Rail strike would destroy US’ economy by costing $2b per day: Fortune

A GE AC4400CW diesel-electric locomotive in Union Pacific livery, ahead of a possible strike if no deal is reached with railroad unions, as a Metrolink commuter train (right) arrives at Union Station in Los Angeles, California, US, on September 15, 2022. [Photo/Agencies]

A coming rail strike would affect the US economy and the producers of food, fuel, cars and chemicals, as well as their customers, leaving them all under pressure, according to an article published on the Fortune website on Wednesday.

The risk of a rail strike in the US is growing, which could begin on December 5, according to the author. This would be very damaging to the economy, as many businesses have only a few days’ worth of raw materials and finished goods space, and passengers would be stranded as many passenger railways use tracks owned by freight railways.

“Major commuter rail services in Chicago, Minneapolis, Maryland and Washington state then warned that some of their operations would be suspended in the event of a rail strike.” The author said.

“Railways transport about 40 percent of the country’s freight every year.” Added by the author. The loss to the economy would reach $2 billion (14.2 billion yuan) a day, and 700,000 people could lose their jobs, while the prices of almost everything would rise, contributing to a recession in the economy.

According to the trade group Association of American Railroads, an estimated 467,000 additional trucks a day would be needed to handle everything the railroads ship.

About 30 percent of all packaged food in the U.S. is shipped by rail, said Tom Madrecki, vice president of supply chain for the Consumer Brands Association, and the number would be higher for denser, heavier items like cans of soup.

“Big food companies don’t like to discuss the threat of a rail strike because concerns about product shortages can lead to panic buying.” He said.

Jeff Sloan of the American Chemistry Council trade group said chemical plants could be close to shutting down when the strike begins. As a result, consumers should also pay more for gas.

Pork and chicken producers in southern US states would be most affected as the cost of trucking feed would increase significantly. They can’t go without rail services for too long before they have to close the feed mills and run into problems,” said Max Fisher, NGFA chief economist.

The retail industry is also developing contingency plans as they worry about shipping holiday items at Christmas, the author explained. At the same time, the auto industry would suffer more if there were strikes, “because approximately 75 percent of all new vehicles begin their journey from factories to dealerships on railroads. Trains deliver about 2,000 cars a day loaded with vehicles.” Automakers can’t seem to keep their plants running during the strike.

Source

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