National Rail Strike Is Averted As Carriers, Two Unions Settle

This story appears in the Dec. 12 print edition of Transport Topics.

Two rail unions settled with carriers on a tentative agreement in the days leading up to a possible Dec. 6 walkout, averting a strike and allowing shippers and fleets to utter a collective sigh of relief.

The tentative agreements reached with the Brotherhood of Locomotive Engineers and Trainmen and the American Train Dispatchers Asso-ciation left just one union, the Broth-erhood of Maintenance of Way Employes, in contract talks, with no prospect of a strike until Feb. 8.

In all, 12 of 13 unions and about 107,000 workers have settled or signed agreements, according to the National Carriers’ Conference Committee, which announced the settlement late on Dec. 1.

“A national railroad strike would have created a supply chain disaster,” Steve Pater, director of transportation for nationwide retailer Crate & Barrel, told Transport Topics. “Even if short-lived, we would experience pickup and delivery backlog and disruption to customer service.”

“We had a contingency plan in place to cover key lanes for peak season,” he added. “However, over-the-road capacity would be extremely tight and add significant expense.”

“The National Retail Federation was pleased to see that the railroads and unions were able to come together for agreements to avert the potential rail strike,” said Jonathan Gold, vice president of supply chain and customs policy for the trade group. “A strike or any kind of disruption would have had a significant negative impact on the retail sector and the economy as a whole.

Averting a strike also prevented the daunting task of finding alternatives for motor carriers that are interdependent with railroads.

One of those carriers is J.B. Hunt Transport Services Inc., the only trucking operator to publicly disclose details of intermodal and other freight moves.

Rail accounted for 78% of Hunt’s total mileage operated in its own equipment, based on an estimated 200 miles of drayage per trip. Through the first three quarters, Hunt’s intermodal shipments traveled approximately 1.4 billion miles by rail in that period, while its dedicated and over-the-road freight combined totaled less than 400 million miles.

Anecdotally, U.S. Xpress Inc. President John White told TT before the settlement announcement that finding trucks to handle the additional loads moving by rail would be a challenge at a time of tight trucking capacity.

A settlement with the Brotherhood of Maintenance of Way Employes workers was expected.

“We are hard pressed to envision a situation where BMWE would not eventually work out a deal with the industry,” Jason Seidl, a Dahlman Rose & Co. analyst, said in a report.

The remaining issue between that union, which is a Teamsters union affiliate, and the carriers, is away-from-home expenses for work gangs that can include up to 180 people.

The BMWE had proposed increasing that compensation by about 70% to match the reimbursement allowed to federal government workers, according to the union’s submission to a Presidential Emergency Board that reviewed the entire nationwide contract dispute.

When the presidential board last month favored the carriers’ approach, the union offered the two-month bargaining extension to work out the issue. The rails argued that a national solution was impractical because each railroad’s working conditions for that union was different.

“Everyone wins when we reach voluntary agreements,” said Kenneth Gradia, chairman of the National Carriers’ Conference Committee. “In a tough economy, these agreements offer a terrific deal for rail employees. They lock in well-above market wage increases of more than 20% over six years, far exceeding recent union settlements in other industries.”

A remaining step in the process is ratification, with rank-and-file members of 10 unions slated to vote this month on the tentative deals. Before the PEB was created in October, the United Transportation Union and its affiliate that represents yardmasters ratified a five-year deal stretching until 2015.

“After reviewing with [union officials] the Carriers’ final settlement offer, your leadership has reached a consensus: a tentative agreement will be submitted to the membership, and you will decide the outcome of this round of bargaining,” said a letter sent by Dennis Pierce, president of the Brotherhood of Locomotive Engineers and Trainmen, a Teamsters affiliate.

Tentative agreements haven’t always been approved in the past. For example, United Transportation Union members turned down a 1996 tentative agreement. Since then, every tentative deal has been ratified.

“Freight rail touches nearly every sector of our economy, and we are committed to finalizing the remaining agreement so that we can continue to deliver for the tens of thousands of American businesses that rely on rail,” Edward Hamberger, president of the Association of American Railroads, said in a statement.