‘Affects all industries’: Possible rail strike would add another layer of pain to supply chain issues

As Congress races to beat the clock to avert a rail strike, businesses, which have been dealing with supply chain issues for months, are bracing for what could be another layer of pain if the situation cannot be resolved.

Whatever political side you fall on, either for government intervention, or not, the need to do something before it becomes a crisis affecting everyone is imperative.

"There is a crucial economic reason behind it because the country as a whole is going to lose a lot of money...it's just going to create a lot of problems for everyone," said Dr. Mehrdad Madresehee, Robert and Mary Jackson Shangraw professor of economics at Lycoming College.

"In the short run, it's not going to be a big deal, but after a while, it's going to really create a major problem," he added.

Some statistics illustrate the situation: 40% of the country's materials, including things like grain and fertilizer, come by rail travel; 75% of all new cars are moved by railroads; 70% of coal; and 50% of packaged goods move through the railway system in this country.

"Basically, you're going to cut a major source of transportation for materials to move from point A to point B in the United States if they go on strike," he said.

A rail strike, according to Madresehee, would definitely exacerbate the country's already difficult supply chain issue.

"Part of the supply chain problem is international issues, like the Russian war with Ukraine and the problem with China also, but this is going to be an additional factor added to the existing problem," he said.

Inflation would also increase because of what he called "supply shock."

"Sometimes inflation is because of additional demand, because of money given to people and those kinds of things, but this is more like a lack of enough supply," he said.

"It's going to affect all industries," he said, but added, "The good thing about Lycoming County is that we are pretty safe."

"Distribution is going to affect every corner of the country, but when it comes to employment, fortunately we do not have many people employed in transportation and warehousing industry," he said.

"In general it's going to trickle down and affect every single person at some point, although some people are going to be affected more drastically by it than we are," Madresehee said.

Under normal circumstances, High Steel Structures, located in the western end of Williamsport, uses rail for all of its raw materials at the plant, said Jeffrey Sterner, president and COO of High Industries Inc. Though, there are back-up shipment methods.

"We are capable of using trucks to get our steel in an emergency, but that would be costly if we needed to do that for all of our raw materials," Sterner said.

"None of our finished girders are shipped out via rail. Those girders are shipped via our fleet of trucks and specialized trailers," he said.

He added that any disruption to our supply chain would present challenges.

"However, we do not expect any circumstance that would force us to reduce our production," he said.

Another factor which reduces the impact in this area, besides the fact that only 3.45% of the population in the Lycoming County metropolitan area is employed in the transportation and warehousing industry, according to Madresehee, is that the rail service utilized by industries is non-union.

The Lycoming Valley Railroad is one of six shortline railroads operating 250 miles of track and 100 customers. It operates 38 miles of track in Lycoming and Clinton counties.

Although they do not have union workers, "the rail cars we handle originate from or are destined for railroads that are union," said Loni Briner, public relations and media manager for the rail system.

"Locally we'll continue to provide service to our customers, but we will not be able to deliver rail cars that we do not have -- rail cars that we'll be waiting on because of strike conditions," Briner said.

"Same with outbound shipments. We can't move them past us. We can only move as much as we have," she said.

"Should a national railroad strike occur, our local customers could see a disruption in their supply chain or their means to move products to destinations, so the local detriment to our economy will probably mirror the macro-level effects everyone is expecting," she added.

Briner indicated that they are keeping their customers apprised of the situation.

"It's kind of a wait and see situation, there's not much you can prepare," she said.

So far, the holiday shopping season should not be affected, because most businesses have already stocked their shelves, Madresehee said.

He is "very optimistic" that the strike will not happen.

"But again, both sides need to understand that they have to basically negotiate in good faith to take care of this matter without any pain," he said.