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Class I railroads work to quickly resume operations

Thursday’s tentative agreement for locomotive engineers and train conductors averts strike

The U.S. operations of the Class I railroads are working to resume operations “immediately” now that a deal has been reached to avoid a strike by union members on Friday.

Two of the largest labor unions — those representing locomotive engineers and train conductors — reached an eleventh-hour tentative agreement with the railroads. The agreement, announced early Thursday, averts a strike that could have begun as early as just after midnight Friday.

“We are moving immediately to resume normal operations and restore service that had been curtailed in anticipation of a potential strike,” Norfolk Southern (NYSE: NSC) said in a Thursday demurrage update. The railroad also said in service announcements that it has reopened all gates to intermodal traffic.

“Our goal from the beginning has been to provide our craft railroaders with pay and benefits that keep them among the highest compensated workers in the nation. We are pleased to have a path forward that accomplishes that goal and lets us get back to the work of running a customer-centric, operations-driven railroad,” NS said.

BNSF (NYSE: BRK.B) told FreightWaves it would continue normal operations. The actions it had taken included restricting movements of temperature-controlled intermodal shipments and hazardous and security-sensitive material. Planned gate restrictions at certain intermodal and automotive facilities will also not occur as previously announced.  

Last Friday, the Association of American Railroads (AAR) said the Class I railroads would be placing embargoes on security-sensitive shipments to prevent those shipments from stopping while en route.

Union Pacific (NYSE: UNP) said in a service update that it has canceled the embargo on security-sensitive and time-sensitive commodities and is working with customers to address any shipment backlogs.

“Union Pacific is pleased tentative agreements have been reached with the rail labor unions, providing historic wage increases for our employees​ and averting a potential work stoppage. We look forward to the unions ratifying these agreements and working with employees as we focus on restoring supply chain fluidity,” UP said in a statement to FreightWaves.

Kansas City Southern said in a Thursday service update: “At KCS, we remained fully committed to keeping it business-as-usual and service remained uninterrupted on both our U.S. and Mexico networks.”

And Amtrak, much of whose network utilizes freight rail-operated tracks, said Thursday morning that it is working to quickly restore canceled trains and reaching out to affected customers to accommodate on first available departures. The passenger carrier had planned to cancel long-distance service routes if the strike occurred.

A new labor deal for union members has been in the works since January 2020, but negotiations between the unions and the railroads failed to progress. A federal mediation board took up the negotiations but released the parties from those efforts earlier this summer. 

The Presidential Emergency Board — a three-person board appointed by President Joe Biden that convened in July and August to come up with ways that the unions and railroads could resolve the impasse — issued recommendations last month. The recommendations were meant to serve as a jumping-off point for a new contract.

Almost all of the dozen unions reached tentative agreements with railroad representatives in recent weeks, but two of the biggest unions, the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the Transportation Division of the International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART-TD), were deep into negotiations over issues regarding the railroads’ attendance policies, which they viewed as too restrictive and punitive.

AAR estimated that a strike would have cost the U.S. economy as much as $2 billion a day. Shippers lobbied Congress to ensure that the tentative labor agreements get reached to prevent a strike.

BMWED, DeFazio, chemical shippers react

With an agreement in hand, BLET and SMART-TD will send the contract to their members for approval. During that time, union members will be unable to engage in a strike.

The tentative agreement addresses attendance policies and other issues that union negotiators hoped to address. But it remains to be seen whether the union members will accept the agreement. Members of the International Association of Machinists and Aerospace Workers (IAM) rejected theirs this week. Representatives for IAM and the railroads will hash out sticking points through Sept. 29. 

“IAM District 19, along with the IAM Rail Division, is working to get back to the table with the National Carriers’ Conference Committee to negotiate an agreement worthy of our members’ ratification,” IAM said in a Thursday statement. “We are also working to better understand the tentative agreements reached earlier. We are grateful for our members and all rail workers, who have delivered a strong message that rail workers deserve respect and dignity on the job. We will share more information with our membership as soon as it becomes available.”

Two unions, the Transportation Communications Union/IAM and the Brotherhood of Railway Carmen, voted to ratify their respective agreements, according to the National Carriers Conference Committee, the group representing the freight railroads.

“We congratulate our Brothers and Sisters with the BLET, SMART-TD, and BRS [Brotherhood of Railway Signalmen] as well as the entirety of rail labor, for their hard work and dedication to the collective memberships of rail labor over the arduous three-year bargaining round,” the Brotherhood of Maintenance of Way Employes Division said in a statement. 

Other stakeholders expressed relief over the tentative deal.

U.S. Rep. Peter DeFazio, D-Ore., chair of the House Committee on Transportation and Infrastructure, said the agreement between BLET, SMART-TD and the railroads gives rail workers “the dignity and working environment they deserve.”

“Today’s tentative agreement between rail workers and the railroads is a major accomplishment for workers who have fought for and won better pay — the highest wage increase in over 45 years — improved working conditions, and the sick days they need to see their doctors without penalty,” DeFazio said in a statement. “At a time when the railroads reap record profits, it is confounding that these changes could not have been agreed upon sooner.”

Meanwhile, the American Chemistry Council reminded the industry of ongoing service issues.

“This agreement helps put one major problem to rest, but we’re certainly not out of the woods yet,” said American Chemistry Council President and CEO Chris Jahn. “The fact remains that Congress and the Surface Transportation Board have more work to do to resolve the freight rail problems that are continuing to put the brakes on the U.S. economy and prolonging the supply chain crisis.”

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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.