U.S. rail companies are poised to stop shipping farm products and other key goods starting today as the industry braces for a possible labor strike forecast to cost the world's biggest economy more than $2 billion a day.
With tentative deals still pending from at least two unions ahead of Friday's strike deadline, about 125,000 rail workers could walk off the job. The stoppage would be the largest of its kind since 1992 and snarl a wide range of goods transported by rail, from food to metal and auto parts. The White House is considering an emergency decree in an effort to keep key goods flowing.
Norfolk Southern Corp. said it planned to halt unit train shipments of bulk commodities today ahead of the potential strike. The railroad said it also stopped accepting autos for transit at its facilities Wednesday afternoon.
Other railways are likely to follow suit, according to the National Grain and Feed Association.
"We are hearing several rail carriers are tentatively planning to wind down shipments," said Max Fisher, chief economist at the association, which represents most U.S. grain handlers.
Food-supply chains are especially at risk as farmers gear up for harvest and need to get product to customers, and crops remain in high demand because of shortages from Russia's war in Ukraine and global weather woes.
"Our members rely on about 27 million bushels of corn and 11 million bushels of soybean meal every week to feed their chickens," said Tom Super of the National Chicken Council. "Much of that is moved by rail."
Norfolk Southern planned Wednesday to cease vehicle deliveries for transit and also planned to close its intermodal gates, the Virginia-based railway said in a notice.
Representatives for BNSF Railway Co. and Union Pacific Corp. also signaled they were prepared to curtail service as the Friday deadline looms.
"We must take actions to prepare for the eventuality of a labor strike if the remaining unions cannot come to an agreement," BNSF officials said in a statement.
The unions must agree to tentative deals, and then have members vote on whether to approve them. Of the nine that agreed to tentative deals so far, two -- the Transportation Communications Union and the Brotherhood of Railway Carmen -- voted to ratify their contracts Wednesday. But members of the International Association of Machinists and Aerospace Workers voted Wednesday to reject their deal.
Votes by the other six unions that approved tentative deals are pending.
Yet to announce tentative deals were representatives from the Brotherhood of Locomotive Engineers and Trainmen, and the Transportation Division of the International Association of Sheet Metal, Air, Rail and Transportation Workers, which together represent some 57,000 engineers and conductors.
Deals that have been announced so far have closely followed recommendations of a Presidential Emergency Board Joe Biden appointed this summer that called for 24% raises over five years, $5,000 in bonuses and one additional day of paid leave per year.
The pending agreements stalled because the respective unions want the railroads to go beyond the board recommendations and address concerns about strict attendance policies and working conditions.
LEGISLATIVE FORCE
Top Republican lawmakers are preparing for Congress to intervene in the standoff, as the Biden administration tries to cajole negotiators into an agreement.
Sens. Roger Wicker, R-Miss., and Richard Burr, R-N.C., have introduced legislation that would force the rail companies and unions to accept contract recommendations made by Biden's emergency board.
Republicans said they still prefer a voluntary deal between the unions and railroads to congressional intervention. The legislation would not codify the board's recommendations until the strike deadline is reached Friday.
Seeking to resolve the impasse, Labor Secretary Marty Walsh hosted emerging meetings of the rail carriers and unions on Wednesday in Washington, D.C.
On Tuesday, Senate Minority Leader Mitch McConnell, R-Ky., said that he supports adoption of the board's recommendations and called on the president to do the same.
"That seems to me to be the perfect place to get the strike settled," McConnell told reporters Tuesday.
Democratic lawmakers, meanwhile, have largely entrusted the Biden administration to reach a deal, and it's not clear whether they would support the GOP's legislation, against the wishes of labor unions, should the impasse reach that point.
Democrats are highly unlikely to approve legislation mandating that workers accept the contract recommendations without changes to time-off policy, said Larry Cohen, a labor leader and former president of the Communications Workers of America.
"Democrats are not going to impose these contracts without dealing with the issue of workers' working lives," Cohen said. "Republicans are viciously against collective bargaining, but carriers are going to have to respect people's lives, and there's going to have to be respect for these workers. They're not getting a settlement without it."
STOKING INFLATION
A halt to shipments of grains, fertilizer, fuel and other crucial items threatens to hobble the U.S. economy at a time of rampant inflation and fear of a prolonged global economic slump, pushing decades-high inflation even higher across the country.
A strike would place new strains on U.S. supply chains and add to price pressures that aren't easing as much as forecasters had hoped. A government report on Tuesday showed consumer prices in August rose 8.3% from a year ago.
Food prices, which are vulnerable to a holdup in rail deliveries, were one of the main contributors to the headline rate, while prices for clothing and new cars also advanced from the previous month.
"This is another risk to tamping down on inflation," said Wells Fargo senior economist Sarah House.
"Goods inflation was really where we were supposed to see the most relief," she said, and the rail strike could mean "we're not potentially getting that relief -- that's a big development for the inflation story."
The railway work stoppage would cost $2 billion a day, depending on how long it lasts, according to the Association of American Railroads.
That could be a setback for U.S. supply chains that are only now recovering from the global turmoil caused by the pandemic, a key driver of the past year's wave of inflation as companies scrambled to get their goods to factories and consumers.
FREIGHT, COMMUTER IMPACTS
The effects of a potential strike would also spread beyond the rail industry -- which carries more than a quarter of goods transported within the United States -- to upend other modes of freight transport.
The American Trucking Association has already called on Congress to help resolve the dispute, warning that the stoppage would require nearly half a million more trucks and 80,000 more drivers -- which aren't available -- to fill the gap.
"The risk is that the last most-economic alternative aside from air freight will see a rise in prices -- that will add to the overall cost of getting goods from point A to point B," said Peter Earle, an economist at the American Institute for Economic Research.
About half of rail freight is final goods destined for consumers, while the other half is raw goods and heavy freight, including coal, car parts, agricultural produce and equipment.
Meanwhile, thousands of Americans would have to find alternative means of transportation if the strike goes ahead, with commuter lines to Washington, D.C., and Chicago warning that trains on some routes will grind to a halt.
Amtrak canceled all long-distance trains starting today.
The disruptions come at a difficult time for Amtrak and transit agencies after ridership plunged during the pandemic and has yet to return to normal.
Amtrak's long-haul network and some commuter rail operators use tracks owned, maintained and operated by freight companies, leaving them with little option to keep services.
Information for this article was contributed by Isis Almeida, Kim Chipman, Ryan Beene and Katia Dmitrieva of Bloomberg News, as well as Josh Funk of The Associated Press.