Today morning, the rail companies and union negotiators came to a tentative agreement that balances the needs of workers, businesses, and the economy, after 20 hours of talks.
The tentative deal averts a freight railroad strike that had threatened to cripple the U.S. supply chains and push prices higher for many goods.
Bloomberg reported that a potential strike by the U.S. rail workers threatens to delay consumer goods sailing from China, affecting global supply chains trying to recover from disruptions due to the pandemic and the Ukraine-Russia war.
The U.S. imported about $47 billion of goods from China in July. The Association of American Railroads (AAR) has warned that losses would be massive in case of the strike, approximately more than $2 billion per day.
American freight-rail companies and unions were in talks to avert a walkout of workers on Friday. Containers have already been stuck at railway yards in the U.S. due to workforce and equipment shortages.
Freight rates have dropped steadily from a record last year as consumer demand has waned. Inflation is hitting personal spending, and retailers are running out of warehouse space to store inventory.
The White House was reportedly considering emergency measures to keep vital goods and supplies flowing while pushing rail companies and unions to agree ahead of a Friday deadline.
The deal gives the union members an immediate 14% raise with back pay dating back to 2020 and raises totaling 24% during the five-year life of the contract, which runs from 2020 through 2024. It also gives them cash bonuses of $1,000 a year.
Labor groups have insisted that employees be able to take unpaid time off for physician appointments. There is no mention of sick time, the critical issue for workers in the dispute.
The agreement does not mean the strike threat has gone away entirely.
President Biden tweeted, "This is a win for the economy and for the American people. Rail workers will get better pay, improved working conditions, and peace of mind around their health care costs."
Railroad and shipping stocks are gaining after the agreement.
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