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Retail Backs Biden’s Call for Congressional Intervention in Rail Dispute

The full force of the retail industry is behind a call by President Biden for Congress to make a move on the protracted rail labor contract negotiations and put an end to the possibility of a strike next week. 

Biden on Monday urged Congress to pass legislation that would force workers to accept tentative agreements their leaders struck with carriers in September. Four of the dozen unions involved in the current round of collective bargaining agreements returned votes rejecting those deals, with paid sick time the major sticking point among three of those groups. 

Biden reminded the public all sides had called the agreement a “fair resolution” at the time the tentative deals were struck. Those agreements were based on recommendations made by the Presidential Emergency Board (PEB) Biden established in the summer to help labor and employers reach a resolution.  

The president said any shutdown of U.S. rail would “devastate our economy” and also cause rail employees to be put out of work. 

At the same time, Biden called on Congress to pass legislation without any further changes to what the PEB recommended and do so “well in advance” of the Dec. 9 strike deadline. 

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“Some in Congress want to modify the deal to either improve it for labor or for management,” the president said. “However well-intentioned, any changes would risk delay and a debilitating shutdown. The agreement was reached in good faith by both sides.” 

Retail industry trade groups echoed the president’s sentiments. 

“After almost three years, negotiations have not resolved this dispute,” Retail Industry Leaders Association (RILA) president Brian Dodge said in a statement Tuesday, backing Biden. “Unlike most of the supply chain challenges retailers have faced over the last several years, the looming specter of a rail shutdown—and the related economic impacts—are entirely foreseeable and preventable.” 

The National Retail Federation once again called on its members this week to reach out to Congress to act. 

“A rail strike, coupled with historically high levels of inflation, could wreak financial havoc and inflict catastrophic harm to American businesses, workers, consumers and the U.S. economy,” National Retail Federation (NRF) president and CEO Matthew Shay said Monday. “We are in peak holiday shopping season, and it is essential that retailers and other businesses are able to rely on these vital supply chain partners.”

Nate Herman, senior vice president of policy at the American Apparel & Footwear Association (AAFA), wrote in an article for Sourcing Journal Tuesday that Congress must “step up immediately and take action.” 

“Even a couple days of strike preparation, or even one day of a strike, would create delays and snarls that could take weeks to fix,” Herman wrote.

RILA, NRF and AAFA, along with more than 400 other industry trade groups, penned a letter to Congressional leadership Monday to “prevent a national rail strike.” 

A report from the Association of American Railroads (AAR) released in September said a national rail shutdown would come at a cost of more than $2 billion daily. At the same time, shippers would look to send much of that cargo to trucks, which would likely be unable to handle the influx of goods. 

The scramble to avoid a national shutdown comes after an extended collective bargaining process and is not the first time the possibility of a strike has reared its head. Carriers in September had begun preparations for a national shutdown as three unions remained deadlocked with railroads on tentative deals. That shutdown was avoided just hours before a deadline that would have allowed for a strike or lockout.  

The PEB recommendations include a 24 percent compounded increase to wages over the contract’s five-year term, which is retroactive to 2020. However, it was the issue of paid time off for sickness that has become central to many of the union’s pushback then and now on getting deals done and approved. 

The railroads, represented by the National Carriers’ Conference Committee (NCCC) have repeatedly said they are unwilling to approve any agreement outside the scope of what was proposed by the PEB, calling the additional demands “in excess” of what other unions have accepted. 

The International Association of Sheet Metal, Air, Rail and Transportation Workers Transportation Department (SMART-TD) is the largest of the unions to reject the contract, with results of the vote announced last week. The union represents about 28,000 workers, or roughly 22 percent of the total number of employees involved in the current round of talks. 

SMART-TD President Jeremy Ferguson maintained the dispute could be handled at the negotiating table and without a strike. 

“The ball is now in the railroads’ court. Let’s see what they do,” he said in a statement last week announcing results of the vote. “They can settle this at the bargaining table.” 

Third-party logistics companies have experience moving cargo in times of labor disputes both on the rails and at the docks. They’re advising customers accordingly and also looking to the past for some assurance. In the case of rail, Congress has historically stepped in to stop a strike or lockout.

“I’m pretty confident that lawmakers will step in and stop [a strike] from occurring. They’ve so much as said so,” Joe Monaghan, president and CEO of Worldwide Logistics Group, told Sourcing Journal.  

Worldwide Logistics works with a number of footwear companies, including Hunter Boot Ltd., Deer Stags, boutique brands and private labels.

Monaghan went on to say port congestion issues and equipment shortages have caused delays at the ports and, thus increased rail transit times more recently. However, he noted the bigger trend happening right now is carriers shying away from taking intermodal cargo. That is, cargo being moved across more than one mode of transportation. 

Paul Brashier, vice president of drayage and intermodal at third-party logistics provider ITS Logistics, told Sourcing Journal earlier this month his company had already been seeing rail slowdowns over the past few months. He cited the example of cargo moving from Los Angeles to Chicago as typically taking five to eight days. The current transit time is more than 20. 

“We’re already feeling it and it is a concern,” Brashier said of rail. “If this shuts down, this affects not just containerized cargo or domestic intermodal cargo, but think about petroleum that’s moved over the rails, commodities, grains, coal—items like that that’s going to affect pricing for fuel.”