Rail strike threat is set to halt shipments of US crops, autos

Posted on Sep 14

UPDATE: The Railroads Say They Won’t Lock Out Workers

The deadline for a strike is midnight on Friday and the railroads have already started diverting freight, but the railroads have said they will not initiate a “lockout” on Friday should the negotiations not be successfully completed. About half of rail freight are final goods destined for consumers, while the other half are raw goods and heavy freight, including coal, car parts, agricultural produce and equipment.

Eight of twelve railroad unions have reached tentative deals with companies as of earlier this week, but two of the biggest unions, BLET and the SMART Transportation Division are still talking to the carriers. The two groups represent about half of union railroad workers. Earlier Wednesday, a smaller union, the International Association of Machinists and Aerospace workers voted against a deal. Negotiators from the railroad carriers and unions met in Labor Secretary Marty Walsh’s office Wednesday as the sides tried to negotiate a deal ahead of Friday’s strike deadline. The meeting started just after 9 AM EST, and a spokesperson for the Labor Department said talks were ongoing as of mid-day. “The parties are negotiating in good faith and have committed to staying at the table today,” the representative said. Two remaining sticking points appear to be sick time policies and quality of life concerns.

Norfolk Southern Corp. said it plans to halt unit train shipments of bulk commodities on Thursday ahead of a potential US rail worker strike the following day. The railroad also said it would stop accepting autos for transit at its facilities starting Wednesday afternoon. Other railways are likely to follow suit, according to one agriculture group. Representatives for BNSF Railway Co. and Union Pacific Corp. also signaled they were prepared to curtail service as the deadline looms. “We must take actions to prepare for the eventuality of a labor strike if the remaining unions cannot come to an agreement,” BNSF said in a statement.

Experts say that an extended walkout would devastate industries that rely on freight to transport grain, coal, diesel, steel and motor vehicle parts. Shipping containers would pile up at ports, severely congesting supply chains and sending prices soaring ahead of the holidays. After the pandemic and supply chain disruptions of the past two years, now is not the time for more uncertainty and disruption,” a White House official told The Hill. “Now is the time for the parties to resolve their differences, before the nation’s economy begins responding to even the prospect of a nationwide rail stoppage.”

The possibility of Congressional action doesn’t appear to offer much hope for a solution. Getting a divided Congress to quickly pass such settlement legislation offers little chance of resolving the dispute, according to John Brennan III, a former senior counsel for the Union Pacific Railroad. Brennan pointed out that when the last rail strikes occurred in the early 1990s, Congress passed settlement resolutions within 24 hours. But the partisan divide in Congress today, along with the upcoming midterm elections, could make it difficult to pass settlement legislation before midnight on Thursday when a work stoppage would be permitted under the law. Delaying a possible strike through congressional action was also opposed by the American Trucking Associations.

V. Alexander will continue to monitor this situation and provide updates as they become available. For now, let’s hope that the parties will find a way to resolve their differences and avoid a labor strike that could cost the world’s biggest economy more than $2 billion a day.

Please contact your V. Alexander account team, or you may also contact our Trade Compliance team at tradeinsights@valexander.com with any questions, and you can always follow us on our website www.valexander.com for updates on this and other topics.