US railroads, unions reach tentative labor deal: Update

Adds contract details, lawmaker and industry reaction.

US freight railroads and union leaders have reached a tentative agreement on a new labor contract that is expected to avert a nationwide strike, the White House said today.

After three years of negotiations, the parties have come to terms on a tentative deal covering pay, working conditions and health care costs. The new contracts include a 24pc percent wage hike over five years, retroactive to 2020, as well as five annual $1,000 lump sum payments, and greater flexibility for time off.

"The hard work done to reach this tentative agreement means that our economy can avert the significant damage any shutdown would have brought," President Joe Biden said.

With a cooling-off period scheduled to expire at 12:01am ET on Friday, railroads already had curtailed shipments of hazardous materials, including toxic-by-inhalation and poisonous-by-inhalation products such as chlorine, as well as crude and certain fertilizers.

Carriers had started pulling back on automotive and intermodal freight, and some scrap metal shippers had reported that carriers were hesitating to take new orders.

The National Carriers' Conference Committee (NCCC), which represents major US railroads in collective bargaining, has been negotiating with 12 labor unions and by Wednesday had reached agreements with all but three.

The White House has been scrambling to avoid the economic pain a nationwide rail strike would impose on an already troubled US economy, without alienating Democrats' labor allies ahead of November's midterm elections.

Railroads and union leaders spent more than 20 consecutive hours yesterday negotiating under the aegis of US labor secretary Martin Walsh before a deal was announced early this morning.

But "Congress stood ready to take action," US House of Representatives speaker Nancy Pelosi (D-California) said this morning.

Most legislators had not publicly agreed or acted on calls for Congress to step in and resolve the situation. But Pelosi's statement "could be interpreted as an expression to carriers and their unions that the House was and presumably will remain prepared to impose the tentative agreements, if necessary," The Fertilizer Institute (TFI) said, calling that good news.

But a strike could still occur. Union members must still approve the agreements their leaders reached. One union's members have already rejected a contract announced on 29 August.

Quality of life issues addressed

The contract just reached does satisfy some issues that has held unions back from agreeing to a contract proposal. The three labor unions had been holding out for "quality-of-life" contract changes.

The just-negotiated deal includes contract language exempting time off for certain medical events from carrier attendance policies. It also includes no increases to insurance copays and deductibles.

"Most importantly, for the first time ever, the agreement provides our members with the ability to take time away from work to attend to routine and preventive medical care, as well as exemptions from attendance policies for hospitalizations and surgical procedures," according to a joint statement by the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the Transportation Division of the International Association of Sheet Metal, Air, Rail and Transportation union (SMART-TD).

The tentative contract also includes provisions that will create voluntary assigned days off for members working in through freight service, and all members will receive one additional paid day off.

The three unions that now have reached tentative agreements represent more than half of all unionized rail employees. Roughly 60,000 workers at Class I railroads are represented by BLET, SMART-TD and the Brotherhood of Railroad Signalmen.

Shippers relieved

Shipper groups are happy a strike has been averted, at least for now, particularly as US railroads said this morning they were working to resume shipments of hazardous materials that had been paused earlier this week.

TFI said it has started to contact US railroads about when ammonia railcars will be allowed to move again. Nearly 70pc of US ethanol moves by rail.

A strike "would have imposed significant harm on agriculture — particularly on the eve of harvest," the Soy Transportation Coalition said.

The National Retail Federation said it was "relieved and cautiously optimistic that this devastating nationwide rail strike has been averted."

The situation had rattled even shippers that do not usually get publicly involved in rail transportation matters. The American Apparel and Footwear Association said a strike had threatened the normally busy autumn shopping season. About 26pc of the group's products move by rail.

By Abby Caplan and David Ivanovich