Railroad Strike That Could Cost Economy $2B Per Day Imminent

The Association of American Railroads is warning that if a deal is not struck soon between the railroad industry and its unions, a nationwide strike could cost $2 billion per day.

According to a report released this month by the railroad association, the 140,000-mile railroad network spanning 49 states and 7,000 Class I trains could be temporarily idled, devastating the U.S. economy.

Five of 12 unions, including the International Brotherhood of Electrical Workers and the American Train Dispatchers Association, have reached tentative agreements with freight railroad operators. In total, 21,000 employees are now under the deals.

However, nearly 90,000 employees still remain uncovered by a collective bargaining agreement, and time is running out. Starting on Sept. 16, workers under unions without an agreement will be permitted to begin the strike.

Alan Baer, CEO of the New York-based shipping company OL USA, told CNBC on Wednesday that there aren’t enough truck drivers to move the rail-bound containers if a strike were to occur.

"Depending on the length of any service interruption, the overall impact would double each day the interruption continued," stated Baer.

"As we experienced with the ports, delays mounted quickly and it is now taking weeks to unwind," he continued. "Domestic trucking rates would surge as capacity disappears. Overall, a nightmare scenario."

The Association of American Railroads report estimates an additional 467,000 long-haul trucks would be required per day to handle the overflowing freight.

Now, industry heads in fields that could be indirectly affected by the backed-up freight are calling on Congress to take swift action on the boiling crisis.

The Fertilizer Institute and Retail Industry Leaders Association have sent letters to lawmakers emphasizing the inflationary effects and "significant disruptions" to the American consumer.

"If farmers do not receive fertilizer, it results in lower crop yields, higher food prices, and more inflation for consumers," The Fertilizer Institute argued.

• Railroads Back Plan Calling for 24% Raises but Workers Wary
• Almost All Dutch Trains Halted by Strike around Utrecht