By: Rick Walker, Vice President, TradeInsights

Just as we think things cannot get any worse, major U.S. railroads are expected to start shutting down intermodal operations as early as midweek this week. The Biden administration has urged railroads and unions to reach a deal to avoid a work stoppage, that according to the White House would pose an unacceptable outcome to the U.S. economy that could cost $2 billion per day. Railroads are vital to the transport of necessities ranging from fuel oil to consumer goods and a lockout or strike could snarl supply chains, stoke inflation and pressure the already fragile U.S. economy.

The National Carriers Conference Committee (NCCC), which represents railroads including Union Pacific, BNSF and CSX has been in contract talks with unions representing 115,000 workers for more than two years. Biden appointed a Presidential Emergency Board (PEB) last month to break the impasse and the board released its findings to interested parties on Tuesday. “The railroads are prepared to meet with the rail unions and reach agreements based on the PEB report without delay,” the NCCC said.

The NCCC said the recommendations would increase wages by 24% during the five-year period through 2024, with a 14.1% wage increase effective immediately. Factoring in healthcare, retirement and other benefits, employees’ total compensation would average more than $150,000 per year.

In addition, Congress would act to avert a strike that could shut down freight-rail operations across the country, House Majority Leader Steny Hoyer said Monday. “There is a role for Congress if in fact they fail to reach an agreement,” the Maryland Democrat said on Bloomberg Television’s “Balance of Power” with David Westin. “We can pass legislation if needed.”

Industry groups, including the US Chamber of Commerce, have urged lawmakers to intervene by extending the Friday deadline for a deal or to force both sides to accept a settlement. “A national rail strike would be an economic disaster — freezing the flow of goods, emptying shelves, shuttering workplaces, and raising prices for families and businesses alike,” chamber President Suzanne Clark said in a statement. Congress has the power to delay or halt a rail work stoppage altogether. In 1986, lawmakers extended a no-strike rule for 60 days to continue negotiations with the Maine Central Railroad Union.

V. Alexander will continue to monitor this situation and provide updates as they become available.

Please contact your V. Alexander account team, or you may also contact our Trade Compliance team at tradeinsights@valexander.com with any questions, and you can always follow us on our website www.valexander.com for updates on this and other topics.