Possible U.S. Rail Strike Now Back On the Table

A labor strike along U.S. railroads is still a possibility after the third-largest railroad union rejected a tentative labor agreement this week. The agreement had the support of the White House, but without all unions voting in favor of the agreement, a labor strike could still occur in mid-November. 

Union leaders are arguing the railroads didn’t do enough to address worker concerns, largely surrounding working conditions and paid time off. Now, both sides will need to return to the bargaining table to avoid a possible strike once again.

The last close call happened just before the September 16th deadline, when a last-minute tentative agreement was struck, preventing a rail strike from taking place on that same date. Now, those labor conversations are back on as the Brotherhood of Maintenance of Way Employes Division Union opposed a potential five-year contract that already included a 24% raise in wages, as well as $5,000 in bonuses.

“The majority of the BMWED membership rejected the tentative national agreement and we recognize and understand that result,” said BMWED president Tony D. Cardwell in a statement. “I trust that railroad management understands that sentiment as well. Railroaders are discouraged and upset with working conditions and compensation and hold their employer in low regard. Railroaders do not feel valued. They resent the fact that management holds no regard for their quality of life, illustrated by their stubborn reluctance to provide a higher quantity of paid time off, especially for sickness. The result of this vote indicates that there is a lot of work to do to establish goodwill and improve the morale that has been broken by the railroads’ executives and Wall Street hedge fund managers.”

Transportation Nightmare 

Strike or no strike, one veteran market analyst says rail issues are still severe, and now backlogs on the nation’s rivers due to low river levels mean even more emphasis will be placed on rail at a time when transportation logistics have been dubbed a “nightmare.”

“Well, even if we don't have a rail strike, the rail is so congested and so problematic,” says Dan Basse of AgResource Company. “Today, it's not going to make much difference. Rail prices are rising. If you look at the barge market heading to the Mississippi today, it costs one-and-a-half times to get beans to the Gulf as it would to load it and get it to China. It's crazy what's going on.”

Sourcing feed was already a problem for livestock producers and grain buyers in the western U.S. Issues nationwide mean everyone is paying more to get the essential grain.

“If you're in Kansas or the Western Plains, you're paying $2-over-plus for corn, if you can find it. It's a problem,” says Basse.

While the third-largest rail labor union rejected the tentative agreement, all 12 unions, which represent nearly 115,000 workers, must ratify their contracts to prevent a rail strike. Four other rail unions approved their agreements with freight railroads.

By Monday midafternoon, the U.S. rail industry had yet to comment on the latest union development. 

History of Ongoing Rail Strike Threat 

As AgWeb first reported in July, a possible strike has been brewing all summer, with NGFA fearful a strike would occur in the middle of harvest. Fisher says even though a strike is prohibited by law ahead of Friday’s deadline, rail companies are shutting down shipments in advance in order to mitigate potential damages.

“The railroads don't want to have the cars and equipment out in areas of the country where they can't protect them very well,” Fisher adds. “So, they're taking steps to mitigate damages. For our members, they're looking at essentially not receiving their grain on time and not being able to then ship out the finished products such as ethanol, flour, things of that nature.”

Impact on Farmers 

What will it mean for farmers? Max Fisher, NGFA chief economist, says a potential rail strike will have a severe economic impact on agriculture. 

“From what I'm being told, we really cannot have the railroad stop even for a minute,” Fisher says. “With the railroads, there's so much planning involved in every shipment that if we get them off plan, like have all the workers at home and so forth, it's very hard to get things started again.”

Another potential problem is grain processing facilities and the backlog it could create. Fisher fears some NGFA members will be forced to shut down.

“I think there's a very good chance we're going to have shutdowns in the grain industry and at our processing facilities, not to mention the impact on our exports also,” Fisher says.