Possible work stoppage at Canada’s two largest railroads could disrupt US supply chain next week
DETROIT– Canada’s two largest railway companies are beginning to shut down their shipping networks as a labour dispute with the Teamsters union threatens to lead to lockouts or strikes that would disrupt cross-border trade with the U.S.
Both the Canadian Pacific Kansas City and Canadian National railroads, which carry millions of tons of freight across the border, have stopped accepting certain shipments of hazardous materials and refrigerated products.
Both sides are threatening to lock out Teamsters Canada workers starting Thursday if no deal is reached.
On Tuesday, CPKC will halt all shipments departing from Canada and all shipments from the U.S. to Canada, the railroad announced Saturday.
The Canadian Press reported that Canadian National on Friday banned the import of containers from U.S. partner railroads.
Jeff Windau, Industrial Analyst for Edward Jones & Co., said his company expects the work stoppages to last only a few days, but that if they last longer, there could be significant disruptions to the supply chain.
“If anything were to take longer, I think there are some significant potential issues, given the amount of freight that’s being moved every day,” Windau said. “In general, the rails touch pretty much the entire economy.”
The two railroads handle about 40,000 railcar loads of freight daily, worth about $1 billion, Windau said. Shipments of fully built cars and auto parts, chemicals, forestry products and agricultural products would be hit hard, he said, especially with the harvest season approaching.
Both railroads have extensive networks in the U.S., and CPKC also serves Mexico. Those operations continue even during a work stoppage.
CPKC said it remains committed to avoiding a work stoppage that would damage Canada’s economy and international reputation. “However, we must take responsible and prudent steps to prepare for a potential disruption of rail service next week,” spokesman Patrick Waldron said in a statement.
By shutting down the network, the rail company can remove dangerous goods from IT before a blockage occurs, CPKC said.
Union spokesman Christopher Monette said in an email Saturday that negotiations are continuing, but the situation has shifted from a possible strike to a “near certain lockout” by the railroad.
CPKC said negotiations would continue on Sunday with the union, which represents nearly 10,000 workers at both railroads. The company said it continues to negotiate in good faith.
Canadian National said in a statement Friday that no meaningful progress had been made in negotiations and that it hoped the union “will engage meaningfully” at a meeting scheduled for Saturday.
“CN wants a solution that allows the company to focus again on what it does best as a team: moving customers’ goods and supporting the economy,” the railway company said.
Negotiations have been ongoing since November last year and the contracts expired at the end of 2023. They were extended as the talks progressed.
According to the union, the company’s demands regarding crew scheduling, track safety and worker fatigue are the biggest sticking points.
Windau said the trucking industry currently has a lot of overcapacity and could potentially absorb some of the railroads’ transportation volumes, but, “You can’t replace all of that with trucking.”