Nationwide Rail Strike Could Deal Another Blow to U.S. Economy


A crippling railroad strike, which has been brewing since January 2020, could unfold by week’s end after the two largest railroad unions drew a line in the sand.

The two holdouts – the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the International Association of Sheet Metal Air, Rail and Transportation Workers (SMART) – account for more than 90,000 of the nation’s 115,000 rail workers.

The unions are demanding that quality of life provisions be put into the contract – including the removal of the draconian Hi-Viz attendance policy and additional vacation and sick days – or they will strike as early as 12:01 a.m. on Saturday, September 17, after the end of the government-mandated cooling off period.

“If this contract is presented to our members in its current form, it will not pass,” said a spokesperson representing the two unions.  “The workers are angry.  They want movement on attendance policies and not be afraid to take a sick day or vacation day without the fear of termination.  There will be no ratification unless this is addressed.”

Eight of the 12 unions have currently reached tentative agreements with the Class I rail carriers, up from five last week, although their members have yet to vote on them.  While the eight unions did not negotiate quality of life provisions for their members, the unions have what is called a “Me Too” agreement, which means whatever benefits BLET and SMART agree to in their contract, they also receive.

Even if a strike action is averted, railroads have already begun preparations by cutting some services.  As of this morning, six of the Class I freight railroads have suspended shipments of hazardous and sensitive materials.  Click here to view Union Pacific’s 15-page list of embargoed commodities. Please note, at the time of writing, no other carrier has published a list of affected goods.

In a late-day Friday service update, Norfolk Southern’s Chief Marketing Officer Ed Elkins said, “We must take steps to ensure we can shut down operations safely if a strike occurs and be positioned to restart quickly when operations resume.  Most importantly, we must ensure that no hazardous material or freight that requires special security is left on an unattended train out on the network in the event of a sudden strike.  To prevent this, we must begin issuing embargoes for certain types of shipments beginning today, which includes rail security-sensitive material (RSSM) and certain time-sensitive shipments outlined in the embargo.”

Elkins went on to say, “Additionally, customers in certain markets, including bulk unit trains, intermodal, and automotive, will see a curtailment of service up to 72 hours before the end of the cooling-off period to prepare for a safe and orderly stoppage should there be a strike.  An embargo with specific information for intermodal and automotive customers is scheduled to be issued on September 11.  We will communicate with all affected customers quickly and transparently about their shipments.”

Meanwhile, Kansas City Southern issued a statement Friday night saying that it will not issue an embargo at this time, but warned the situation could change.  “KCS does not intend to lockout unionized employees.  Additionally, we currently do not intend to embargo shipments, although circumstances could change as a result of embargoes put in place by other carriers.  We will immediately communicate any changes in KCS’ approach.”

The Association of American Railroads (AAR) has also warned that other freight customers may experience delayed or suspended service this week unless a settlement can be reached by midnight Friday.

Potential Impacts of a Nationwide Railway Strike

A nationwide shutdown could cost the U.S. economy $2 billion per day and disrupt an already snarled logistics chain.  At a time of elevated inflation, a prolonged strike action will likely lead to temporary closures of factories who can’t get the parts they need to operate, empty store shelves, and higher prices for both consumers and businesses, making inflation drastically worse.

In addition, a potential stoppage this weekend would occur as American farmers are harvesting their crops and will exacerbate global food insecurity.

Impact on Trucking

The American Trucking Association (ATA) has warned that idling all 7,000 long-distance daily freight trains would require more than 467,000 long-haul trucks each day to handle the amount of shipments diverted from rail – a number that far exceeds available supply.  In a letter to Congress, ATA President Chris Spear wrote “As such, any rail service disruption will create havoc in the supply chain and fuel inflationary pressures across the board.”

If the strike action goes forward, it would make the last two years of the pandemic pale in comparison.  The sheer volumes of freight would overwhelm all sectors of trucking, leading to significant delays and skyrocketing freight rates.

What Can the Government do to Prevent a Shutdown?

While President Biden prevented a strike two months ago by imposing a 60-day cooling off period and appointing the Presidential Emergency Board to offer recommendations to both sides, he does not have the power to prevent another industrial action at this time.  Only Congress can step in now to prevent a work stoppage, either by forcing the two sides into a deal of their making or extending the cooling off period.

The unions are urging Congress not to act, saying a strike action is the only way to reach a deal with the Class I railroads that will improve the intolerable work rules.  The railroads on the other hand are counting on Congress to act to keep the rails running.  Meanwhile many businesses that would like to see the conflict resolved are wary about turning to Congress, who will, most likely, extend the cooling off period until the after the mid-term elections, which would be no solution at all.

“Merely delaying a possible strike through congressional action will simply exacerbate the concerns of consumers and industry,” Spear wrote. “A possible strike or lockout in October or November is arguably worse than one next week – although any disruption will cost the nation billions of dollars of lost productivity.”

OCEANAIR will continue to monitor the situation and provide updates as soon as they become available.