President Joe Biden has announced an agreement in principle between the unions and the trucking companies. In a statement, Biden has declared:
The agreement in principle reached tonight is an important victory for our economy and the American people. It is a victory for tens of thousands of railroad workers who worked tirelessly during the pandemic to ensure that America's families and communities received deliveries of what has kept us standing during these difficult years.
The International Association of Machinists and Aerospace Workers (IAM) union had rejected the settlement offer that would have ended the strike that begins Friday. Two other unions had accepted the terms, but in the face of IAM's refusal, the strike was maintained. In anticipation of service being disrupted, Amtrak has decided to suspend all long-distance trains.
The main stumbling block to an agreement is not related to economic conditions. The agreement in principle provides for a 24% salary increase in 2024. Unionized workers at the IAM want to be able to request a day off for the illness of a family member. Engineers and drivers, grouped in the Brotherhood of Locomotive Engineers and Trainmen and SMART, also insist on this point. Freight companies insist on their right to manage human resources, and administer work attendance and labor discipline. Union Pacific and BNSF have introduced changes to avoid the problem of absenteeism.
Transportation Secretary Pete Buttigieg has stated from the Detroit auto show that.
Everyone is going to have to move a little bit to get a deal done. The United States needs a strong, functioning rail system, which is why we continue to stress to the parties the urgency and importance of getting a new agreement quickly.
Supply chain disruptions
The consequences of a strike that would paralyze rail transport would be very negative for the economy. Vox
Rachel Premack, editorial director of FreightWaves, a publication that reports on supply chains:
The railroad transports many commodities that we don't think about on a daily basis. They move sand and gravel that is then crushed into concrete for roads or to lay the foundations of houses. Railroads move chemicals used to purify water or to compromise crop fertilizer, soybeans that could become food for humans or [los animales] that are then food for humans. This is a lot of goods from the initial chain.
According to According to the Association of American Railroads (AAR), trains transport 1.6 million railcars of food annually. Seventy percent of food transport is by road, but there are not enough trucks to take on the transport that would be lost with the train strike.
Energy would also be affected. The AAR notes that trains transport 70% of the ethanol and 70% of the coal. Gasoline prices could rise by 35 to 75 cents per gallon in the event of a rail shutdown, says expert Patrick de Haan
#GasPrices could jump 35-75c/gal if a railroad strike lasted more than a few days, should the shipment of these components impact refiners production abilities. Gasoline inventories could quickly draw. It's a situation to watch carefully.
- Patrick De Haan ⛽️📊 (@GasBuddyGuy) September 14, 2022
Industry could be paralyzed, at least in part, by the interruption of the arrival of intermediate goods. AAR again
that trains carry 1.8 million parts from the automotive industry alone.