People
Last week, a union representing almost 12,000 rail workers in the United States voted down a tentative contract, which had been brokered by the White House in September to avoid a nationwide rail strike.
The good news
This decision, which was made by only 1 of the 11 unions that represent 115,000 rail workers in the United States, does not present an immediate risk of a strike.
At present, six labor organizations have ratified agreements to resolve the national bargaining round. Tentative agreements with five other labor organizations remain subject to ratification. Two of the labor organizations with tentative agreements that remain subject to ratifications are expected to announce their vote in five weeks.
And even this union—the Brotherhood of Maintenance of Way Employees Division of the Teamsters (BMWED)—isn’t about to walk off the job. By rejecting the agreement, BMWED has entered a “status quo” period in which they will reengage bargaining with the Class 1 freight carriers.
The not-so good
It remains unknown as to whether the seven remaining organizations will ratify the tentative contract. One of the primary concerns is that BMWED’s actions have opened the door for others to decline to ratify.
In addition, this period of calm may be relatively short lived. On November 19, which is five days after Congress returns to session, BMWED’s “status quo” period will expire.
Timing and potential knock-on effects
The November 19 deadline puts a potential strike at risk going into the Thanksgiving holiday, just as rail shipping ramps into high gear due to holiday volumes. If a strike were to occur, the railroads could take weeks to recover.
Parcel shipments are particularly vulnerable. Much of their volume goes via rail, and trucks have a limited amount of spare capacity. Consumers could experience extended shipping transits on their Black Friday or Cyber Monday purchases in the event of a strike.
Labor shortages are also already a concern, with the holidays traditionally making a bad situation worse as workers go on vacation. A strike would only add to these existing headaches, leading to congestion and much longer transit times.
What do you need to do?
It’s time to prepare action plans as more labor organizations decide how they would like to proceed and before the November 19 deadline.
- Act today. If you have the option of moving goods or holding further safety stock prior to the mid-November deadline, this could prove wise given potential disruptions if a strike were to occur.
- Plan for tomorrow. Develop detailed plans for next steps if a strike were to occur. Where are your goods today? Where will they be after November 19? Prioritize products and shipments. Secure other modes of transportation. Begin planning communication to customers now in case a rail strike were to occur. For shipping to consumers via parcel, a higher level of service could be used to ship to customers during the slower, but the business should be cognizant of additional expense.
The good news is that a strike is not imminent, but to avoid being caught flat footed at one of the busiest times of year, act and plan accordingly.
