(by Tyler Durden | Zero Hedge) – President Biden and senior administration officials are working with others in the transportation industry, including truckers, shippers, and air freight, for “contingency plans” if a rail shutdown materializes at the end of the week, a White House official told Bloomberg.
The administration is trying to understand what supply chains could be disrupted the most — and how to utilize other forms of transportation to ensure commodities and consumer goods continue to flow across the country.
More than 100,000 railroad workers could walk off the job on Friday if freight-rail companies and unions don’t reach labor agreements.
We noted that 29% of all US freight moves on the rails. Half the cargo is bulk commodities, such as energy, food, chemicals, metals, and wood productions — the other half is shipping containers of consumer goods.
A work stoppage would cost the US economy $2 billion per day in supply chain disruptions. It wouldn’t be the best optics for the Biden administration ahead of the midterm elections.
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The Biden administration held talks with freight-rail companies and unions to avert more than 100,000 railroad workers walking off the job if contracts weren’t agreed upon by the end of the week, according to Bloomberg.
President Biden’s involvement in stalled labor talks indicates just how serious the White House is taking the possibility of a work stoppage. Most of the railroad unions involved in contract disputes have reached agreements or were very close (as of Monday), while two unions totaling more than 100,000 workers are prepared to strike on Friday if contracts aren’t signed.
Bloomberg said a union-affiliated person close to the negotiations noted some progress at the bargaining table Monday, but the unions and railroads still can’t agree on letting workers take unpaid time off for doctor’s appointments without being penalized.
A strike ahead of the midterm elections in November would be a huge political risk for Biden and Democrats. A work stoppage would result in increased nationwide supply-chain chaos. Biden has promised the nation to be the most pro-union president ever — so optics would be very sour if a strike were allowed.
Most of the 12 railroad unions have reached or finalized tentative agreements with BNSF Railway, CSX Corp., Kansas City Southern, Norfolk Southern Corp., and Union Pacific Corp. via collective bargaining. Two unions, the Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal Air, Rail and Transportation Workers, accounting for more than 100,000 workers, are still holding out while negotiating.
On Monday, freight-rail companies initiated “contingency plans” for the possibility of a controlled rail network shutdown if labor disputes weren’t resolved.
Amtrak warned passengers that interruptions could begin today on its national network as it removes trains on three long-distance routes “to avoid possible passenger disruptions while on route … these adjustments are necessary to ensure trains can reach their terminals prior to freight railroad service interruption if a resolution in negotiations is not reached,” Amtrak said in a statement.
The Association of American Railroads warned a freight railroad shutdown could “devastate” Amtrak operations. This would likely mean tens of thousands, if not more, daily commuters could experience travel disruptions if a work stoppage occurred.
Railroad Strike: 57k worker, soon as Friday.
-suspension of some longer routes for passengers starting today
-up to $2b per day cost to economy daily, although rerouting some cargo & passengers via alt carriers will be attempted.
— Diane Swonk (@DianeSwonk) September 13, 2022
We explained Monday a strike would cost the US economy $2 billion per day and result in supply chain disruptions for shipments of commodities, such as grains, fertilizer, and energy, along with consumer goods.
“Coal would stop,” said Ernie Thrasher, chief executive officer of Xcoal Energy & Resources LLC, the biggest US exporter. “No coal is going to move until these guys go back to work.”
Iowa Republican Chuck Grassley tweeted that President Biden needs to tell the unions to find a resolution, and “if he can’t, Congress must.”
“There is a role for Congress if in fact they fail to reach an agreement,” House Majority Leader Steny Hoyer told Bloomberg. “We can pass legislation if needed,” he said.
Congress can delay or halt a rail stoppage and it would probably be in the best interest of Democrats for optical reasons ahead of the midterm