After Some Freight Rail Unions Reject Agreement, Strike Is Again a Possibility

Just as the holiday season is getting underway, a potential strike by freight railroad workers stands to possibly derail shoppers and the economy overall.

The stand-off between railroad companies and a dozen unions representing workers from conductors to locomotive engineers is for the second time heading toward a possible strike.

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In September, unions were on the precipice of a potential work stoppage, but then a special emergency board convened by the White House got involved and hammered out a tentative deal.

Since then, a handful of unions voted to reject those terms – enough to disband the agreement with a rough deadline of early December. Even though eight other unions are on board with the proposal, if one union decides to strike the others won’t cross the picket line.

If it comes to that, the work stoppage would cause wide disruptions given that railroads are a lifeline for moving raw materials and finished goods

“It would affect all walks of life as we know it,” said P.S. Sriraj, director of the University of Illinois Chicago’s Urban Transportation Center. “It could affect day to day operations, it could affect families, it could affect industries, it could affect any different sector that you could think of.”

Longtime rail analyst Anthony Hatch, who runs the conference RailTrends, said railroads are a lifeline for moving raw materials and finished goods and Chicago is a key rail hub.

“If we had a real rail strike like you see in other industries, it would not take very long – maybe a day and a half – before auto plants, which are trying to catch up to demand, would have to scale back because they wouldn’t be getting parts,” Hatch said. “Steel wouldn’t be getting coking coal, and farmers’ goods – especially with a very dry Mississippi River – would not be heading to the appropriate silos or down to the Gulf Coast for export.”

The very clothes on his body at some point probably came through Chicago on a train before heading to him in New York, Hatch said.

“This sweater I’m wearing likely came from abroad. Could have been Southeast Asia, in a container, to a store of which the entire North American journey was 90% rail and the last 10% was trucked to a store on Madison Ave.,” he said.

With Christmas and Hanukkah coming up, a freight industry stoppage could also impact holiday shopping.

Gregory DeYong, who used to work in logistics and is now an associate professor of Operations Management at Southern Illinois University, said most big-box stores learned their lessons during the pandemic. They’ve stocked up in case of potential disruptions and most have high inventories.

“So in fact for the Christmas shopping season, the stores are pretty well stocked and the stores are on the shelfs. So if you’re planning on doing your Christmas shopping in person, other than it’s getting later you’d better get going, it’s not a bad situation,” he said. “If you do a lot of shopping online, the longer you wait the closer we get to a situation where there could be a disruption, could be a problem”

Beyond packages, passengers’ travel plans could be canceled.

DeYong said even the threat of a strike could cause Amtrak to cancel service, as it preemptively did for certain routes in the fall when the rail labor dispute was looming.

“You can’t put a bunch of people on a train and send them out to California and halfway there have a railway strike strand them in the middle of Utah,” he said. “It’s bad enough to strand products. It’s really bad to strand people.”

Amtrak did not directly respond to a question about whether it could again take such precautions.

Spokesman Marc Magliari sent a statement saying, “Amtrak continues to monitor ongoing freight rail management-labor contract negotiations.”

He pointed out that this is between freight companies and workers. The negotiations do not involve Amtrak or its workforce. But Amtrak is, to a degree, at the mercy of freight companies given that routes run on tracks owned by the freight railroads.

September’s tentative deal gave rail workers a double digit boost of 24% over the life of the contract, but DeYong said some workers have soured on that given that with inflation at nearly 8% it works out to level pay.

Their frustration is not just about money; unions’ umbrage is over work conditions.

Workers are also demanding less strict sick leave policies, and they don’t want to have to be constantly on call – an issue that gets back to layoffs early in the pandemic, causing a worker shortage now.

“The reality is that they need that workforce and in order to bring them back, they need to woo them back. And it’s not so easy because the workers that have been let go have gone on to other things,” Sriraj said. “And that’s where the rub lies.”

Though railroads are offering incentives for new hires, it takes time to get them up to speed.

Rail analyst Hatch says the timing couldn’t be better for labor, giving them the upper hand. He compares it to New York Yankee Aaron Judge heading into contract talks just after hitting a Major League Baseball record with 62 home runs in a season.

“We have a labor shortage everywhere, right? You have wage inflation everywhere. You have a supply chain crisis that may be on its way out but has been high profile. You have the rail industry under all sorts of public attack in D.C. and other places for poor service, mostly because of a shortage of labor. And finally you have a Democratic government in the House and Senate and the White House,” Hatch said.

Control of the U.S. House will soon flip to Republicans, and DeYong said the uncertainty of what that could mean may be an impetus to get talks back on track. Per federal law, Congress has the ability to force workers back on the job, and to forbid companies from locking out employees.

DeYong said this and other mechanisms, like cooling off periods, are intended to stave off a crisis such as a strike or lockout. As long as both sides are in serious talks, he said they can continue work under the now-expired former contract.

Still, he said, it’s impossible to draw comparisons to past predicaments.

“To say ‘this will be like last time,’ well, last time was 1992 so there was no internet, there was no Amazon, there was no global economy that we see today. So it’s totally different in terms of what can happen,” DeYong said.  “That being said, I think the chances of an actual strike are fairly low.”

Hatch and Sriraj likewise predict both sides will reach a resolution. They say nobody wants to take the blame for the widespread impact a strike or stoppage is apt to have, though it will likely take weeks for that to happen.

“It makes sense not to do it today, but to wait until Dec. 7 or something because the pressure is the whole game they’re both playing with each other,” Hatch said. “If we don’t get a settlement and there is a strike, I believe it will last somewhere between a day and a minute because they’ll have to intervene in order to not bring everything else down with it.”

Follow Amanda Vinicky on Twitter: @AmandaVinicky

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