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Business Groups Urge Biden to Intervene to Help Prevent Rail Strike

Two rail worker unions recently rejected a new contract their leadership had agreed to, raising the chances of a railroad strike that would cripple supply chains and hurt promo and other industries.

A coalition of more than 300 business groups representing a wide array of industries fears the potential for a supply chain-crippling railroad worker strike is quickly increasing; it has sent a letter to President Joe Biden calling on his administration to intervene in contract challenges to prevent a work stoppage.

The letter from the 322 groups – representing everyone from retailers to farmers to automakers – came after two rail worker unions recently voted to reject a contract that their leaders had reached a tentative agreement on with railroad employers in September.

freight train cars

Six other unions have signed onto the agreement. Four more need to vote. Still, in order for railroad operations to continue unaffected under a new contract, all 12 unions covered by the proposed deal must approve it.

If that doesn’t happen, a strike could begin by Nov. 19. Such a work stoppage simply can’t happen, the business groups say, because it will cause massive domestic supply chain disruption, as 30% of the United States’ cargo moves by rail. Repercussions of a strike could include worsened inflation and shortages of essential goods and products, potentially including fuel and food, critics say.

“It is paramount that these contracts now be ratified,” the letter to the Biden administration said.

Signees on the letter included The American Farm Bureau Federation, Alliance for Automotive Innovation, American Bakers Association, National Retail Federation, and U.S. Chamber of Commerce.

If a deal is not reached by Nov. 19, it’s possible that Congress could step in to legally prevent a strike. Whether or not that would happen is unclear, though some lawmakers have spoken in favor of taking action.

The promotional products industry would not be immune to disruption from a strike. Fallout could include much more expensive costs for moving product from port to warehouse, as logistics pros across industries would be scrambling to get items on trucks and even planes – items that they would have moved by rail.

Insufficient capacity in the non-rail transportation industry for moving the increased influx of goods could lead to restocking delays for promo suppliers, which could then translate to renewed inventory shortages.

The nation came within hours of a strike in September, but an 11th-hour tentative deal was reached between union leadership and railroad employers with the help of the Biden administration, which appointed a special board of arbitrators that established the framework for a compromised contract. This prevented a work stoppage.

Nonetheless, rank-and-file union members must vote to ratify the deal, and two railroad unions have rejected it over what comes down to quality-of-life issues. Most basically, union members want paid sick-leave time added and the easing of schedules that they assert keep them working or on call around the clock.

Railroad employers have so far rebuffed those demands. Last week, for instance, the National Carriers’ Conference Committee (NCCC) representing major railroads – including BNSF, CSX, Norfolk Southern, and Union Pacific – issued a statement rejecting new sick-time requests made by the Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters (BMWED).

Under the tentatively agreed-to contract, workers would get an immediate 14.1% wage increase following ratification. They’d also get wage increases totaling 24% during the five-year period of the contract – 2020 to 2024. The deal is retroactive.

Unionized workers would see their next annual increase in July 2023 – 4% – followed by a 4.5% rise in July 2024. They’d also receive five $1,000 annual lump-sum payments, and at a time when healthcare costs are skyrocketing, the rail workers would see no change to their insurance copays or deductibles. The workers had been without a contract since 2019 as the contentious negotiations proceeded without result.