On Thursday, the Department of Labor said that the threat of a US rail strike had been averted. The department said that the outcome is the result of 20 consecutive hours of negotiations with rail companies. The parties involved arrived at a tentative agreement that balances the needs of workers, businesses and the economy.

However, the Labor Department provided no further details about the tentative agreement. Negotiations had revolved around the key quality of life demands made by the sector’s two largest unions, SMART TD and BLET.

The unions represent more than 50,000 engineers and conductors. They were concerned about labour cuts and scheduling demands that they claim had made conditions untenable for workers in the railroad industry.

The National Carriers’ Conference Committee was the body negotiating on behalf of US freight railroads. It retained a 24 per cent wage increase during a five-year period from 2020 to 2024, including a 14.1 per cent salary rise ( to be effective immediately) and also five annual USD 1,000 lump sum payments. It, however, did not mention sick time.

It was estimated that a strike would have had a harsh 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. As per a report, a labour action shutting down rail networks could cost the US economy at least USD 2B per day, as well as delay commutes and disrupt freight shipments across the country.

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.