Possible railway worker strike could mean more shortages, higher inflation

A looming railway worker strike could mean more shortages of food and goods, and even higher inflation, and is already leaving some train passengers stranded.

PREVIOUS: Massive rail strike could mean more supply chain issues

The International Association of Machinists and Aerospace Workers agreed to postpone a possible strike from this Friday until September 29th.  But they rejected a contract offering a 24% pay raise because it did not resolve scheduling issues.

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Many of the country’s freight trains could be halted, along with the food and goods they carry, if tens of thousands of railway workers go on strike.

"We’re talking about a huge piece of the supply chain linkage if there is a rail strike. It would be disruptive by billions of dollars a day," said David Gantz, the Baker Institute's Will Clayton Fellow in Trade and International Economics at Rice University.

"It would affect a lot of things, produce, food, everything we import, everything we export," said Nick Klein, Vice President of Sales and Marketing at freight and logistics company OES Group.

The August inflation rate was still high, at 8.3%, sending Wall Street plummeting Tuesday. A strike could make inflation and food and consumer goods shortages even worse.

"We’ve all been warned already," said Gantz. "Do your Christmas shopping early this year because you don’t know what kind of disruption you’re going to have in November and December."

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Congress could pass a bill to enact a new contract and keep the rails running.  And the White House says it is asking ships and truckers to keep goods moving if railworkers walk off the job.

However, Klein points out, "It would take 460,000 trucks to replace the railroads. And we’re already short 80,000 drivers in this country."

Klein adds, "We also have to remember the longshoreman are operating without a contract along the whole west coast."

Meanwhile, Amtrack passenger trains, which travel on 21,000 miles of tracks owned by freight train companies, have already suspended some routes, including parts of the Texas Eagle route between Los Angeles and San Antonio.  


Consumers need to prepare for more economic pain.  In another effort to curb inflation, the Fed is expected to raise interest rates again on September 21, which will mean higher interest on credit cards and loans.