US Rail negotiations update and Business continuity planning

We are monitoring developments on a potential rail strike by union members who work for Class I rail operators BNSF, CSX, Norfolk Southern, CN, CP, Union Pacific, and KCS. Of the 12 unions that have participated in the negotiations, eight have approved contracts while four unions representing 60,000 rail workers have voted down the tentative agreement that had been negotiated in September with the participation of a White House appointed mediation panel.

The four unions rejecting the current offer include SMART TD, BMWED-IBT, BRS, and the International Brotherhood of Boilermakers. If even one of the railroad unions were to go on strike, the other 11 would honor the picket lines, effectively shutting down the national railroad network. Friday, December 9th at 12:01 am EST marks the end of a cooling off period, giving rail union workers the option of striking. The dispute is over wages, attendance policies and paid time off.

On November 28th, the White House released a statement from President Biden calling on Congress to immediately pass legislation to adopt the tentative agreement between railroad workers and operators. The House passed legislation on Wednesday, November 30th that would impose the contract terms on unions that have rejected the agreement. A second House vote added seven days of paid sick leave to the tentative agreement. The legislation now heads to the Senate for voting before the President can sign into law. This latest development has left us optimistic that the contract dispute will be resolved and a rail strike avoided.

The labor dispute has the potential to significantly disrupt rail operations in the days leading up to the shutdown, the strike period itself, and the network restart to follow. We expect to receive guidance from the rail operators in the coming days regarding the implementation of contingency plans as part of a sequential shutdown. Customers can expect reduced allocations and embargos for hazardous and reefer cargo as a safety precaution. If a strike ensues, there would be no train movement in the rail network as early as 12:01 am on December 9th. This would include the shutdown of all cross-border rail activity in either direction between the U.S. and Canada. Most rail ramps will remain open for import pickup, though there may be significant congestion and limited cargo access.

Maersk’s contingency planning is focused on the following.

• Convening a daily Crisis Management Team call to work through business continuity planning
• Offering transload options for customers through our extensive Performance Team warehouse network
• Offering nationwide off-dock container yards for customers to increase container storage capacity if needed
• Recommending customers to pick up as many import containers as possible from U.S. inland rail ramps at this time to avoid rail ramp congestion and costs from any possible disruptions.

Should you desire information on any of these business continuity solutions, please feel free to contact your local Maersk representative for more information.

We are in constant contact with our rail partners on this developing situation and we will keep you informed of all developments that could affect your supply chain as new information becomes available.

Thank for you entrusting us to care for your logistics needs.