Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) issued notices on Aug. 18, indicating disruptions in rail service will most likely begin on Thursday.
CN has formally advised the Teamsters Canada Rail Conference (TCRC) of its intention to lock out Canadian TCRC-represented employees on Aug. 22 at 00:01 ET unless an agreement or binding arbitration is achieved before that time. Meanwhile, the Teamsters have served a 72-hour strike notice to CPKC, signaling a work stoppage at the same time unless parties reach last-minute agreements.
The strike and lockout threats between CN, CPKC, and the TCRC have been escalating for months, with negotiations failing to resolve key issues such as wages, working conditions, and benefits. Despite negotiations over the weekend, CN says the parties remain “very far apart” with no meaningful progress made.
CN has already started implementing embargoes and halting shipments of certain goods beginning last week – including hazardous goods classified as toxic or poisonous “inhalation hazards” – as part of a phased shutdown plan to mitigate risks associated with the potential strike.
“CN must continue with the progressive and planned shutdown of its network, as we remain under the threat of an unpredictable strike notice. This planned shutdown helps to ensure the safety of the communities in which we operate and the safety of our customers’ goods and to optimize the network’s recovery following a labor disruption,” CN said in a release, adding that additional embargoes will be issued on Aug. 19.
The TCRC, on the other hand, accuses CPKC of unilaterally locking out members and changing the terms of collective agreements, which they argue strips workers of essential protections.
“We do not take this decision lightly, but CPKC’s reckless actions have forced our hand,” said Paul Boucher, president of the TCRC. “We’re serving strike notice to defend the rights and safety of our members.” He added that CPKC “cares little” for farmers, supply chains, or small businesses. “This highly profitable company is playing hardball with the Canadian economy, doing whatever it can to line the pockets of its managers and shareholders, no matter the consequences,” said Boucher. “We are ready to bargain, but CPKC needs to stop playing games and get serious.”
Impact on trucking, broader supply chain
Pascal Chan, senior director of transportation, infrastructure, and construction at the Canadian Chamber of Commerce, highlighted the potential severity of the situation.
“The statistic from the Railways Association of Canada is that they move $380 billion worth of goods annually, so over a billion dollars worth of goods a day, and they’re also responsible for half of the country’s exports. So yes, [there will be] massive, massive consequences, and especially with everything that goes in and out of the U.S., given that they’re our most important trading partner and ally,” he said in an interview with TruckNews.com. “If there’s a lockdown and a work stoppage and everything stops moving, that is, make no mistake, devastating for the economy. It’s absolutely terrible.”
In the event of the railway services stopping, the industry expects increased reliance on the transportation sector to carry the load. But Chan said there’s ‘nowhere near enough capacity’ in the transportation system to compensate for the suspended rail operations. “Having both class one freight railways shut down – there’s just no substitute for that. It’s really unprecedented.”
The Canadian Trucking Alliance (CTA) echoed these concerns in a statement last week. The alliance said that some rail customers have been securing additional truck capacity since February based on concerns over labor disruptions, adding that while current economic conditions have generated some additional capacity in the trucking industry, this capacity will have its limits based on commodities and lanes. CTA president Stephen Laskowski added that in the long term, potential labor disruptions of this magnitude would send the message to the world that Canada’s business environment is becoming ‘less and less appealing to invest in’.
Dave Earle, chief executive officer of B.C. Trucking Association told TruckNews.com that the reliance on rail is integral to maintaining supply chain continuity in British Columbia. He agrees with Chan, saying that in case of the strike, it will be challenging for the trucking sector in the province to take on the load.
“The looming rail strike is a very, very big issue. But again, the goods will back up, and there will be disruptions depending on how long that dispute goes on for,” Earle said. “There’s no way our industry can step in and take the load off of the railways. There’s just no way. So, the goods aren’t going to move. Just aren’t going to move.”
B.C.’s Port of Vancouver, a vital gateway for international trade and Canada’s largest port, also expressed concerns about the potential impact.
“We are concerned about the prospect of further labor disruptions impacting port and supply chain operations—damaging Canada’s economic prosperity and our reputation as a reliable trading partner,” said Alex Murno, senior communications advisor with Vancouver Fraser Port Authority, in an email.
Damage extends beyond transportation industry
The effects of a potential rail lockout extend far beyond transportation, with several key sectors facing significant risks. Chan said that some of the most vulnerable are perishable goods, construction materials, automotive supplies, and liquid transportation fuels. He added disruptions could also pose a risk to public health due to a disrupted supply of water treatment chemicals like chlorine.
However, he added that the lockout, while still very disruptive, might be less damaging than a strike.
“The thought that this could happen a little bit later, [during] the harvest season in fall and the peak retail shipping period as we get closer to Christmas and a lot of more goods start to move, that would be even worse,” Chan explained, saying that the lockout decision is aimed at providing more certainty for businesses that need to plan around potential disruptions.
“The idea [I think] is also to create more certainty for businesses that have to plan around this because if they don’t act now and then we wait until the fall, businesses will continue asking the same questions, worrying about that, trying to find alternatives to the way they do business. And that ultimately is something that we talk about a lot at the chamber, which is the impact of not being able to plan, having uncertainty about whether you’re going to be able to move goods. It’s really damaging to business.”
Looking ahead, the Canadian Chamber of Commerce, along with other industry groups, like CTA and the Private Motor Truck Council of Canada, is calling for better investment in trade infrastructure and a more effective resolution mechanism for labor disputes. Chan cites the analysis of Employment, Social Development Canada data, saying that last year Canada lost most days to labor disputes since 1986.
“So clearly, there’s a problem here, and it definitely needs to be addressed,” he said.
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