US looming railway strike poses threat to grain movement

A United States railway shutdown set for 0001 Friday, September 16 has become the latest grain supply chain threat.

Currently, the US rail industry has reached tentative agreements with 10 of the 12 unions involved in current negotiations, with the two remaining unions accounting for 57,000 engineers and conductors that are still negotiating pay and post-covid working conditions.

A nationwide rail shutdown could cost the US economy more than $2 billion per day, as freight railroads serve nearly every agricultural, industrial, wholesale, retail and resource-based sector of the US economy, according to the Association of American Railroads (AAR).

According to the US Department of Agriculture (USDA), railroads account for more than 20% of the nation's grain shipments.

The railway systems are critical during peak harvest season and a disruption would prompt grain processors to shut down, overwhelming grain storage facilities, boosting the chances of spoilage, and sending basis prices higher.

Railroads move approximately one-third of US grain exports, which is especially crucial at this time amid the war in Ukraine and ongoing supply concerns.

Additionally, over half of all fertilizer moves by rail year-round.

“If farmers do not receive fertilizer, it results in lower crop yields, higher food prices, and more inflation for consumers,” Corey Rosenbusch, the Fertilizer Institute (TFI)’s President and CEO, told lawmakers. 

“TFI would like to see an agreement between the rail carriers and labor unions,” concluded Rosenbusch.

Under the Railway Labor Act, the carriers and the unions that have not reached agreements remain in a “cooling off” period, which ends at 00:01 on September 16.

The United States' largest freight railroad companies — including Norfolk Southern, BNSF, Union Pacific, and CSX are implementing contingency plans as early as Monday, September 12 ahead of the possible strike.