Importers of clothing, shoes, textiles, fabric dyes and trimmings breathed a sigh of relief that President Biden stepped in to avert a possible railroad worker strike that could have taken place as early as Monday.
In an executive order signed Friday, Biden named an emergency three-person board of arbitrators to work with the freight railways and their 115,000 workers to hammer out a contract that has been under negotiation since January 2020. The board will get back to Biden in 30 days with its findings.
“The combination of more than two years of rail negotiations, paired with the breakdown of federal mediation, means presidential intervention is essential,” said Nate Herman, the senior vice president of policy at the American Apparel & Footwear Association, which represents apparel and footwear manufacturers. “We applaud President Biden for this step as our members work to supply essential seasonably appropriate clothing, shoes and accessories at affordable prices to consumers at a time of record-setting inflation and immeasurable supply chain disruptions.”
Earlier this year, an independent federal agency called the National Mediation Board, which helps settle labor agreements for the rail and airline industries, stepped in to mediate. But negotiations remained at an impasse.
Consequently, the NMB in June released the railroads and the unions from mediation and imposed a 30-day cooling off period, which ended on July 18.
Any delay in shipping freight from U.S. ports via rail would have been a disaster, shipping industry experts said.
“The San Pedro Bay port complex is responsible for moving 40 percent of the nation’s imported cargo. A fully functioning rail system is necessary to accomplish this important task. Anything that would obstruct the national supply chain during the critical peak shipping season would be detrimental to the flow of goods, ” said Mario Cordero, the executive director of the Port of Long Beach.
Traffic is backed up at the ports. Already, cargo containers at the Port of Long Beach and the Port of Los Angeles are waiting on average 7.4 days to be loaded onto a rail car, when it should be two days. Cargo containers being picked up by truck are waiting on average 4.8 days instead of a normal 3.3 days.
“We now have more than 29,000 rail containers on our docks. That number should be no more than 9,000,” said Gene Seroka, the executive director of the Port of Los Angeles, who noted that 20,000 of those containers have been sitting around longer than normal.
“Everyone has a role to play in this solution. Cargo owners must pick up their boxes [containers] at inland rail terminals faster than they are today. The western railroads need to provide cruise engine powered rail cars faster back to the West Coast. Marine terminals, shipping lines and the ports need to provide key data to help prioritize evacuation of this cargo quicker,” Seroka said.
Even before Biden named a special board of arbitrators, some importers were coming up with their own solutions to the rail problem. Last August, shoe and apparel giant Nike secured a dedicated Los Angeles-to-Memphis train it called the “sole train” to move cargo faster to its facilities in Tennessee.
For more than two years, railroad workers have been asking for increased wages that offset inflation. They are concerned about how automation will affect their jobs and whether a one-person rather than a two-person train crew should be permitted.
The group that represents the Union Pacific, BNSF, CSX, Norfolk Southern, Kansas City Southern and other railroads and the 12 railroad worker unions have expressed optimism that this new presidential board will be able to help them resolve the dispute.
Meanwhile, cargo keeps inundating the U.S. ports. The ports of Los Angeles and Long Beach, which sit side by side and form the largest port complex in the United States, saw robust activity in May as the shipping season started early.
The Port of Los Angeles had its busiest June ever during its 115-year history, with cargo container movement up slightly from last year. The Port of Long Beach saw a slight dip of 1.8 percent in June’s cargo container movement.
All important to moving cargo are the longshore workers who unload all those containers from the massive ships calling at the ports. Currently, the five-year contract for the 22,000 longshore workers at 29 West Coast ports expired on July 1. That contract is being negotiated without an extension. That means longshore workers who belong to the International Longshore and Warehouse Union could stage a work slowdown, strike or walk off the job if negotiations break down with their port terminal employers represented by the Pacific Maritime Association.