In 2022, yearslong contract negotiations between U.S. freight rail carriers and various labor unions broke down, threatening global supply chains with a strike. The federal government tried brokering an agreement but ultimately had to impose one, averting economic disaster across sectors.
The agricultural supply chain in the United States is complex and is growing more so every year due to increasing product interdependencies, expanding markets, and globalization of the human and animal food supply. This global interdependency introduces considerable vulnerability when the failure or weakening of even one of the supply chain links has cascading effects up and downstream. Take, for example, the wildfires in the western U.S. and Canada. Widespread regional impacts negatively affected downstream product supply availability due to cargo aircraft and ships not being able to safely land or dock for several days due to visibility concerns. From a national preparedness standpoint, awareness of these vulnerabilities, interdependencies, and cascading effects may assist with prevention and mitigation efforts should the supply chain be disrupted.
Agricultural commodities are particularly complex in that they are used in both their raw and processed forms as human and animal food and can be further processed into non-food products, such as ethanol, carbon dioxide, gasoline, components of consumer products, etc. Disruption early in the distribution chain of raw agricultural materials not only creates supply and demand issues for those commodities but also impacts availability and market value of all the other products those commodities support downstream.
The importance (and vulnerability) of the agricultural supply chain was spotlighted nationally in 2022 with the threat of a nationwide freight rail labor dispute. The dispute prompted an immediate analysis of the agricultural commodity supply chain and its impact on the U.S. and global population within 24 hours of and following a potential strike.
A Rail-Related Case Study
In 2022, freight rail carriers and labor unions had been in mediation at the National Mediation Board, after years of contract negotiations, with little success. In July 2022, President Joe Biden issued an executive order establishing a three-person emergency board to investigate and report on disputes between the carriers and the labor organizations.
Negotiations continued throughout the summer of 2022, and the board issued a recommendation in August that included a 24 percent raise from 2020 to 2024 and bonus increases but left out the union’s proposed changes to carriers’ attendance policies. By September, only two of the twelve unions had not agreed to a new contract. However, those two unions were the two largest, and they were expected to strike in solidarity. Biden announced a tentative settlement on September 15, 2022, that prevented an immediate strike and provided members of all twelve unions with an opportunity to vote to ratify the contract.
Despite the short-term settlement, union membership had serious concerns about the proposed agreement, and several unions rejected the proposal—creating the potential for another strike by early December 2022. Congress ultimately passed a bill on December 2, 2022, imposing the September agreement on both the rail carriers and the unions, averting a strike.
The (Potential) Impact: The First 24 Hours
If the national freight rail system had shut down due to a strike, consequences affecting agriculture and interdependent supply chains would have been significant, if not catastrophic. The U.S. food and agricultural industry relies heavily on the rail transportation network for inputs and raw materials as well as transporting products to market. A severe, widespread disruption of rail transportation would have significant and long-lasting impacts on the food and agriculture sector.
Supply chain issues would likely appear within the first 24 hours of a national freight rail shutdown. First, food makers and agricultural processors would be forced to draw down stocks of existing products (e.g., flour, gasoline) and could reduce production to conserve stocks. Livestock, dairy, and poultry producers (who depend on rail for feed) would also draw down existing feed stocks—which could be at low levels due to reliance on just-in-time replenishment. Since grain could not be moved to market, grain storage facilities would also begin to fill. Cold storage space for perishable products could also reach capacity quickly. Trade markets would also be affected, with foreign exporters preemptively reducing shipments to the U.S. to avoid stoppages.
The (Potential) Impact: The Days After
Impacts would significantly increase if a national freight rail shutdown lasted beyond 24 hours. Meat and poultry processors would be impacted by being unable to ship out byproducts, an ingredient used in other supply chains such as pet food processing. Some feed plants and animal feed lots would most likely cease operations due to a lack of incoming grain. Energy and chemical supply chains would also be impacted. Ethanol plants would likely close because they would be unable to continue production without corn supplies, and the lack of ethanol production would create shortages of CO2, a process byproduct. Reduced ethanol production would impact gasoline availability, since ethanol is essential for fuel blending. Widespread shortages of consumer products would be likely.
Though the U.S. could have been severely affected by a protracted freight rail shutdown, its impacts would have been felt worldwide as well. Other nations rely on U.S. food and agricultural products as well as other exports. Consequences for international trade and global markets would be severe and long-lasting.
The possible impacts of a national freight rail disruption illustrate the interdependency of multiple economic and infrastructure sectors. The food and agriculture sector produces food and other essential raw materials used in energy and other sectors. These sectors rely on transportation to move materials to processors and food products to market. Reduced agricultural raw materials could lead to reduced energy production, which could further reduce the capacity of alternate transportation such as trucks and vessels.
Nontraditional Partners in Impact Assessment and Contingency Planning
Emergency managers, agricultural producers, and transportation providers at all levels should collaborate and communicate well before any potential disruption so that all parties understand the supply chain’s capacity, weak points, and established contingencies (if any). This planning process can also set distribution priorities for commodities and identify potential alternate supply sources to mitigate upstream and downstream impacts. For example, one distribution priority might be to promote the consumption of locally produced food products and to utilize local product receivers, when feasible, to reduce dependency on broader geographic transportation networks.
This rail case study illustrates the need to involve key stakeholders in contingency planning for supply chain disruptions, who might not be the traditional emergency management players. These include not only government but agribusiness producers who are represented by various agricultural trade associations. Additional key players could include transportation providers—certainly the freight rail carriers but also trucking and maritime representatives who have detailed knowledge of system capacities and interdependencies. Port authorities and private industry have also proven to be important partners in identifying alternative distribution routes during and after a regional disruption.
Developing a contingency strategy well in advance of future distribution disruptions is key to clearly communicating impacts and managing consumer expectations. By bringing traditional and nontraditional partners together all along the supply chain to fully inform this process is integral to mitigating potential disruptions to the complex and fragile agricultural commodity supply chain.
Michael Sharon
Michael Sharon, MPA, is the chief of the Emergency Programs Division at the U.S. Department of Agriculture’s Office of Homeland Security. His extensive emergency management career includes positions at FEMA, the U.S. Department of State, the Maryland Department of the Environment, and the Maryland Emergency Management Agency. The views expressed in this article are his own and do not reflect official policy of the U.S. Department of Agriculture.
Randy Treadwell
Randy Treadwell, MPH, is the former associate executive director for programs at the Association of Food and Drug Officials (AFDO). Prior to his role with AFDO, Randy served as the rapid response and emergency management program manager for the Washington State Department of Agriculture where he led multi-agency and multi-sector partners in agricultural and food/feed related emergency responses and contingency planning. (The views expressed in this article are his own and do not reflect official policy of AFDO or the Washington State Department of Agriculture.)
