Rail strike could fuel recession; US Congress must act to prevent it – ACC

Adam Yanelli


HOUSTON (ICIS)–With the possibility of a rail worker strike looming, the American Chemistry Council is urging Congress to take action to prevent it or risk pushing the US economy closer to a recession.

The trade group published a new economic analysis on Wednesday that it said shows most Americans would be severely impacted by a strike lasting as short as one month.

“The impact of a potential strike would be felt almost immediately in terms of business shutdowns, scarcity of materials and goods, and lost economic activity,” the ACC said.

According to the ACC’s analysis, a strike would lead to 700,000 job losses across multiple industries and economic sectors, essentially erasing all job gains made over the past three months.

A rail strike would cause more inflation as producer prices could surge by another 4%, the ACC projected.

The Producer Price Index (PPI) measures inflation from the viewpoint of industry and is considered a leading indicator for consumer inflation.

A 4% spike would represent a twentyfold increase over the latest PPI reading, the ACC said.

Last, a strike that led to a shutdown of US railroads would cause gross domestic product (GDP) to contract by 1 percentage point, equivalent to almost $160bn pulled out of the economy.

“A rail strike could shove the economy out of recovery mode and into a recession,” ACC Chief Economist Martha Moore said. “A prolonged strike would have an exponential effect for each additional month and drag the country into a potential recession much faster.”

US chemical manufacturers are one of largest users of freight rail, shipping more than 33,000 carloads per week worth $2.8bn.

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, sulphuric 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.

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

Members of the two largest rail worker unions, representing about 90,000 members, have received their ballots and now must decide whether or not to accept the tentative labour agreement reached in September between rail companies, union negotiators and the US Department of Labor.

Ballots from the Brotherhood of Locomotive Engineers and Trainmen/Teamsters Rail Conference (BLET) and the Transportation Division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD) are due by the end of the day on 20 November.

The 12,000-member Brotherhood of Maintenance of Way Employees Division (BMWED) voted against ratification on 10 October, but agreed earlier this month to extend the cooling off period until at least 4 December which will better align it with the two larger unions.

The union said by aligning with the two larger unions, it will allow BLET and SMART-TD to finish their ratification procedures for any tentative national agreements without disruption.

On Monday, the 300-member International Brotherhood of Boilermakers (IBB) voted against ratification.

The union agreed previously to extend the cooling off period until 9 December in the event the tentative agreement was not ratified.

Status of Rail Worker Unions Membership Votes

Union Vote
American Train Dispatchers Association (ATDA) Ratified, 4 Oct
Brotherhood of Locomotive Engineers and Trainmen (BLET) Ballots sent out 28 October, starting 21-day voting period
Brotherhood of Railroad Signalmen (BRS) Voted against ratification on 26 Oct
International Association of Machinists (IAM) Voted against ratification on 14 Sept; ratified on 5 Nov
International Brotherhood of Boilermakers (IBB) Voted against ratification on 14 Nov; extended cooling off period to 9 Dec
National Conference of Firemen & Oilers (NCFO) Ratified, 13 Oct
International Brotherhood of Electrical Workers (IBEW) Ratified, 28 Sept
Transport Workers Union of America (TWU) n/a
Transportation Communications Union/IAM (TCU) Ratified, 26 Oct
SMART-TD Ballots sent out 28 October, starting 21-day voting period
Brotherhood of Maintenance of Way Employees Division (BMWED) Voted against ratification on 10 Oct; extended cooling off period to 4 Dec
SMART Mechanical Ballots sent out 28 October, starting 21-day voting period

Focus story by Adam Yanelli


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