With unions aligned, railroad strike, contingency planning timeline is clear

A railway strike in December could have major consequences for the economy

The alignment of the four unions that voted not to ratify a labor agreement has provided a clear timetable for strike preparation plans on freight railways and with sensitive cargo, including chemicals.

The Brotherhood of Railroad Signalmen (BRS) announced Tuesday that it is extending its status quo period through December 8 to align with the BMWED (Brotherhood of Maintenance of Way Employees), SMART-TD and the International Brotherhood of Boilermakers. If no agreement is reached by then, a coordinated strike could begin on December 9. Rail unions that voted to ratify have said they will not cross picket lines and support their fellow union workers, risking a nationwide rail freight shutdown.

According to federal safety measures, railroad companies begin preparing for a strike seven days before the strike date. The carriers are beginning to prioritize securing and transporting safety-sensitive materials such as chlorine for drinking water and hazardous materials in the rail winddown.

Ninety-six hours before a strike date no more chemicals will be transported. According to the American Chemistry Council, rail industry data shows that the week of Sept. 10, when railroads stopped accepting shipments due to the earlier threat of a strike, 1,975 carloads of chemicals were shipped.

The Association of American Railroads was expected to release its planning steps similar to what it announced in September.

A new economic analysis from the American Chemistry Council estimates that a railroad strike would impact about $2.8 billion in chemical cargo transported weekly, with a month-long strike resulting in an overall blow to the economy of $160 billion, or one percentage point of GDP.

The ACC represents companies in the industrial, energy and pharmaceutical sectors, among other manufacturing niches, including 3M, Dow, Dupont, Exxon Mobil, Chevron, BP and Eli Lilly.

If no agreement is reached between the four unions and the railroad companies during the cooling-off periods, a strike or lockout could occur unless Congress intervenes with its power through the Constitution’s Commerce Clause. Under this clause, Congress could introduce legislation to stop a strike or lockout and set the terms of the agreements between the unions and the carriers.

One of the key labor bargaining points during this status quo period is asking for 56 hours of sick leave under an executive order for federal contractual benefits.

The Association of American Railroads has provided CNBC with its explanation of the furlough policy, which was updated in mid-October. In a September report, the AAR quantified the impact of a strike on the supply chain and the US economy at up to $2 billion a day.

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