US railroads, unions reach tentative labor deal

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.

"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. Representatives from the Class I railroads and the unions then met with US labor secretary Martin Walsh on Wednesday.

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.

The three unions that now have reached tentative agreements represent more than half of all unionized rail employees. Roughly 60,000 workers are represented by the Brotherhood of Locomotive Engineers and Trainmen, the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division, and the Brotherhood of Railroad Signalmen.

The deals could still fall apart. Union members must still approve the agreements their members reached. One union's members have already rejected a contract announced on 29 August.

But shipper groups are happy a strike has been averted, at least for now.

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."

By David Ivanovich and Abby Caplan