Wrong Time for a Rail Strike

April 16, 1991

In a perfect world, this would be a perfect time for a rail strike. Industry staffing rules aboard trains are archaic, despite a decade of cost-cutting. Rail companies seem flush, as union reports show, and they could pay more in exchange for the productivity improvements they desire. And both sides have grown overly comfortable with the Railway Labor Act, which requires Congress to step in to settle any dispute that grows too contentious. As the Journal of Commerce has observed, that limits the damage any strike is likely to cause while setting in stone contract terms rail managements like. A presidential emergency board drew up those terms, and the Congress is chary of a veto.

But this is not a perfect world. First, the railroads are finally making profits from "inter-modal" transportation -- truck trailers and containers on flat cars -- but new, long-combination road vehicles threaten them. And while the railroads' market share is large, it continues to shrink, from 56 percent down to 37 percent over the last 40 years, while trucks' share has climbed from 16 percent to 25 percent. So while railroaders point with pride to carrying 50 percent more cargo, they note that shippers spend $9 with the truckers for every $1 they spend moving goods on the rails.

A major strike could cause enough pain to both sides to induce serious bargaining, especially by rail managements, but it could be devastating for market share. Those long-combination vehicles, monster trucks 110 feet long, weighing up to 134,000 pounds versus today's 80,000 pounds, would surely erode high-value traffic onto the Interstate highway system. For everyone else depending on the rails, the devastation could be much worse.

In the city of Chicago, which handles more intermodal freight than any other transportation center, an estimated 10,000 jobs depend on a smooth flow of traffic. In Baltimore, shorter rail routes to the Midwest define a major advantage over competitors to the north and south, justifying huge investments to modernize ship-to-rail container movement. A long strike could disrupt much more than the rails.

Finally, many businesses have moved to "just-in-time" inventory control. Automakers, electronics firms, appliance makers, all have re-tooled to use transportation as a warehouse, dropping parts and subassemblies at the plant as they are to be used. Jamming that pipeline could shut plants across America, a situation no Congress could tolerate.

Far better for the lines and their unions to agree to an extension, and to begin no-nonsense negotiations. The presidential emergency board's recommendations go a long way to please managements, but they give unions important pay concessions as well. Moreover, some practices being eliminated have existed since the days of steam. Solid bargaining is better than a strike that will hurt everyone, ultimately making railroads and their unions major losers.

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