Concerns Over Another Major US Logistics Crisis... Railroad Union Considers Strike Possibility

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] In the U.S. railroad union negotiations, some unions ultimately rejected the tentative agreement despite President Joe Biden's intervention, increasing the likelihood of a strike once again. If a railroad strike occurs for the first time in 30 years, it is feared that not only will supply chain disruptions worsen, but also inflation in the U.S., which is at its highest level in 40 years, will be further fueled.

According to the Wall Street Journal (WSJ) and others, on the 21st (local time), the SMART Transportation Division, representing rail conductors, rejected the tentative agreement through a member vote. To prevent a railroad strike, all 12 railroad unions that have been negotiating wages and other issues with management since 2020 must accept the tentative agreement, but with the SMART Transportation Division's decision on this day, the number of unions rejecting the mediation proposal increased to four.

Earlier, the Biden administration prepared a tentative agreement in September to prevent a railroad strike, including a 24% wage increase over five years until 2024, and each union was to decide on ratification through a vote. The remaining eight unions out of the 12 accepted the tentative agreement.

The unions that rejected the tentative agreement will enter renegotiations with management by the night of December 8. However, if no agreement is reached, the U.S. railroad system is likely to come to a halt due to a strike starting December 9. This would be the first railroad strike since 1991. The number of railroad workers in the U.S. is approximately 115,000.

Currently, union members who voted against the agreement cite issues such as overwork due to labor shortages, declining quality of life, and job security, demanding expanded paid leave and improved working conditions. Jeremy Ferguson, president of the SMART Transportation Division, said, "We are now back at the negotiating table," adding, "It can be resolved through negotiations without a strike."

If railroad operations, which handle nearly 30% of freight transportation in the U.S., are suspended, a supply chain crisis is inevitable. It is estimated that a strike would cause daily damages exceeding $2 billion (approximately 2.8 trillion KRW) to the U.S. economy. Considering that the average daily production scale in the U.S. last year was $63 billion, this exceeds 3%.

Especially in a situation where transportation costs have surged and labor shortages have intensified since the pandemic, if railroads also come to a halt, the logistics supply chain will inevitably be hit. This is expected to lead to increased costs for both companies and consumers. It will also be a negative factor for the Biden administration, which has been striving to normalize supply chains since COVID-19.

Ultimately, there is also talk of possible federal congressional intervention. Congress has the constitutional authority to regulate interstate commerce and can impose an agreement on labor and management in the event of a railroad strike.

The White House also holds a firm stance that a railroad strike is unacceptable. The White House stated, "A strike cannot be tolerated as it could harm jobs, families, farms, businesses, and communities nationwide," adding, "The majority of unions voted to ratify the tentative agreement. The best option remains for the parties to resolve this themselves."

This content was produced with the assistance of AI translation services.