Rail Shipping Service and the Presidential Emergency Board

President Biden recently announced a Presidential Emergency Board, gathering some of the nation’s rail carriers and their unions to resolve labor challenges. But what is a Presidential Emergency Board? Why did Biden announce an Emergency Board? And what could this mean for the future?

Let’s take a look at these topics and explore!

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Railroad Labor Difficulties and Slow Service

On July 19, 2022, at the Midwest Association of Rail Shippers’ Summer Conference, some of the North American Class 1 Railroads discussed the challenges contributing to degraded rail services, particularly, local service.

When COVID-19 first appeared, there was no clear vision of the future and how it would impact the rail traffic. With declining traffic, many railroads laid train crews off in early 2020. These pandemic layoffs came after a string of other layoffs related to the carrier’s focus on streamlining their operations through Precision Scheduled Railroading. By late 2020 attempts were made to recall employees but were widely unsuccessful. The railroads then shifted to hiring new employees, and have placed significant effort in attracting, hiring, and training new employees. However, they are now faced with an employment landscape where many newly hired employees quit within the first six months of employment.

To combat this, many railroads are considering diverse options to attract and retain employees. While nothing is concrete, some ideas include wage increases, higher pay for holiday and weekend shifts, and changes in working conditions.

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Biden Announces Rail Presidential Emergency Board

President Biden has set up a Presidential Emergency Board (PEB) to help the railroads and rail labor organizations in bringing the current round of national rail negotiations to a successful conclusion. The current round of negotiations is arrested due to details concerning employee salary, holidays, and weekend hours. According to the National Carriers Conference Committee (NCCC), it remains in the best interest of all parties – and the public – to promptly settle the bargaining round on reasonable terms that provide employees with prompt and well-deserved pay increases while preventing rail service disruptions.

The president has named Ira Jaffe as chair of the PEB. Barbara C. Deinhardt and David Twomey will also serve as members of the board. All three are experienced, respected labor arbitrators with experience resolving labor disputes.

The NCCC anticipates the Presidential Election Board will hold hearings in the coming weeks and issue a written report, including settlement recommendations, in mid-August 2022. Although Presidential Election Board recommendations are not binding, they historically have aided the parties in reaching voluntary agreements during a 30-day cooling off period that begins when the Presidential Election Board issues its report.

Strikes and other work stoppages are prohibited while the Presidential Election Board completes its work and during the following 30-day cooling off period.

Throughout the bargaining round, the NCCC maintains that the railroads have worked to address issues raised by both sides and have offered pay increases that are consistent with labor market benchmarks and reward rail employees for their essential work. The railroads’ proposals would continue to place rail employee pay and benefits among the best in the nation.

The NCCC will be looking to prove to the PEB how a recommendation based on their proposals would appropriately reward rail employees’ demanding work and skills, while best positioning the industry to grow and compete for traffic in the nation’s highly competitive freight marketplace.

The Railway Labor Act, which governs bargaining in the rail industry, has a proven record of bringing about voluntary agreements without disruptions to rail service. In the rare instances – most recently in the early 1990s – when the parties have not reached voluntary agreements, Congress has intervened to resolve the matter and maintain vital rail service.

Why do we have Presidential Emergency Boards?

Presidential Emergency Boards have historically been utilized to resolve labor disputes, much like the reasoning behind the upcoming Presidential Emergency Board. Our government realizes that our supply chain and economy cannot afford service disruptions due to labor disputes and therefore are intervening with the tools they have available to use.

The first Presidential Emergency Board was created in May of 1936. Previously the Railway Labor Act of 1926 was passed to ensure that labor disputes within the railroad industry were managed with the least amount of disruption possible to commerce and shipping. The National Mediation Board, an independent federal agency, was created by a later amendment to the Railway Labor Act to enforce the act, as well as to provide an oversight organization.

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The Railway Labor Act says that if the National Mediation Board finds that an unresolved dispute between a carrier and a labor organization threatens “substantially to interrupt interstate commerce to a degree such as to deprive any section of the country of essential transportation service,” the National Mediation Board is to notify the President of the United States. Upon such notification, the President may create an emergency board to investigate the dispute and issue a report and recommendations.

As laid out in the Railway Labor Act, the emergency board is to be made up of any number of individuals chosen by the President. The board may not, however, include members with a monetary interest in the carriers or the labor organizations involved, to ensure that their recommendations are unbiased. Usually, professional arbitrators with proven experience are selected to be members of a presidential emergency board. The board typically has 30 days within which to complete its investigation and issue a report.

If the carriers and labor organizations have not reached an agreement within 60 days after the creation of the board, the National Mediation Board convenes a public hearing. At the hearing, parties to the dispute must appear and explain why they have not accepted the proposals and recommendations of the emergency board.

If the board selects the employees’ offer as the most reasonable and if the carrier refuses to accept that offer, the employees may strike. In such a case, the carrier will not be entitled to take part in any benefits of any agreements between carriers designed to aid carriers during a strike.

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What Can You Do?

If you are an organization that ships by rail, you will feel the impact of reduced train crews in a variety of ways, none of them any less difficult than the other. Fewer crews has led to degraded rail service, particularly hard hit is local service.

We are hopeful that the Presidential Emergency Board will encourage the carriers and unions to work together, and that it will create a positive impact for service by getting crews back in place. In the meantime, we recommend staying engaged and watching for announcements from the Presidential Emergency Board, the rail carriers, and the unions. Some of them have been communicating regularly, which allows you to be aware of how your supply chain could be affected.

As you deal with the current services issues, consider documenting all challenges brought on by the lack of service. You can communicate these challenges to your rail carrier representatives to help them understand the difficulties you face. This may not create immediate change, but it will help the carrier understand your needs. You should also document all switching issues. Doing so will provide you with backup data to dispute erroneous demurrage charges, prioritize getting switched sooner during the next service day, and provide you with leverage as you negotiate with your rail carriers.

During these times it is important to be a strong partner with your rail service provider and show that you are willing to do whatever you can do to make things work, but that you do need their help. Make sure your expectations are reasonable and clearly communicated to your rail service provider.

Also consider an external logistics team to help you manage your railcars, allowing you to spend more time adapting to and overcoming service challenges. RSI Logistics’ experienced rail fleet management professionals can work for you to save you time and money. Contact us to get started.