US faces potential rail strike which could cost economy up to $2bn a day

The United States is facing a potential national train strike from later this week which could cost the economy up to $2 billion a day and disrupt travel plans for rail passengers.

The Biden administration has begun working on contingency arrangements to ensure the delivery of essential goods in the event of a shutdown of the rail system. At the same time, it is pressing train companies and trade unions to reach an agreement to avoid a work stoppage which would hit freight and passenger services.

The rail system in the US is predominantly used for transporting freight.

The dispute centres on work schedules for train drivers and conductors, which unions argue are excessively arduous after years of falling staff numbers.

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An existing “cooling off” period in the row between unions and rail employers is due to expire on Friday morning and a strike or a lockout could, in the absence of further outside intervention, commence any time afterwards.

US secretary of labour Marty Walsh was scheduled to hold talks to unions and train company executives on Wednesday.

If no agreement is reached in talks, the US Congress could intervene by extending a period for negotiations or establish its own settlement terms.

Unions representing train drivers and conductors represent about half of the 100,000 unionised workers employed in the rail freight sector in the US.

If they are on strike freight trains, which are hugely important in the transport of goods across the country, will not operate nor will many passenger services which run over rail lines owned by freight companies.

US passenger rail operator Amtrak has already begun cancelling some long-distance services ahead of any potential industrial action.

A freight train strike could affect up to 30 per cent of cargo shipments across the US, drive inflation and hit supplies of food and fuel in the weeks leading up to crucial elections in November.

It is estimated that such a dispute could cost the US economy up to $2 billion a day.

US president Joe Biden established an emergency board in July to create a framework to settle the dispute between unions and rail employers over terms and conditions.

The emergency board recommended increases of 24 per cent over a five-year period including an immediate raise of 14 per cent with some backpay to 2020. The proposal also involved $1,000 cash bonuses.

Several unions have accepted the terms but for others the sticking point is not about pay but working conditions.

Drivers and conductors maintain that due to staff reductions of about 30 per cent in the industry over the past six years, they face being on call for 14 consecutive days without a break and do not receive any sick leave, either paid or unpaid.

Unions maintain that some companies operate attendance policies based on a points system that can penalise workers up to dismissal for missing work to go to routine medical appointments or for family emergencies.

Unions have maintained that at the same time some rail operators have reported record earnings.

The White House said on Tuesday it had “made crystal clear to the interested parties the harm that American families, businesses and farmers, and communities would experience if they were not to reach a resolution.”

“So we are working with other modes of transportation, including the shippers and truckers, air freight, to see how they can step in and keep goods moving in case of this rail shutdown.”

However, it is estimated that it would take an additional 467,000 trucks to deal with cargo carried by rail, and the US does not have the number of vehicles or drivers to implement such a shift in transportation.