Railroads and unions worked all weekend to reach an agreement. There was little sign of progress, and railroad companies are now taking steps Monday to secure the shipment of hazardous and safety-sensitive materials “in the face of the possibility of a railroad workers’ strike,” the Association of American Railroads (AAR) wrote in a statement.
On Sunday, Norfolk Southern released a statement detailing that it “began implementing its contingency plans for a controlled shutdown of our network at 12:01 a.m. Friday, September 16.” The railroad said that two unions are sticking to new contracts, “we still have no obligation not to strike and must act accordingly,” adding, “Our aim is to ensure that in the event of a work stoppage, crews, equipment, and… the cargo reaches its destination safely and with minimal disruption.”
Union Pacific and CSX also announced contingency plans for a possible work stoppage. The BNSF urged customers to call Congress so lawmakers on Capitol Hill “can intervene to prevent or expeditiously remedy the business disruption” if workers go on strike Friday. The railroad also said, “We will take action as early as Monday to manage and secure shipments of hazardous and security-sensitive materials.”
Rail freight networks are the arteries of the US economy.
Two months ago, the Biden administration imposed a two-month cooling off period slated to expire at 12:01 a.m. ET on September 16 – after which President Biden had no power to prevent a strike between two unions who had yet to negotiate a deal with railroads . Only Congress can intervene after the time limit has expired.
According to Bloomberg, the two unions include the Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal Air, Rail and Transportation Workers, which represent more than 90,000 rail workers. Ten of the other unions have already struck a deal with railroads.
The Association of American Railroads warned that a railroad strike could cost the US economy more than $2 billion a day, while disruption would not bode well for the Biden administration ahead of November’s midterm elections.
Bloomberg Intelligence analyst Lee Klaskow pointed out that BNSF and Union Pacific account for 45% of Class I intermodal traffic, while CSX and Norfolk Southern have 31%.
According to government figures, about 29% of all US goods move by rail. Half of the freight is bulk goods such as energy, food, chemicals, metals and wood products – the other half are shipping containers with consumer goods.
“Even a temporary disruption would create a devastating ripple effect in US supply chains,” warned the American Bakers Association, a Washington-based trade group representing more than 300 companies.
Even without a strike, the rail networks are already congested. Maersk shipping company recently suspended import bookings through Fort Worth, Texas, due to “severe congestion” at the stations.
The railroads are bracing for possible work stoppages later in the week if the two unions fail to reach an agreement. There is a chance that Congress will intervene before the cooldown period expires. If not, then expect a flare-up in tangled supply chains.