The Class I railroads are ready to alter operations in the event of a strike on September 16, stating that shipments of security-sensitive and hazardous cargo will be suspended.
Norfolk Southern Chief Marketing Officer Ed Elkins described how NS (NYSE: NSC) would begin to apply embargoes for specific types of cargo, including rail security-sensitive items, in a late-day Friday service update.
Elkins stated that ten of the twelve unions are nearing agreement on new labor contracts, but two have not reached an agreement and have not committed to not striking.
“We must take steps to ensure that we can safely shut down operations in the event of a strike and that we can restore operations rapidly when activities resume.” Most importantly, in the event of a sudden strike, we must ensure that no hazardous material or freight requiring special security is left on an unattended train on the network,” Elkins said. “To avoid this, we must start imposing embargoes for specific types of shipments today, including rail security-sensitive material (RSSM) and certain time-sensitive shipments detailed in the embargo.”
“Additionally, customers in some markets, including bulk unit trains, intermodal, and automotive, will see service curtailment up to 72 hours before the end of the cooling-off period to prepare for a safe and orderly halt if there is a strike,” Elkins wrote. On September 11, an embargo with specific information for intermodal and automotive clients will be released. We will communicate with all affected customers regarding their shipments in a timely and open manner.
According to a Friday service update, Union Pacific will begin protecting hazardous and other security-sensitive materials through embargoes on Monday.
“This is a preventative move we are taking ahead of any potential work stoppages due to a labor dispute,” UP (NYSE: UNP) stated.
BNSF said it will take efforts to handle and secure security-sensitive materials as early as Monday.
“These are critical actions to guarantee that we are handling security sensitive and hazardous goods in line with federal requirements, as well as to ensure that no hazardous cargo is left unattended or insecure in the case of a work stoppage,” BNSF (NYSE: BRK.B) explained to FreightWaves.
Meanwhile, Kansas City Southern has stated that it would not issue embargoes for the time being, although this could change.
“KCS does not plan to lockout unionized employees. Furthermore, we do not intend to embargo shipments at this time, though circumstances may change as a result of embargoes imposed by other carriers. “Any changes in KCS’ strategy will be communicated immediately,” KCS said in a late Friday service update.
“If current negotiations with the remaining two unions do not result in agreements, KCS will strive to convey freight to customers and to interchanges until any union work stoppage begins.” We intend to maintain interchange at all key locations to the greatest extent possible, and we will work closely with our interchange partners to give customers as much notice as possible about the handling of interline shipments,” KCS added.
The railroads’ service updates come as the Association of American Railroads (AAR) announced on Friday that the six Class I freight railroads participating in national bargaining will begin managing and securing shipments of hazardous and security-sensitive materials, such as chlorine and fertilizer chemicals, as early as Monday.
“Railroads are taking all necessary procedures to handle sensitive cargo in line with federal laws to ensure that no such cargo is left on an unattended or insecure train in the event of a work stoppage due to a labor dispute,” AAR stated. “Additionally, additional freight customers may begin to suffer delayed or interrupted service over the coming week as railroads prepare for the chance that present labor negotiations do not result in a settlement and are compelled to curtail operations safely and securely.”
While these preparations are required, they do not guarantee a work stoppage. Railroads will continue to meet with the remaining unions over the weekend to work toward tentative agreements. The railroads want, and will continue to fight for, a quick resolution that would offer unprecedented wage increases to rail employees while also allowing the railroads to continue serving customers and preventing more interruption to the suffering supply chain.”
Since January 2020, a new labor agreement for union members has been in the works, but negotiations between the unions and the railroads have stalled. A government mediation board took over the proceedings, but the parties dropped out earlier this summer.
The Presidential Emergency Board (PEB) — a three-person board appointed by President Joe Biden that convened in July and August to come up with ways that the unions and railroads could resolve their negotiations impasse — issued recommendations last month that sought to resolve the impasse in negotiations. The recommendations were intended to serve as a springboard for a new contract.
Five unions have officially announced that they have struck an agreement and have sent it to their members for confirmation.
Per the Railway Labor Act, both sides have until midnight on Friday to come to a resolution; after that, the “cooling-off” period ends and union members could elect to go on strike.
