Total Connection Blog

How Would a Rail Strike Effect North American Supply Chain


A danger the United States government thought had been mitigated a little over two months ago is back on the cards.

The possibility of a national rail strike starting a few weeks before Christmas has become much more apparent following contract rejection by one of the largest rail unions. Rail operators and their affiliated unions have been involved in a dispute over better pay and working conditions.

Initially. fears of industrial action had died following the announcement of a provisional agreement between railroad companies and various rail unions. However, several reports suggest that the deal has been rejected by several unions, thereby throwing the whole agreement process into chaos.

But just how much would a rail strike impact the economy?

Evidently, the strike would affect commuters who rely on the railway. However, aside from passenger transportation, every significant facet of the country, from manufacturing to distribution, logistics, energy, and every other industry in between, would also be significantly affected. Hence, here’s all you need to know about the looming strike and its consequences.

What Is The Dispute About

Two particular grievances have been passed across throughout this dispute – working conditions and paid sick leave. Railroad unions have highlighted how much they’ve had to cope with understaffing, a rigid work environment, and contracts that do not include paid sick leave. 

Typically, rail employees are to work 12 hours daily and are frequently on-call every hour of the day, seven days a week. The work environment is so rigid that rail workers must make requests months in advance when scheduling time off.

On the other hand, railroad companies have argued that there is a need to keep labor costs low by all means necessary. These include having employees show up to work as expected and deal with any medical conditions on their time off.

How Close Are We To A Strike

In September, the dispute seemed like it had been resolved; however, the past few days have seen it quickly unravel. The brief reprieve from the conflict came with a contract offer that included better pay and improved working conditions. The contract consists of a pay rise of about 14% and the potential to rise to about 24% by 2024. Workers would also get $1,000 bonuses annually for five years.

But, while the deal offered some form of flexibility and a better healthcare plan, it does feature a points-based attendance policy which rail unions feel could punish employees for missing work. In line with this, several unions, most notably the union for rail conductors, SMART Transport Division, have announced that its members have voted down the deal.

Employees in the United States are usually entitled to work stoppage – a concerted cessation of work by a group, usually more spontaneous and less severe than a strike. If this right is activated, there is a possibility other unions will join in solidarity.

Rail Union Demands

Considering the new deal, the points-based attendance policy employed by some of the most prominent rail lines remains a crucial issue. These policies punish employees severely, sometimes to the extent of termination, when they miss work, even for innocuous reasons such as family or health emergencies.

Some workers are also placed on call for up to 14 consecutive days without a break, sick day, or extra pay. According to the Brotherhood of Locomotive Engineers and Trainmen, employees have been punished for missing work due to severe medical conditions such as a heart attack or COVID.

That said, the current demands of rail union workers include 15 days of paid sick leave, as opposed to the single day proposed by the proposed contract. The new deal also eliminates penalties for missing work due to medical emergencies, yet workers are still unsatisfied with the contract’s apparent compromise.

The United States Government’s Role In This Dispute

The US government is undoubtedly a significant player in this dispute, with Congress’s power to end this dispute effectively. Several speculations have been made on how the potential rail strike could end. Amid all that, the Constitution and Railway Labor Act (RLA) gives Congress the authority to solve the matter.

Rail lines are recognized as a critical aspect of the economy, and industrial actions would be detrimental to the country. Hence, the constitution provides arbitration measures such as cooling-off periods where strikes would not be allowed.

In light of this, there have been calls for Congress to pass legislation that would enforce the contract offered by railroad companies without any modification or delay. This would be a strategy to avert a rail strike that could severely impact the nation. However, while it might seem straightforward, political tensions, particularly between the democrats and republicans, are bound to make it a complex and highly political process.

What Would Happen In A Shutdown

A rail strike would undoubtedly disrupt the economy, from creating logistical issues to testing a fragile supply chain. According to industry experts and economists, a strike will completely shut down about a third of the country’s freight industry. Historically, these factors have been the leading causes of elevated inflation levels.

Additionally, these rail unions primarily run commuting lines, making them subject to the impacts of a strike. The Association of American Railroads has highlighted how devastating a rail strike would be to Amtrak operations – the national passenger railroad company of the United States.

As a result of all these impacts, the government and logistics operators are developing contingency plans to ensure high-priority products and cargo transported by trains reach their final destination without significant delay. These products include food, energy, and health supplies.


FMC LIC: 026203NF | MC: 280101

11 Main Street
Holmdel, NJ 07733 USA
+1 732-817-0401

Urgent Quote Form

Fill out the below form and we
will get back to you in a few minutes.