In America, both sectors boomed during the pandemic, as shoppers stocked up on stuff. Now both are bracing for an economic slowdown, which may also affect them in similar ways
Start with rail. Cost-cutting and price rises brought huge profits to American freight-rail firms in 2021 and 2022, despite lower volumes than before the pandemic. Railways embraced “precision scheduling”, which reduces how long full train carriages sit in yards waiting for a long train to be built. The industry is also consolidating, which leads to greater pricing power.
Instead of less choice, in other words, customers in America’s most crowded rail corridor, which runs through the centre of the country, will now have the option of moving goods on a single line from the northern to the southern border. It was this “end-to-end” nature of the merged company—with no overlapping tracks or shared customers—that theIf the merger is unlikely to boost margins for the industry, could more cost-cutting? Probably not.
The same could be true for hauliers, for many similar reasons. During the pandemic, demand soared and the number of trucking firms, starting one of which requires little more from an entrepreneur than securing the right licence and a lorry, steadily increased. Today America has nearly 600,000 such companies, 100,000 more than in 2019. Capacity has been recovering from a covid-induced dip: in February it was 4% higher than the year before.
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