Deadline nears for labour agreement between US freight railroads, workers

HOUSTON (ICIS)–The 30-day window for negotiating a labour agreement between US freight railroads and rail workers closes on 16 September, and market participants are already looking at alternative means for receiving and delivering product.

According to a customer letter seen by ICIS, chemicals producer Indorama Ventures is proactively exploring alternative modes or commercially reasonable alternatives for the delivery of raw materials to its facility and PET resin to its customers.

“In the event of a strike, which is beyond IVL’s reasonable control, we cannot assure that the supply of products will go uninterrupted, however through this proactive and collaborative approach we may be able to minimise the impact,” the company said in the letter.

“Where we can make alternative arrangements of delivery, we request your support on any additional cost incurred,” the company said.

The company did not immediately respond to a request for comment.

A report released today by the Association of American Railroads (AAR) estimates that a rail service disruption could cost the US economy more than $2bn/day.

The report includes an update from a 1992 Federal Railroad Administration (FRA) economic study to quantify the potential impacts of a national rail shutdown on employment and economic output in today’s dollars.

BACKGROUND
US rail workers voted almost unanimously in mid-July to strike, but railroads are governed by the Railway Labor Act, which substitutes bargaining, arbitration and mediation for strikes to resolve labour disputes.

US President Joe Biden appointed a Presidential Emergency Board (PEB) a day later, which opened a 30-day window to convene, hold hearings and issue a report in mid-August that includes settlement recommendations.

When the PEB published its report earlier this month, it recommended significant increases to pay and benefits, setting up a framework for continued negotiations during a “cooling off period” over the next 30 days, which ends on 16 September.

The National Carriers Conference Committee (NCCC), a part of the National Railway Labor Conference (NRLC), is representing the nation’s freight railroads in the negotiations.

Early last week, the NCCC reached a tentative agreement with three unions representing about 11% of total unionised rail workers.

On Friday, the NCCC reached a tentative agreement with two more unions representing about 6,000 workers.

The largest unions, the Brotherhood of Locomotive Engineers and Trainmen (BLET), with more than 57,000 total members, and the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division (SMART-TD), continue to negotiate.

The BLET is keeping the threat of a strike alive.

“We have made it abundantly clear to the carriers that we are prepared and willing to exercise every legal option available to us, to achieve the compensation and working conditions that we and our families rightfully expect and deserve,” the union said.

In the US, chemical railcar loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest.

In Canada, producers rely on rail to ship more than 70% of their products, with some exclusively using rail.

Thumbnail image of railroad tracks by Shutterstock