President Joe Biden announced early Thursday morning that a tentative rail labor agreement had been reached, averting a potential strike. The deal came after overnight talks. The president said it's “an important win" for the economy, the American people, tens of thousands of rail workers and the railway companies.
Railroads and union representatives had been in negotiations for 20 hours at the Labor Department on Wednesday to hammer out a deal, as there was a risk of a strike starting on Friday that could have shut down rail lines across the country.
Biden made a key phone call to Labor Secretary Marty Walsh as the talks were ongoing, according to a White House official insisting on anonymity as they spoke with The Associated Press. The president told the negotiators to consider the harm to families, farmers and businesses if a shutdown occurred.
What resulted from the back and forth was a tentative agreement that will go to union members for a vote after a post-ratification cooling off period of several weeks.
“These rail workers will get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned,” Biden said. “The agreement is also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come.”
The Association of American Railroads estimates a rail worker strike would cost the United States more than $2 billion a day. While many industries would be hurt by a shutdown, its report notes that “we can’t feed ourselves for long without railroads.”
If farmers are not able to move their goods by railroad, there isn’t a good backup plan, said Matt Hargreaves, the vice president of communications for the Utah Farm Bureau Federation.
“Trucks can only pick up a small percentage of goods typically moved by rail,” he said. “Even then, trucking is not a direct substitute for rail shipping. Moving grain and other products by truck costs more than moving products by rail.”
An average railcar load of wheat is enough to make 260,000 loaves of bread, according to the association’s report. And about 6,300 daily car loads of food and farm products are shipped nationally. While trucks can also be used to deliver goods, the association estimates an additional 467,000 long-haul trucks would be needed daily to make up for the disruption.
If a strike had happened, there would have been a worry about agricultural goods spoiling and crops rotting, since the “U.S. doesn’t have adequate storage infrastructure to hold onto mass amounts of grain for an extended period of time,” Hargreaves said.
Bailee Woolstenhulme, the Public Information Officer for the Utah Department of Agriculture and Food, said Utah exports a lot of agricultural products via railroads and imports vital things that farmers need.
“It’s pretty hard to get fertilizer and extremely expensive to get fertilizer. So to have the railroad shut down would impact that even further,” she said “So that would have a huge impact on the future of crop growth as we’re looking at next year.”
Woolstenhulme said the wheat that is grown in Utah has to be carried by railroads to granaries, in Utah or other states, for processing.
“We only have a few of those granaries that can do that processing here in Utah. And they can only take in so much wheat,” she said.
With the economy still recovering from the supply chain disruptions of the coronavirus pandemic, the president's goal was to keep all parties so a deal could be reached. The disruptions would have hit farmers and ranchers first, but like the earlier supply chain waves, consumers would have eventually felt it. Hargreaves said the immediate price impact would have been on non-food items “while food price implications could take longer to be felt.”
In 2020, Utah’s agriculture contributed 2.7% to that state’s total gross domestic profit, according to the University of Arkansas Systems’s Division of Agriculture.
The Associated Press contributed to this report.
