atHBS