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Retail Relieved as Biden Action Averts Rail Strike

A Presidential Emergency Board (PEB) was established Friday, staving off the possibility of a rail strike next week that would have involved 115,000 workers and strangled cargo movement nationwide.

President Biden signed the executive order for the PEB, which will have 30 days to look into the contract dispute between the rail carriers and unions. Labor groups would have had the option of striking as early as Monday if the PEB was not established, following a two-and-a-half-year deadlock on a new collective bargaining agreement for workers.

“Keeping supply chains running means keeping America’s railways running,” the White House said in a statement Friday. “In making the decision to create the Presidential Emergency Board, the president has considered input from relevant stakeholders.”

The PEB now has 30 days to produce a report with recommendations on how the contract dispute can be settled. Both sides will then have an additional 30 days to review the findings.

The National Carriers’ Conference Committee (NCCC), the group negotiating for the carriers, and the dozen unions, represented by the Coordinated Bargaining Coalition and Brotherhood of Maintenance of Way/SMART Mechanical Coalition, were in a 30-day cooling off period after mediation failed to resolve the dispute. That cooling-off period would have ended Monday.

“The rail unions remain united in their efforts, and are now working together in preparation of a unified case representing the best interests of all rail employees before the Presidential Emergency Board,” the unions said in a statement Friday. “Our unified case will clearly show that the unions’ proposals are supported by current economic data and are more than warranted when compared to our memberships’ contribution to the record profits of the rail carriers.”

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SMART-TD confirmed Thursday it had received the required two-thirds vote to authorize a strike in the event Biden didn’t move to establish a PEB.

The Brotherhood of Locomotive Engineers and Trainmen (BLET) said earlier this week 99.5 percent of its more than 23,000 members voted in favor of a strike authorization.

The National Retail Federation (NRF) applauded establishment of the PEB.

“Now that we are in the peak shipping season for back-to-school and winter holiday merchandise it is critical that both parties come back to the table to reach an agreement without any kind of rail service disruption this fall,” NRF senior vice president of government relations David French said Friday.

American Apparel and Footwear Association senior vice president, policy, Nate Herman describes rail as an “increasingly important piece of the puzzle as American businesses that supply clothing, shoes, and accessories work to bring affordable and seasonably appropriate products to consumers.”

“The record inflation that has translated to higher prices on basic necessities like clothes, shoes, and backpacks will only be felt more intensely as Americans get started with purchases of back-to-school goods,” he said in a statement Sunday. “The combination of more than two years of rail negotiations, paired with the breakdown of Federal mediation, means Presidential intervention is essential.”

A strike could have had significant implications on the flow of goods in the U.S., with rail cargo congestion already high. That prompted a number of industry groups, including NRF and the American Apparel & Footwear Association, to ask the White House to intervene in the matter.

Port of Los Angeles executive director Gene Seroka said this week during a media briefing much of the cargo congestion at the port was due to long-dwelling rail cargo, with more than 29,000 rail containers sitting on docks an average of seven-and-a-half days. Rail cargo typically totals around 9,000 containers with a dwell time of around two days.

The glut of rail cargo is a factor in why a container dwell fee first introduced in October continues to see delayed implementation. The most recent decision to hold off on putting the fee into action came Friday when the San Pedro Bay ports issued a joint statement saying the matter would be shelved until July 22, citing a 25 percent decline in aging cargo since the program was first announced late last year.

Seroka, when asked about implementation of the fee, said the situation is not the same as it was back in October when the policy was first announced.

Rail cargo now makes up 75 percent of the aging cargo, according to Seroka, who went on to say he doesn’t see the ports in “the dire straits” they were in last year ahead of the busy holiday season.

The rail contract is one of several disputes involving labor that are being closely watched for their potential impacts to cargo movement.

Port of Los Angeles and Long Beach truck drivers have been protesting Assembly Bill 5 (AB5) since Thursday and are expected to move north to the Port of Oakland to continue their demonstration Monday.

AB5 would make it more difficult for trucking owner-operators and other independent contractors to remain independent and would force many companies to reclassify those workers as employees. Pushback against the legislation is coming from individuals who prefer to remain independent.

A petition calling for the repeal of AB5 had garnered nearly 5,000 signatures as of Friday afternoon.

A new contract for some 22,000 West Coast dockworkers is also being negotiated. The previous one expired July 1 and a new one is likely to be struck sometime in August or September, according to anonymous sources cited by a Journal of Commerce report this week.

Elsewhere in the world, dockworkers at German ports continued a strike that began Thursday after seven rounds of failed talks with employers. The strike is set to end early Saturday morning.