Trade groups applaud executive order on rail talks

Supply chain industry trade groups are praising the Biden administration’s efforts to address ongoing railway labor negotiations, calling it an important step to avoid disruptions that would slow trade and add to inflationary pressures.

President Biden signed an executive order Friday establishing a Presidential Emergency Board (PEB) to help resolve labor disputes between freight railroads and rail labor organizations. The move came ahead of a deadline to intervene in the nationwide talks covering 115,000 workers or risk a strike or lockout. The PEB has 30 days to investigate the dispute and issue a report on how it should be resolved.

Talks between major freight railroads and labor unions have dragged on for more than two years; Friday’s executive order begins a cooling-off period aimed at helping both sides reach a settlement.

The National Retail Federation (NRF) and the American Trucking Associations (ATA) said the PEB is an essential step to avoiding disruptions that would hamper trade as peak shipping season gets underway.

“Now that we are in the peak shipping season for back-to-school and winter holiday merchandise, it is critical that both parties come back to the table to reach an agreement without any kind of rail service disruption this fall,” NRF’s David French, senior vice president of government relations, said in a press release Friday. The association had sent a letter to President Biden earlier this month asking the administration to intervene.

ATA President and CEO Chris Spear echoed those sentiments.

“In order to move past our supply chain challenges and reduce the inflationary pressure that’s hurting American families, we must continue to steer clear of the kinds of avoidable, unnecessary disruptions to the movement of freight that this strike would have caused,” Spear said in a statement Friday. “Our nation’s supply chain has faced a wide range of stress factors during the past several months. We are glad the White House recognizes the importance of keeping freight rail running, one of the key modes of freight transportation that is highly interconnected with the trucking industry in delivering goods nationwide.”

The threat of a rail slowdown was adding to a host of other economic and supply chain pressures, including ongoing labor negotiations between shipping lines and dock workers on the West Coast, and the ramifications of California’s Assembly Bill 5 (AB5), a labor law that requires companies to compensate certain independent contractors as full employees, including truck drivers. Legal proceedings had kept the law from being applied to the trucking sector, but the issue is in the spotlight again following a June Supreme Court decision essentially allowing the law to take effect.

Dawn Tiura, CEO and president of Sourcing Industry Group (SIG), agreed that the rail issue is compounding the other problems occurring on the West Coast, but said the situation is expected to improve sooner than the dock worker talks. Combined with the complications of AB 5, she said the issues are a “perfect storm” affecting the supply chain, with the effects on trucking a key factor moving forward.

“We’re still down 85,000 drivers,” Tiura said in an interview Friday, referring to industry statistics citing a lack of available truck drivers nationwide.

SIG represents executives in sourcing, procurement, and risk at Fortune 500 and Global 1000 companies. Tiura pointed to recent efforts to relax guidelines for obtaining a commercial driver’s license (CDL) as a helpful step, but said that finding ways to attract more workers to the trucking industry is essential to avoiding the disruptions and delays that have plagued supply lines the past few years.

“We have to start incentivizing people to drive,” Tiura said, adding that she expects further action on AB5, which she said will affect freight capacity in California. “Getting this solved is going to be so important.”

Independent owner-operator truck drivers blocked the Port of Oakland earlier this week in protest of AB5, which they say will put them out of business by increasing their costs—in the form of additional fees and higher insurance, for instance—or forcing them into full-time employment.

This story was updated on July 20, 2022.