Even Santa Isn’t Immune from the Contagion

Written by David Nahass, Financial Editor
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FINANCIAL EDGE, RAILWAY AGE SEPTEMBER 2022 ISSUE: An industry patiently waited to find out who will blink first in the complicated chess match between labor, railroad and government. The 30-day period for which there is a stay on strike or lockout while Presidential Emergency Board 250 has been working on its proposal came to a tension-filled close.

The PEB issued a proposal that represents a 22% nominal wage increase during a five-year period, saying it aimed “to act as honest brokers and to recommend terms for an agreement that are fair and reasonable.” The five years is from 2020 to 2024, as the time frame for the review is retroactive to 2020, when the contract first expired.

Calm in the eye of the hurricane.

Considering the list of grievances labor has against railroad management, it seemed unlikely that the unions would agree to take less than what is recommended by the PEB. At that juncture, what did they have to lose?

There may be plenty of downside for the railroads. Recent pronouncements by the DOT on airline flight-related delays suggest that the government has an interest in taking the side of the passenger (it is mid-term election season after all), and it wouldn’t seem unreasonable to see a similar bend toward shippers.

Specifically, DOT is creating a dashboard to identify proper compensation for delays or cancellations within the airlines’ control. Imagine Transportation Secretary Buttigieg setting up a similar circumstance for companies that ship by rail. And the government thinks airline passengers are an ornery bunch!

Before closing out that issue, and while practicing deep breathing to de-stress on labor and service issues, another item flew across the vista on the rail-related newswire. As occasionally noted in this space, public relations is not always the railroad industry’s best ally/strong suit.

Recently, CSX announced that, for the third year in a row, it was canceling the 80-year-old Santa Train tradition and instead pivoting to local distribution of 5,000 gift backpacks full of toys and winter accessories this holiday season. While cancellations in 2020 and 2021 were defensible due to pandemic-related disruptions (after all, who wants to hobnob with a Santa that celebrates the holidays by giving gifts and transmitting COVID-19 to families (“Merry Christmas to all, and to all Covid blight!”)), the cancelation in 2022 is related to “current supply chain and ongoing staffing challenges across our network.”

In other words, CSX has effectively canceled Santa and is using the current issues it has with labor and hiring as the reason for the cancellation.

Bah humbug!

One can only imagine what will be included in the gift bags being handed at locations along the traditional train route. Perhaps they will have an IOU for items missing due to congestion on the Eastern Seaboard threatening to cause another round of supply chain disruptions just in time for the holiday season.

Maybe this is where the DOT idea really comes to bear. In addition to providing a forum for shippers to make damage claims for shipment delays and cost increases, the DOT website could provide a forum for consumer related complaints. It could cover inflation, higher residential energy prices and unavailability of items (toys, clothing, French champagne) that are not currently available in their traditionally overabundant numbers due to shipping delays. It could even stretch out to handling emotional stress resulting from Santa’s inability to deliver gift packs.

It could be the world’s largest complaint window.

Kidding aside, considering the tenuous political landscape right now and the importance of the mid-term elections, government erred on the side of the majority and did everything it could to prevent a strike (apologies to the unions). That’s a good thing being done for the wrong reasons. Politicians are like caged animals when one tries to take their cushy government jobs away.

The DOT is showing that it is not buying the idea that hiring problems remain a relevant excuse for service-related airline passenger disruptions. Even floating the idea that airlines could be categorically required to provide monetary refunds to passengers for cancelations or delays potentially viewed as avoidable crosses
a milestone.

Perhaps the STB might take a page out of the DOT playbook and create a similar dashboard for rail service disruptions. Hits on that server might make the HBOMax server crash for the opening episode of House of Dragons look amateur by comparison.

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