Oncoming Train – Potential Rail Strike in Question

By In Insight On 15th September 2022

Just when you think things may return to normal, there’s another surprise around the corner. Companies within the U.S. that rely on trains for transporting goods may have just avoided what could have been a bumpy ride.

Labor unions and railroads have been working to avoid a strike that could cost the U.S. economy in excess of $2 billion a day. The companies have been alerting customers of potential service disruptions, enacting contingency plans for a controlled shutdown, and providing notice of a potential union strike.

Over 100,000 rail workers could walk off the job without an agreement to a new contract with railroads. The most recent information is that five of the 13 unions representing rail workers have reached tentative agreements with railroads to enact the Presidential Emergency Board (PEB) recommendations, which call for 24 percent pay raises, back pay, and cash bonuses.

Of the total U.S. freight movements, trains account for approximately 28%, which accounts for the busiest mode behind trucks. This is split 50/50 between bulk commodities and smaller consumer goods.

The Midwest region relies upon intermodal commerce, and it is no surprise that Chicago continues to be the most important hub of U.S. intermodal commerce. According to the Association of American Railroads, 46% of all intermodal traffic starts, stops, or passes through the Chicago region.

Trains are a vital link in the supply chain and a key part of the American economy that’s still recovering from the disruptions of the pandemic, including equipment imbalances and severe congestion around rail ramps and container yards.

As of Thur., 15 Sept, the rail unions have advised that they have reached a tentative agreement with railroad companies, averting the immediate possibility of widespread rail strikes that could have crippled the U.S. economy.

The deal will now need to be voted on by unions and approved by its members. However, it puts to bed the immediate risk of strike action that was set to start as early as Friday, 16 Sept, and would have significantly crippled much of the U.S. rail network. This recent news allows the Unions to enter another cooling-off period as members choose whether to ratify the contract.

While it appears that we may have avoided a runaway train, we will have to await the outcome. Still, even a temporary interruption could create a devastating ripple effect in our already fragile supply chain.

No matter what the outcome, we will resolve to find creative solutions and get through this together.

Written by

Mark Williams

Head of Sales Operations & Sales



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