This week is shaping up to be a pivotal one for companies in the US that rely on trains for transporting goods necessary for a healthy economy.
Things have gotten so bad that President Jie Biden urged railroads and unions to reach a deal to avoid a shutdown of the U.S. rail system saying it would pose “an unacceptable outcome for our economy.”
U.S. Labor Secretary Marty Walsh is postponing travel to Ireland to remain engaged in talks, the department said Monday.
“The parties continue to negotiate, and last night Secretary Walsh again engaged to push the parties to reach a resolution that averts any shutdown of our rail system,” a Labor Department spokesperson said. “All parties need to stay at the table, bargain in good faith to resolve outstanding issues, and come to an agreement.”
Bloomberg is reporting that the unions worked through the weekend to avoid a strike that could cost the world’s largest economy more than $2 billion a day, however, there were few signs of progress.
Many companies are advising customers of potential service disruptions starting today, ahead of a potential walkout later this week.
To that end, on Sunday, Norfolk Southern said in an online notice that it “has begun enacting its contingency plans for a controlled shutdown of our network at 00:01 on Friday, Sept. 16.” Union Pacific and CSX also announced contingency planning for a possible strike. BNSF urged its customers to call members of Congress to prevent any interruptions.
Trains accounted for about 28 percent of total US freight movements, according to government data for 2020, making it the busiest mode after trucks. Half of that traffic moves bulk commodities — particularly food, energy, chemicals, metals, and wood products — as well as automobiles and industrial parts. The other 50 percent consists mostly of shipping containers carrying smaller consumer goods.
America’s ports still struggling
America’s ports are still struggling with backlogs and a disruptive supply chain. The peak season for ocean freight is underway and DHL Global Forwarding says it’s way too early to declare a softening in trade volumes and a decrease in congestion.
The maritime and logistics industry has been in a continuous loop of problems fueling congestion. Land capacity issues creating port and terminal congestion, a lack of railcars, and the unavailability of truckers and chassis have impacted all trade participants.
All this combines to make the stakes sky-high economically, and we’ve already seen what backed-up ports do to the economy. Politically, according to Axios, any work stoppage would spell disaster for a pro-labor White House determined to keep inflation in check and avert bottlenecks.
In the meantime, port workers on the West Coast have been in negotiations for a new contract since the last one expired in June.
The shipping industry says it must automate more of the work loading and unloading ships to keep up and avoid the backups experienced last holiday season.
But dockworkers are not thrilled at having to work with robots or any kind of automation, saying robots are not the answer. They warn automation will only kill American jobs.
In this high-stakes moment at America’s busiest ports, robots are a hot-button issue in contract negotiations between the International Longshore and Warehouse Union, which represents 22,000 dockworkers up and down the West Coast, and the Pacific Maritime Association, which represents 70 ocean carriers and terminal operators.
The talks started in May. The last contract expired July 1. The two sides have agreed to no disruption to the work. But in the past, negotiations have devolved into slowdowns and lockouts, bringing trade to a screeching halt.
This time around, both sides are well aware that any interruption could wreak economic havoc just as the holiday shopping season gets rolling.
“A shutdown of our freight rail system is an unacceptable outcome for our economy and the American people,” a White House official said in a statement to Axios over the weekend.
Actually, the White House is looking at both the rail and port situation, going into the h9oliday season. The American economy is already 0on a rocky path, and we certainly don’t need any more mishaps.
