By Lisa Baertlein and David Shepardson
LOS ANGELES (Reuters) -U.S. freight railroads said Wednesday they are ready to reach labor agreements with union workers based on the recommendations of President Joe Biden's emergency board, even though they represent "the most substantial wage increases in decades."
The National Carriers Conference Committee (NCCC), which represents railroads including Union Pacific (NYSE:UNP), Berkshire Hathaway-owned BNSF and CSX (NASDAQ:CSX), has been in contract talks with unions representing 115,000 workers for more than two years. Biden appointed a presidential emergency board (PEB) last month to break the impasse and the board released its findings to interested parties on Tuesday.
"The railroads are prepared to meet with the rail unions and reach agreements based on the PEB report without delay," the NCCC said.
Railroads are vital to the transport of necessities ranging from fuel oil and soybeans. A lockout or strike could snarl supply chains, stoke inflation and pressure the already fragile U.S. economy.
Susquehanna railroad analyst Bascome Majors in a note titled "State of the Unions - Neither Side Will Love the PEB Report" said the board split the difference between the unions' wage ask and the railroads' offer.
The NCCC said the recommendations would increase wages by 24% during the five-year period through 2024, with a 14.1% wage increase effective immediately.
The recommendations - which are often the framework for a deal - also include five annual $1,000 lump-sum payments, adjustments to healthcare premiums, and limited changes to work rules. A portion of the wage increases and lump-sum payments would be retroactive, resulting in more than $11,000 on average in immediate payouts to employees.
Factoring in healthcare, retirement and other benefits, employees' total compensation would average more than $150,000 per year.
Union representatives did not respond to requests for comment.
The two sides are in a cooling-off period that ends at 12:01 a.m. EDT on Sept. 16. If they do not reach a voluntary settlement by that time, a strike or lockout becomes legally possible. Missing that deadline also opens the door for Congress to intervene.
Mike Steenhoek, executive director of the Soy Transportation Coalition, said agricultural shippers are frustrated with unreliable rail service and urged both sides forge a deal before the deadline to avoid further service disruptions.
"It would particularly be an inopportune time given the upcoming harvest and overall global food insecurity," Steenhoek said.