US freight railroads have started reducing service on Monday ahead of a possible strike on September 16 after the country's two largest rail unions failed to agree on a new contract.

The unions told management they are unwilling to promise they won't walk off the job, according to a customer advisory sent to shippers late Friday by Norfolk Southern Railway. The developments were confirmed in a statement from the Association of American Railroads.

The five US Class I railroads, along with more than 30 regional and short-line railroads, began notifying customers last Friday about the service cuts because they don't want to leave hazardous materials or expensive cargo abandoned on trains across the US, if labour were to walk off the job, reports IHS Media.

"Railroads are taking all measures necessary to handle sensitive cargo in accordance with federal regulations to ensure that no such cargo is left on an unattended or unsecured train in the event of a work stoppage due to an impasse in labour negotiations," the AAR said.

"Additionally, other freight customers may also start to experience delayed or suspended service over the course of next week, as the railroads prepare for the possibility that current labour negotiations do not result in a resolution and are required to safely and securely reduce operations."

Contract deals have been struck with 10 out of 12 rail unions, but the two holdouts are the biggest - the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the International Association of Sheet Metal Air, Rail, and Transportation Workers (SMART) - which account for more than 90,000 rail employees necessary to operate trains and maintain the tracks.

Three unions agreed to a deal August 29 that guaranteed wage hikes in line with the recommendations from the Presidential Emergency Board formed on July 16 to avert a rail strike.

Seven more unions have struck deals in principle with similar terms and conditions, including a 22 per cent wage increase covering 2020 through 2024, and US$5,000 in bonus payments.

The Biden administration pushed both sides to make a deal to avert a strike six weeks before crucial mid-term elections, but the presidential authority expires on September 16 at midnight when a 30-day "cooling off" period ends.

If the two sides don't voluntarily agree to extend the "cooling off" period until mid-October, then Congress would have to pass legislation to prevent any strike or lockout.