Congress Steps in to Avert Railroad Strike: House Passes Measure, Awaits Senate Approval
Stirke Update 120122
Congress is stepping in to avert a nationwide railroad strike, which was set to happen as early as Dec. 9.
The House took the lead passing legislation Wednesday. The Railway Labor Act empowers Congress to require rail companies and unions to accept labor agreements rejected by their members.
Thirty percent of all U.S. cargo by weight is shipped by rail. A shutdown in service, even temporarily, would seriously cripple ag product movement and hurt commodity prices, particularly grain.
I think the grain sector would really have struggled if the strike took place," says Kent Beadle with Paradigm Futures. "Obviously, that would have impacted basis levels as grain would back up in the system, and it probably would have the potential to shift some export sales to other places in the world."
The threat of a strike was already halting economic activity, including energy and fertilizer sectors. Cash grain merchandisers tell AgDay their customers were gearing up for the strike and looking at other modes of transportation, which are unfortunately also in crisis mode.
Nick Tsiolis with Farmer’s Keeper says: "All of that is going to have to shift to new places whether that’s barge or going down by trucks. It's funny in the last few weeks we’ve seen more bids for trucks going from even Minnesota all the way down to Texas, which is typically pretty rare and very expensive."
It is estimated a strike would cost the U.S. economy $2 billion a day in lost GDP.
The measure now heads to the Senate. Quick Senate action on the bill will depend on obtaining unanimous consent to waive day of standard procedural delays on floor votes, with several senators already signaling that may not occur.
