Editorial: Market Forces at Work
Watching markets function would not make for a good spectator sport on TV, but the process does have its charms and we recommend it highly — especially when freight transportation is involved.
Two of our stories, one on CSX service delays and another on the growth of intermodal traffic, look at the match between railroads and trucks, particularly in the intermodal arena. The good news is that intermodal shipping during the second quarter rebounded by a healthy 4.5%.
U.S. businesses and our fellow citizens are more confident and/or flush with cash than in 2016, so they’re buying more goods that need to be transported. The shipping of international containers, domestic boxes and even trailers on flatcars all increased during the quarter.
Some freight managers said part of the gain represents staking out claims for intermodal capacity next year, ahead of an anticipated decline in truckload capacity due to the start of mandatory electronic logging of driver hours of service. It’s a subtle, interesting adjustment and we applaud people for paying attention and looking out for their best interests.
It’s also important to look out for customers’ best interests, and the other story demonstrates how inattention to their needs can steer business to rivals.
Eastern U.S. railroad CSX Corp. has been sitting on customer shipments and not responding promptly, or even at all sometimes, when distraught shippers make inquiries. The shippers are complaining to CSX, trying to switch to direct competitor Norfolk Southern, complaining to the federal government and to reporters, and — to our great delight — booking trucks.
We have some empathy for people assigned the difficulty in dealing with unhappy customers, but all of that melts away when we learn of dismal customer service at CSX and the CEO’s intimation that the blame rests with his employees.
That CEO, Hunter Harrison, is paid handsomely to manage both the assets and employees of CSX for the benefit of the company’s shareholders and shippers. Perhaps the market-induced defection of business from CSX to other freight carriers will concentrate the minds of Harrison and the CSX board of directors.
The marketplace would punish quickly and severely any trucking company that blew off its shippers’ concerns.
Well into the 21st century, this is not about a zero-sum game between trucks and railroads. As participants in the intermodal industry demonstrate, the modern supply chain needs a lot of cooperation among transportation professionals.
And if a demanding marketplace helps guarantee that, all the better.