Economic Impact of Rail Shutdown Must be Avoided

Retailers, and Americans generally, have weathered a litany of disruptions and supply chain shocks over the past two and a half years: the ripple effects of an unprecedented global pandemic, still ongoing. But unlike most of these, the looming specter of a rail shutdown—and its related economic impacts—is entirely foreseeable and preventable.

While retailers largely have their holiday inventory in place at distribution centers and stores, supply chains are always moving. Everything from food products to Spring merchandise to the inputs that will be used to assemble next year’s merchandise are currently making their way through an interconnected supply chain that relies on rail.

A snag anywhere in the network—let alone a total shutdown of a significant part of the network—has knock-on effects that amplify through the system. Millions of ecommerce orders will be stranded in train cars full of parcel shipments and intermodal cargo will back up and return gridlock to the nation’s ports.

And it's not just these direct effects for retail that concern us.

Today I joined a call with leaders of organizations representing railroad, agriculture, petroleum, and fertilizer industries, and we heard just how pervasive the effects of a rail stoppage would be to all of these industries and ultimately the entire economy.

The potential hit to the national economy and the added inflationary pressures must not be ignored. Strain on the global supply chain has been a major contributor to inflation. You don’t need a Ph. D in economics to know how a rail shutdown would exacerbate these pressures.

Our position has been clear throughout, we believe a negotiated deal is the best outcome. But now, with the deadline approaching and no deal within sight, Congress needs to act. A shut down is unacceptable and the economic catastrophe it would cause is entirely predictable and preventable.

President Biden yesterday expressed the urgency of avoiding a rail strike and called on Congress to act. We echo the president’s statements and call on Congress to swiftly codify the White House-endorsed Tentative Agreements reached by unions and railroads in September and ensure that there is no strike or further disruption. 

RILA will continue monitoring this issue closely and keep members apprised of developments. Please reach out to RILA VP of Supply Chain Jess Dankert or Director of Government Affairs Sarah Gilmore for more information.
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