Rail strike impact could be quick for commodities like cars, auto parts, beer

Railroads carried $186B worth of freight in ’21 between US, Canada and Mexico

Noi Mahoney

2 years ago

Shipments of all kinds of goods between the United States, Canada and Mexico could be disrupted if unions and railroads can’t come to an agreement to avert a looming labor strike.

Everything from finished vehicles, auto parts, grains, chocolate and beer to steel and fuels are shipped by rail between the three countries.

On Monday, President Joe Biden called on Congress to prevent a rail strike by passing a bill that would compel the railroads and unions to adopt the new agreement. Rail workers are negotiating for better working conditions, raises, more paid time off, sick pay and increased train crew sizes.

While eight unions have agreed to new contracts with the Class I freight railroads, the members of four unions have rejected ratifying their labor deals. Those four could strike on Dec. 9 if a compromise cannot be reached.

If there is a prolonged workers’ strike, the potential disruption could be devastating for businesses across the country, Ken Roberts, founder and president of WorldCity, told FreightWaves.

“A rail strike would be that one, maybe two giant steps backwards as the United States tries to find the path to avoiding a recession and combating inflation that continues to challenge,” Roberts told FreightWaves in September before the strike deadline was extended to December.

WorldCity is a Miami-based media company focused on the impact of export-import trade on the nation’s ports and border crossings.

“A whole host of U.S. imports and exports rely upon rail,” Roberts said.

While trucks still transport the majority of cargo across North America, railways are still vital to the supply chain. International trade accounts for about 40% of the carloads and intermodal units that U.S. railroads carry, according to the Association of American Railroads.

Railroads carried $186 billion worth of freight between the United States, Canada and Mexico in 2021. Trucks carried $830 billion worth of goods for the year, according to the Bureau of Transportation Statistics.

Rail moved $84 billion in goods across the U.S.-Mexico border in 2021, with more than 246,000 loaded rail containers passing through the port of entry in Laredo, Texas. The Laredo rail crossing is the busiest on the border, averaging about 24 trains daily in both directions.

Texas is also a key connecting point for rail traffic from Mexico, with Class I railroads such as BNSF, Union Pacific, CSX and Kansas City Southern operating major intermodal facilities across the state.

Roberts said beer and auto parts from Mexico, as well as oil and petroleum exports from the U.S. to Mexico, could be affected if workers and the railroads can’t end their standoff.

He said Mexican beer is a good example of how a rail strike could affect imports.

“Fifty-six percent of the beer that enters the U.S. comes through the small town of Eagle Pass, Texas, which is the closest border crossing to the world’s largest brewery in Nava, Mexico,” Roberts said. “Almost every drop of that beer, the Mexican brands like Corona and Dos Equis, goes across the border by rail.”