Potential food crisis averted as rail strike deal is reached

Railroads and unions representing tens of thousands of workers reached a tentative deal to avoid a freight shutdown that threatened to further disrupt the U.S. food supply already snarled by historically high inflation and supply chain disruptions.

The agreement announced Thursday morning represents approximately 60,000 railroad employees. It will now head to union members for a vote, a period during which they will not strike.

The deal includes a 24% wage increase over the five-year period from 2020 through 2024 and five annual lump sum payments of $1,000, according to the National Carriers’ Conference Committee, which represents railroads in negotiations.

“These rail workers will get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned,” President Joe Biden said in a statement. “The agreement is also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come.”

Food industry groups had expressed concern over what the strike could mean for supply and prices, given the fraught inflationary environment.

Grain storage facilities would have filled up, leaving crops at risk of spoiling, Chief Economist Max Fisher at the National Grain and Feed Association (NGFA) told The Hill. This would have raised the price of items such as bread and baked goods, which already are being heavily impacted by the war in Ukraine and a bad growing season for wheat.

The NGFA applauded the deal and said it would continue to work with lawmakers, regulators and the rail industry on maintaining the strength and reliability of the country’s freight operations. NGFA members include 1,000 companies that handle U.S. grains and oilseeds.

“The efficient operation of our rail network, which moves 25 percent of all U.S. grain, is crucial to a functioning agricultural economy,” Mike Seyfert, NGFA president and CEO, said in a statement.

The Consumer Brands Association said in a statement that narrowly avoiding a strike was “too close for comfort,” and led to the cancellation of some product shipments and rail routes.

“This situation is proof that we must be better prepared for potential supply chain disruptions. Enacting policies that build in resiliency and add visibility across the national supply chain are a necessary complement to CPG companies’ efforts to shore up their own supply chains after the pandemic exposed weaknesses,” Tom Madrecki, CBA vice president of supply chains and logistics, said in a statement.