BNSF, CSX, Norfolk Southern, and Union Pacific announced embargoes on certain shipments earlier this week as negotiations continue with two of the nation’s largest rail unions — the Brotherhood of Locomotive Engineers and Trainmen and SMART Transportation Division. The Biden administration created a Presidential Emergency Board via executive order two months ago to facilitate the negotiations.
“We have made crystal clear to the interested parties the harm that American families, businesses and farmers, and communities would experience if they were not to reach a resolution,” White House Press Secretary Karine Jean-Pierre told reporters on Tuesday, adding that the administration is working with shipping, trucking, and air freight companies to “see how they can step in and keep goods moving in case of this rail shutdown.”
Labor Secretary Marty Walsh is slated to host union leaders and rail company executives on Wednesday morning, according to a statement from a Department of Labor spokesperson.
Supply chain bottlenecks driven by widespread labor shortages and lockdowns in Asian manufacturing hubs have impacted the American economy over the past two years, contributing to higher inflation as consumer goods fail to reach shelves.
The daily cost of a nationwide rail shutdown could amount to $2 billion, according to a report from the Association of American Railroads. Moving shipments to truckers would require the equivalent of 467,000 additional long-haul trucks per day — growth that would take “years of concerted effort” to achieve, especially amid a shortage of more than 80,000 truck drivers.
The Retail Industry Leaders Association explained in a July letter to the Biden administration that freight rail accounts for 40% of long-distance shipping volume — “more than any other mode of transportation.”
“A strike at this juncture would be devastating to the rail industry and to the millions of American retailers and other businesses that depend on rail who are already dealing with ongoing challenges in every area of supply chain, plus mounting inflationary pressures,” the group said. “Failure to reach a reasonable agreement could result in significant disruptions to the rail network and by extension the retail industry.”
Last month, the White House suggested increasing railroad employee pay by 24% over the next two years — a measure that would lead to an average raise of $11,000 per employee. “An agreement based on these terms would lead to the largest general wage increase in nearly 40 years,” Association of American Railroads CEO Ian Jefferies said in a statement.
Gas prices could increase between $0.35 and $0.75 per gallon if a railroad strike continued for multiple days, warned GasBuddy analyst Patrick De Haan. “Since ethanol primarily moves via rail, and much of the nation blends ethanol into all grades, it would be a big challenge,” he remarked on social media.
The national average price of gasoline was $2.38 per gallon when Biden assumed office and increased to $3.53 per gallon by the start of the Russian invasion. After surpassing $5.00 per gallon in early June, prices have subsided to $3.70 per gallon as of Wednesday, according to data from AAA.