National railroad strike threatens to choke trade

By Kristopher Hanson, Staff Writer
Posted: 11/30/2011 04:17:15 PM PST
Updated: 11/30/2011 10:43:06 PM PST

A nationwide freight-rail strike inched closer to reality Wednesday after two key unions rejected an offer by railroads to extend negotiations into January, prompting a coalition in Congress to propose emergency legislation to avert a shutdown.

The dispute between the nation's largest freight railroads, including Union Pacific and Burlington Northern Santa Fe, which handle cargo to and from the ports of Long Beach and Los Angeles, has been simmering since summer.

In October, President Barack Obama appointed a five-member Presidential Emergency Board to issue recommendations and help mediate a settlement between the railroads and 13 unions.

While the board's recommendations, which included a 30-day "cooling off" period, did help 11 of the unions reach settlements or agree to extensions, two indicated Wednesday they weren't close to an agreement and wouldn't rule out a strike.

The holdouts represent thousands of engineers and dispatchers, who say they may walk off the job or be locked out by their employers at 12:01 a.m. Tuesday if new contracts aren't reached before then.

At stake is the smooth flow of a freight network spanning the nation and responsible for an estimated $2 billion in economic activity per day.

The two unions are the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the American Train Dispatchers Association (ATDA), who are seeking better wages, working conditions and caps on annual healthcare increases, among other issues.

Both unions, which represent workers in Long Beach and Los Angeles, said they remain hopeful that agreements can be reached by Monday. If not, members will be asked to vote for strike authorization Tuesday - when the "cooling off" period expires.

"At this point, an extension would not serve either BLET members or the bargaining process in which we are engaged," BLET National President Dennis R. Pierce said in a statement. "If an agreement is to be reached, it is now, not some time down the road. Bargaining is at a point where an extension simply will not affect the outcome for BLET members."

The National Carriers Conference Committee, which represents 30 of America's largest railroads, had asked the unions to extend negotiations for at least one month to give both sides time to reach a settlement, but the engineers and dispatchers unions rejected that proposal Wednesday.

In response to the stalemate, retailers, shipping companies, automakers and railroads have turned to Congress for federal intervention, which may come in the form of special legislation preventing the unions from striking.

Three House Republicans announced they are working on such legislation, which may come up for a vote by early next week.

Under the federal Railway Labor Act, courts have the right to enjoin workers from striking only if a Presidential Emergency Board has exhausted all efforts to reach a settlement, a measure now off the table since the PEB released the parties from mediation.

That leaves Congress open to vote on a special bill to resolve the dispute, similar to legislation passed during the last national rail strike in 1991, which essentially forged a new contract within a day.

"We are following with concern the situation involving our nation's railways, and we are troubled by the possibility of a national railway strike," according to a statement from the trio, which includes representatives Kevin McCarthy (R-CA), John Boehner (R-OH) and Eric Cantor (R-VA). "While our hope is that the parties involved will find common ground and resolve the situation without congressional involvement, the House is prepared to take legislative action in the days ahead to avert a job-destroying shutdown of our country's railroads, in the event such legislation proves necessary."

The impact on goods movement through the ports of Long Beach and Los Angeles is unclear, but could be devastating. Union Pacific and Burlington Northern have a monopoly on rail cargo shipped through San Pedro Bay, handling about 40 percent of all freight, with the rest being transported by trucks and other means.

Long Beach and Los Angeles are the nation's busiest port complex.

The Retail Industry Leaders Association, an umbrella group representing thousands of businesses nationally, said a rail stoppage could force thousands more trucks onto local roads and could slow deliveries in the middle of the holiday shopping season.

Each train leaving the port complex carries an average 280 containers, taking the equivalent amount of trucks off local roads and freeways. Trains calling at the ports also haul raw materials, automobiles, chemicals and other non-containerized cargo.

"Such a significant interruption of supply chains at this critical time would have a broad and dramatic effect, while interfering with retailers' ability to provide customers with the items they seek during the holidays and beyond," said RILA President Sandy Kennedy.

"A national railroad shutdown would force retailers to shift the delivery of their goods to trucks, increasing costs, time of delivery and congestion on our nation's already crowded roadways."

Automakers also warn that a rail shutdown could cripple car and truck sales and auto parts production domestically and internationally.

General Motors estimates it ships 9,000 vehicles per day by train.

"Within several days, nearly every North American assembly center would be impacted due to a lack of ground space for storing finished vehicles, as our assembled cars could not be shipped out," said GM Vice President of Global Supply Robert Ferguson in a letter to investors and Congress.

As it stands, the only apparent winner if a strike proceeds could be truckers.

Transportation analyst Donald Broughton, speaking on SiriusXM's "Land Line Now" program, predicted rates could jump 50 percent for long-haul freight as retailers scramble to get goods onto store shelves.

"What's happening is, until there's a settlement, shippers are going to begin today, tomorrow and into the weekend diverting freight from (rail) to over-the-road simply because they can't afford to get their freight, especially during holiday shipping season, stuck on the rail in the event of the strike," Broughton said.

kristopher.hanson@presstelegram.com, 562-499-1466

http://www.presstelegram.com/news/ci_19442340