Can a rail strike – and by extension food shortages on shelves – be avoided?

By Elizabeth Crawford

- Last updated on GMT

Source: Getty/Cultura/Monty Rakusen
Source: Getty/Cultura/Monty Rakusen

Related tags strike FMI Consumer Brands Association Supply chain

Congressional leaders on both sides of the aisle promise to push forward this week legislation to divert a looming national freight rail strike that threatens significant job and financial losses and which could snarl still fragile supply chains, including for groceries, at a time when many American families will gather around their tables to celebrate the holidays.

The move is seen by many, including those lobbying for it, as a last resort and one that undermines workers’ rights and union negotiations – especially as four of the 12 unions rejected the most recent offer brokered this fall by the Biden Administration.

However, many also agree that a strike must be avoided given the outsized impact it could have across industries and on the already precarious American economy.

“Tomorrow morning ​[Nov. 30] we will have a bill on the floor”​ that would adopt the tentative agreement reached in September with help from the Biden administration, including a 24% raise, no changes in copays, deductibles or coinsurance costs and time off for routine, preventative and emergency medical care, House Speaker Nancy Pelosi said Tuesday at the White house following a meeting with key legislators and President Biden.

She added that the current proposal and legislation will not include everything she “would like to see,”​ including paid sick leave, which is a sticking point for the unions that voted to reject the deal.

Pelosi also emphasized that she doesn’t like “going against the ability of unions to strike, but weighing the equities, we must avoid a strike.”

A rail strike would be ‘catastrophic’

In a statement released Monday night, Pelosi explained that if a rail strike were to occur, the consequences would be “catastrophic”​ and it “would grind our economy to a halt. Our entire nation would suffer: more than 750,000 workers, including many union members, would lose their jobs in just the first two week. Millions of families would be able to get groceries, medications and other goods, and our economy would be paralyzed as it continues to recover.”

Her sentiment echoes that of President Biden who called on Congress Monday night to “immediately adopt the Tentative Agreement between railroad workers and operators – without any modification or delay – to avert a potentially crippling national rail shutdown.”

He lamented that “as a proud pro-labor president, I am reluctant to override the ratification procedures and the views of those who voted against the agreement. But in this case – where the economic impact of a shutdown would hurt millions of other working people and families – I believe Congress must use its powers to adopt this deal.”

He added that he shares workers’ concern about the inability to take paid sick leave, noting, “no one should have to choose between their job and their health,”​ which is why he added that he has “pressed legislation and proposals to advance the cause of paid leave in my two years in office, and will continue to do so.”

But, he said, “at this critical moment for our economy, in the holiday season, we cannot let our strongly held convictions for better outcomes for workers … hurl this nation into a devastating rail freight shutdown.”

CPG industry leaders encourage fast, bipartisan action

Biden’s call to action and Pelosi’s commitment to move come days after industry groups, including the Consumer Brands Association, asked Congress to pass legislation to avoid a strike, the impact of which they argue would go beyond economic.

In a letter sent Nov. 21 to Pelosi, Majority Senate Leader Charles Schumer and other legislators, CBA argued congressional intervention before the Dec. 9 deadline for finalizing a voluntary agreement is essential because “the impact of a rail service stoppage goes far beyond the nearly unfathomable economic calculation of $2 billion per day.”

CBA VP of supply chain and logistics Tom Madrecki said that a strike could trigger “panic buying” akin to what happened early in the pandemic because food manufacturers and other CPG companies would not be able to access key ingredients and inputs so that on-shelf availability and accessibility of their products would “quickly drop.”

He explained that while freight rail accounts for about only 30% of total CPG transportation, “rail-centric operations rely almost exclusively on rail due to bulk commodity shipment requirements, historical distribution patterns and manufacturing efficiencies.”

He added: “These operations cannot easily transition to other transportation modes, nor is there available capacity to handle huge swings in demand. That means a work stoppage for freight rail would effectively bring hundreds of America’s largest food, beverage, household and personal care manufacturing operations to a halt in a matter of days.”

FMI – The Food Industry Association – agreed with CBA’s assessment and added that “as we are in the midst of the busy holiday season, American consumers and businesses cannot afford to have our economy shut down.”

As such, FMI chief public policy officer Jennifer Hatcher urged Congress to “act now to keep our railroads operational.”

She added that FMI is “encouraged that leaders in the House and Senate have signaled their commitment to passing legislation to avert a rail strike, and we strongly urge lawmakers in both chambers to swiftly approve this bill in a bipartisan fashion.”

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