President Joe Biden and members of his cabinet are working to mediate a contract dispute between freight railroads and their unions ahead of a looming Friday strike deadline, according to a White House official.

What You Need To Know

  • President Joe Biden and members of his cabinet are working to mediate a contract dispute between freight railroads and their unions ahead of a looming Friday strike deadline

  • Labor Secretary Marty Walsh sat down at the negotiating table Sunday to urge the parties to reach a deal

  • Business groups have said that a stoppage would be an economic disaster and urged Congress and the White House to intervene

  • The Association of American Railroads trade group put out a report last week estimating that shutting down the railroads would cost the economy $2 billion a day

For the second time in the last week, Labor Secretary Marty Walsh sat down at the negotiating table Sunday to urge the parties to reach a deal. Walsh postponed a planned to trip to Ireland this week to remain close to the talks.

The pressure to avert the strike stems from concerns that halting railroad deliveries of raw materials and finished products that so many companies rely on could be catastrophic for the economy.

"A shutdown is not acceptable," White House press secretary Karine Jean-Pierre said Tuesday.

“We’re going to be very honest — a shutdown would have a tremendous impact on our supply chains,” she added. “It’s going to have a ripple effect into our overall economy, on American families.”

“A national rail strike would be an economic disaster — freezing the flow of goods, emptying shelves, shuttering workplaces and raising prices for families and businesses alike,” said Suzanne Clark, the head of the U.S. Chamber of Commerce, on Monday.”

The Labor Department appeared to agree, with a spokesperson saying that it’s crucial that the parties remain at the negotiating table and come to an agreement because “a shutdown of our freight rail system is an unacceptable outcome for our economy and the American people.”

The Chamber of Commerce joined a number of other business groups, including a coalition of 31 agricultural shipping trade groups, in sending letters to Congress urging lawmakers to be prepared to step in and block a strike if the two sides can't reach an agreement by the end of the week. The chamber said if it comes to that, Congress should impose the terms recommended by a Presidential Emergency Board that Biden appointed this summer.

The Association of American Railroads trade group put out a report last week estimating that shutting down the railroads would cost the economy $2 billion a day.

"About 29% of all freight is moved via rail," Patrick Penfield, a professor of supply chain practice at Syracuse University's Whitman School of Management, told Spectrum News. "So in order to replace that, we would have to have an additional 500,000 trucks, and that just isn't going to happen."

The coalition negotiating on behalf of the nation's biggest freight railroads — including Union Pacific, CSX, Norfolk Southern, BNSF and Kansas City Southern — has announced eight of the 13 tentative agreements needed to avert a strike by some 115,000 rail workers.

The deals that have been announced so far have closely followed the Presidential Emergency Board’s recommendations that called for 24% raises over five years, $5,000 in bonuses and one additional paid leave day a year. But the two biggest unions representing conductors and engineers have been holding out because they want the railroads to go beyond those recommendations and address some of their concerns about strict attendance policies and working conditions.

The railroads have said they would begin curtailing shipments of hazardous materials and some other goods Monday in advance of a possible work stoppage at the end of the week. That would ensure that containers of those dangerous goods aren't left stranded along the tracks.

The possible strike has already impacted passenger rail as well. Amtrak, which is not involved in the labor dispute, canceled three long-distance train routes, saying that a strike "could significantly impact" its service.

"Amtrak is closely monitoring the ongoing freight rail – rail labor contract negotiations," the company said in a statement. "The negotiations do not involve Amtrak or the Amtrak workforce. While we are hopeful that parties will reach a resolution, Amtrak has now begun phased adjustments to our service in preparation for a possible freight rail service interruption later this week."

The heads of the Sheet Metal, Air, Rail and Transportation Workers — Transportation Division union that represents conductors, and the Brotherhood of Locomotive Engineers and Trainmen union that represents engineers, criticized that decision as a move to increase pressure on shippers and Congress to intervene.

The federal law governing railroad contract talks won't allow a strike or lockout before Friday.

"If this can get resolved by Friday , this will be a huge relief for a lot of people, a lot of people in industry," Penfield told Spectrum News. "If it doesn't, then this is kind of a bad situation, especially right before the holidays."