A Possible Rail Strike Is Already Hurting The Economy

A work-stoppage on freight railways could cost the U.S. economy as much as $2 billion per day.
The prospect of a nationwide rail strike is already hurting the economy as the railways halt shipments of dangerous and safety-sensitive materials.

The prospect of a nationwide rail strike is already troubling the US economy.

A possible strike by unionized workers at Union Pacific ( UNP ) and CSX ( CSX ) — two of the nation’s largest railroad operators — is already affecting the flow of freight, which could disrupt freight operations.

According to CNN Business, US freight railroads have already stopped accepting shipments of hazardous and other safety-sensitive materials because of the threat of a strike.

Union Pacific, one of the major national railroads whose operations will be halted by the strike, said the move was meant to “protect employees, customers and the communities we serve,” according to CNN.

Specifically, the railroad trade group said the move is “necessary to ensure that no such cargo is left on uncarried or unsecured trains.”

140,000 workers are seeking better ‘quality of life’ provisions
Union Pacific, CSX and BNSF Railroad, the freight companies owned by Warren Buffett’s Berkshire Hathaway ( BRK.A ), have been pitted against labor unions representing about 140,000 workers seeking to improve “quality of life provisions.” Agreements on attendance policies, vacation and sick days.

There are 12 major unions, and 10 of those 12 have already reached an agreement, but the Brotherhood of Locomotive Engineers and Trainmen, as well as the SMART transport division, are pushing for more.

“Railroads are using shippers, customers and our nation’s supply chain as pawns in an effort to hold our unions to their contract demands,” the union said in a statement. “Our unions will not fall for these scare tactics, and Congress should not engage in what can be described as corporate terrorism.”

 

The growing tension surrounding what could be the first national railroad strike in 30 years beginning this Friday reflects the union’s position. About 60,000 union members who work for the railroad will go on strike, including engineers and conductors who make up the two-man crew on each train.

Although 45,000 other union members belong to unions that temporarily deal with the railroads, a strike by engineers and conductors will bring the freight rail system, which carries about 30% of the nation’s freight, to a standstill — just in time for the busy holiday shopping season.

A potential national financial disaster
In the words of the US Chamber of Commerce, a massive rail strike could deal another blow to the US economy, even a national economic disaster.

Indeed, an abrupt halt to freight rail traffic is the last thing the US economy needs as it struggles to recover from years of supply chain problems that have already left store shelves barren and prompted temporary factory shutdowns just-in-time. Time part – which has fueled inflation.

Labor law for railroad and airline employees differs from the law governing labor relations for most private sector workers. The Railroad Labor Act, the nation’s oldest labor law, allows Congress to act to keep workers on the job in the event of a strike or lockout.

But it’s not clear that Congress can act quickly enough to find the bipartisan solutions needed to win votes to avoid a strike, especially in the weeks before crucial midterm elections.

“The railroads have not indicated any intention to contract with our unions, but they cannot legally lock out our members until the cooling-off period expires,” the union said in a statement. “Instead, they are locking out their customers starting Monday and further damaging the supply chain in an attempt to provoke congressional action.”

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