A possible national railroad strike is looming over the U.S. supply chain and adding to the inflation fears that have roiled markets this week.
Major freight railroad operators have already warned that they are preparing for a possible strike and halting some services, creating network slowdowns. The deadline to agree to terms is 12:01 a.m. on Friday.
How many railroad unions are there?
Talks involve no fewer than 12 unions, but two unions representing train conductors and engineers are the notable holdouts as they represent more than 50% of the workers at the negotiation table. The two are the Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal, Air, Rail and Transportation Workers. On Wednesday, about 4,900 members of the International Association of Machinists and Aerospace Workers District 19 voted to reject a tentative deal negotiated by their own leadership.
Why are rail unions striking?
Trouble has been brewing for close to three years. In July, President Joe Biden intervened to avert a strike, naming a panel of arbitrators to mediate the contract disputes.
The panel last month issued a 124-page report recommending a 24% pay increase and bonuses through 2024, along with back pay through much of 2020.
But the issue at the heart of the dispute is what unions say are restrictive attendance, sick and time-off policies. Union members say that their workers are penalized for taking unplanned days off for themselves or to attend to family matters, and have to be on call for weeks on end.
“It sucks the life right out of you,” a former engineer told NPR.
Why is Amtrak canceling trains?
Sure, the possible strike involves freight trains. But here’s the catch: Passenger and commuter rail services operate mainly on freight railroad tracks in many areas.
According to the industry group Association of American Railroads, freight railroads such as Union Pacific Corp. UNP, -3.69%, Norfolk Southern Corp. NSC, -2.16%, and Berkshire Hathaway’s BRK.B, +0.05% BRK.A, +0.43% BNSF own and maintain nearly 97% of the tracks on Amtrak’s nearly 22,000-mile system.
Half of commuter rail systems operate at least in part on tracks or rights of way owned by freight railroads, so “a shutdown would also disrupt hundreds of thousands of commuter daily rail trips across the country,” the AAR said.
Amtrak said it has begun “initial service adjustments” in response to the possible strike. Only “minimal” changes are expected for the Northeast corridor between Boston, New York and Washington, and no impact to Acela, Amtrak said.
“If your train is canceled, we will attempt to notify you at least 24 hours in advance at the contact information you provided when making a reservation — as well as offer the opportunity to receive a full refund,” Amtrak said.
Commuter railroads such as Southern California’s Metrolink on Wednesday put up service advisories in case of a strike. New York’s MTA and New Jersey Transit, two of the major commuter railroads in the U.S., told MarketWatch they don’t anticipate disruptions. In the Chicago area, however, the Metra commuter line said it will suspend operations on four of its 11 lines if there is a strike Friday.
When was the last railroad strike?
Wall Street seems inclined to believe railroads are likely to try to force congressional intervention to avoid a strike, and if a strike happens, it would be short.
The precedent for this is the June 1992 railroad strike, the last one in the U.S., that “lasted only two days before Congress passed a bill banning strikes and lockouts,” which was signed by President George H. W. Bush, analysts at Davidson said in a note Tuesday.
If a shutdown were to be longer lasting, however, “we would assume spot rates would spike, as persistent driver and truck shortages would make it difficult for the trucking industry to absorb the additional volume demands,” they said.