Aug 19, 2022

Emergency Board Recommends Pay Increases to Keep Grain Trains Moving

Recommendations can help resolve ongoing contract dispute between major freight railroads and unions

On August 16, the Presidential Emergency Board (PEB) submitted to President Biden recommendations to help resolve the ongoing contract dispute between major freight railroads and unions.

According to reports, the PEB report suggests that — before the PEB was created — the two sides’ proposals widely diverged in value by more than $9 billion.

After working with both parties, the PEB made several recommendations to help resolve the dispute, including a 24% compounded wage increase over five years (some retroactive).

The wage-increase recommendation was 7% above the carriers’ offer and 7% below the unions’ offer, but also included annual service-recognition bonuses.

Other recommendations include removing the cap on monthly employee healthcare contributions so that they equal 15% of the plans' overall cost of providing covered benefits, and jointly rebidding contracts to ensure that current costs are competitive.

With the PEB’s submission, the Railway Labor Act now requires a 30-day cooling off period, after which, if railroads and unions still cannot come to agreement, strikes and lockouts are allowed to take place.

President Biden appointment emergency board to avoid rail strike

On July 18, President Biden signed an executive order (EO) to prevent — for at least 60 days — a nationwide strike by U.S. railway workers that would deprive the country of essential transportation services.

The unions and railroads had 30 additional days to negotiate a new deal before entering a “self-help” period in mid-September, during which railroads can lock out workers and workers can strike.

The core issues of the dispute involve salary, benefits and working conditions.

Talks between major freight railroads, including Union Pacific, BNSF Railway and CSX, and unions representing 115,000 workers have dragged out for more than two years.

Grain industry impact

Because the start of the self-help period coincides with the start of the harvest season, grain shippers could be especially impacted.

According to reports, America's rail network is already feeling the strain from a year's worth of record-breaking imports, and rail backlogs are a leading contributor to congestion at key U.S. seaports.

Throughout 2022, agricultural shippers have dealt with significantly deteriorated rail service.

The Surface Transportation Board (STB) held a two-day hearing in April, with testimony from agricultural groups, including the National Grain and Feed Association (NGFA) describing costly ongoing problems.

Lisa Cleaver

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