Tentative contract agreements were reached early on Sept. 15 with the remaining three unions representing approximately 60,000 railroad employees, averting a potential rail strike that was scheduled to commence as early as Sept. 16. Earlier agreements were negotiated with nine of the 12 unions, which collectively represent roughly 115,000 rail workers.
“Thanks to the dedication of all members involved in the collective bargaining process, these new contracts 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,” the Association of American Railroads (AAR) announced on Sept. 15.
The news was welcomed by the fertilizer and agriculture industries, which had been pressing for a quick resolution ahead of the Sept. 16 deadline and had warned of catastrophic consequences if a strike or lockout occurred.
The resolution was also hailed by the Biden administration after Labor Secretary Marty Walsh met with the two sides on Sept. 14-15 to lead 20 consecutive hours of negotiations. Transportation Secretary Pete Buttigieg, Agriculture Secretary Tom Vilsack, and National Economic Council Director Brian Deese reportedly joined Walsh in working the negotiating table.
“The tentative agreement reached tonight is an important win for our economy and the American people,” President Biden said in a statement. “These rail workers will get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned. 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 final agreements were reached 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.
The unions agreed to accept the raises and bonuses that a Presidential Emergency Board (PEB) recommended this summer (GM Aug. 19, p. 28), while the railroads agreed to ease attendance policies to allow workers unpaid days off for doctor’s appointment without penalty. The tentative agreement still needs to be ratified by respective unions through a vote by rank-and-file rail workers.
“Averting a strike Friday morning was priority number one,” said Corey Rosenbusch, President and CEO of The Fertilizer Institute (TFI). “We are hopeful that union membership will vote to approve the tentative agreement to ensure freight rail in the US continues to operate. As we move forward, it is also essential that rail carriers hire and retain the appropriate employee staffing levels to support a strong economy. Staff reductions in recent years have dramatically hurt rail service and made the rail-labor contract negotiations more challenging.”
In preparation for a possible strike, the six Class 1 freight railroads on Sept 9 announced that they had initiated steps to “secure” shipments of hazardous and security-sensitive materials, including anhydrous ammonia, resulting in those shipments being suspended or delayed beginning on Sept. 12.
The effect of the embargo on distribution was almost immediate, with sources telling Green Markets that some producers and ag retail suppliers immediately withdrew pricing and warned customers that the timely shipment of 4Q prepay ammonia tons was in doubt for the fall application season.
“For every day this uncertainty continues, we essentially lose five shipping days because of the ramp down and ramp up,” Rosenbusch said in a Sept. 14 statement. “If this situation is not resolved by tomorrow, it could quickly impact supplies for fall application and lead to a reduction in US production at a time when 70% of European production has been curtailed or ceased due to Russia’s shutoff of natural gas supplies.”
In its Sept. 15 statement after the labor agreement was announced, TFI said “most or all of the ammonia embargoes have been lifted as of this morning,” and stressed that ammonia shipments “must quickly resume.”
The Agricultural Retailers Association (ARA) also issued a Sept. 15 statement saying it was “encouraged and relieved” that a tentative agreement had been reached. ARA confirmed that its members were “already feeling the impact of a potential strike as railroad carriers started to cancel shipments of critical fertilizer products such as anhydrous ammonia and impacting domestic fertilizer production earlier this week.”
“The prospect of a rail strike would have further disrupted a supply chain that is already strained,” said ARA President and CEO Daren Coppock. “We hope the unions will quickly ratify the agreement so this cloud of uncertainty can be cleared away.”
ARA said it and other members of the Agricultural Transportation Working Group had sent letters to Congress on Sept. 8 and Sept. 13 urging lawmakers to intervene quickly if an agreement could not be reached by the Sept. 16 deadline (GM Sept. 9, p. 1). An AAR report warned that a rail shutdown could cost the US economy up to $2 billion a day.
The National Corn Growers Association (NCGA) also issued a statement on Sept. 15 calling the tentative agreement “a positive development” for farmers and the agricultural community. “We are thankful that the White House has announced a tentative agreement between rail carriers and union leaders and applaud the efforts from all parties to avoid this crisis,” said Brooke S. Appleton, NCGA Vice President of Public Policy.
The National Grain and Feed Association (NGFA) on Sept. 15 commended rail and union representatives for reaching a preliminary agreement as well. Earlier in the week, Bloomberg reported that Norfolk Southern Corp. had alerted customers that it planned to halt unit train shipments of bulk commodities, including grain, on Sept. 15 if negotiations remained stalled.
“The efficient operation of our rail network, which moves 25% of all US grain, is crucial to a functioning agricultural economy,” said NGFA President and CEO Mike Seyfert. “Resilient and reliable rail service is essential to the daily operations of NGFA members. We thank our rail industry partners for working to get this deal, and we encourage quick ratification by the labor unions.”
While no work stoppage will take place on Sept. 16, the threat of a labor strike or management lockout is still not over, according to a Sept. 15 Railway Age report, which confirmed that just two of the 12 unions have so far ratified the tentative agreements.
Railway Age noted, however, that all of the earlier tentative agreements contained “me too” clauses, which means the terms reached during the all-night bargaining session on Sept. 14-15 will apply across the board.