The next inflation threat could be a U.S. rail strike

Sep. 10, 2022 10:21 AM ETUnion Pacific Corporation (UNP)WMT, TGT, IYT, HD, FDX, UPS, CNI, CP, CSX, NSC, BRK.A, BRK.B, BIPBy: Clark Schultz, SA News Editor154 Comments

Railway track in the evening in sunset

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U.S. freight railroads will reportedly reduce some service after Monday with a new rail union contract still up for negotiation. The reduced service would come ahead of a potential rail strike date of September 17 if talks fail to progress.

While ten of the twelve railroad worker union have struck deals, the holdouts - Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal Air, Rail, and Transportation Workers - account for more than 90K rail employees.

Association of American Railroads statement: "While these preparatory actions are necessary, they do not mean a work stoppage is certain. Railroads will continue meeting throughout the weekend with the remaining unions to work toward tentative agreements. The railroads want, and continue to advocate for, a prompt resolution that would provide historic wage increases to rail employees – and allow the railroads to continue servicing customers and prevent further disruption to the struggling supply chain."

The Association of American Railroads estimated that a strike would cost the economy $2B per day.

A rail strike could disrupt the retail industry and giants like Walmart (WMT), Target (TGT), and Home Depot (HD) if domestic trucking rates accelerated again. FedEx (FDX) and UPS (UPS) could also be impacted. Economists warn that an extended rail strike could impact food prices and be another contributor to inflation in the U.S.

Related Tickers: Canadian Pacific Railway (CP), Canadian National Railway (CNI), CSX Corp. (CSX), and Union Pacific (NYSE:UNP), Berkshire Hathaway (BRK.A) (BRK.B), Norfolk Southern (NSC), and Brookfield Infrastructure Partners (BIP)

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