Pending Rail Strike Could Have Far-Reaching Economic Ripples

Four rail unions have not approved contracts due to rigorous schedules and the lack of paid sick time, increasing the possibility of a strike on December 9.

If freight trains stop moving, the economy will soon feel the effects. Some businesses have just a few days of raw materials, according to the Associated Press, and limited space for storing finished goods. Car, food, fuel, and chemical manufacturers would suffer from a standstill, as would their customers. Additionally, since many commuter railroads use the same tracks as freight trains, passengers would be stranded.

Become a Subscriber

Please purchase a subscription to continue reading this article.

Subscribe Now

Congress is expected to step in and impose contract terms on workers, given the disastrous reverberations a strike could cause. In 1992, the last time a rail strike occurred, Congress intervened after two days. It’s been nearly 100 years since a longer strike has taken place. In 1926, a law governing rail negotiations was passed, making it more difficult for workers to strike.

A strike could cost the economy $2 billion per day, according to the Association of American Railroads trade group. If manufacturers switch shipping to trucks, there wouldn’t be enough of them to manage the goods that trains handle. Another 467,000 trucks would be needed, the association said.

Chemical companies and refineries would be particularly hard hit, as they would need to shut down the shipping of hazardous products at least a week before a potential strike. Early stoppage would be required to avoid having tank cars filled with dangerous materials sitting idle, Jeff Sloan with the American Chemistry Council told the AP.

As for store shelves, it would be a week before consumers would see scarcity in the markets, Tom Madrecki, Vice President of Supply Chain for the Consumer Brands Association, told the AP.

Meat prices would likely increase, as freight trains carry feed to pigs and chickens across the U.S. “Our members rely on about 27 million bushels of corn and 11 million bushels of soybean meal every week to feed their chickens,” Tom Super, a spokesman for the National Chicken Council, told the AP. “Much of that is moved by rail.”