09/15/2022
-- Confidence waning as ports, rails prepare for strike --
The prospects of heading off a crippling rail strike in the US later this week appeared to dim Wednesday even as the Biden administration brought management and two holdout unions to Washington for face-to-face talks.
Hopes for a resolution were raised early Wednesday when the White House revealed that Secretary of Labor Marty Walsh was hosting railroad management and unions for talks at the Labor Department. A strike or lockout can happen just after midnight on Friday.
“Secretary Walsh continues to lead discussions at the Department of Labor between the rail companies and unions,” a Labor Department spokesperson told JOC.com in a statement Wednesday. “The parties are negotiating in good faith and have committed to staying at the table.”
But the positive momentum was stalled when the International Association of Machinists and Aerospace Workers (IAM) District 19 announced Wednesday that its 4,900 members had voted to reject a tentative agreement reached Aug. 29 with the National Carriers’ Conference Committee (NCCC). The news was a particular blow because IAM’s leadership had previously signaled their approval of the tentative deal.
“The railroads will work with the IAM to determine next steps,” the NCCC said in a statement. “The parties have agreed to maintain the status quo pending current discussions.”
Two other unions — the Transportation Communications Union and the Brotherhood of Railway Carmen — ratified their agreements on Wednesday.
However, the country’s two largest rail unions — the Brotherhood of Locomotive Engineers and Trainmen (BLET) and Sheet Metal Air, Rail, and Transportation Workers (SMART-TD) — have shown no inclination thus far to accept the recommendations of the Presidential Emergency Board (PEB) that was created in July — a 22 percent wage increase covering 2020 through 2024 and a total of $5,000 in bonus payments. Sources have told JOC.com that work conditions and lifestyle concerns, rather than compensation, are the main obstacle to a deal at this point.
The PEB urged the unions to drop their proposals on sick time and work conditions from the national contract talks and work through the local grievance and arbitration process to settle those issues.
-- Midterm elections at play --
The White House is particularly sensitive to the status of the talks because a strike or lockout by management that further hobbles an already stressed US supply chain would be hugely unhelpful to President Joe Biden and Congressional Democrats just six weeks away from crucial midterm elections.
“All parties need to stay at the table, bargaining in good faith to resolve outstanding issues and come to an agreement,” White House press secretary Karine Jean-Pierre told reporters during a televised briefing Wednesday. “A shutdown of our rail system is an unacceptable outcome for our economy and the American people, and all parties must work to avoid just that.”
Jean-Pierre tamped down, at least for now, expectations that Congressional Democrats would ride to the rescue. Republican Senators Richard Burr of North Carolina and Roger Wicker of Mississippi on Monday introduced a resolution that would halt a strike or lockout and codify the recommendations of the PEB, but Senator Bernie Sanders blocked the bill on the floor Wednesday. Congress does have power to halt labor action and force an agreement on the parties.
But “this is an issue that can and should be worked out between the rail companies and the union, not Congress,” Jean-Pierre said.
-- Rails, ports make contingency plans --
Meanwhile, BNSF Railway announced its intermodal contingency plans for a potential strike. Shippers will not be able to bring trailers or containers into BNSF Cicero and Corwith in Chicago, BNSF Memphis, or BNSF Seattle effective Friday. But the western US railroad will allow truckers to come into all terminals to pick up and deliver containers arriving before any work stoppage.
BNSF will continue to accept outbound loads in all its other terminals.
Norfolk Southern Railway stopped accepting outbound intermodal loads on Wednesday at all terminals.
Union Pacific Railroad announced that it will run trains through Thursday evening. If there is a work stoppage, UP said intermodal terminals will accept containers on Friday but stop accepting containers beginning Saturday. UP said trucks will be allowed to pick up and deliver containers to shippers even if intermodal service is suspended.
CSX Transportation has not announced its operating plan yet.
The South Carolina Ports Authority stopped accepting export loads at Inland Port Greer at 3:00 pm local time on Wednesday, ahead of Norfolk Southern Railway closing gates Wednesday evening. Truckers can still pick up import containers arriving before Friday and empty containers will be accepted in Greer through any rail shutdown, the port authority said.
The final train will leave Inland Port Dillon to Charleston on CSX at 3:00 pm local time on Thursday. Exports will be accepted in Dillon during any strike or lockout, but no trains will arrive or depart.
“SC Ports has capacity on its marine terminals and rail-served inland ports — particularly at Inland Port Dillon and Leatherman Terminal — to serve our customers if a disruption occurs,” the port authority said in a service advisory Wednesday.
The Georgia Ports Authority will continue to accept exports at the Appalachian Regional Port even if trains stop running, a port authority spokesperson told JOC.com. CSX has committed to running trains between Savannah and Chatsworth, Georgia, through Thursday, the port authority said.
-- Shippers start turning to truckers --
Shippers are reportedly scrambling to secure assets such as tractors and trailers and looking for assurance from third-party logistics providers (3PLs) that truck capacity will be available if a rail strike takes place.
“Customers primarily want to be assured there’s capacity to switch freight from rail to truck if they need to, which is something we’re constantly doing — sometimes for price, sometimes for speed, and especially during times of disruption like hurricanes,” Tim Humbert, vice president of North American intermodal at logistics provider C.H. Robinson Worldwide, told JOC.com.
The problem is, “there’s not enough capacity out there,” Greg Orr, president of CFI, a Joplin, Missouri- based truckload carrier recently acquired by Heartland Express, told JOC.com Wednesday.
Before Tuesday, only one shipper had called CFI looking for help to move freight normally shipped by rail, he said. By Wednesday morning, that number had grown to 10 of CFI’s top 25 customers. “Our customer service floor is a lot more active,” he said.
“The railroads are shifting from serving customers to repositioning assets, and we’ve been advising that anything that is critical to ship, get it out now,” said Mike Regan, chief relationship officer at TranzAct Technologies and a member of the National Industrial Transportation League board of directors.
Shippers are likely to turn to asset-based contractual partners first, Regan said.
CFI’s Orr says there are “pockets” of capacity available in contract networks, including his own, but the locations of those pockets vary from week to week. “There might be additional capacity in the Pacific Northwest one week, but not the next,” he said. “It’s been a little more volatile than it’s been in the past.”
If anything, truckload capacity and demand seems closer to a balance than they have in years. That could change quickly if rail unions go on strike, said Orr.