The rail network carries about 28% of U.S. freight and is second only to trucking, which carries about 40% of freight, according to government data. Railroads are a lifeline for bulk commodities. Freight capacity is already tight across the U.S., and experts say airplanes, trucks, and barges can absorb only a small portion of the big volumes moving by rail if railway workers strike. A potential railroad worker strike could have cost the U.S. economy $2 billion every day.
With rail unions making clear that their workers were prepared to walk off the job, the pressure was building on freight carriers to avoid an economically devastating strike that was set to inflict financial pain on them as well as businesses, farmers, and consumers by crippling the movement of many critical goods. A walkout “could have quickly impacted supplies for fall application and led to a reduction in U.S. production when 70% of European production has been curtailed or ceased due to Russia’s shut-off of natural gas supplies,” Mr. Rosenbusch said.
How The Industries Braced Up for The Potential Railway Strike and its Impacts
Companies from food suppliers in the Midwest to retail importers across the U.S.
Braced for a potential national rail strike by seeking alternative transport to keep their supply chains running.
Bulk commodities such as ethanol and coal: A biofuel shortage could increase gas prices. Alternative sources of transportation needed to be sorted for these, said Debnil Chowdhury, vice president of refining and marketing at S&P Global Commodity Insights.
Transporting of hazardous materials: In anticipation of a strike, transportation of all hazardous material were placed a week before the strike. Any further restriction could have profoundly impacted the industry’s ability to deliver critical energy supplies.
Manufacturers of food, beverages, and healthcare products: These manufacturers were seeking assurances from logistics operators whether they can switch from rail to trucks in the event of a strike, said Tim Humbert, vice president of North American intermodal at C.H. Robinson Worldwide Inc.
Farmers and crops: Corn and Soybeans were at their peak harvest time. U.S. railroads hauled more than 18,000 carloads of grains before the strike, according to the Association of American Railroads. Potential delay of Soyabean to a hog farm in China would have pushed overseas buyers towards other countries, said Peter Friedmann, Executive Director of the Agriculture Transportation Coalition, a Washington, D.C.-based association representing farming interests in shipping. The strike would have crippled U.S. agricultural production and supply chains and exacerbated food price inflation.
Hazardous cargoes: Some railroads were already accepting these cargoes to ensure dangerous chemicals weren’t stranded in unsecured locations in the event of a strike. Cargoes like ammonia are used in fertilizer, and chlorine is used in water treatment, etc. The fear among several groups representing the water sector was that if freight rail service for chlorine does not return to normal, communities would be unable to produce safe drinking water, resulting in many boil water advisories and the threat of waterborne disease outbreaks.
Railroad Strike Impacts on Other Modes of Freight
In the U.S, freight capacity is already tight across the country, and airplanes, trucks, and barges can bear only a small portion of the big volumes that move by rail.
Trucking sector
- This could have triggered delays in getting goods from warehouses to some stores
- Trucking sector is the biggest single customer group for U.S railroads and funnels tens of thousands of loads each week into intermodal rail networks. “The volume freight shippers would try to move and would overwhelm all trucking sectors,” said Dean Croke, an analyst at DAT Solutions LLC.
Sea Freight sector
- This last year seaports have coped with big volumes of containers. They were prepared for a build-up if rail service halts and would have to create space to store boxes at cargo-handling yards and off-dock depots.
- Outside the ports, many logistics facilities remain swamped by the flood of imports.
Craig Grossgart, senior vice president of global ocean for freight forwarder Seko Logistics, said his firm’s 3.5 million square feet of warehouse space near the ports of Los Angeles and Long Beach, Calif., is so full it couldn’t cope with a surge in new cargo.
Congress intervenes in the railroad strike 2022
of railroad union workers, were holding out on a deal until policies on attendance, vacation, and sick days were addressed. The unions claim members are getting fired for missing work due to illness and doctor visits. The deadline was on Friday September 16 at 12:01 a.m., two unions were going to walk out at an impasse over a new labor contract. Labor Secretary Marty Walsh took all efforts to avert a strike. Wall Street analysts had predicted that any walkout wouldn’t last long because they expected Congress to order rail workers to return to their jobs, as lawmakers have done in earlier strikes. Last month itself, President Joe Biden appointed a Presidential Emergency Board to help negotiate a compromise.
Freight rail companies and unions representing tens of thousands of workers reached a tentative agreement to avoid what would have been an economically damaging strike, a relief for businesses and consumers.
The breakthrough on Thursday morning (September 15)came just hours before a critical deadline that would have allowed workers to strike and had already begun affecting rail service across the United States.