Railroad challenges started before strike threats

ANKENY, Iowa — As railroad corporations and railroad labor unions continue to clash at the bargaining table, industries, including agriculture, have long had challenges with rail service, reliability and availability.

“This is a time when we need rail service to improve, not to take a step backward. A strike or a slowdown or a lockout would be a profound step backward. We want to avoid that at all costs,” said Mike Steenhoek, executive director of the Soy Transportation Coalition.

Earlier this month, the Brotherhood of Maintenance of Way Employees Division, the third-largest railroad workers’ union, rejected a five-year contract offer.

In response, the National Carriers Conference Committee, which represents the nation’s major freight railroads, including BNSF, Union Pacific, CSX and Norfolk Southern, in the bargaining process, rejected the BMWED’s proposal for additional sick leave.

The impasse between the BMWED, which is part of the Teamsters, and the NCCC sets the stage again for a possible strike.

So far, at least six of the 12 unions that represent railworkers have approved agreements with railroad companies.

But labor challenges and service issues aren’t a new phenomenon in the U.S. rail industry.

“Broadly, extricating it from the labor negotiations that have dominated the news, rail service has really been concerning over the last couple of years,” Steenhoek said.

He said the costs of rail shipping have been a concern, but service and reliability have been bigger challenges, especially for ag shippers. And those issues can be traced back to labor issues.

“We don’t begrudge anyone trying to run a tight ship and really trying to minimize costs of doing business. But there was a real concern that a lot of people had, and I certainly shared it, that if they cut their operations to the bone with personnel, if you had any kind of pendulum swing on demand, railroads are not an industry that can quickly react,” Steenhoek said.

The COVID-19 pandemic in 2020 and 2021 impacted demand and labor throughout the economy and various industries adjusted their operations accordingly.

As the nation emerged from the height of the pandemic and the economy began to return to normal, demand for goods and services — and the workers who provide the goods and services — also returned.

“All of a sudden you had this healthy demand that really affected our entire supply chain, including rail. And railroads were not able to respond,” Steenhoek said.

The labor challenges within the rail industry have also impacted the supply of railcars.

“I was talking to a rail shipper, an ag shipper, who ships to the Pacific Northwest from the Midwest. It normally takes five days to get from the Midwest to the Pacific Northwest via rail and then five days back. That means you can count on a 10-day roundtrip journey, which means you can get three 10-day roundtrip turns on that particular asset, that railcar, that month,” Steenhoek said.

Those trips have lengthened, cutting back on the availability and reliability of railcars for shippers.

“Now, all of a sudden, what he is experiencing is seven to eight days out, seven to eight days back so you have a 14- to 16-day roundtrip journey. Now you can only get two turns of that railcar per month. Two to three days on each leg doesn’t sound like much, but when you think of it in terms of, well, I can utilize that rail car twice a month instead of three times a month, that’s a profound difference and you are seeing a lot of that,” Steenhoek said.

The ongoing negotiations, the continuing threat of a strike that could effectively halt rail shipping and transportation and the uncertainty created by that has added to the issues that rail shippers were experiencing.

“It’s that lack of reliability that we were already experiencing within the rail sector and then all of a sudden you have these negotiations between railroads and railroad unions, which is really concerning,” Steenhoek said.

Steenhoek emphasized that a rail stoppage, coming on top of major challenges with river transportation on the drought-stricken Mississippi River, could land a heavy blow to the U.S. ag industry and farmers and grain elevators.

“It would be so devastating to our industry, so devastating to the ag economy,” he said.

With crucial midterm elections coming up in just weeks, Steenhoek said he believes any strike would be delayed until after the midterms.

“My thought is that I don’t think anything is going to happen before the midterm election. I think politics are very profound in the negotiations. The president and congressional leaders need a rail slowdown or lockout or strike like they need a hole in the head,” he said.

The outcome of the midterms could influence the outcome of the negotiations and the timeline.

“I think everyone is going to be watching. Is there going to be a different majority or majorities in Congress? If so, will that make the unions say let’s just accept what we’ve got, what we’ve been offered? If Democrats retain the majority, that might change their calculations, as well,” Steenhoek said.

“We will see what happens when they actually start voting, but I think what happens during the midterms will influence how that vote occurs.”