Market News & Headlines >> U.S. Scrambles to Avoid Rail Strike

The  federal government is working feverishly to avert a strike against U.S. freight railroads and head off a shutdown of the rail system that would cause a serious disruption to the nation’s supply chain and cost the economy up to $2 billion per day, according to a Transportation Department estimate.

The timing of a strike would be terrible for U.S. agriculture. “A rail stoppage on September 16 would hit right as the fall harvest accelerates in many parts of the United States,” National Grain and Feed Association President and CEO Mike Seyfert noted in a Sept. 12 letter. “The economic damages across the food and agricultural supply chain would be swift and severe.”

Some railways have announced plans to halt unit train shipments of bulk commodities on Thursday a day ahead of the potential strike. A rail shutdown would also disrupt deliveries of needed crop inputs to farmers. Railroads have already halted shipments of ammonia-based fertilizers and other hazardous materials ahead of the potential strike, citing a need to keep supplies secure.

U.S. Labor Secretary Marty Walsh on Wednesday hosted talks in Washington with freight railroad and union officials even as one of the smaller unions involved in the dispute rejected a deal, boosting the odds of a rail stoppage. Nearly 5,000 railway workers at the International Association of Machinists and Aerospace Workers (IAM) voted to reject a tentative contract agreement with railroads and authorize a strike, the union said Wednesday morning.

The country’s two largest railroad workers unions, the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART are continuing to negotiate. BLET and SMART represent nearly half of all U.S. rail workers and specifically engineers and conductors.

Congress has the power under the Railway Labor Act to end the situation either through an imposed settlement or by ordering trains to operate as usual while contract negotiations continue. However, House of Representatives Speaker Nancy Pelosi said it was not clear whether Congress would step in, noting that the main issue "is that there's no sick leave for the workers and that's a problem." "We'd rather see negotiations prevail so there's no need for any actions from Congress," Pelosi added, according to Reuters.