The deadline for a rail strike that could cost $2 billion a day is approaching

A road maintenance worker watches as an eastbound freight train passes his gang in Alva, Oklahoma.

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Following the latest round of labor negotiations between the National Conciliation Commission, unions and freight railroads, the Association of American Railroads released a report predicting that the economic impact of the strike Railways nationwide can reach more than 2 billion USD per day.

Hitherto, five out of 12 unions, which represents 21,000 employees, has reached voluntary agreements with the railway. According to August data, the 30-day period when unions can quit is midnight on September 16. There are just under 115,000 Class I railroad employees in the US.

If a strike occurs, report from the AAR’s economic and policy team – using historical data from the Federal Railroad Administration – declared that the 140,000-mile rail network across 49 states and 7,000 Class I trains would be out of service and The impact would paralyze both commerce and commuters.

Have not enough trucks or truck drivers According to the report, to move rail containers, 467,000 more long-distance trucks are needed per day to handle cargo.

Logistics executives told CNBC that the impact of a nationwide rail strike would hit the economy far more than a port strike on the West Coast.

“Depending on the length of any service disruption, the overall impact will double each day as the disruption continues,” said Alan Baer, ​​CEO of OL-USA. “As we have experienced with ports, delays add up quickly and now take weeks to clear. Inland trucking rates will increase as capacity disappears. Overall a scenario. nightmare.”

Raise the salary that the railroads are providing

The details of the agreement was recommended by the Presidential Advisory Board appointed by President Joe Biden in July to prevent a strike. They are non-binding, but if implemented, employees will receive a 14.1% salary increase effective immediately and a compound salary increase of 24% for a 5-year period from 2020 to 2024. Service will also be awarded to the employee over the term of the contract and will total $5,000. Combining one-time payments and retroactive pay raises, employees will receive an average instant payment totaling more than $11,000.

The average salary of a railroad employee if the agreement is ratified will be about $110,000 per year at the end of the agreement. Combined with benefits like retirement and health care, employees will earn $160,000 a year. If agreed, industry insiders told CNBC the overall wage increase would be the most significant in at least 40 years of negotiations over rail labor. According to industry reports, the average U.S. Class I freight rail worker earns a salary of $95,700 and ancillary benefits of $40,000 in 2020, for a total compensation of $95,600. $135,700.

The terms of the agreement must be agreed between the union and the railway.

The National Carriers Conference Committee, which represents freight rail lines, declined to comment to CNBC, citing the sensitivity of active negotiations. A spokesman for the Transportation Exchange Division of the AFL-CIO – a federation of 37 leading transportation workers unions in the US – also cited ongoing negotiations and declined to comment.

Several union holders have recently made strong statements about their stance. Leaders of the BLT and Smart-TD unions said in a Labor Day statement that they have been “engraved” from the rest of rail labor because “we are the only Union that the unions have.” The carrier stressed when it changed its working rules during the PEB hearing.”

“It has become clear during our Post-Presidential Emergency Board (“PEB”) negotiations with the Railroad Carriers that they are counting on the Federal Government to assist if we No Agreement could be reached, and to date, we have not reached an Agreement,” stated BLT President Dennis Pierce and SMART-TD President Jeremy Ferguson.It was the same rail carriers that complained about government intervention when the Federal Railroad Administration proposed a regulation on crew sizes, and shuddered at the thought of the Surface Transportation Board banning crew size. implementing regulations that could help shippers, currently all but Congress, refuse so far. Negotiate terms that our members will accept and ratify. “

In a statement, AAR President and CEO Ian Jefferies said, “As the freight sector enters peak shipping season, the nationwide rail shutdown will result in economic damage. daily non-essential $2 billion President Biden’s PEB recommends provisions that will maintain the highest quality of health care coverage and results in a 24% compound salary increase, bonuses totaling $5,000 la – highest salary increase in nearly 50 years.”

“Just like those unions that have temporarily agreed to the PEB agreement, each of the remaining unions can still enter into agreements based on these recommendations. However, if the negotiations fail and result in settlements stop work, Congress must act to implement PEB’s recommendations – reward employees and prevent unnecessary economic harm and uncertainty for rail customers.”

Industries urge Congress to intervene

Several major industries including the Fertilizer Institute and the Retail Industry Leaders Association have sent letters to Congress asking to intervene.

“More than half of fertilizer moves by rail year-round across the United States, and the timeliness and reliability of fertilizer shipments is absolutely critical,” he said. TFI said in its letter. “If farmers don’t receive fertilizer, it will lead to lower crop yields, higher food prices and more inflation for consumers.”

RILA members, which account for more than $1.5 trillion in annual retail sales, Written, “Failure to reach a reasonable agreement could result in significant disruption to the rail network, the retail industry, and ultimately American consumers.”

According to the AAR report, industries that rely heavily on railways to move their products include e-commerce, agriculture, chemicals, automotive, construction and coal.

UPS, for example, could be one of the largest rail customers,” the report states. An intermodal container or a rail trailer shipping for UPS can hold 1,800 to 2,000 packages. A train with 100 containers or trailers can have 200,000 UPS packages headed to our doorstep. “

The report notes that the U.S. supply chain will also be disrupted by delays in raw materials, such as wood from Canada used to build and construct homes, cars and auto parts. .

Travel itinerary, impact of Amtrak

Amtrak will also be significantly impacted, AAR reports, as the passenger rail service owns a very small portion of its rail system, with the remaining 97% running on tracks driven by rail lines. Cargo owned and maintained. In addition to the tracks, the freight lines also provide services to Amtrak, from station maintenance, train maneuvering and emergency repairs to security.

Both the union and the rail negotiators will meet again with the National Conciliation Commission on Thursday and Friday. Negotiations between the 12 railroad workers’ unions and the National Carriers Conference Committee have been going on for years.

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