Shippers of goods from animal feed to electronics have urged the US Congress to intervene in a simmering labour dispute that could freeze freight service on the nation’s railways as soon as this week.
More than 100,000 rail workers will be free to strike for the first time since 1992 if contracts are not agreed when a federally mandated cooling-off period expires on Thursday, unless Congress takes action. They include employees of the largest carriers in North America, such as Union Pacific, CSX and BNSF, a business owned by Warren Buffett’s Berkshire Hathaway.
Ten of 12 labour unions in talks with the bargaining committees had struck tentative deals as of late Tuesday. But two were holding out after almost three years of unsuccessful negotiations, and members of a third on Wednesday voted to reject their agreement. The unions have threatened to strike even if one remains without a deal.
The impasse presents a challenge to president Joe Biden, who has made goals of strengthening supply chains and supporting organised labour.
The White House was “working with other modes of transportation, including shippers and truckers, air freight, to see how they can step in and keep goods moving in case of this rail shutdown”, press secretary Karine Jean-Pierre told reporters on Tuesday. Congress has the power to force the unions and railways into binding arbitration.
Urgent appeals by industry groups have heightened the pressure at a time when inflation is running hot. Business groups warned that a strike could cripple supply chains, raise food prices and make it impossible to restock store shelves and operate factories. The US Chamber of Commerce described it as a “national economic disaster”.
The American Petroleum Institute, the country’s main oil lobby group, said railways informed energy companies last week that hazardous materials shipments would be curtailed to clear tracks ahead of a potential stoppage. API warned of “catastrophic” disruptions to the rail network if no settlement was reached.
Ammonia, a main ingredient in nitrogen fertiliser used in agriculture, was also among the hazardous products sidelined from the rails, according to the Fertilizer Institute, a trade group. A strike would have “swift and severe” effects on farmers’ ability to ship crops for export at a time when Russia’s invasion of Ukraine has curbed food supplies from the Black Sea, National Grain and Feed Association president Mike Seyfert said.
Brian Dodge, president of the Retail Industry Leaders Association, which represents big box stores, said the prospect of a strike was having an effect. “Jobs will be lost, and costs will go up as shortage of raw materials and consumer goods ripples throughout the economy — it will be a double whammy,” he said. “And based on [Tuesday’s] inflation report, it should be self-evident that this couldn’t come at a worse time.”
Amtrak, the national passenger rail service, cancelled all its long-distance trips starting on Thursday because it operates on tracks owned by freight railroads outside the north-east. Commuter rail systems in Chicago, northern Virginia and southern California also said they would suspend their service during a freight rail strike.
Scott Group, an analyst at Wolfe Research, said the chances of a full-blown strike “remain low” because “Congress would very likely intervene”, but some economic impact was unavoidable.
The National Carriers’ Conference Committee, which represents the railways in the negotiations, said it was willing to accept contract terms recommended by an emergency board appointed by the White House, including an immediate 14 per cent raise for workers and stronger health benefits.
Despite the pleas from business groups, the two holdout unions urged Congress not to intercede. The Sheet Metal, Air, Rail and Transportation Workers — Transportation Division and the Brotherhood of Locomotive Engineers and Trainmen have said they will not accept any proposal from the railways that does not change attendance policies to make it easier to schedule unpaid time off for medical appointments and family emergencies.
Members of another union, the International Association of Machinists and Aerospace Workers, on Wednesday voted to reject the tentative deal their leaders reached with the railroads. But they agreed to continue talks for another week before triggering a strike.
A rail workers’ strike could cost the US economy more than $2bn a day, according to a report by the Association of American Railroads, a trade group. The parties have nearly exhausted a labour relations process outlined by the 1927 Railway Labor Act that was designed to prevent economic turmoil caused by strikes.
Additional reporting by Myles McCormick in New York