Pandemic Effects on Supply Chains Has Been Uneven

The effects of the CVOID-19 pandemic on supply chains served by railroads have been uneven.

A panel of shippers convened on behalf of Railway Age magazine also agreed that despite the pandemic rail service has been strong in recent months with shippers able to get better pricing if they deliver volume to Class I carriers.

Whereas the pandemic had depressed paper shipping to levels one panelist called the “slowest demand environment” she has seen during her time in the industry, chemical shippers have been relatively unaffected because they were deemed to be providing essential services.

The shippers expect traffic volumes in July to exceed those of June but two shippers predicted that July traffic will be flat when compared with the same month in 2019.

Shippers are uncertain if traffic will pick up in the fall.

The paper shipper said business has been adversely affected by retailers having to shut down during stay at home orders.

The retailers weren’t buying paper to advertise what they had for sale.

The shipper said her company has thus far shipped 23 rail cars of paper thus far in 2020 while in a typical year it would ship 750 cars for the year.

On the other hand, the shipper said, shipment of paper for packaging or masks businesses has been strong.

Shippers on the panel noted concerns about the lack of adequate customer service from railroads, which they attributed to the carriers having cut management positions in that area.

One shipper said she seldom hears from the customer service departments of the railroads she works with and another shipper said the customer service representative at the railroad he works with is too inexperienced to be helpful.

A panelist said the situation seems to be that railroads have reduced their staffing by so much that as rail shipping has begun to recover in recent weeks the carriers are struggling to get employees back to positions that could handle the increase.

That shipper said this was similar to what happened during the recession of 2008.

Railroads have been pushing shippers to use self-service applications.

However, when something goes wrong and a shipper tries to reach the railroad customer service department by phone, it has been difficult at times to reach someone who is knowledgeable and helpful.

One shipper said the more that his company uses its own technology the more a railroad it works with wants to work with them.

This has been particularly the case with trucking where anything that can eliminate wait time or paperwork for drivers is welcomed by the carriers.

Yet panelists noted that Class 1 railroads are seeking to boost their traffic volume and marketing staffs are reaching out to shippers for more business.

Although the pandemic has disrupted supply chains, the panelists do not expect it to result in major changes once the pandemic abates.

They attributed that to supply chains already being efficient before the pandemic struck.

Some panelists expect there might be a shift to less reliance on goods made in China to greater use of goods from Southeast Asia or India.

That could result in more shipments landing at East Coast rather than West Coast ports.

Asked about the effect of precision scheduled railroading, the panelists said it has helped with long-haul freight moves but the first-mile and last-mile segments remain slow and frustrating.

Some shippers highlighted a discrepancy between their unchanged transit times and the bragging of Class I railroads about improved transit times, increased velocity and lower terminal dwell.

An emphasis on trip plan compliance might be a better measurement of rail service, but shippers said trip plan compliance can be flawed, too.

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