We close out the year with some major questions affecting the long-term position of the rail/intermodal space that remain unresolved — such as the labor contract (which will follow the PEB guidelines in any event), the International Longshore and Warehouse Union contract, the CP-KCS merger process (set to be approved early in the new year) and, most of all, the question of service restoration. That last, all-consuming issue is tied, as so much is, to labor (hiring/training/retaining).
Those issues are all of a near-term nature but with long-term implications. Assuming the sequential progress noted here, the questions for next year — no matter the state of the economy — will be: How much pent-up demand will there be? Some was business not moved for lack of crews, such as in bulk and finished vehicles. Another set might be boxcar and intermodal business that can shift back to rails as service improves.
Then comes the biggest question of all — have the rails truly moved past what I dismissively called “the cult of the operating ratio” to a growth platform? Does service, as the KCS precision-scheduled railroading mantra stated, really beget growth? Service is hard — is it worth it? Can rails, through better integration, smart capital spending, and IT application, actually provide consistent service, especially in the higher-end markets? I think they can, but I know that they’d better.