9/12/22, 8:38 AM US railroads to begin cutting service as deal with biggest unions remains elusive

Published on JOC.com (https://www.joc.com)

Home > US railroads to begin cutting service as deal with biggest unions remains elusive

Ari Ashe, Senior Editor | Sep 09, 2022 7:23PM EDT

US freight railroads will reduce service effective Monday ahead of a possible strike on

Sept. 16 after the country’s two largest rail unions failed to agree on a new contract this
week and told management they are unwilling to promise they won’t walk off the job,
according to a customer advisory sent to shippers late Friday by Norfolk Southern
Railway. The developments were confirmed in a statement from the Association of
American Railroads. 

The five US Class I railroads, along with more than 30 regional and short-line railroads,
began notifying customers on Friday about the service cuts because they don’t want to
leave hazardous materials or expensive cargo abandoned on trains across the US, if
labor were to walk off the job. 

Two largest rail unions in the US have yet
to agree on a new collective bargaining
agreement and could walk off the job next
week. Photo credit: Ray
Geiger/Shutterstock.com.
“Railroads are taking all measures necessary to handle sensitive cargo in accordance
with federal regulations to ensure that no such cargo is left on an unattended or
unsecured train in the event of a work stoppage due to an impasse in labor negotiations,”
the AAR said. “Additionally, other freight customers may also start to experience delayed
or suspended service over the course of next week, as the railroads prepare for the
possibility that current labor negotiations do not result in a resolution and are required to
safely and securely reduce operations.” 

Contract deals have been struck with 10 out of 12 rail unions, but the two holdouts are the biggest — the Brotherhood of Locomotive
Engineers and Trainmen (BLET) and the International Association of Sheet Metal Air, Rail, and Transportation Workers (SMART) —
which account for more than 90,000 rail employees necessary to operate trains and maintain the tracks.  

Three unions agreed to a deal Aug. 29 that guaranteed wage hikes in line with the recommendations from the Presidential
Emergency Board formed on July 16 to avert a rail strike. Seven more unions have struck deals in principle with similar terms and
conditions, including a 22 percent wage increase covering 2020 through 2024, and $5,000 in bonus payments. 

https://www.joc.com/print/3685096 1/2
9/12/22, 8:38 AM US railroads to begin cutting service as deal with biggest unions remains elusive

The Biden administration pushed both sides to make a deal to avert a strike six weeks before crucial mid-term elections, but the
presidential authority expires on Sept. 16 at midnight when a 30-day “cooling off” period ends. If the two sides don’t voluntarily agree
to extend the "cooling off" period until mid-October, then Congress would have to pass legislation to prevent any strike or lockout. 

Supply chains already near breaking point 

The stakes are high for a deal to be reached because the Association of American Railroads estimates that a strike would cost the US
economy $2 billion per day. The Bureau of Transportation Statistics reports that about 30 percent of US freight, including non-
containerized goods, travels on trains. 

The timing of a reduction in service ahead of a possible strike is not good as international supply chains are clogged with containers
piling up at intermodal terminals in Chicago, Dallas, Memphis, Kansas City, and Ohio Valley.  

Labor action would also cause disruptions in ports across the US because a sizable share of containers is moved off terminals on
trains, including from the ports of Los Angeles and Long Beach, New York and New Jersey, Savannah, Seattle-Tacoma, and Virginia. 

Even domestic intermodal activity would be impacted with intermodal marketing companies large and small unable to book capacity
for all their loads. 

A strike could disrupt the trucking market and send spot market rates, which have been falling for eight months, back upward as
shippers scramble for capacity to move their loads across the US. 

Contact Ari Ashe at ari.ashe@ihsmarkit.com and follow him on Twitter: @arijashe. 

Rail & Intermodal › Class I Railroads

Rail & Intermodal › Class I Railroads
Rail & Intermodal › Class I Railroads
Rail & Intermodal › Class I Railroads
Rail & Intermodal › Class I Railroads
Rail & Intermodal › Class I Railroads
North America › United States
› BNSF Railway
› CSX Transportation
› Kansas City Southern Railway
› Norfolk Southern Railway
› Union Pacific Railroad

Source URL: https://www.joc.com/rail-intermodal/class-i-railroads/us-railroads-begin-cutting-service-deal-biggest-unions-remains-elusive_20220909.html

https://www.joc.com/print/3685096 2/2