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With a looming rail strike, tech companies are diverting chips to trucking

A container delivery truck heads to one of the terminals at the Port of Long Beach in Long Beach, California.

Frederick J. Brown | AFP | Getty Images

Tech companies supplying critical semiconductor chips to the economy have begun shifting freight from railroads to trucks as a nationwide rail freight strike approaches. As reported by CNBC DHL Global Forwarding, these steps are being taken to avoid any pre-strike preparations that would force freight rail companies to prioritize freight.

Truckloads of technical cargo include semiconductor chips critical to the high-tech and automotive industries.

“This is a technical cargo from California,” said Goetz Alebrand, Head of Shipping Americas at DHL Global Forwarding. Alebrand said truck capacity is now greater than it was when the railroad strike was first threatened in September, as a result of fewer container ships calling at U.S. ports overall.

“There are more trucks and chassis, but that doesn’t mean there are enough of them to carry all the rail freight onto trucks,” Alebrand said.

According to federal security measures, railroad carriers begin to prepare for a strike seven days before the strike date. Carriers are beginning to prioritize safety and the movement of sensitive materials such as chlorine for drinking water and hazardous materials in railroad closures.

Ninety-six hours before the strike date, no more chemicals are transported. According to the American Chemical Council, rail industry data shows that in the week since Sept. 10, when railroads shut down freight due to a previous strike threat, chemical shipments fell by 1,975 railcars.

The Association of American Railroads is expected to publish its planning steps similar to what it announced in September.

According to Alebrand, the client’s cargo is not characterized as perishable or dangerous, but is waiting to be transported. On average, it takes two to three days to clean up one day of a backup. The pre-strike September containers, which were delayed by about 48 hours, took six days to complete.

The delays caused by the railroad strike will only add to the late fees that shippers pay the railroad for overdue cargo.

“DHL Global Forwarding has advised customers of the severe impact of the rail strike on their operations, including delays and associated delay and demurrage penalties,” Alebrand said. “Our first priority was to make them aware of this situation so they could prepare for the risk of delays in receiving goods,” he added.

DHL Global Forwarding also investigates the location of containers and, in case of unforeseen circumstances, moves import cases from railway stations whenever possible, and analyzes all import and export flows using rail transport to check if road transport can be used in case of accidents. strike, Alebrand said.

DHL’s areas of concern include Dallas and Fort Worth, which receive shipments from the Port of Houston. The Port of Houston has handled historic cargo volumes as trade shifts from West Coast ports to Gulf and East Coast ports due to fears of a strike among West Coast port workers. Another inland port where DHL sees congestion is El Paso, a major destination for cargo moving in and out of Mexico.

“Congress will resume work next week,” Alebrand said. “Now we’re waiting to see what happens.”

The railroad strike could start on December 9 if an agreement is not reached between the unions and the railroad companies. Congress can intervene, using its powers through the commerce clause of the Constitution, to pass legislation to stop a strike or lockout, and to set the terms of agreements between unions and carriers.

We are doing everything possible to avoid stopping rail work, says the CEO of the Association of American Railroads.

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