Railroads and unions representing tens of thousands of workers have reached a tentative agreement to avert a freight shutdown that could have further disrupted the U.S. food supply, which is already strained by historically high inflation and supply chain issues. Announced on Thursday morning, the deal affects approximately 60,000 railroad employees and will be put to a vote among union members, during which a strike will be avoided.
The agreement includes a 24% wage increase over the five years from 2020 to 2024, along with five annual lump sum payments of $1,000, as stated by the National Carriers’ Conference Committee, which represents railroads in negotiations. President Joe Biden commented, “These rail workers will receive better pay, improved working conditions, and peace of mind regarding their healthcare costs— all hard-earned.” He added that the agreement is also a win for railway companies, enabling them to retain and attract more workers in an industry that will remain a crucial part of the American economy for years to come.
Food industry groups had voiced concerns about the potential impact of a strike on supply and prices, especially in the current inflationary climate. Chief Economist Max Fisher at the National Grain and Feed Association (NGFA) noted that grain storage facilities would have become overwhelmed, risking crop spoilage. This could have driven up prices for staples like bread and baked goods, which are already affected by the war in Ukraine and adverse wheat growing conditions. The NGFA welcomed the agreement and committed to collaborating with lawmakers, regulators, and the rail industry to ensure the resilience of the nation’s freight operations. With over 1,000 companies involved in handling U.S. grains and oilseeds, the efficient functioning of the rail network—responsible for transporting 25% of all U.S. grain—is vital for a robust agricultural economy, emphasized Mike Seyfert, NGFA president and CEO.
The Consumer Brands Association expressed that narrowly avoiding a strike was “too close for comfort,” leading to some product shipments and rail routes being canceled. “This situation highlights the need for better preparedness for potential supply chain disruptions. Implementing policies that enhance resilience and visibility throughout the national supply chain is essential for consumer packaged goods companies, especially after the pandemic revealed vulnerabilities,” stated Tom Madrecki, CBA vice president of supply chains and logistics.
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