Biden hails tentative deal to avert rail strike as businesses urge freight workers to back it

The White House struck a tentative deal Thursday to avoid a rail strike that risked major disruptions across the United States, with freight workers securing a key demand.

The agreement between major freight rail operators and two large unions — the Brotherhood of Locomotive Engineers and Trainmen and SMART Transportation Division — highlights the labor movement’s growing influence under an administration that has cast itself as a staunch ally of labor. Their tentative pact drew a collective sigh of relief from business groups that had warned a stoppage would cause crippling economic damage.

“This agreement is a big win for America,” President Joe Biden said Thursday at the White House, thanking negotiators for the unions and the rail carriers, after what he said were 20 hours of marathon talks ahead of a looming Friday deadline.

For the president and fellow Democrats, the deal offers a measure of political relief after fears that the economic fallout from a strike could further squeeze households hit by stubbornly high inflation.

“This is a win for tens of thousands of rail workers and for their dignity,” Biden said, adding that the deal would also boost rail operators’ ability to hire and retain workers, and called the carriers a vital “backbone” of the economy.

Joseph Hinrichs, the incoming CEO of rail company CSX, said the employees are “deserving of these raises they’re getting,” speaking on CNBC Thursday. “They’ve been through the pandemic and through all of the work they’ve done for us,” said Hinrichs, who was not directly involved in the talks. (CNBC and NBC News are both part of NBCUniversal.)

Pandemic pressures, including those that scrambled supply chains, worked in freight workers’ favor, logistics experts said.

“Railroad employees feel they have a strong hand to play now, and they’re playing it,” said Zac Rogers, assistant professor of operations and supply chain management at Colorado State University. “They have been worked to the bone for the last two years trying to deal with Covid and its aftershocks,” he said, adding that the general public has “never been more aware of the importance of supply chain” just as some longstanding bottlenecks show signs of easing.

A rail strike would dent many industries, as about 40% of goods that are shipped long-distance rely on the nation’s rail system. Agriculture, automotive, chemical, packaging and industrial parts makers would take the biggest hits, according to Glenn Koepke, general manager of network collaboration at the supply-chain management platform FourKites.

Even though a strike has been forestalled, Koepke said that shippers looking for contingency plans were already driving up demand for trucking. “Rates will spike through the end of the week and have been as high as 25%, but they will return to stable levels next week,” he said.

On Thursday, a broad range of industry groups applauded the tentative deal and urged its approval