Coal, Lumber and Food Under Threat by Potential US Rail Strike — UW GROUP

Coal, Lumber and Food Under Threat by Potential US Rail Strike

  • Lumber surges while fertilizer industry prepares for worst
  • ‘Bad news for farmers and food security’: fertilizer executive

Commodities groups are sounding the alarm as a potential railway strike threatens to cripple transportation of vital goods from food and lumber to coal.

Freight railroads and labor unions worked through the weekend to try to avoid a strike that could cost the US economy more than $2 billion a day, though there isn’t much sign of progress ahead of a potential Sept. 17 walkout. A strike would threaten shipments of grains, fertilizer and energy when global food prices are elevated and inflation ripples through economies. 

The threat comes as the world increasingly turns to the US for food supplies, with Russia’s war in Ukraine roiling commodity markets and disrupting grain shipments from the Black Sea, one of the world’s breadbaskets. The US coal industry also faces significant impacts since the vast majority of the power-plant fuel is transported by train.

“Coal would stop,” said Ernie Thrasher, chief executive officer of Xcoal Energy & Resources LLC, the biggest US exporter. “No coal is going to move until these guys go back to work.”

A strike could impact all major US railroads, including BNSF, Union Pacific and CSX Transportation. Ten of 12 railroad workers’ unions have struck new labor deals, there are two holdouts — the Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal Air, Rail, and Transportation Workers.

President Joe Biden and cabinet officials were in touch with freight-rail companies and unions on Monday in an effort to avert a strike, according to a White House official. Biden’s personal involvement in the stalled labor talks signifies how seriously the White House is taking the possibility of a work stoppage.

Iowa Republican Chuck Grassley said in a tweet that Biden needs to step in and tell those holding out to keep negotiating or take the deal, and “if he can’t Congress must.”

Lumber prices are already reacting, soaring to levels not seen in a month. Futures contracts rose 9.6% on Monday in Chicago to the exchange limit of $559.80 per 1,000 board feet, the highest price since Aug. 18.

Fertilizer shippers are already preparing for the worst.

“Rail networks are complicated, and carriers must make preparations ahead of a potential stoppage to keep certain types of cargo safe and secure,” Fertilizer Institute CEO Corey Rosenbusch said in a Saturday statement. “Fertilizer falls into that category and is being taken off the rails. That is bad news for farmers and food security.”

The looming stoppage comes as US growers are about to apply fall fertilizer, said Jeff Blair, CEO of GreenPoint Ag, an agriculture supply company in the southern US. Rail is a key part of the nation’s agriculture supply chain and moving fertilizer to farmers and crops, he said.

“With the global food shortage due to Russia’s invasion of Ukraine and high inflation, any strike would be brutal for farmers, the industry and the public,” Blair said.

bloomberg

Наши контакты


+90 242 502-03-66

+90 552 707-79-07

office@uwgroup.com.tr

Главный офис
ANTALYA / TURKEY

Обратная связь


UWGROUP Middle East © 2022 All Rights Reserved