Rail Strike Would Cost $2 Billion a Day, Expert Warns

Date: Friday, September 9, 2022
Source: Sourcing Journal

Retailers expressed their concerns Thursday to members of Congress about the impacts of a possible rail strike, which a trade association said could come at a cost of about $2 billion per day.

Seven out of a dozen railroad unions have yet to sign tentative agreements with carriers, following recommendations made by the Presidential Emergency Board (PEB) last month to help resolve a nearly three-year contract dispute. The ongoing talks have raised fears of a possible service disruption that could come as early as next week.

National Retail Federation (NRF) senior vice president of government relations David French in a letter to House and Senate leaders Thursday said the organization and its members “remain concerned” about the potential for disruptions.

“While the PEB has done its job, it is now time for Congress to ensure that a freight rail shutdown does not occur,” French said in the letter.

He went on to urge lawmakers to use the PEB recommendations if employers and workers are unable to reach an agreement.

“We are in the middle of the peak import season as retailers bring in their holiday merchandise for the all-important fourth quarter,” French said. “Any rail network disruptions this month could have long-lasting negative effects on this important selling season. Product delays and shortages are correlated with inflation—an issue of great significance to Americans and the economy.”

The PEB, which was established in July to stave off a strike, recommended carriers and workers agree to a 24 percent compounded wage increase over the five-year span of the contract, which would be effective from 2020. The board also recommended $1,000 bonuses for each year of the contract. The suggested increase would be the highest increase seen for workers in more than three decades.

Five unions, representing more than 21,000 workers, have so far reached tentative agreements with the National Carriers’ Conference Committee (NCCC), the organization negotiating on behalf of the railroads. That leaves roughly 94,000 workers still without a new contract.

Dennis Pierce and Jeremy Ferguson, the respective presidents of the Brotherhood of Locomotive Engineers and Trainmen (BLET) and SMART Transportation Division (SMART-TD) unions, had strong words for Congress going into the Labor Day weekend when they asked lawmakers to “stay out of our dispute.”

Leadership of some of the unions that struck agreements with carriers had signaled they were unwilling to take the chance of having Congress step in and compel workers to accept the PEB recommendations, choosing instead a path that ensures their members are able to make their own choice in voting on the contract.

Congress would have the authority under the Railway Labor Act to step in after Sept. 16 to avert a rail strike should the remaining unions fail to reach an agreement with carriers by then.

The Association of American Railroads (AAR), a rail research and policy organization, released a report Thursday looking at the cost of a national rail shutdown.

The association concluded a strike could drive at least $2 billion each day in damages to the economy in the form of inventory shortages, higher costs, commuter rail disruptions, declines in exports and increased reliance on alternative modes of transportation in the short- and long-term.

Shippers would likely turn to trucking, the report said. However, that industry has already been hampered by its own labor shortages.

AAR called the impact of such a strike “devastating.”

“As the freight sector heads into peak shipping season, a nationwide rail work stoppage would result in an unnecessary $2 billion daily economic hit,” AAR president and CEO Ian Jefferies said in a statement following release of the association’s report.

The AAR asked that Congress prepare for the possibility of not all unions reaching an agreement by the deadline with legislation that would use the PEB suggestions in their entirety.


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