A looming rail strike would affect the U.S. economy and put pressure on food, fuel, auto and chemical manufacturers and their customers, according to an article published on the Fortune website Wednesday.
The risk of a rail strike in the US is growing and could begin on December 5, the author says. This would do a lot of damage to the economy because many companies only have a few days of raw materials and space for finished goods, and commuters would be stranded because many passenger railroads use tracks owned by freight railroads.
“And major commuter rail services in Chicago, Minneapolis, Maryland and Washington state warned that some of their operations would be suspended in the event of a rail strike.” The author said.
“Railways carry about 40 percent of the country’s freight each year.” The author added. Economic losses would reach $2 billion (14.2 billion yuan) a day, and 700,000 people could lose their jobs, while prices for almost everything would rise, contributing to an economic downturn.
According to the trade group the Association of American Railroads, an estimated 467,000 additional trucks a day would be needed to handle everything the railroads deliver.
About 30 percent of all packaged food in the U.S. is shipped by rail, said Tom Madrecki, vice president of supply chain at the Consumer Brands Association, and that number would be higher for denser, heavier items like cans of soup.
“Big food companies don’t like to discuss the threat of a rail strike because fears of product shortages could lead to panic buying.” He said.
Jeff Sloan of the American Chemistry Council’s trade group said chemical plants could be close to shutting down when the strike begins. Consequently, consumers would also have to pay more for gasoline.
Pork and chicken producers in the US southern states would be hardest hit, as the cost of delivering feed by truck would increase significantly. They can’t go without rail service for too long before they have to close the feed mills and they’re in trouble,” said Max Fischer, NGFA chief economist.
The retail industry is also developing emergency plans because it is concerned about the delivery of festive goods for Christmas, the author explained. At the same time, the auto industry would suffer more if strikes occurred, “because about 75 percent of all new vehicles start their journey from factories to dealers on the railroads. Trains deliver about 2,000 cars filled with vehicles every day.” Automakers seem unable to keep their factories running during the strike.