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More rail unions reach tentative labor agreements while concerns over a strike remain high

While two more railroad labor unions have reached tentative agreements with United States freight railroad carriers, the possibility of a freight railroad strike remains a possibility, based on recent statements respectively issued by industry organizations and U.S.-based Class I railroads.

For the former, the National Carriers’ Conference Committee (NCCC), an organization representing the nation’s freight railroads in national collective bargaining, said yesterday that three more railroad employee unions reached tentative agreements with various United States freight railroads.

The NCCC said that the tentative agreements were struck with the following unions— the Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters, the International Brotherhood of Boilermakers, and the International Association of Sheet Metal, Air, Rail and Transportation Workers – Mechanical Department.

This follows previous tentative agreements made in recent weeks, with the following unions: the International Brotherhood of Electrical Workers; the American Train Dispatchers Union; Transportation Communications Union/IAM; Brotherhood of Railway Carmen; and International Association of Machinists and Aerospace Workers.

These agreements follow the announcement of recent appointment of the Presidential Emergency Board (PEB) appointed by President Biden, which is focused on resolving a labor dispute between Class I rail carriers and 12 U.S.-based rail labor unions on reaching labor accord. The PEB’s recommendations, which were released on August 16, include a 24% wage increase over the five-year period from 2020 through 2024, coupled with a 14.1% wage increase that is effective immediately, as well as five annual $1,000 lump sum payments, with NCCC noting that a portion of the lump sum payments are retroactive and will be paid out promptly upon ratification of the agreements by the unions’ membership.

As per the terms of the Railway Labor Act, NCCC said that the unions and railroad carriers are in a 30-day cooling off period, adding that voluntary settlements with all unions would avert any potential rail service disruptions upon the end of the cooling off period on September 16 at 12:01 AM. NCCC added that it is “critical” the remaining unions quickly reach agreements with the railroads, explaining that the rail carriers are in active discussions with the unions yet to reach tentative agreements, which are based on the PEB’s recommendations, while two unions—the Brotherhood of Locomotive Engineers and Trainmen Teamsters Rail Conference (BLET) and the SMART Transportation Division (whom collectively reporesent more than 90,000 railroad employees)—are holding their ground on coming to terms on an agreement.

In a joint statement, SMART Transportation Division President Jeremy Ferguson and BLET President Dennis Pierce pointed to recent actions being taken by freight railroads, in the form of declaring embargoes on certain shipment types five days in advance of the end of the cooling off period on September 16, in which they said railroad carriers advised that all rail shippers could be blocked from making any rail shipments well in advance of the September 16 deadline for a lockout or strike.

Ferguson and Pierce did not mince their words on this matter, saying: “This completely unnecessary attack on rail shippers by these highly profitable Class I railroads is no more than corporate extortion. Our Unions remain at the bargaining table and have given the rail carriers a proposal that we would be willing to submit to our members for ratification, but it is the rail carriers that refuse to reach an acceptable agreement.  In fact, it was abundantly clear from our negotiations over the past few days that the railroads show no intentions of reaching an agreement with our Unions, but they cannot legally lock out our members until the end of the cooling-off period.  Instead, they are locking out their customers beginning on Monday and further harming the supply chain in an effort to provoke congressional action. The railroads are using shippers, consumers, and the supply chain of our nation as pawns in an effort to get our Unions to cave into their contract demands knowing that our members would never accept them. Our Unions will not cave into these scare tactics, and Congress must not cave into what can only be described as corporate terrorism.”

From the railroads’ perspective, Norfolk Southern said that it has started to enact its contingency plans for a controlled shut down of its network at 12:01 on September 16. 

“Although negotiations with the two holdout unions continue, we still do not have a commitment not to strike and must act accordingly,” it said. “Our goal is to ensure that in the event of a work stoppage, crews, equipment, and freight safely reach their destinations with minimal disruption.”

NS EVP & Chief Operating Officer Ed Elkins wrote in a customer service update that the company is taking steps to ensure it can shut down operations safely if a strike occurs and be positioned to restart quickly when operations resume. 

“Most importantly, we must ensure that no hazardous material or freight that requires special security is left on an unattended train out on the network in the event of a sudden strike,” wrote Elkins. “To prevent this, we must begin issuing embargoes for certain types of shipments beginning [September 11], which includes rail security-sensitive material (RSSM) and certain time-sensitive shipments. This does not mean a work stoppage is certain.  We want a prompt resolution that allows us to continue serving customers and prevents disruption to an already fragile U.S. supply chain.  We have asked the holdout unions to come to the table and finalize an agreement based on the recommendations of the PEB, and we will continue to seek a voluntary agreement. If the position of the unions changes and the threat of a strike is retracted, we will seek to resume normal operations as quickly as practical.” 

What’s more, the Association of American Railroads (AAR) issued a report making the case for what is at stake should deals not be struck with the remaining unions that have yet to reach new labor deals.

The AAR’s report puts a firm onus on the need for all 12 rail labor unions to reach deals by the September 16 deadline, explaining that a nationwide rail service interruption “would dramatically impact economic output and could cost more than $2 billion per day of a shutdown.”

What’s more, it added that should deals not be reached by the deadline, Congress will need to step in and act to prevent a service interruption that will harm and impact every rail-served economic sector. Examples of this highlighted in the report include: idling more than 7,000 trains per day; triggering retail product shortages and widespread manufacturing shutdowns; job losses; and disruptions to hundreds of thousands of passenger rail customers.

A research report issued by Cowen & Co. explained that Congress has the power to block and/or delay a rail strike and also noted that Congress could also vote to ratify the PEB recommendations and/or appoint arbitrators to forge a new fast-track contract.

“Biden cannot prevent a strike without Congress,” it said. “The last time Congress ended a rail strike was in 1991 less than 24 hours after it began; there was a four-day rail strike in 1982. Congress has intervened in at least 11 rail strikes since 1963 under the Railway Labor Act of 1926. Fears abound that Congress will fail to intervene to avert a work stoppage due to political gridlock. The 1991 legislation seems like a potential middle ground, though vote margins will be tight: create a board that has 65 days (past midterms) to resolve remaining issues. If board deadlocks, the PEB recommendations go into effect.”

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Railroad Shipping
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About the Author

Jeff Berman's avatar
Jeff Berman
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review and is a contributor to Robotics 24/7. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis.
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