The past weeks have been unique in most of our lives. First, our special thanks go out to all of you employed in the essential business of rail transportation, both freight and passenger, for putting yourselves “in the front line” and risking your health to serve us all.
As our organizations look to do all they can to keep North America’s economy and society functioning, the way we work has changed. We rely more on technology than before, whether working from home in back office jobs or online safety briefings.
Freight rail helps deliver critical raw materials and components to keep supply chains functioning. Yet, with automotive plants idled, some 15% of carload traffic immediately evaporated. Traditional rail freight energy commodities such as coal were in decline before this hit. Now with many industries halted, or repurposing plants to manufacture healthcare equipment such as masks and ventilators, we see a massive decline in traffic.
Rail cannot compete with road for those time-critical emergency supplies. We are set up to handle bulk. Intermodal takes care of consumer products. Grain and other agricultural products are vital to people the world over, and rail moves them better than any other mode, with greater flexibility than barge. Chemicals, such as used for manufacture of cleaning materials, will also be vital. It’s all about derived demand.
The global fall in the price of oil has two opposite impacts on freight rail. Fracking has almost ceased as oil stocks build up. Sand and oil field pipe consignments evaporated. Yet, the price of diesel fuel has fallen, reducing one of our largest operating costs.
Precision Scheduled Railroading (PSR) has put the larger railroads in a position where they have shed assets, furloughed people and stored locomotives. Thousands of railcars are in storage. When we emerge from the depths of this recession, how quickly will we be able to place those assets back in service?
For passenger rail, the picture is possibly darker. Transit and urban rail provide essential services to get essential workers to their jobs. Discretionary travel has all but disappeared. Social distancing and sanitation make it less inviting to take transit.
Passenger services in many places operate on greatly reduced frequencies. Transit authorities, Amtrak and other operators are taking all the precautions they can to protect staff and travelers. What will happen when things start to return to normal?
Will people return to the 9 to 5 patterns we know as commuting, or will working from home take a larger hold? Many companies may switch to a four ten-hour-day week, immediately reducing transit revenue by up to 20%. Some longer-distance trips will no longer be needed as families keep in touch through videoconferencing.
Will the Acela trains on the Washington-New York-Boston Northeast Corridor still attract enough business travelers willing to travel to attend a meeting that can be done online? Changes in peoples’ propensity to travel will make it much harder for passenger rail to cover operating costs from farebox revenues.
We face continuing uncertainty, even after social distancing ends. We must be ready to react, have plans in place to work toward the future needs for both freight and passenger transportation by rail.
Collaboration to deliver customer excellence and exceed expectations in every dimension including safety, security, reliability and cost, among others, will be vital. Everything we do as a railroad, whether freight or passenger, must be seen to add value to our customers, their customers and the end-consumer. This will involve working across modal boundaries to design new services and improve the overall efficiency and impacts of transportation.