Inside This Issue
· Labor Doomsday Nears: A U.S. Rail Strike Looms
· Improvements, But More Work to Do: The Latest on Rail Ops
· Mixed Messages: Economy Shows Signs of Both Slowing and Growing
· Intermodal Mellows: Container Import Boom Clearly Slowing
· Might As Well Hump: Norfolk Southern Reopening Hump Yards
· Unease on the Seas: An Update on Falling Costs for Ocean Shipping
Track Talk
“We’re in a place now where we’re seeing growth because our network is more fluid.”
-Union Pacific CEO Lance Fritz, speaking at a Cowen investor event
The Latest
· So here we are. Summer has come and gone, and so have numerous milestones for reaching a new railroad industry labor agreement. Bilateral negotiations between management and unions couldn’t do it. Federal mediation couldn’t do it. As of this writing (early Sunday, Sept 11th), not even a Presidential Emergency Board (PEB) has done it. The doomsday date of Friday, Sept. 16th is fast approaching—that’s 30 days after the PEB issued its recommendations, and after which unions are free to strike. They’re still very much talking like they will. But even if they don’t, the industrial dispute is already starting to impact rail operations. As the Journal of Commerce first reported, U.S. railroads are already reducing service in anticipation of a strike, to ensure an orderly shutdown if the next few days don’t produce a settlement. The Association of American Railroads, in fact, said the six Class I railroads involved in the negotiations will immediately start taking steps to “manage and secure the shipments of hazardous and security-sensitive materials.” It gave the examples of chlorine used to purify drinking water and chemicals used in fertilizer.
· To be clear, the PEB recommendations did produce tentative contract agreements between the railroads and ten of their unions. But two big ones remain defiant, namely the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the International Association of Sheet Metal Air, Rail, and Transportation Workers (SMART). They together represent roughly 90,000 workers, according to the Journal of Commerce. The smaller deals already clinched, by the way, provide workers with 22% wage hikes for the five years covering 2020 through 2024. They also include one-off bonus payments for workers.
· What are the odds a strike will actually happen come midnight on Friday? The economic and political stakes are both immense, with supply chains already stressed and midterm Congressional elections just weeks away. It’s also harvest season for many grain farmers that depend on rail to get their crops to market. One possibility—assuming the matter isn’t settled this week—is that labor and management agree to continue talks past Friday. The Biden Administration’s Labor Department is actively involved, hosting talks in Washington. Congress is watching closely as well, under pressure from many shippers to prepare legislation that would prevent a strike if deals aren’t reached by the weekend. We should note that any and all tentative contract agreements aren’t final until union members vote on the matter.
· The BLET and SMART unions, for their part, issued a joint statement on Sept. 2nd, claiming railroads are banking on the Federal government to step in and prevent a strike. “The same rail carriers that complain about government intervention when the Federal Railroad Administration proposes a rulemaking on crew size, and also shudder at the thought of the Surface Transportation Board issuing regulations that would help shippers, now all but hide behind Congress, refusing so far to negotiate terms our members would accept and ratify… We call on Congress to stay out of our dispute.” The unions also noted that their members differ a lot on how to proceed. Some presumably are more keen to strike than others. In general, unions across the U.S. are eager to capitalize on a moment of great negotiating leverage, with labor markets extremely tight. Their position hasn’t been this favorable in decades.
· The AAR, meanwhile—along with associations representing farmers, manufacturers, and other rail-dependent shippers—are emphasizing the immense cost to the economy a rail strike would inflict. AAR says the toll could reach $2b a day, resulting from product shortages, plant shutdowns, lost jobs, higher costs for consumers and businesses, and disruptions to rail commuters (about half of the
Keep reading with a 7-day free trial
Subscribe to Railroad Weekly to keep reading this post and get 7 days of free access to the full post archives.