The U.S.-based Class I railroads have been taking steps this week to prepare for a potential strike by union members after midnight Friday by embargoing security-sensitive material and even winding down operations for intermodal and temperature-controlled rail traffic.
On Wednesday, Norfolk Southern (NYSE: NSC) will close all its gates to intermodal traffic at 5 p.m. local time as part of a controlled shutdown of its network ahead of a possible strike. This includes in-gates for loaded and empty intermodal units, and traffic originating at on-dock port facilities and privately owned intermodal terminals will not be accepted, NS said in a Tuesday service update.
Out-gates will remain open at NS intermodal terminals for customers to pick up units, NS said.
NS’ actions follow efforts to embargo automotive shipments, effective Wednesday, and plan for the “orderly lay down of trains” in NS’ bulk network to enable an efficient restart of normal operations, according to a Monday service update.
Meanwhile, BNSF is keeping out-gates open during normal business hours for customers to pick up units “as we do not intend to close our facilities,” BNSF said Wednesday. But the railroad will start to restrict in-gates at select intermodal and automotive facilities on Friday as a way to control inventory levels. However, the majority of intermodal facilities will remain open at normalized gate allocation levels through the weekend, it said.
“Even if ongoing negotiations do not lead to agreements with the remaining unions before Friday, we ask that you continue to pick up containers and trailers,” BNSF said. “Our facilities will remain open for out-gating regardless of the outcome of these negotiations to reduce lot congestion, provide the space needed to process freight and ensure we are able to resume operations as quickly as possible.”
BNSF said Monday that it would take action on temperature-sensitive shipments on Wednesday by not allowing temperature-controlled intermodal (TCI) units to in-gate at its intermodal facilities.
But nonrunning TCI units for dry bulk shipments may still be in-gated, BNSF said.
“Customers are encouraged to pick up their TCI units that have reached their final destination and units at origin that have not been loaded onto a train,” BNSF said.
Other railroads had either not released their plans publicly as of Wednesday morning or were taking another approach.
Last Friday, the Class I railroads said they would start embargoing shipments of security-sensitive material this week.
“Due to the uncertainty of the labor negotiations, we are prepared to take the proactive steps to secure our customers’ goods,” Union Pacific (NYSE: UNP) said in a Tuesday service update. “At this time, we have only embargoed rail security-sensitive material (RSSM) shipments to make sure these hazardous commodities are safely secured in the event of a work stoppage.”
Rail stakeholders are watching whether the two largest unions, the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division (SMART-TD), will reach a tentative labor agreement with the railroads before Friday, which is when a “cooling-off” period ends and union members would be allowed to strike, per the Railway Labor Act.
The uncertainty with freight rail operations has even caused Amtrak to plan to suspend service. Amtrak uses track owned by the freight railroads.
“Amtrak is closely monitoring the ongoing freight rail-rail labor contract negotiations,” stated an email from Amtrak spokesman Marc Magliari. “The negotiations do not involve Amtrak or the Amtrak workforce. While we are hopeful that parties will reach a resolution, Amtrak has now begun phased adjustments to our service in preparation for a possible freight rail service interruption later this week. Such an interruption could significantly impact intercity passenger rail service, as Amtrak operates almost all of our 21,000 route miles outside the Northeast Corridor (NEC) on track owned, maintained, and dispatched by freight railroads.
“These initial adjustments include canceling all long distance trains and could be followed by impacts to most state-supported routes. These adjustments are necessary to ensure trains can reach their terminals before freight railroad service interruption if a resolution in negotiations is not reached.”
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.
Cabinet working with labor, railroads to reach agreement
White House press secretary Karine Jean-Pierre told reporters Tuesday that the Whte House has been looking at contingency plans to move freight in the event of a strike.
“We are working with other modes of transportation, including the shippers and truckers … airfreight to see how they can step in and keep goods moving in case of this rail shutdown,” Jean-Pierre said. “The administration has also been working with relevant agencies to assess what supply chains and commodities are most likely to face severe disruptions and available authorities to keep goods moving.”
What’s unclear for now is Biden’s role should the impasse continue through the deadline Friday.
“The president strongly supports collective bargaining as the best process available for employers and working people to reach mutual acceptable solutions,” Jean-Pierre said. “But here’s the reality. … He’s focused on how this is going to hurt families and farms and businesses and communities. They could be harmed by this rail shutdown. So, again, he encourages [rail stakeholders] to continue to negotiate at the table in good faith.”
Labor Secretary Marty Walsh, Transportation Secretary Pete Buttigieg and Agriculture Secretary Tom Vilsack have also been involved in recent labor talks in order to cut a deal between railroads and two of the larger unions before midnight Friday, Jean-Pierre said.
The rail companies and the unions “have worked out agreements in previous negotiations. This is not the first time, and they can do this again. So, we are going to encourage them to stay at the negotiation table and, in good faith, come up with the solution this time around, as they have done many times before,” she said.
UPS, meanwhile, said it is working on options to meet customers’ needs.
“UPS continues to work on contingency plans to flex our integrated smart logistics network to serve our customers. However, any disruptions will create uncertainty in supply chains and the U.S. economy,” UPS (NYSE: UPS) told FreightWaves. “We encourage an immediate resolution, beneficial to all parties, so that our country avoids any additional negative economic impacts and ensures business continuity.”