Key Texas industries could face bottlenecks over railroad labor dispute

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Texas industries that transport commodities ranging from agriculture to petroleum products via railroad could face bottlenecks as soon as this weekend as large railroad companies and unions representing railroad workers remain locked in a dispute over pay and working conditions.

Tens of thousands of railroad workers around the country are threatening to stop working Thursday night if a new contract is not reached between the companies and two major unions that represent a majority of the country’s railroad workforce.

The Biden administration is urging the two sides to compromise as the deadline for resolving quickly approaches: At 11:01 p.m. Central time Thursday, a federally mandated 30-day “cooling off” period ends.

The impasse is already impacting commuters who travel on Amtrak trains, which will stop long-distance service Thursday because of the potential work stoppage on freight railroads, whose tracks Amtrak uses.

But in Texas, which has the most miles of railroad tracks of any state, the bigger concern is for businesses that move large amounts of products by rail and face significant disruptions if there’s a work stoppage — which would come on top of lingering supply chain problems triggered by the COVID-19 pandemic.

“Over half of rail freight is bulk goods such as agricultural or petroleum products, clearly important Texas industries,” said Ray Perryman, an economist based in Waco. “A rail strike at this time would be another blow to an already weakened supply chain.”

Many Texas companies also have been battered by a national labor shortage and supply chain issues caused by the Russian invasion of Ukraine, he said.

“For some, the failure to receive rail deliveries as expected would create significant bottlenecks,” Perryman said.

Pedro Reyes, a professor of supply chain management at Baylor University, said no matter what happens, motorists could see gas prices increase as a result of the dispute because petroleum products are often transported via railroad.

“Either way we’re going to see it — it’s just a matter of how much,” Reyes said. “A, they go on strike, there’s a shortage of movement of oil and gas, then we see an increase. B, they come to an agreement and get better wages and working conditions. Somebody has to pay for that.”

The railroad companies and their workers have been at odds over issues such as sick time and penalties for missing work. Points-based attendance policies penalize workers for going to routine doctor’s visits or dealing with family emergencies. Workers also said they can be on call for two weeks straight without a break.

If the parties don’t come to an agreement, the work stoppage would be the first railroad strike in decades.

“I’ve been on the railroad for 28 years, and this would be my first strike, if it happens,” said Kamron Saunders, a locomotive engineer from Smithville who is now the Texas legislative director for SMART Transportation Division, formerly the United Transportation Union. “We are definitely in the 11th hour.”

The Railway Labor Act of 1926 allows Congress to step in and quash a strike by ordering workers back to work. During the last railroad strike 30 years ago, Congress intervened after three days to ban strikes and lockouts.

Saunders said the impacts on Texas business and the supply chain depend on how long a potential strike lasts.

“If we get to a strike, I don’t foresee us staying out for very long,” Saunders said. “Just because of the economic impacts. But it’s hard to tell.”

Disclosure: Baylor University has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

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