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12/2/2011
SPECIAL REPORT: Rail strike won’t happen
By David Tanner, Land Line associate editor

Friday, Dec. 2, 2011 – A railroad strike that could have led to a windfall for long-haul truckers will not happen next week. Nonetheless, trucking is still well-positioned to make money this season.

The threat of a strike had nervous shippers gearing up to put more freight on long-haul trucks for the holidays and pay the premiums. Analysts said retail haulers were in the best position to cash in on the situation.

Railroad unions and management agreed last night to extend their negotiation period through February 2012, nullifying the strike that could have taken place on Tuesday. Two railroad labor unions are still holding out for higher wages and benefits, but agreed to the two-month “cooling off” period.

“A strike was potentially a big problem for rail and a big windfall for trucking,” said Donald Broughton, managing director and senior market analyst for Avondale Partners.

“With the settlement, the next opportunity for any disruption in labor for the rails won’t come until February, so at least for now shippers will go back to using intermodal as much as they can in longer lengths of haul and not put that traffic on the road.”

Broughton said some truckers may have got in on some higher-paying freight as the labor talks hit a standstill with the clock ticking.

“I’m sure it produced incremental loads this week – Wednesday especially – but not anywhere to the extent it would have today, tomorrow and on Monday if they had continued to draw out the negotiations,” he said.

Truck availability is still tight overall this season, Broughton said, and that means higher rates are out there.

“Capacity is still very tight, and that is great news for pricing and ought to be good news for profitability if they’re running their operation right,” Broughton said.

A railroad strike could have cost the U.S. economy $2 billion per day according to members of the U.S. House of Representatives, who said they were prepared to step in with legislation if necessary.

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