Transport strikes put supply chains under duress again
The White House said Thursday it had reached a tentative agreement to avoid a potential railway strike that threatened to shut down a crucial vein of the U.S. economy.
President Biden said the tentative deal “is an important win for our economy and the American people.” He credited the unions and rail companies “for negotiating in good faith and reaching a tentative agreement that will keep our critical rail system working and avoid disruption of our economy.”
The Association of American Railroads, or the AAR, which represents the nation’s freight railroads, said three unions representing around 60,000 workers had reached a tentative agreement that included new contracts providing rail employees with a 24% wage increase during the five-year period from 2020 through 2024, including an immediate payout on average of $11,000 upon ratification. The association didn’t mention whether changes to attendance policies were made as part of the deal.
But it’s not just a potential U.S. rail strike putting supply chains at risk. Air traffic controllers in France are taking Friday off, and dockworkers at two major U.K. ports have scheduled work stoppages.
The pandemic, a giant cargo ship stuck in the Suez Canal, floods and droughts, and worker shortages have created two years of havoc for businesses and consumers that depend on freight shipments. Now potential disruptions are coming from within. Workforces, emboldened by a tight labor supply amid high demand and ongoing shipping delays, and expecting to be compensated for sacrifices made to keep economies going during COVID, feel they have leverage.
Workers at the ports of Felixstowe and Liverpool are preparing to strike in the United Kingdom, and the actions will overlap.
Unite, the union that represents dockworkers at the Port of Felixstowe, has scheduled a work stoppage for Sept. 27 until Oct. 5. Stevedores also went on strike for eight days in August.
Felixstowe is a major port, handling about 48% of all containerized imports in the U.K.
Union leaders say Felixstowe Dock and Railway Co. and its Hong Kong-based owner, Hutchison Port Holdings, are offering only a 7% raise when inflation in the U.K. is above 12%.
Unite also said longshoremen at the Port of Liverpool would not report to work from next Monday to Oct. 3 in a dispute with Peel Ports Group over pay. Peel Group says it has offered a pay package equivalent to an 8.3% increase.
Logistics company C.H. Robinson also alerted customers that port operations will be suspended or reduced on Monday in a show of respect for Queen Elizabeth II’s funeral.
During the strikes, it noted, truck deliveries will also be severely limited and temporary storage charges may occur for cargo that can’t get on a vessel or exit port property.
In Germany, unionized workers and the bargaining unit for management at Hamburg and other ports reached agreement on a 9.4% pay hike after multiple rounds of contentious negotiations that nearly led to a strike but was postponed by a court ruling in July.
Meanwhile, talks between terminal operators and the International Longshore and Warehouse Union, which represents dockworkers on the U.S. West Coast, have bogged down. The ILWU has pledged not to go on strike, but there are growing concerns that informal work slowdowns could increase. Major sticking points include a local dispute with the Port of Seattle/Tacoma and automation, with workers in Southern California not working ships calling at the automated section of Pier 400 in Los Angeles, The Wall Street Journal reported.
Against this backdrop, major U.S. freight railroads have embargoed many types of freight and are making preparations to shut down on Friday after failing to reach a collective bargaining agreement with two large unions. The prolonged strike could exacerbate intermodal congestion and inflation in the country, analysts say.
Longshoremen in Europe and the U.S. say ocean carriers and port terminals have raked in huge profits since the COVID crisis and should now share more of that wealth.
Air traffic control dispute in France
The French Civil Aviation Authority DGAC has asked all airlines operating in France to reduce their flight schedule from all French airports by 50% on Friday, when the main union representing air traffic controllers in France has called a one-day strike.
Air France on Wednesday announced it will cancel 10% of its long-haul flight schedule and 45% of short- and medium-haul flights.
Data from Cirium shows there are more than 1,800 flights scheduled in France on Friday, the bulk of them on intra-European routes, SimpleFlying reports.
DGAC said it is working with navigation regulator Euronav to help airlines avoid the country’s airspace. Bypassing French national airspace could put strain on airline operations throughout Europe.
The industrial action is scheduled to last from 6 a.m. Friday to 6 a.m. Saturday. The air traffic control union SNCTA cited the need for higher pay to cope with inflation and more hiring as reasons for the strike.
The impact on air cargo is expected to be modest given the short duration of the strike. Air France is also maintaining most of its international flights, which carry the bulk of air shipments booked with the airline.
It’s the latest in a series of labor actions that have contributed to a bumpy summer of congestion and thousands of flight cancellations for travelers and shippers in Europe. Airports such as London Heathrow and Frankfurt in Germany capped daily passenger counts to keep the system from bogging down.
In July, ground staff at Lufthansa walked off the job for a day before the sides resolved their differences. A last-minute agreement between pilots and the German flag carrier averted a two-day strike last week. Cabin crew at Spanish operator Iberia Express conducted a work stoppage this summer.
In Australia, airport ground services company dnata recently reached a tentative agreement with workers that prevented a 24-hour work stoppage at large airports.
Typhoons, heat waves, COVID lockdowns and geopolitical tensions in Southeast Asia have hindered airline operations as well.