US chem industry lauds new rail agreement, but service problems still must be fixed – ACC

HOUSTON (ICIS)–Industry trade groups lauded the agreement on Thursday between rail workers and the major freight railroads that averted a potential strike, but the American Chemistry Council (ACC) said work must still be done to address service issues that have contributed to the supply chain crisis.

“This agreement helps put one major problem to rest, but we are certainly not out of the woods yet,” Chris Jahn, president and CEO of the ACC, said. “The fact remains that Congress and the Surface Transportation Board (STB) have more work to do to resolve the freight rail problems that are continuing to put the brakes on the US economy and prolonging the supply chain crisis.”

The American Fuel & Petrochemical Manufacturers (AFPM) echoed the sentiment.

“Refiners and petrochemical manufacturers are relieved that the two sides were able to come to agreement and avert what would have been a disastrous event for our economy and energy security,” Chet Thompson, AFPM president and CEO, said.

“We hope the same urgency and energy that brought about this outcome can now be directed to the work of bipartisan Surface Transportation Board reauthorization and service reforms to make America’s freight rail system more efficient and accountable, competitive, and less costly for shippers and consumers,” Thompson said.

The STB, the US government’s regulator for railroads, has been holding hearings to address allegations of significant performance deterioration recently in the freight rail industry.

Recent ACC member surveys have found that freight rail service has continued to worsen, which has forced chemical manufacturers to curtail production and shipments, explore other modes of transportation – and in some cases add rail cars to their fleets.

THE DEAL
The deal reached between the National Carriers Conference Committee (NCCC), a part of the National Railway Labor Conference (NRLC) which represented the nation’s freight railroads in the negotiations, and the unions includes a 24% wage increase backdated to include a 5-year period from 2020-2024, including an immediate payout of $11,000 upon ratification.

The financials were largely in line with the recommendations of the Presidential Emergency Board (PEB), appointed by President Joe Biden in July.

The deal also includes provisions that will create voluntary assigned days off for members working in through-freight service, and all members will receive one additional paid day off, according to a joint statement from the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division (SMART-TD), which together represent about 125,000 active and retired rail employees.

Most importantly, for the first time ever, the agreement provides union members with the ability to take time away from work to attend to routine and preventive medical care, as well as exemptions from attendance policies for hospitalisations and surgical procedures.

In 2021, freight railroads moved 2.2m carloads of plastics, fertilizers and other chemicals.

The highest-volume chemical carried by US railroads is ethanol.

More than half of all rail chemical carloads consist of various industrial chemicals, including soda ash, caustic soda, urea, sulfuric acid and anhydrous ammonia.

Plastic materials and synthetic resins account for close to a quarter of rail chemical carloads.

Most of the rest is agricultural chemicals.