Rail and tanker cars and shipping containers sit idle at the Canadian Pacific Kansas City rail yard in Port Coquitlam, B.C., on Aug. 19. For several days, the railway been winding down operations ahead of a possible shutdown.DARRYL DYCK/The Canadian Press
Canada’s miners, grain exporters and large retailers are braced for lockouts or strikes at both of the country’s big freight railways.
Canadian National Railway Co. CNR-T and Canadian Pacific Kansas City Ltd. CP-T have issued lockout notices for early Thursday morning amid tense labour negotiations with the Teamsters union representing almost 10,000 train workers. The Teamsters have also issued a Thursday strike notice at CPKC, raising the odds of a stoppage that would strand grain, ore and a vast range of goods.
There are no real alternatives to freight trains – trucks are too small and few in number, and shippers usually have no means to switch railways because of track locations – assuming both are not shut down. A work stoppage at CPKC would also halt some commuter trains that serve Montreal, Toronto and Vancouver.
“A strike for the supply chain is going to be devastating,” said John Corey, president of the Freight Management Association of Canada, which represents dozens of companies that rely on the railways. These include Home Depot, Canadian Tire, miners and ports.
Why Canada is on the verge of an unprecedented rail labour stoppage
For several days, both railways have been winding down operations ahead of a possible shutdown, ceasing to pick up some loads in order to ensure goods are not stranded and trains are safely parked. U.S. railways have also stopped sending goods to Canada and interchanging cars with CN and CPKC.
Jim Vena, chief executive officer of Union Pacific Railroad UNP-N, said this has already affected the Omaha, Neb.-based company’s operations and customers. “Anything that is ready to be shipped cannot be shipped to Canada,” he said by phone.
Mr. Vena, who worked at CN for 40 years before taking the top job at the second-biggest U.S. railway, said worries about the possible shutdown have driven some freight away from Canadian to U.S. ports, and halted some commodities. “It’s not good,” Mr. Vena said. “It’s not a win-win for anybody.”
Most industrial companies do not have much on-site storage for raw materials and finished goods, and they count on regular railway service to operate, Mr. Corey said. A pulp mill or chemical plant that cannot ship to customers will be forced to close and lay off employees, he said. Similarly, retailers have warehoused inventories but count on seasonal deliveries.
“If the railways both go out on Thursday, the ports of Vancouver, Montreal and Halifax have got maybe two days before they shut down because the boxes that are piling up there will not be able to leave and anything that goes to the port won’t be able to exit,” Mr. Corey said. “So all our imports and exports come to a standstill.”
Business groups say Canada’s railways ship $380-billion worth of goods a year, and they have urged the federal government to take action to prevent costly stoppages. Bulk commodities such as crops and coal comprise much of the freight moving on Canada’s railways. However, the companies also ship high-value products that include autos and containers of consumer goods from Asia.
“People do underestimate the importance of the railways,” said Barry Prentice, a transportation professor at the University of Manitoba. Still, “the average Canadian isn’t going to see very much [impact] because most of what they purchase is delivered by truck. The people who will feel it are people who are shipping commodities, farmers and people working in the forest industries and others.”
The Canadian Chamber of Commerce and the U.S. Chamber of Commerce called on Ottawa to intervene and prevent a “devastating” shutdown of rail service. “Significant two-way trade and deeply integrated supply chains between Canada and the United States mean that any significant rail disruption will jeopardize the livelihoods of workers across multiple industries on both sides of the border,” the groups said in a joint statement. “The government of Canada must take action to ensure goods continue to move reliably between our two countries.”
Labour Minister Steven MacKinnon was in Montreal on Tuesday evening to meet with CN, Teamsters and federal mediators, and set to be in Calgary on Wednesday to talk with the CPKC parties. Mr. MacKinnon said on social media that his message will be, “Get a deal at the table. Workers, farmers, businesses and all Canadians are counting on it.”
Mr. MacKinnon last week refused a CN request to direct the Canadian Industrial Relations Board to lead binding arbitration in the disputes, a measure that could prevent or delay stoppages.
Prof. Prentice predicted the government would not allow a strike or lockout to last more than seven to 10 days, using back-to-work legislation and sending the parties to arbitration.
If Canadian National and CPKC railroads can't work out deals with the union that represents their engineers, conductors and other employees, the trains could stop on Thursday.
The Associated Press