As you may be aware, certain freight rail workers are threatening to strike pending ongoing union contract negotiations with the carriers they work for. As of Monday, the majority of unions had announced agreements with the National Carriers' Conference Committee representing BNSF, CSX, Kansas City Southern, Norfolk Southern and Union Pacific railways. Two major unions, the Brotherhood of Locomotive Engineers and Trainmen, and the SMART Transportation Division have not reached a settlement. President Biden prevented a strike two months ago by imposing a cooling off period during which a panel he appointed, known as a Presidential Emergency Board (PEB). The (PEB) looked at the disputed issues in the negotiations and issued a recommended settlement.
That 60-day cooling off period is due to expire at 12:01 AM EST Friday, September 16, and President Biden does not have the power to prevent a strike at that time. Only Congress can act to prevent a work stoppage, either by imposing a deal on the two sides or by extending the current cooling off period. We are following the situation closely and will provide updates as more information becomes available and will continue to provide you with strategic support as this situation unfolds.
If the railroads do strike it is expected to be disruptive to freight markets in nearly every transportation mode, including: rail, intermodal, full truckload, less-than-truckload (LTL) and parcel. Approximately 30% of tonnage transported in the U.S. moves via rail. And while some economists estimate the impact to be $2 billion per day, the U.S. has not seen a rail strike in over 30 years. The level of service and rate disruption to over-the-road transportation would depend on length of work stoppage by the railroads.
Many of the national LTL carriers rely on some form of rail service. Most carriers have already ceased putting any shipments on the rails and will utilize more of their own linehauls or purchase over-the-road truckloads. However, be aware that until railroad service is back to normal, LTL shipments will experience more delays in general because of the additional stress on their linehaul networks. Carriers will also begin to put limits on hazmat shipments, guaranteed services, and partial/volume loads. Several publications have estimated that it may take one week of normal operations to catch up for each day of the strike.
We remain hopeful that an agreement and resolution will be reached quickly. In the meantime, Jarrett is here to answer your questions and convert any rail shipments to over-the-road if deemed necessary.
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