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Roughly 1/3rd of all US exports rely on freight transport. Food, wood, coal and metal all move across the US’ 140,000 miles of freight routes. Because of this, many US goods providers are worried about the possibility of yet another major railway strike. In September, two of the 12 major US railway unions rejected negotiations, putting a potential strike back on the table this winter. This latest steel news has buyers and sellers wondering: what does this mean for metal?
About 52% of all US freight cargo consists of bulk commodities. For instance, coal, iron ore, and scrap steel are three common freight goods transported around the US daily. This also includes coking coal used to produce steel. Therefore, America’s steel mills are particularly dependent on the railway systems’ ability to transport these items on-site. Should a strike ensue, it would mean big trouble at an already-sensitive time.
Union Pacific boasts an extensive railway system network that travels in and out of America’s online steel mills.
In particular, Illinois, Eastern Texas and the Pacific Northwest have a dense concentration of operating steel mills that utilize Union Pacific railways. If negotiations don’t make headway soon, the transportation of raw materials and production materials like coking coal and scrap steel could suffer significantly.
The steel industry depends on these routes being functional in order to get coal, iron ore, scrap steel, and other necessary materials. In fact, in 2021 alone, US railroad freight routes transported more than 560,000 tons of steel and raw materials across the country. These are then finished into products like pig iron, steel wire, and steel plates.
If all 12 railroad unions cannot come to an agreement with US railroad companies, the entire steel logistics system faces a potential breakdown. Steel news sites have already reported extensively on what a mass strike might look like. The results would not bode well in any economy, let alone on toying with recession.
Paid sick leave remains one of the largest issues preventing railroad unions like Brother of Railroad Signalmen from ratifying the tentative agreement. The other major union to reject the deal was Way Employees Division of the Teamsters. With these two prominent unions holding up ratification, many worry more railway unions will have no choice but to follow suit.
By Jennifer Kary
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