News

Customer Advisory - U.S. Rail Negotiations and Business Continuity Planning

(Florham Park, NJ)…We are monitoring developments this week on a potential rail strike by conductors and engineers who work for Class I rail operators BNSF, CSX, Norfolk Southern, CN, CP and Union Pacific.

Negotiations were ongoing this past weekend between the two rail unions - the Conductors Union (SMART-TD) and the Brotherhood Locomotive Engineers and Trainmen (BLET) that represent 57,000 engineers and conductors and the employers - represented by the National Railway Labor Conference – and Federal mediators to avert a strike. The dispute is over wages, paid leave, rules controlling worker scheduling (hours) and on-call policies.

Friday, September 16th at 12:01am EST marks the end of a 60-day cooling off period and rail union workers have the option of striking. (President Biden prevented a strike two months ago by imposing a cooling off period and appointing a panel called the Presidential Emergency Board (PEB) to evaluate the issues and identify a recommended settlement).

President Biden does not have the authority to prevent a strike on September 16th. Only Congress can act to prevent a work stoppage by imposing a deal on the two sides or to extending the current cooling off period.

Our rail partners are optimistic/hopeful that governmental pressure will deliver an agreement or extend the cooling off period. The expectation is that Congress will legislate in 24 hours, but it will likely take another 24 hours to get workers back into position.

We have been evaluating our cargo status in the days ahead on all vessel arrivals – and import discharge for rail, what’s in the U.S. rail terminals now and what is in transit. We understand railroads will position their locomotive power near railroad yards for easier access to restart and to maintain operations.

Most rail operators are implementing contingency plans this week (as part of sequential shutdown aimed at ensuring hazardous and special cargoes are in a safe place) which include stopping acceptance of on-dock rail at port container terminals and closing gates to intermodal traffic. Until further notice, most rail operators are keeping out gates open to enable pick up of containers by truckers.

Hamburg Süd’s contingency planning is focused on:

• Developing transloading solutions in Performance Team’s extensive warehouse network.

• Securing off-dock container yards to increase container storage capacity.

• Reviewing cross-border opportunities to store freight in Canada or Mexico

• Reviewing Canada port gateways, but they already face heavy congestion in Toronto and Montreal.

• We highly recommend customers pick up as many import containers as possible this week from U.S. inland rail ramps to avoid holiday and refrigerated cargo becoming stranded in a strike situation.

Our rail operators are keeping us informed of all developments and we pledge to keep you fully informed.

Please contact your Hamburg Süd representative with any questions that you may have.