After last week’s rejection of the deal by a union representing train drivers, President Biden called on Congress to avoid a costly strike before the deal’s Dec. 9 deadline. “It’s not an easy call, but I think we have to do it. The economy is at risk,” he said.
Biden led a Nov. 29 meeting on the topic that included House Speaker Nancy Pelosi, House Republican Leader Kevin McCarthy, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell. The US Congress is expected to vote on the issue on November 30, and if the vote passes, it has the authority to order workers back to work.
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Heading into the busiest shopping time of the year, retail industry representatives have expressed concern over the prospect of a rail shutdown. Following Biden’s urgent message to Congress on Monday, National Retail Federation President and CEO Matthew Shay echoed the call for action. “The freight rail system is an integral part of America’s transportation system, bringing freight to communities in every corner of the country every day. Millions of Americans depend on good, stable rail operations to safely transport consumer goods, food and other essential items,” said Shay. “A rail strike, coupled with historically high levels of inflation, could wreak financial havoc and cause catastrophic damage to American businesses, workers, consumers and the economy. We’re in the peak holiday shopping season and it’s critical that retailers and other businesses can rely on these vital supply chain partners.”
The Consumer Brands Association also weighed in on the matter, calling on Congress to act. “Companies that manufacture and distribute everyday items such as peanut butter, cooking oil, breakfast cereals, soap, canned vegetables and household cleaning products use rail to transport large concentrations of such raw ingredients as well as finished products”, said Tom Madrecki, the vice president of the group. supply chain and logistics. He noted that rail freight accounts for about 30% of total CPG transport, but bulk cargo and other rail-centric businesses rely almost exclusively on railways.
An industry analyst agreed that the risk of a strike has been raised and reported that those already affected by supply chain problems are taking action. “As a unified strike among unions rejecting the deal appears an imminent threat, shippers are already working at emergency sites to shift volume to avoid blocking cargo in the process,” said Spencer Shute, principal consultant at Proxima, a firm that offers procurement service consultancy.
That said, the trucking industry cannot handle all the cargo that would otherwise be shipped by rail. “The cargo market has slowed and the truck-to-cargo ratio is at its lowest point since the start of the pandemic, making the initial cargo diversion fairly easy to navigate. However, the current trucking market and fuel demand cannot compensate for the volume moving through the rail network every day,” Shute said.
He added a warning: “Should an all-out strike go into effect, the US economy could be severely affected even as we head into the holiday season and as we move into 2023. Businesses will see rates rise rapidly and the ability to to decrease significantly. Automotive, fertilizer and food companies, mainly dry goods, move a significant portion of their volume by rail. Any strike could shut down 30 percent of U.S. freight.”