Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Will Congress intervene to prevent US rail strike?

Photo: Unsplash View of US Capitol building
With the potential of a December strike that would see traffic on the big US railroads grind to a halt just one week away, the temperature is heating up.

Even though 9 December is the day that the strike could begin, the big “roads” would begin restricting shipments slightly in advance of this date. Under laws dating back to the 1920’s, the US Congress does have the ability to actually set an agreement in place that could preclude a strike.

Like everything else in the States, this issue is hyper-political, with President Biden, who previously had urged labour and the rails to talk, now urging the Congress to draft, and pass, legislation that would prevent a strike.  Such legislation, which the House of Representatives might vote on during this week, could take the form of a “cooling off period” allowing the parties to talk, or it could be more draconian- actually dictating the terms of a binding agreement between the rails and the workers.

Those trying to handicap the outcome have noted that in this “lame duck” session of Congress, after the mid-term elections, but prior to House control switching from Democrats to Republicans, results may not be predictable. Traditionally, the Democrats have sided with labour, while the Republicans back business interests.

The biggest issue cited by unions which have rejected the tentative deal reached in September has been that of “paid sick leave” for workers who’ve been stretched then as demand to move cargo has recovered after pandemic-related declines. While extreme left-winger Senator Bernie Sanders (Democrat - Vermont) urged support for workers, President Biden, in a letter to Congress, has voiced concern regarding critical supply chains for materials moving on the rails.

In the worst case, cargo offloaded at ports could back up at terminals, in the absence of intermodal switching onto the rails.

Equity analysts who follow land-side transport as well as shipping have tamped down the hysteria. Referring to President Biden’s public pronouncement- in his letter, Jon Chappell, from Evercore ISI, said, in a note to clients: “The impact of this letter to the threat of a strike cannot be understated, as it brings the  labour-friendly  Democrats  to  a  proactive  resolution  (House  is expected to vote as early as tomorrow, with Nancy Pelosi calling for a vote  this  week)  under  its  leaders,  with  sources  noting  enough Republicans  on  board  to  result  in  a  bipartisan  agreement.”

In a report from late November, Deutsche Bank analyst Amit Mehrotra had written, regarding ratification votes by two large unions: “If one or both don't ratify, we'd expect the status quo to be maintained to allow for additional negotiations. We continue to think a national rail strike is very unlikely, but if it happens, we expect it to be very short-lived.”


TAGS: Ports Americas