Biden, unions, rail executives struggle for deal as shutdown looms

Employees risked Covid-19 exposure during the pandemic to keep goods moving, while employers reaped hefty profits, experts say. PHOTO: EPA-EFE

DETROIT/LOS ANGELES - Biden administration officials hosted labour contract talks late on Wednesday to avert a potential rail shutdown that could disrupt cargo shipments and impede food and fuel supplies, but one small union rejected a deal and Amtrak cancelled all long-distance passenger trips.  

Railroads including Union Pacific, Berkshire Hathaway’s BNSF and Norfolk Southern have until a minute after midnight on Friday to reach deals with three holdout unions representing about 60,000 workers before a work stoppage affecting freight and Amtrak could begin.

Talks between labour unions and railroads, which started at 9am were still underway more than 12 hours later after 9pm ET on Wednesday at the US Labour Department’s headquarters in Washington.  

The talks are being overseen by Labour Secretary Marty Walsh, with input from other US officials.

The parties ordered in Italian food for dinner Wednesday in order to continue discussions.  

“Everybody is going to have to move a little in order to get a deal done,” US Secretary of Transportation Pete Buttigieg told reporters on the sidelines of the Detroit auto show.  

A union representing about 4,900 machinists, mechanics and maintenance personnel said on Wednesday its members voted to reject a tentative deal.  

Rail workers have gone three years without a raise amid a contract dispute, while rail companies have recorded robust profits.  

In the current talks, the industry has offered annual wage increases from 2020 to 2024, equal to a 24 per cent compounded hike.  

Three of 12 unions, representing about half of the 115,000 workers affected by the negotiations, are asking for better working conditions.

Two of those 12 unions, representing more than 11,000 workers, have ratified deals, the National Carriers’ Conference Committee (NCCC), which is bargaining on behalf of railroads, said on Wednesday.

Unions are enjoying a surge of public support and worker interest in the wake of the pandemic - when employees risked Covid-19 exposure to keep goods moving and employers reaped hefty profits, labour and corporate experts say.

A shutdown could freeze almost 30 per cent of US cargo shipments by weight, stoke inflation, cost the US economy as much as US$2 billion (S$2.8 billion) a day and unleash a cascade of transportation woes affecting the US energy, agriculture, manufacturing and retail sectors.

White House spokeswoman Karine Jean-Pierre told reporters aboard Air Force One that a shutdown of the freight rail system would be an "unacceptable outcome for our economy and the American people and all parties must work to avoid just that."

The Labour Department in a statement said "the parties are negotiating in good faith and have committed to staying at the table" on Wednesday in a meeting hosted by Labour Secretary Marty Walsh.

President Joe Biden's administration has begun making contingency plans to ensure deliveries of critical goods in the event of a shutdown.

The stakes are high for Biden, who has vowed to rein in soaring consumer costs ahead of November elections that will determine whether his fellow Democrats maintain control of Congress.

“Unless they reach a breakthrough soon, rail workers will go on strike this Friday. If you don’t think that will have a negative impact on our economy... think again,” said US Senator John Cornyn, a Republican and Biden critic.

Senator Bernie Sanders late on Wednesday objected to a Republican bid to unanimously approve legislation to prevent a rail strike, noting the profits the rail industry has made.

If agreements are not reached, there could be union strikes or employer lockouts. But the railroads and unions also could agree to stay at the bargaining table, or the Democratic-led US Congress could intervene by extending talks or establishing settlement terms.

House of Representatives Speaker Nancy Pelosi said it was not clear whether Congress would step in, noting that the main issue is a lack of sick leave for workers.  

Amtrak, which uses tracks maintained by freight railways, said it would cancel all long-distance trips on Thursday and some additional state-supported trains.  

A shutdown could freeze almost 30 per cent of US cargo shipments by weight, stoke inflation, cost the US economy as much as US billion (S.8 billion) a day. PHOTO: EPA-EFE

Rail hubs in Chicago and Dallas were already clogged and suffering from equipment shortages before the contract showdown.

Those bottlenecks are backing up cargo at US seaports by as much as a month. And, once cargo gets to rail hubs in locations such as Chicago, Dallas, Kansas City and Memphis, Tennessee, it can sit another month or longer.

Package delivery giant United Parcel Service, one of the largest US rail customers, and US seaports said they are working on contingency plans. 

Meanwhile, factory owners are fretting about idling machinery while automakers worry that a shutdown could extend vehicle buyer wait times. Elsewhere, food and energy companies warn that additional service disruptions could create even sharper price hikes. REUTERS

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