It’s been a tumultuous several months for the nation’s railroads, with union workers threatening to stop work if their demands aren’t met. The mixed approval and disapproval of the settlement brokered by the Administration and narrow failures of ratification from several unions with large memberships have placed the issue in Congress and President Biden’s laps to resolve. If a strike were to happen, it would have far-reaching implications for shippers, both domestic and international.
The strike would bring rail transportation to a halt across the country, causing major disruptions in the supply chain. This could be disastrous for retailers who rely on railroads to move their goods from coast-to-coast. Many of these retailers would have to turn to alternative means of transportation to move goods, which given the holiday season, is not only stressful but can be costly. Last-minute supply chain shifts can incur unexpected costs, especially if capacity is limited, so finding a solution may not be as easy as it sounds.
At issue is the issue of sick days – both being granted them and being allowed to take them without fear of reprisal. Today, union employees who need to mark off for things like doctor appointments must do so without pay.
For shippers, this presents an uncertain future. Railroads are an integral part of the supply chain and any disruption could have serious implications. Whether the movement of ocean containers to and from inland rail ramps or trains of coal moving to provide energy for power plants, any kind of stoppage will have disastrous and cascading consequences.
Earlier today, the House of Representatives passed a bill requiring both sides to reach an agreement and are taking up the issue of sick days under a separate bill. The Senate must also take up a corresponding bill. We have a number of sources who have indicated that there is zero likelihood that Congress or the President would allow a strike to happen for any period of time.
Regardless of the clarity of the fact that the union employees will be required to keep working, it doesn’t change the preparation that rails are making – including embargoing cargo – that does not have the potential to impact cargo owners during this critical holiday shipping season.
Argents will continue monitoring developments between the two sides, as well as the interventions taken by Congress, the White House and the relevant cabinet agencies trying to bring the negotiations to a successful conclusion.