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‘Imminent’ $2 Billion Rail Strike Has Retailers on Edge

The contract voting results for the remaining and largest railroad labor unions has retailers on edge once again about a possible strike during the peak shipping period. 

The concerns follow Monday’s announcement by the International Association of Sheet Metal, Air, Rail and Transportation Workers Transportation Division (SMART-TD) that its 28,000 train and engine service members rejected the tentative agreement before them. The group’s roughly 1,300 yardmaster members accepted the deal. 

Industry groups are now pushing for lawmakers to intervene. 

“A rail strike is truly imminent (Dec. 9) and Congress has not properly used its authority to intervene,” Nate Herman, American Apparel & Footwear Association (AAFA) senior vice president of policy, told Sourcing Journal in an email Monday. “We expect to see massive disruptions in the U.S. rail network, which has immediate detrimental impacts on the U.S. economy, U.S. workers and the availability of winter apparel, footwear and all goods for Americans this holiday season.” 

National Retail Federation (NRF) president and CEO Matthew Shay echoed a similar sentiment in pushing for lawmakers to prepare for a strike if the remaining unions are not able to work out new deals with the carriers before the cooling off period ends. 

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“American businesses and families are already facing increased prices due to persistent inflation, and a rail strike will create greater inflationary pressures and will threaten business resiliency,” Shay said in a statement Monday. “Congress must intervene immediately to avoid a rail strike and a catastrophic shutdown of the freight rail system.” 

SMART-TD is the largest of the unions negotiating contracts for workers. There are, in total, nearly 125,000 workers spread across a dozen unions involved in the current round of collective bargaining. 

SMART-TD president Jeremy Ferguson looked to soothe rising fear of a possible rail strike

“This can all be settled through negotiations and without a strike,” Ferguson said in a statement. “A settlement would be in the best interest of the workers, the railroads, shippers and the American people.” 

The group agreed to maintain a status quo period with the railroads through Dec. 8, which staves off the possibility of a strike or lockout until Dec. 9 at the earliest. 

“The ball is now in the railroads’ court. Let’s see what they do,” Ferguson said. “They can settle this at the bargaining table.” 

The SMART-TD results now mean four unions’ members have rejected the tentative agreements before them. 

Meanwhile, eight have now ratified the contracts, with the Brotherhood of Locomotive Engineers and Trainmen (BLET) the final and largest of the groups to agree to the tentative deals. 

BLET said Monday its members had voted to approve the contract. The union represents about 20,000 workers, which equates to roughly 20 percent of the total group negotiating deals with the railroads.

Should any of the unions that rejected the deals go on strike, the other eight would honor the picket lines with BLET president Dennis Pierce saying “we will continue to stand in solidarity with [other rail unions] as we approach the finish line in this round of negotiations.” 

The National Carriers’ Conference Committee (NCCC), which is negotiating for the railroads, indicated rail operators will begin preparing for the possibility of a disruption. Those preparations could include embargoes on shipment of certain materials, which the industry saw in September with a possible strike deadline looming. 

“A national rail strike would severely impact the economy and the public,” the NCCC said. “Now, the continued, near-term threat of one will require that freight railroads and passenger carriers soon begin to take responsible steps to safely secure the network in advance of any deadline.”  

The NCCC also took issue Monday with the groups that have rejected their contracts saying their leadership had “initially endorse the agreements,” but “at least three of these unions now demand terms that exceed those recommended by the [Presidential Emergency Board] and that have been accepted by other unions.” 

President Biden established the PEB in the summer in an effort to help the two sides resolve their dispute and bring to an end the protracted talks, which began in 2020. 

The board’s recommendations included, among other things, a 24 percent increase to wages over the five-year contract term and $5,000 in bonuses. 

However, sick time remains a point of contention, with the unions requesting additional paid sick time in the new contracts. The NCCC has maintained it would not agree to anything outside of what was recommended by the PEB. 

The other groups that rejected ratification include the Brotherhood of Maintenance of Way Employees Division (BMWED), International Brotherhood of Boilermakers (IBB) and Brotherhood of Railroad Signalmen (BRS). 

The Association of American Railroads (AAR) said in a report released in September that a national shutdown of the nation’s railroads would come at a cost of more than $2 billion each day.