Tentative contract deal averts crippling US rail strike

Tentative contract deal averts crippling US rail strike

A rail strike or lockout could have happened just after midnight Friday. Photo credit: Shutterstock.com

(This story has been updated with details, comments, and background)

US freight railroads and unions reached a tentative contract agreement early Thursday brokered by the Biden administration, averting a strike that would have crippled the country’s already fragile supply chain.

A strike or lockout could have happened just after midnight Friday.

President Joe Biden, in a statement, called the tentative deal “an important win for our economy.”

“These rail workers will get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned,” Biden said. “The agreement is also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come.”

The leadership of 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) — said in a statement Thursday they will submit the tentative agreement to their rank and file for a vote. No specific timeline was provided, though a spokesperson for SMART-TD told JOC.com it will be “a matter of weeks.”

“This contract will not become final until our members have an opportunity to review its terms and approve it through a ratification vote,” the unions said in their statement.

The Association of American Railroads, representing the country’s freight railroads, said in a brief statement that the tentative deal covers about 60,000 employees.

The tentative deal came after a 20-hour marathon negotiating session was held all day Wednesday and into Thursday at the Department of Labor, with Labor Secretary Marty Walsh hosting leadership from railroads and the unions.

A Presidential Emergency Board (PEB) that was created in July recommended a compounded 24 percent wage increase covering 2020 through 2024 and a total of $5,000 in bonus payments for workers. But sources had told JOC.com that work conditions and lifestyle concerns, rather than compensation, were the main obstacle to a deal.

BLET and SMART-TD were the holdouts to accepting a deal. And things looked even bleaker early Wednesday when a third union, the International Association of Machinists and Aerospace Workers (IAM) District 19, announced that its 4,900 members had voted to reject a tentative agreement.

The White House was particularly sensitive to the status of the talks because a strike or lockout by management that further hobbled the US supply chain would have been hugely unhelpful to Biden and Congressional Democrats just six weeks away from crucial midterm elections.

“For the American people, the hard work done to reach this tentative agreement means that our economy can avert the significant damage any shutdown would have brought,” Biden said in the statement.

Unions win lifestyle concessions

The BLET and SMART-TD statement indicated the unions had won a sufficient amount of the lifestyle concessions they were seeking.

“We listened when our members told us that a final agreement would require improvements to their quality of life as well as economic gains,” the BLET and SMART-TD said. “As a result, this agreement includes...provisions that will create voluntary assigned days off for members working in thru freight service, and all members will receive one additional paid day off.

“Most importantly, for the first time ever, the agreement provides our members with the ability to take time away from work to attend to routine and preventive medical care, as well as exemptions from attendance policies for hospitalizations and surgical procedures,” the unions added.

BLET and SMART-TD thanked Biden and Walsh for their efforts and, notably, thanked Congressional leaders for listening to labor’s request to stay out of the dispute, “allowing for an agreement to be reached across the bargaining table, rather than through legislation.” Congress has the power to end a strike or lockout and force an agreement on the parties.

US retailers ‘relieved’

Shipper and retail groups, who had warned of the crippling effects of a strike on the US supply chain and urged the parties to come to a resolution, expressed relief Thursday that a tentative deal was in place.

“We are relieved and cautiously optimistic that this devastating nationwide rail strike has been averted,” Matthew Shay, president and CEO of the National Retail Federation, said in a statement. “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.”

The National Industrial Transportation League said in a statement its “confidence in the future of freight rail transportation is a brighter” in the wake of the tentative deal. “The industrial freight shippers move billions of dollars’ worth of freight via the rail and our members’ dependency on reliable rail service is critical,” the NITL said.

The tentative deal means railroads and ports can unwind the contingency plans they had begun to implement this week ahead of the strike deadline. The South Carolina Ports Authority told JOC.com Thursday its inland ports “are resuming normal operations immediately.”

Contact the JOC news team at news@JOC.com.