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Canadian railway work stoppage begins, threatens US supply chains

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Canadian railway work stoppage begins, threatens US supply chains

The decision early Thursday sets the stage for an unprecedented rail stoppage that could badly damage the Canadian economy

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Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) announced the lockout of their Canadian workers on Thursday after failed labor talks, resulting in a shutdown of their rail networks in the country.

The decision, confirmed by the Teamsters union representing close to 10,000 workers at the companies, sets the stage for an unprecedented rail stoppage that could badly damage the Canadian economy and have a significant effect on cross-border trade with the United States.

Canada is the world’s second-largest country by area and relies heavily on rail transport. The stoppage is set to cripple shipments of grain, potash, and coal while also slowing the transport of petroleum products, chemicals, and autos.

Industry groups had urged Prime Minister Justin Trudeau’s Liberal government to prevent a stoppage, noting Canada’s railways transport around $277 billion worth of goods annually. U.S. railroad Union Pacific said on Tuesday a stoppage would halt the movement of 2,500 rail cars across the border daily.

The Canadian and U.S. economies are highly integrated. Rail transport accounted for 14% of total bilateral trade of $382.4 billion between the countries for the first half of the year, according to the U.S. Department of Transportation.

The stoppage comes after months of talks. The union and the companies struggled to reach an agreement on key terms, with both sides accusing the other of bad faith. The union is seeking improved provisions for fatigue, rest, and scheduling, stressing the need for worker safety.

CN said it had offered better wages and a deal that would have seen employees work fewer days per month, but the “union did not respond.” CPKC said a negotiated outcome with the Teamsters Canada Rail Conference union was not within reach.

The companies said they had made final offers to the Teamsters in an attempt to avoid the stoppage and urged the union to engage in negotiations.

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