Association Leaders React to Impending Rail Strike

Written by David Schollaert

A potential nationwide rail strike could wreak havoc on the steel industry, association executives warned, negatively impacting the shipment of finished and semi-finished steel products as well as steelmaking raw materials.

“Our supply chains are stressed and any disruption in freight rail service will hurt our economy by adding costs and delays to a rail service system that is already suffering from poor service”, Philip Bell, president of the Steel Manufacturers Association (SMA) told Steel Market Update (SMU).

The four largest US railroads began limiting service Monday in preparation for a potential strike that stands to halt freight rail movement across the country, presenting a new supply chain-related challenge for US industry.

CSX, BNSF, and Union Pacific all halted traffic of hazardous materials on Monday due to the threat of “spontaneous labor action,” according to the Association of American Railroad’s list of active embargoes.

“American steel producers rely heavily on railroads for transporting raw materials to their mills and for shipping finished steel products to the market,” Kevin Dempsey, the American Iron and Steel Institute’s (AISI) president and CEO told SMU. “A functional freight railroad system is critical to ensuring that the American steel industry can effectively and efficiently serve its customers.”

A possible service slowdown or stoppage could occur as soon as this Friday, Sept. 16. 

The Class I railroads have been in national bargaining with multiple rail unions since November 2019, with little to no progress.

A Presidential Emergency Board (PEB) was established to mediate negotiations and help both parties reach an agreement. The PEB issued recommendations to resolve the current railroad-labor union impasse on Aug. 16, triggering a 30-day cooling-off period and extending negotiations through 11:59 p.m. on Sept. 15.

If the parties do not come to an agreement during this cooling-off period, a strike or work stoppage is possible.

“A voluntary agreement among all parties to the ongoing rail negotiations is clearly the best outcome,” said Dempsey. “But if negotiators fail to reach an agreement by the end of the cooling off period, we urge Congress to act to ensure that our nation’s freight rail system remains operational.”

“While we are are hopeful that the carriers and unions will reach an agreement before Friday, the Biden administration and Congress must be prepared to prevent a shutdown of our rail system,” said Bell.

Congress is likely to intervene to prevent or stop any rail service disruptions as it has in the past if the parties do not resolve their differences through a voluntary agreement.

And it’s not just industry associations that are bracing for the fallout of a potential rail stoppage. Mills have begun notifying customers of the impending strike and its consequences.

Bell called on Washington to pass the Freight Rail Shipping Fair Market Act, H.R. 8649, a piece of legislation that “makes market-based incentives and improvements, including enhancement of rail-to-rail competition and performance reciprocity when unreasonably poor rail service hurts shippers and American consumers.”

“Any interruption in freight rail service will be harmful to our nation’s competitiveness,” Bell added.

By David Schollaert,

David Schollaert

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