UPDATE: 9/15/2022—At 5:00 am this morning, the White House announced that a tentative agreement had been reached with the rail employers and the remaining rail labor unions that will avoid the potential for a strike or lockout.
This is welcomed news, as such action would have crippled the nation’s rail network and inserted chaos into a supply chain that has finally shown signs of recovery over the last several weeks.
The details of the agreement are not known, but all sides are showing signs of restoring services and schedules that had been removed in anticipation of labor action.
The two largest labor unions representing workers essential for operating and maintaining railroads have failed to agree a new contract, and preparations have begun for a strike to begin as early as Friday, September 16.
Rail unions have been pushing for a new agreement over the last several months, and an Emergency Board put together by the Biden Administration was able to issue a “cooling-off” period to avoid any labor action.
However, that period comes to an end at midnight on September 16. With no new contract in place, the stage is now set for what could be a devastating work stoppage on an already strained rail network.
In preparation, major rail operators such as Norfolk Southern have announced they will begin reducing services as early as Monday, September 12, to limit the amount of material that could be stuck on the rail—should a strike occur. Another announcement confirmed the plan to stop receiving any new equipment at 17:00 on September 14.
Containers moving on rail to inland points have experienced a number of difficulties throughout 2022, including extended delays at ports of unload and extreme congestion at inland points through the Midwest and Ohio Valley.
A strike at this time would certainly worsen the situation, potentially stranding containers already in the rail network, while forcing alternative options such as transloading and full truckload for cargo that would otherwise be routed on the rail. It would also reverse the recent decline in truckload costs, as this would cause a large spike in long haul demand.
It remains to be seen if the Biden Administration or Congress will be able to intercede again, should the two sides not come to an agreement this week. Such an action could extend another grace period to keep rail cargo flowing. Even so, if a grace period is enforced, a threat will remain until an agreement is made.
Mohawk Global will continue to monitor the situation and provide updates, as they are available.
By Chris Lindstrand, Director of International Transportation