Railroad Shutdown: How Looming December Strike Would Directly Impact Consumers

Railroad Yard Aerial stock photo
Art Wager / iStock.com

A railroad strike that had been scheduled to take place before Thanksgiving has been pushed back to early December, temporarily easing fears that an already strained supply chain in the United States would run into even more problems. However, the threat of a strike still looms, meaning consumers might soon feel the impact.

In a Nov. 9 announcement on its website, the Brotherhood of Maintenance of Way Employees Division (BMWED) — the third largest rail union in the country — indicated it has pushed the end of its “cooling off” period from Nov. 19 to Dec. 4. That’s the same date that the Brotherhood of Signalmen Union (BRS) status quo period ends, CNBC reported.

Both unions have rejected the proposed deal with railroad management recommended by the Biden administration. Two other major rail unions — the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the Smart Transportation Division (SMART-TD) — are scheduled to vote on whether to ratify the deal on Nov. 21.

A labor spokesperson told CNBC that if the BLET or SMART-TD unions do not ratify, the new cooling-off period date would be Dec. 8, which means a strike might happen on Dec. 9.

If the unions do go on strike, it would have a big impact on American consumers, analysts say. Major freight railroads such as Union Pacific, BNSF, CSX and Norfolk Southern transport everything from cars and chemicals to oil, grain, imported goods and raw materials throughout the United States, The Associated Press reported. Even a brief shutdown would delay critical shipments around the country.

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The Association of American Railroads estimates that a strike would cost the economy $2 billion a day. The Business Roundtable, a nonprofit lobbyist group, said a rail strike would be an “economic catastrophe.”

That catastrophe would have a particularly negative impact on oil deliveries — and gas prices. As AP noted, about 300,000 barrels of crude oil are shipped by rail every day. Refineries might have to slow production if deliveries are delayed, and analysts have already warned about shortages of gasoline and diesel in the Northeast and elsewhere.

Similarly, most new automobiles are shipped by rail, and industry experts say trucks would not be able to fill the gap if the railroads go on strike. This would likely lead to even longer wait times for new vehicles.

Food deliveries would also be impacted by a rail strike. Railroad companies have announced plans to stop shipping refrigerated items ahead of the strike deadline, meaning there might be disruptions in the delivery of produce, meat and other items. Meanwhile, agricultural companies warn that even a brief strike would interrupt the shipment of feed to livestock and poultry producers.

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