American consumers and almost every industry will be affected if freight trains stop next month.
One of the largest rail unions rejected their agreement on Monday, joining three others that did not approve the contracts over concerns about demanding schedules and a lack of paid sick time. That increases the risk of a strike, which could start on December 5.
The effects of a rail strike would not take long to hit the economy. Many companies only have raw materials for a few days and space for finished products. Food, fuel, car and chemical manufacturers would feel the pinch, as would their customers.
That’s not to mention travelers who would be stranded because many passenger railroads use track owned by freight railroads.
The stakes are so high for the economy that Congress is expected to step in and impose contract conditions on rail workers. The last time the US railroads went on strike was in 1992. That strike lasted two days before Congress intervened. There hasn’t been a prolonged rail shutdown in a century, in part because a law passed in 1926 governing rail negotiations made it much more difficult for workers to strike.
These are some of the expected impacts of a rail strike:
$2 billion per day
The railways transport about 40% of the country’s cargo each year. The railroads estimated that a rail strike would cost the economy $2 billion a day in a report issued earlier this fall. Another recent report by a chemical industry trade group projected that if a strike lasted for a month, some 700,000 jobs would be lost due to the closure of railway-dependent manufacturers, the prices of almost everything would rise further. and the economy could be affected. plunge into a recession.
And while some companies would try to shift shipments to truckloads, not enough are available. The Association of American Railroads trade group estimated that an additional 467,000 trucks would be needed per day to handle all that the railroads deliver.
Chemicals dry up
Chemical manufacturers and refineries will be some of the first businesses affected, because the railways will stop shipping dangerous chemicals about a week before the strike deadline to ensure that no tank cars full of dangerous liquids are left stranded.
Jeff Sloan of the American Chemistry Council trade group said chemical plants could be on the verge of closing by the time a rail strike begins because of it.
That means the chlorine that water treatment plants rely on to purify water, which they might have on hand for just a week, would be hard to come by. It would be difficult for manufacturers to make anything out of plastic without the chemicals that are part of the formula. Consumers will also pay more for gasoline if refineries close because they can’t get the ingredients they need to make fuel or because rail isn’t available to transport by-products like sulfur.
About half of all commuter rail systems rely, at least in part, on tracks owned by freight railroads, and nearly all of Amtrak’s long-distance trains run on the freight network.
In September, Amtrak canceled all its long-distance train days before the strike deadline to ensure passengers were not stranded in remote parts of the country while still en route to their destinations.
And major commuter rail services in Chicago, Minneapolis, Maryland and Washington state have warned that some of their operations would be suspended in the event of a rail strike.
fears of food
It would take about a week for customers to notice shortages of things like cereal, peanut butter and beer at the grocery store, said Tom Madrecki, vice president of supply chain for the Consumer Brands Association.
About 30% of all packaged food in the US is transported by rail, he said. That percentage is much higher for denser, heavier items, like soup cans.
Some products, such as cereals, cooking oils, and beer, have entire operations based on rail deliveries of raw materials such as grains, barley, and peanuts, along with shipments of finished goods.
Those companies typically only keep two to four days’ worth of raw ingredients on hand because they’re expensive to store, Madrecki said, and supermarkets also keep a limited supply of produce on hand.
Madrecki said big food companies don’t like to discuss the threat of a rail strike because concerns about product shortages can lead to panic buying.
Any disruption to rail service could threaten the health of chickens and pigs, which rely on trains to deliver their feed, and contribute to rising meat prices.
“Our members rely on about 27 million bushels of corn and 11 million bushels of soybean meal each week to feed their chickens. Much of that is transported by rail,” said Tom Super, a spokesman for the National Chicken Council, an industry trade group that raises chickens for meat.
The National Grain and Feed Association said a rail strike would now hit pork and chicken producers in the southern US the hardest because their local supply of corn and soybeans from this year’s crop would likely be low. ran out and they would have to send the food by truck, dramatically. rising costs.
Jess Dankert, vice president of supply chain for the Retail Industry Leaders Association, said retailers’ inventory is ready for the holidays. But the industry is developing contingency plans.
“We don’t see, you know, canceling Christmas and that kind of narrative,” Dankert said. “But I think we will see widespread disruption of really anything that moves by rail.”
David Garfield, managing director of consulting firm AlixPartners, said a rail strike could still affect Christmas items shipped to stores in late December and would definitely make it more difficult to stock next season’s produce.
Retailers are also concerned about online ordering. Carriers such as FedEx and UPS use rail cars that hold approximately 2,000 packages in each car.
Drivers are already paying record prices and often waiting months for new vehicles because of production problems in the auto industry related to shortages of computer chips in recent years.
That would only get worse if there was a rail strike, because roughly 75% of all new vehicles start their journey from factories to dealerships on the rail. The trains deliver about 2,000 wagons a day full of vehicles.
And automakers can have a hard time keeping their plants running during a strike because some larger parts and raw materials are transported by rail.
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