FINANCIAL EDGE, RAILWAY AGE DECEMBER 2024 ISSUE: It’s the Holiday Season (cue your favorite version of the Andy Williams classic). It’s the season of giving, and true to the spirit of the season, the railroad industry has provided an abundance of impactful events.
First up, the current labor picture: Elections do funny things to people. The railroads are flush with the idea that the incoming Administration will be a friend to big corporate. That immediately caused an equally concerned reaction from those unions that have not signed agreements with the railroads in advance of a contract end in July 2025. The question remains open. Is the President-elect a friend of the working class or will he follow the Republican stance favoring management over unions?
An Associated Press report notes that the railroad unions (including BLET) that have not agreed on new deals have had the opportunity to see the leverage exercised by the longshoreman union’s 62% six-year salary increase and the rejection of other labor deals not viewed favorably by unions at other companies like Boeing.
What tension! On one hand, a gleaming brass ring sits in front of the unions’ future, within reach. On the other, labor must worry about what kind of shake it might get from the Executive Branch if corporate policy is favored over labor rights.
Perhaps U.S. rail unions can take some confidence at the swift resolution in Canada when the Canadian government forced labor back to work, called off the strike and mandated mediation. Or perhaps not, as since October, negotiations seem as protracted as they did before mediation was ordered in August.
There’s an old saying: When your taxi driver gives you stock tips, get out of the market. Here’s today’s reframe of that sentiment: When the Associated Press starts telling you there are going to be problems settling your labor contract nine months before its expiration, it might be time to cut and run. That is a 2025 story to watch.
Next up: The Transportation Security Administration (TSA) calls on the railroads to provide more data on how they are securing their technological systems from cyberattack. Any industry veteran knows that “sharing information” are not two words associated with rail transportation and railroad relations. Apparently, TSA expects something different. In early November, the Wall Street Journal reported that after the 2021 Cyberattack on the Colonial Pipeline, TSA instituted annual cyber directives aiming to prevent future cyberattacks on critical infrastructure—think bus operators, pipelines and, you guessed it, railroads (passengers and freight).
Since 2021, the TSA has continued to tighten the requirements on parties it oversees and to expand the scope of required reporting from the critical infrastructure group. The railroad critical infrastructure group is broad: 73 of the more than 500 freight railroads would fall within TSA’s new requirement. The agency will require reporting of all cyberattacks and also require an annual summary of the individual railroad’s security plan.
Why does this matter? Stop & Shop supermarkets (known as Giant in Eastern Pennsylvania) recently suffered a second cyberattack. Both attacks led to supply chain disruptions and empty shelves. Former Van Halen front man Sammy Hagar and TV cooking personality Guy Fieri (“Diners, Drive-ins and Dives” fame) recently had two trailers with $1 million (that’s 24,240 bottles for those keeping score at home) of Extra Anejo Single Barrel Tequila “redirected” from Laredo to a Los Angeles warehouse from its Pennsylvania destination.
While tequila or supermarket shelves might not be the real concern of the TSA, the agency is worried about loads of LNG or TIH commodities being hijacked by hackers or by locomotives bypassing technology safety measures and causing derailments and main line disruptions. It is difficult to imagine a train being rerouted like a trailer of tequila, but the reality is that businesses using technology (which is all businesses) are encountering more-sophisticated cyberattacks more frequently.
The cost estimate is more than $680 million over the next decade. Given the propensity of government agencies to underestimate the actual costs of “government projects,” it’s not a leap to assume that estimate is light. Factor in the ongoing need to ramp up as technology increases in sophistication, and that number could double or triple.
It will be interesting to see how far the railroads lift the veil on their policies and practices or if they decide to fight the request in the courts. On some fronts—RailPulse™ for example—there is some willingness to embrace being more open about data. This matter is likely to promote a different response. Public comments on the new TSA policy are being accepted until February 2025. Have at it.
The best of the Holiday Season to readers and their families and best wishes for a peaceful and successful 2025.
Got questions? Set them free at dnahass@railfin.com.
