Rail companies and labor union leaders have reached a tentative deal following hours of negotiations mediated by Biden Administration officials Wednesday. The tentative agreement averts a freight rail shutdown that would have disrupted U.S. supply chains and cost the U.S. economy billions of dollars a day.
“The tentative agreement reached tonight is an important win for our economy and the American people,” President Biden said in a statement published Thursday morning. “It is a win for tens of thousands of rail workers who worked tirelessly through the pandemic to ensure that America’s families and communities got deliveries of what have kept us going during these difficult years.”
The statement did not include details of the deal, but indicated that workers will receive better pay and improved working conditions, sticking points that had been driving the years-long labor talks. The agreement averts a strike that could have happened as early as this Friday, pushing it off for several more weeks while unions review the proposal and vote, according to reports.
Industry leaders immediately praised all parties for their efforts to avoid a freight rail shutdown.
“Our supply chain is entirely interdependent, making the potential for a nationwide rail stoppage a serious threat to our nation’s economic and national security,” American Trucking Associations (ATA) President Chris Spear said in a statement Thursday. “We applaud both sides for reaching a tentative agreement that averts this outcome and permits our supply chain to continue climbing out of this Covid-induced rut.”
The Association of American Railroads (AAR) estimated that a rail shutdown would reduce the country’s economic output by more than $2 billion a day.
In a statement Thursday, AAR officials said the proposed contracts will provide rail employees a 24% wage increase during the five-year period from 2020 through 2024, including an immediate payout on average of $11,000 upon ratification, following the recommendations of a Presidential Emergency Board (PED) established in July to mediate the talks.
All tentative agreements are subject to ratification by the unions’ membership, AAR also said. The agreements are with the Brotherhood of Locomotive Engineers and Trainmen Division of the International Brotherhood of Teamsters; the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division; and the Brotherhood of Railroad Signalmen–collectively representing about 60,000 workers.
Officials at the National Retail Federation (NRF) weighed in as well.
“We are relieved and cautiously optimistic that this devastating nationwide rail strike has been averted. We appreciate the Biden administration’s intervention on behalf of the businesses and consumers who would have been impacted at a time when high inflation and economic uncertainty are challenging consumer budgets and putting business resiliency at risk,” NRF President and CEO Matthew Shay said in a press release. “We hope railway workers will accept the new terms of the proposed contract and the railway system can continue to operate on behalf of the millions of hardworking Americans who rely on it for their jobs and the economic security of our country.”
Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.