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September 13, 2022 10:23 AM, EDT

Rail Talks Watched as Contract Deadline Nears

Tentative Agreements Reached With Some Unions
Norfolk Southern freight train in Homestead, Pa.A Norfolk Southern freight train makes it way through Homestead, Pa. Railroad management has reached tentative agreements with some unions prior to the Sept. 16 contract deadline. (Gene J. Puskar/Associated Press)

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As shippers and retailers head into the peak shopping season, ongoing labor negotiations are being closely watched for any signs of disruption, which experts say would have a huge impact on the U.S. economy.

SEPT. 15 UPDATE: Strike averted as tentative deal in place



A Sept. 16 deadline is looming for a contract among 13 unions representing an estimated 150,000 U.S. railroad workers and Class I freight carriers represented by the National Carriers’ Conference Committee.

Such a disruption would deeply affect the supply chain.

However, NCCC announced Sept. 11, that some unions and the management team have reached tentative agreements.

“We are pleased to announce that the nation’s freight railroads have reached tentative agreements with the Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters, the International Brotherhood of Boilermakers, and the International Association of Sheet Metal, Air, Rail and Transportation Workers-Mechanical Department,” the statement said.

INFLATION RISK: Food prices vulnerable to holdup in deliveries

Negotiations continue with other unions, including the Brotherhood of Locomotive Engineers and Trainmen (BLET).

“It is critical that the remaining unions promptly reach agreements that provide pay increases to employees and prevent rail service disruptions,” the NCCC statement said. “The carriers are in active discussions with the remaining unions about finalizing agreements based on the [Presidential Emergency Board] recommendation. However, the two operating craft unions, BLET and SMART-TD, continue to maintain positions that were expressly rejected by the PEB.”

SMART-TD is the Sheet Metal, Air, Rail and Transportation-Transportation Division.

The tentative agreement follows the Aug. 16 recommendations of the PEB, which called for a 24% wage increase from 2020 through 2024. There also is an immediate 14.1% wage increase and five annual $1,000 lump-sum bonus payments. NCCC said parts of the wage increases and lump sum payments are retroactive and will be paid promptly upon ratification of the agreements by the unions’ membership.

BRACING FOR A STRIKE: How various industries would be impacted

Even as some of the negotiations have made progress and reached tentative agreements, the railroads are preparing for a possible labor disruption.

The Association of American Railroads said the six Class I freight railroads are taking steps to manage and secure the shipments of hazardous and security-sensitive materials, such as chlorine, which is used to purify drinking water and other chemicals used to make fertilizer, which started as early as Sept. 12.

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“Railroads are taking all measures necessary to handle sensitive cargo in accordance with federal regulations to ensure that no such cargo is left on an unattended or unsecured train in the event of a work stoppage due to an impasse in labor negotiations,” AAR said on its website. “Additionally, other freight customers may also start to experience delayed or suspended service over the course of next week as the railroads prepare for the possibility that current labor negotiations do not result in a resolution and are required to safely and securely reduce operations.”

Meanwhile, the leadership of BLET and SMART-TD are criticizing the railroad’s move to delay shipments. The unions called it an attempt to pressure Congress to intervene and block a work stoppage by imposing a contract on workers. After Sept. 16, Congress can impose a settlement under the Railway Labor Act because railroad workers are considered essential.

Several trade associations, including American Trucking Associations and the American Short Line and Regional Railroad Association, wrote members of Congress urging them to prevent a freight-rail strike.

Chris Spear

Spear

“Idling all 7,000 long-distance daily freight trains in the U.S. would require more than 460,000 additional longhaul trucks every day, which is not possible based on equipment availability and an existing shortage of 80,000 drivers,” ATA President Chris Spear said in a letter. “As such, any rail service disruption will create havoc in the supply chain and fuel inflationary pressures across the board.”

Short-line railroads often feed the larger carriers with cargo, especially at ports and other regional locations.

“A rail system shutdown would be catastrophic for the U.S. economy, tens of thousands of businesses, and tens of millions of consumers. It would spike inflation, cause industrial chaos and be a terrible result for everyone involved,” ASLRRA President Chuck Baker wrote on Sept. 10.

Labor Secretary Marty Walsh took part in recent talks, urging both sides to reach a deal.

AAR said a strike will idle freight trains and disrupt passenger operations because Amtrak and half of all commuter rail systems rely at least partly on tracks owned by the freight railroads.

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