Rail strike looms

A nationwide railroad strike could occur as soon as Dec. 9. (Miner file photo)

A nationwide railroad strike could occur as soon as Dec. 9. (Miner file photo)

OMAHA, Neb. – American consumers and nearly every industry will be affected if freight trains grind to a halt next month.

One of the big rail unions rejected its deal Monday, joining three others that have failed to approve contracts over concerns about schedules and the lack of paid sick time. That raises the risk of a strike, which could start Dec. 9.

It wouldn’t take long for the effects to trickle through the economy. Many businesses only have a few days’ worth of raw materials and space for finished goods. Makers of food, fuel, cars and chemicals would all feel the squeeze, as would their customers.

The stakes are so high for the economy that Congress is expected to intervene and impose contract terms on railroad workers. The last time U.S. railroads went on strike was in 1992. That strike lasted two days before Congress intervened. An extended rail shutdown has not happened for a century, partly because a law passed in 1926 that governs rail negotiations made it harder for workers to strike.

Here are some of the expected impacts:

FOOD FEARS

It would take about a week for customers to notice shortages of things like cereal, peanut butter and beer at the grocery store, said Tom Madrecki, vice president of supply chain for the Consumer Brands Association.

About 30% of all packaged food in the U.S. is moved by rail, he said. That percentage is much higher for denser, heavier items like cans of soup.

Some products, like cereal, cooking oils and beer, have entire operations built around rail deliveries of raw ingredients like grain, barley and peanuts, along with shipments of finished products.

CHEMICALS RUN DRY

Chemical manufacturers and refineries will be some of the first businesses affected, because railroads will stop shipping hazardous chemicals about a week before the strike deadline to ensure that no tank cars filled with dangerous liquids wind up stranded.

PASSENGER PROBLEMS

Roughly half of all commuter rail systems rely at least in part on tracks that are owned by freight railroads, and nearly all of Amtrak’s long-distance trains run over the freight network.

Back in September, Amtrak canceled all of its long-distance trains days ahead of the strike deadline to ensure passengers wouldn’t be left stranded in remote parts of the country while still en route to their destination.

AUTOMOBILE ANGST

Drivers are already paying record prices and often waiting months for new vehicles because of the production problems in the auto industry related to the shortage of computer chips in recent years.

That would only get worse if there is a rail strike, because roughly 75% of all new vehicles begin their journey from factories to dealerships on the railroad. And automakers may have a hard time keeping their plants running during a strike because some larger parts and raw materials are transported by rail.

RETAIL RISKS

Jess Dankert, the vice president for supply chain at the Retail Industry Leaders Association, said retailers’ inventory is largely in place for the holidays. But the industry is developing contingency plans. “We don’t see, you know, canceling Christmas and that kind of narrative,” Dankert said. “But I think we will see the generalized disruption of really anything that moves by rail.”

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