Canada’s two largest railroads are starting to shut their transportation networks as a labor dispute with the Teamsters union threatens to cause lockouts or strikes that will disrupt cross-border trade with the United States.
Both Canadian Pacific Kansas City and Canadian National Railroad, which transport thousands and thousands of tons of freight across the border, have stopped accepting certain shipments of hazardous materials and refrigerated products.
Both are threatening to lock out Teamsters employees in Canada starting Thursday if no agreement is reached.
On Tuesday, CPKC will stop all shipments originating in Canada, in addition to all shipments originating within the United States and destined for Canada, the railway company announced on Saturday.
The Canadian Press reported that Canadian National banned the import of containers from its U.S. partner railways on Friday.
Jeff Windau, an industry analyst at Edward Jones & Co., said his company expects the work stoppages to last only a couple of days, but in the event that they last more, there could possibly be significant disruptions in the availability chain.
“If something were more long-term in nature, I think there would be some significant potential problems, just given the amount of goods that are handled every day,” Windau said. “By and large, rail touches pretty much the entire economy.”
The two railways move about 40,000 carloads of freight value about $1 billion a day, Windau said. The transport of complete cars and automotive parts, chemicals, forest products and agricultural goods will probably be severely affected, he said, especially with the upcoming harvest season.
Both railroads have extensive networks within the United States, and CPKC also serves Mexico. Operations will proceed even when work is halted.
CPKC said it stays committed to avoiding a piece stoppage that will harm Canada’s economy and international fame. “However, we must take responsible and prudent steps to prepare for a possible disruption to rail service next week,” spokesman Patrick Waldron said in a press release.
By closing the network, the railway company can remove dangerous goods from its network before disruptions occur, CPKC said.
Union spokesman Christopher Monette said in an email Saturday that negotiations were ongoing however the situation had shifted from a possible strike to an “almost certain lockout” by the railroad company.
CPKC said negotiations with the union, which represents nearly 10,000 employees at each railroads, are set to resume on Sunday. The company said it continues to barter in good faith.
Canadian National said in a press release on Friday that no significant progress had been made in negotiations and that it hoped the union would “meaningfully engage” at a gathering scheduled for Saturday.
“CN wants a solution that allows the company to refocus on what it does best as a team: transporting customer goods and the economy,” the railroad company said.
Negotiations have been ongoing since last November; the contracts would have expired at the top of 2023. As the talks progressed, they were prolonged.
The union said the corporate’s demands regarding workforce planning, rail safety and employee fatigue were the most important points of contention.
Concerns in regards to the quality of lifetime of rail employees battling demanding hours and no paid sick leave nearly led to a strike by U.S. rail employees two years ago, but Congress intervened and prevented a strike. The major U.S. railroads have since made progress by offering paid sick leave to most rail employees and attempting to improve work hours.
Windau said that the trucking industry currently has large excess capability and will possibly cover a part of the rail transport volume. However, “it will not be possible to replace all of this with trucks.”
