Supply Chain Recovery Under Threat Due to Impending Rail and Port Strikes

Supply Chain Recovery Under Threat Due to Impending Rail and Port Strikes

Impending Strikes Suggest Supply Chain Snarls Again

(DailyVantage.com) – Over the last year, the United States has been subject to supply chain issues. The aftereffects of COVID-19, combined with labor shortages and the war in Ukraine, have created bottlenecks and resulted in many empty store shelves. Now, possible impending strikes could lead to even more struggles.

There are two disputes. One involves several rail companies and the other, ports.

The rail companies involved include Union Pacific, BNSF, CSX, as well as unions representing over 115,000 employees. If those involved cannot reach an agreement, it could have a domino effect of consequences. The increased delays in the supply chain could also cost the American economy an estimated $2 billion per day. At a time when inflation is high across the board with a potential recession looming, shortages would be nothing short of devastating.

End of Cooling Off Period Rapidly Approaching

The federally mandated cooling-off period, or the notice of a contract ending, is this Friday, September 16. If the parties involved don’t reach an agreement, workers could go on strike while awaiting negotiations. So far, representatives for the conflicting parties have made little progress, and companies are warning of potential service disruptions.

What Happens if the Rail Stops?

The most damaging effect of a railway transportation stoppage would entail trying to find alternate ways of moving supplies to the stores. Truckers, already in high demand in an industry hurting for labor, would have to pick up the slack. According to experts, there aren’t enough big rigs to go around. And even if there were, they can’t support the loads that rails can. Railways, for instance, transport cars and large volumes of shipping packages from carriers like USPS and UPS.

Ports Are also at Risk

Additionally, trouble is brewing at the docks. A contract dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union also faces a cooling-off period that ends Friday. The contract negotiations for these parties center on increasing wages and negotiating the expansion of dock automation. The previous contract expired in June.

The last time a lockout took place at the ports was in 2002. It cost the US economy a whopping $11 billion — an expense Americans are ill-positioned to afford again.

Is Congressional Intervention Necessary?

Congress and the executive branch typically don’t intervene in labor strikes, or, at least, they’re not usually involved in the negotiation process. Yet, the potential impact on the American economy might justify an intervention this time. In May, the White House appointed Retired Army Gen. Stephen Lyons as port czar to help manage supply chains. In the meantime, Labor Secretary Martin J. Walsh has applied pressure on both sides of the railway dispute to avoid a standstill.

Time will tell if the parties can hash out their differences to sign a new contract that benefits all involved.

Copyright 2022, DailyVantage.com