Large rail union SMART-TD votes to reject labor deal as national strike moves closer

By Lori Ann LaRocco for cnbc.com

KEY POINTS 

  • Two of the largest rail unions diverged on labor deal votes Monday, with SMART-TD rejecting the deal but BLET voting for ratification.
  • But BLET said it will honor the picket line with other unions that voted against the deal and a strike could begin in early December, though more negotiations with rail management are set. 
  • BRS, the signalmen’s union, can strike as soon as Dec. 5, but has the option to move its strike date to Dec. 9, to align with other unions including SMART-TD.
  • UPS tells CNBC it will preemptively reroute packages to alternative lanes to minimize unexpected disruption.
An aerial view of shipping containers and freight railway trains at the BNSF Los Angeles Intermodal Facility rail yard in Los Angeles, California, September 15, 2022.
Bing Guan | Reuters

SMART-TD, one of the largest railroad labor unions, voted down the tentative agreement with rail management, raising the likelihood of a strike in December. The BLET, the other largest union which represents engineers, voted to ratify the labor deal but said it will honor the picket line.

“We stood shoulder to shoulder with our brothers and sisters in SMART-TD and others in rail labor throughout this process and we will continue to stand in solidarity with them as we approach the finish line in this round of negotiations,” said BLET President Dennis Pierce.

The BMWED, which represents the Brotherhood of Maintenance of Way Employees, is scheduled to strike on December 5 with The Brotherhood of Railroad Signalmen (BRS). But BMWED announced it would extend its cooling-off period if one of the larger unions voted not to ratify the tentative labor deal. The BRS has not indicated whether it will extend its deadline for talks.

SMART-TD, BMWED, AND BRS represent more than 50% of all rail labor.

BMWED AND BRS have another round of talks with railroad carriers Monday afternoon on federal sick pay.

During the tentative agreement review process, Pierce and SMART-TD president Jeremy Ferguson traveled the country together and held joint town halls to explain the deal to union members. Both unions credit the record turnout as a result of the presidents’ meetings with members.

BLET, the Brotherhood of Locomotive Engineers and Trainmen, represents approximately 24,000 professional locomotive engineers and trainmen throughout the United States. The BLET is the founding member of the Rail Conference, International Brotherhood of Teamsters.

The majority of SMART Transportation Division members are conductors — who split with the union’s other members on the vote — but the union also represents brakemen, yardmen, engine service employees and yardmasters, who are voting on a separate contract. SMART-TD has a total of 36,000 members. To ratify the tentative agreement, each of those respective union groups must individually agree to the deal.

Economic impact of national rail strike

The American Chemistry Council, which represents companies including 3MDowDupontBP, Exxon Mobil and Eli Lilly, says a rail strike would impact approximately $2.8 billion in chemicals cargo a week, and lead to a GDP decline and renewed inflation.

“AAR data show that there was a drop of 1,975 carloads of chemical shipments during the week of September 10 when the railroads stopped accepting shipments due to the threat of a strike,” Jeff Sloan, ACC’s senior director of transportation policy, recently told CNBC. “We would expect a similar dramatic reduction in chemical shipments if an embargo were to take place this month.”

Other industries, from agriculture to retail, have warned of the economic risks of a strike. The rail industry has estimated the impact of a strike at $2 billion per day. A strike would affect all of the major rail operators, including Union PacificNorfolk Southern and CSX.

UPS, which is the rails’ largest customer, said in a statement from a spokesperson that it has the capabilities to help manage the situation if an agreement is not reached, which includes its flexible and integrated smart logistics network. “Our network planning tools also enable extensive coordination across UPS facilities around the world, including preemptively rerouting packages to alternative lanes to minimize unexpected disruption for our customers,” the spokesperson stated.

Based on the September strike preparation guidelines, if the BRS sticks with their strike date of Dec. 5, strike prep is expected to begin November 28, the day the Senate arrives back from Thanksgiving break. The House is back on the Hill on November 29.

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