in the early A few hours on Thursday morning, major U.S. freight railroads reached a tentative agreement with unions that narrowly avoided a nationwide rail shutdown less than 24 hours before the strike deadline. The shutdown would have devastating consequences for the nation’s economy and supply chain, nearly 30% of which relies on rail. Even a near miss has some impact. Long-distance Amtrak passenger service using freight tracks and hazardous materials is now resuming after the railroad suspended them to prevent people or cargo from being stranded by the strike.
The tentative deal, voted on by union members, was reached through negotiations brokered by the Biden administration. It scrambled this week to avoid a shutdown that could lead to major disruption and worsening inflation by limiting supplies of key commodities and pushing up transportation costs. Rail unions and the rail industry association issued a statement on Thursday welcoming the deal. But freight rail services had been unreliable long before this week’s standoff, and trade groups representing rail customers say much remains to be done to return to acceptable levels.
This spring, only two-thirds of trains arrived within 24 hours of their scheduled time, down from 85 percent before the pandemic, forcing rail customers to suspend business or — grimly consider euthanizing starving chickens. Scott Jensen, a spokesman for the American Chemistry Council, whose members rely on rail to transport chemicals, called the latest shutdown threat “another ugly chapter in a long saga of freight rail problems.”
While Thursday’s deal was applauded by companies that rely on rail freight, the ACC, the National Grain and Feed Association and other trade groups also believe the rail industry needs further reform. Competition has waned as service is concentrated among a few large railroads, which have shed 29 percent of their workforce over the past six years. Rail customers have asked lawmakers and rail regulators to intervene. Recommendations include federal minimum service standards, including penalties for leaving loaded cars at rail yards for extended periods of time, and rules allowing customers to divert cargo to another service provider at certain interchanges to address the fact that many customers are being held captive single carrier.
Major U.S. freight railroads have cut jobs significantly in recent years as part of implementing a leaner, more profitable operating model called Precision Plan Rail. Profits have indeed soared — Union Pacific and BNSF, the two largest freight companies owned by Warren Buffett, broke records last year. But staffing shortages have plunged the rail network into crisis after many workers decided not to return to the rail industry after the pandemic furloughed. At a federal hearing this spring, railroad customers complained that they had suffered the worst service levels on record because of the loss of a resilient network.
Many freight rail jobs have always involved erratic schedules and long journeys from home, but workers complain that streamlined operations expose them to longer hours, higher injury rates and more unpredictable schedules . Many workers do not take sick leave and are penalized for taking time off outside vacation time (an average of three weeks per year) or vacation and personal time (up to 14 days per year for the most senior employees).