The United States on the brink of a national rail strike. How will it affect the economy? – Whole country

If freight trains stop next month, American consumers and nearly every industry will be affected.

One of the largest railroad unions rejected the deal on Monday, joining three other unions who failed to approve the deal over concerns about tight schedules and lack of paid sick leave. This increases the risk of a strike, which could start as early as December 5th.

It doesn’t take long for the effects of the rail strike to ripple through the economy. Many companies only have space for a few days worth of raw materials and finished goods. Manufacturers of food, fuel, automobiles and chemicals will all feel the same pressure as their customers.

Not to mention stranded commuters as many passenger trains use tracks owned by freight railways.

The economic impact is so great that Congress is expected to step in and impose contract terms on railroad workers. The last time a U.S. railroad company went on strike was in 1992. The strike lasted two days before Congress intervened. The law governing railroad negotiations passed in 1926 made it much more difficult for workers to strike, so no long-term railroad closures have occurred in a century.

Here are some of the expected effects of a rail strike:

Rail carries about 40% of the country’s freight each year. The railroad company estimated in a report published this fall that rail strikes cost the economy US$2 billion a day. According to another recent report compiled by chemical industry trade groups, a month-long strike would result in the loss of about 700,000 jobs and nearly all It is predicted that prices will rise further and the economy could be hit. into recession.

Also, some companies are trying to shift their shipments to trucks, but there are very few trucks available. The American Railroad Association industry group estimates that 467,000 additional trucks per day would be needed to handle all that rail has to offer.

Chemical manufacturers and refiners are the first to be affected, as railroads stop transporting dangerous chemicals about a week before the strike deadline to prevent tank cars filled with dangerous liquids from becoming stranded. You will be part of the receiving company.

American Chemistry Council trade group Jeff Sloan said chemical plants could be close to closing by the time rail strikes actually begin.

This means that the chlorine that water plants rely on to purify water may only be on hand for about a week, making it difficult to obtain. Without the chemicals that are part of the formula, it would be difficult for manufacturers to make anything out of plastic. Consumers pay more for gasoline when refineries shut down due to unavailability.

Chemical plants also produce carbon dioxide as a by-product, limiting the supply of carbon dioxide that beverage manufacturers use in soda and beer, but the gas usually travels through pipelines.

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About half of all commuter rail systems rely at least in part on tracks owned by freight railroads, and nearly all of Amtrak’s long-distance trains pass through the freight network.

Amtrak canceled all long-distance trains in September, days before the strike deadline, to ensure passengers weren’t stranded in the remotest parts of the country en route to their destinations.

It also warned that all major commuter rail services in Chicago, Minneapolis, Maryland and Washington state would suspend some services in the event of a rail strike.

According to Tom Madrecchi, vice president of supply chain at the Consumer Brands Association, it takes about a week for customers to notice that grocery stores are running out of cereal, peanut butter, beer, and more.

About 30% of all packaged food in the United States is transported by rail, he said. That percentage is much higher for dense, heavy items like canned soup.

Some products, such as cereals, cooking oils, and beer, are built around rail delivery of raw materials such as grains, barley, and peanuts, and shipment of finished products.

These companies typically only have two to four days’ worth of raw food on hand, Madrecki said. This is because storing them is expensive.

Madrecki said big food companies don’t like to discuss the threat of rail strikes because they fear product shortages will lead to panic buying.

Disruptions to rail services threaten the health of chickens and pigs that rely on trains for feed delivery and can lead to higher meat prices.

“Our members rely on about 27 million bushels of corn and 11 million bushels of soybean meal each week to feed their chickens, much of which is transported by rail,” says the broiler. said Tom Super, a spokesman for the National Rooster Council, a trade group for the industry.

The National Grain and Feed Association says local supplies of corn and soybeans from this year’s harvest are likely to be depleted and the feed has to be shipped dramatically by truck, so the current rail strike will cut pork and pork in the southern United States. It said it would hit chicken producers the hardest: rising costs.

“They have so much storage. They can’t be without rail service until they have to close their feed mills and have problems,” said NGFA’s chief economist. Max Fisher says.

Jess Dankert, vice president of supply chain for the Retail Industry Leaders Association, said retailers’ inventories are nearly complete for the holiday season. However, the industry is developing contingency plans.

“We’re not going to cancel Christmas or any of those kinds of stories,” Dunkert said.

David Garfield, managing director of consulting firm AlixPartners, said the rail strike could affect holiday merchandise that ships to stores in late December, and will certainly hinder inventory for next season’s merchandise. rice field.

Retailers are also concerned about online ordering. Shippers such as FedEx and UPS use rail vehicles that can hold approximately 2,000 packages in each vehicle.

Due to the auto industry’s production problems related to computer chip shortages in recent years, drivers are already paying record prices and are often waiting months for new cars.

About 75% of all new cars start their factory-to-dealer journey by rail, so the situation is made worse in the event of a rail strike. The train delivers about 2,000 of his cars full of cars a day.

And because some large parts and raw materials are transported by rail, automakers could struggle to keep factories running during strikes.