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Chemical shippers warn rail strike could hasten recession

Trade group urges Congress to intervene should a strike appear imminent

American Chemistry Council warns of economic consequences of a rail strike. (Photo: Jim Allen/FreightWaves)

A potential rail strike could be the catalyst that brings the U.S. economy into a full-on recession, the American Chemistry Council warned in publishing Wednesday an economic analysis of the impacts on its industry and others.

“[If a strike lasts one month, it] would likely put a major chill on several leading economic indicators through the first half of 2023,” ACC said in a release about the report. 

The group, which represents chemical shippers, determined a strike could result in 700,000 lost jobs across multiple industries, as well as cause a 4% spike in the producer price index (PPI), a 1% contraction of the U.S. gross domestic product (GDP) and pull out almost $160 billion from the economy.

According to the U.S. Bureau of Labor Statistics, the PPI measures the average change over time of the selling prices received by domestic producers for their output.

If a strike continues for another month, the two months combined could result in the PPI  increasing by 12% and cause the GDP to contract by 2%.

“A rail strike could shove the economy out of recovery mode and into a recession,” ACC Chief Economist Martha Moore said in a news release. “A prolonged strike would have an exponential effect for each additional month and drag the country into a potential recession much faster.”


A rail strike could curtail production at ACC member facilities because they typically don’t have more than four to five days’ worth of empty cars or raw materials on hand, according to the report. If facilities aren’t able to receive the supplies they need after roughly a week, they could be forced to shut down. 

ACC and other shippers have urged Congress to prevent a rail strike, sending a letter recently to the majority and minority leaders in the U.S. Senate and House of Representatives. 

Should a strike appear imminent, Congress should pass legislation that would enact the labor contract terms that the unions and the railroads agreed to in September, ACC said.

Shippers’ groups are concerned that a strike could occur should members of the two largest rail unions — the ones representing locomotive engineers and train conductors — decide against ratifying their labor agreements with the railroads. The results of their votes on whether to approve a new deal will be announced Monday.

Three other rail unions have already voted against ratifying their labor agreements and headed back to the bargaining table. 

Sick leave policies could be one of the sticking points for those unions, although the railroads have indicated publicly a reluctance to budge, opting instead for that discussion to occur outside of contract negotiations, per recommendations by the U.S. president-appointed board that convened over the summer to help resolve the multiyear negotiations impasse.

If members of the locomotive engineers and train conductors’ unions vote against ratification, members could opt to engage in a strike but only after a cooling-off period, per federal law. That stretch for some of the five remaining unions ends Dec. 4, although that timetable could be extended to Dec. 9 if they align their ending dates for the periods.

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3 Comments

  1. Austin

    Maybe the extremely profitable railroads should just pay their employees a decent wage then, surely this is all costing them significantly more in the long run than just not being greedy pieces of sh*t right?

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Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.