By Geoffrey Smith and Scott Kanowsky
Investing.com -- The threat of a U.S. rail strike has been averted, the Department of Labor said in a statement early Thursday.
"Moments ago, following 20 consecutive hours of negotiations at the Department of Labor, rail companies and union negotiators came to a tentative agreement that balances the needs of workers, businesses and our nation’s economy."
"The Biden Administration applauds all parties for reaching this hard-fought, mutually beneficial deal," it added.
But the Labor Department gave no further details about the "tentative agreement." Negotiations had revolved around key "quality of life" demands made by the sector's two largest unions, BLET and SMART TD.
The unions, which are representing more than 50,000 engineers and conductors, were particularly concerned about labor cuts and scheduling demands that they claim had made conditions untenable for workers in the railroad industry.
The National Carriers' Conference Committee, the body negotiating on behalf of U.S. freight railroads, said in a statement it had agreed to a 24% wage increase during a five-year period from 2020 to 2024, including a 14.1% salary rise effective immediately and five annual $1,000 lump sum payments. However, it did not mention sick time, a key sticking point in the talks.
Analysts had warned that a strike would have had a severe impact on domestic supply chains that have still not entirely recovered from the effects of the pandemic, while also adding even more upward pressure on soaring consumer prices. According to a report from the Association of American Railroads, a labor action shutting down rail networks could cost the U.S. economy at least $2B per day, as well as delay commutes and disrupt freight shipments across the country.
Media reports say that the deal will now go back to union members for a vote following a post-ratification cooling-off period.
Shares in large freight railroads like CSX Corporation (NASDAQ:CSX), Norfolk Southern Corporation (NYSE:NSC) and Union Pacific Corporation (NYSE:UNP) all rose in pre-market trade.