Labor dispute stops Canadian rail freight and could cause economic disruption in U.S.
Prime Minister Justin Trudeau delivers a statement on the potential rail strike following an event in Gatineau, Quebec, on Wednesday, Aug. 21, 2024.Sean Kilpatrick/AP/The Canadian Press
Trudeau said Labor Minister Steven MacKinnon met with both sides in the CN talks in Montreal on Tuesday and would be on hand for the CPKC talks in Calgary, Alberta. MacKinnon later said he wrapped up his meetings with the rail companies and the Teamsters.
'Workers, farmers, commuters and businesses can’t wait. Canadians need urgency at the table. The parties need to get deals done now," he posted on the social platform X.
The negotiations are stuck on issues related to the way rail workers are scheduled and concerns about rules designed to prevent fatigue and provide adequate rest to train crews. Both railroads had proposed shifting away from the existing system, which pays workers based on the miles in a trip, to an hourly system they said would make it easier to provide predictable time off.
The railroads said their contract offers have included raises consistent with recent deals in the industry. Engineers make about $150,000 a year on Canadian National while conductors earn $120,000, and CPKC says its wages are comparable.
Similar quality-of-life concerns about demanding schedules and the lack of paid sick time nearly led to a U.S. rail strike two years ago until Congress and President Joe Biden intervened and forced the unions to accept a deal.
Canadian workers reach deal to end strike that shut down Great Lakes shipping artery
Manufacturing companies may have to scale back or even shut down production if they can't get rail service, while ports and grain elevators will quickly become clogged with shipments waiting to move. And if the dispute drags on for a couple weeks, water treatment plants all across Canada might have to scramble without new shipments of chlorine.
“If railways are not picking up the goods that are coming in by ships, then pretty soon your terminals get filled up. And at that point you cannot take any vessels at the terminal anymore,” said Victor Pang, chief financial officer at the Vancouver Fraser Port Authority.
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He pointed to the 13-day strike by 7,400 British Columbia dockworkers last summer, which manufacturers said blocked the flow of $500 million Canadian (US$368 million) worth of goods each day.
Some companies would undoubtedly turn to trucking to keep some of their products moving, but there's no way to make up for the volume railroads deliver. It would take some 300 trucks to haul everything just one train can carry.
August 22, 2024
By The Associated Press
A worker climbs aboard a locomotive at a CPKC rail yard on Wednesday, Aug. 21, 2024, in Kansas City, Mo.Charlie Riedel/AP
TORONTO — Both of Canada’s major freight railroads have come to a full stop because of a contract dispute with their workers, an impasse that could bring significant economic harm to businesses and consumers in Canada and the U.S. if the trains don’t resume running soon.
Canadian National and CPKC railroads both locked out their employees after the deadline of 12:01 a.m. Eastern Thursday passed without new agreements with the Teamsters Canada Rail Conference that represents some 10,000 engineers, conductors and dispatchers.
All rail traffic in Canada and all shipments crossing the U.S. border have stopped, although CPKC and CN’s trains will continue to operate in the U.S. and Mexico.
Billions of dollars of goods each month move between Canada and the U.S. via rail, according to the U.S. Department of Transportation.
“If rail traffic grinds to a halt, businesses and families across the country will feel the impact," Jay Timmons, president and CEO of the National Association of Manufacturers, said in a statement. "Manufacturing workers, their communities and consumers of all sorts of products will be left reeling from supply chain disruptions.”
There will be other impacts as well, including on the more than 30,000 commuters in Vancouver, Toronto and Montreal who will be scrambling to find a new way into work because their trains won’t be able to operate over CPKC’s tracks while the railroad is shut down.
Business groups had urged the government to intervene, but Prime Minister Justin Trudeau has declined to force both sides into arbitration yet.
CN said it was waiting for a response on one final offer made late Wednesday when it locked the workers out. CPKC spokesperson Patrick Waldron said the union rejected its last offer that CEO Keith Creel made at the table in person. Both railroads have said they would end the lockout if the union agreed to binding arbitration.
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“Despite the lockout, the Teamsters remain at the bargaining table with both companies,” the union said in a statement.
CN had been negotiating with the Teamsters for nine months while CPKC had been trying to reach an agreement for a year, the unions said.
Many companies across all industries rely on railroads to deliver their raw materials and finished products, so without regular rail service they may have to cut back or even close.
That’s why the U.S. government kept rail workers from going on strike two years ago and forced them to accept a contract despite their concerns about demanding schedules and the lack of paid sick time.
Author Interviews
How a quest for greater profits upended the global supply chain during the pandemic
Canada’s railroads have sometimes shut down briefly in the past during contract negotiations — most recently CPKC was offline for a couple days in March 2022 — but it is rare for both railroads to stop at the same time. The impact on businesses will be magnified because both CN and CPKC have stopped.
Both CN and CPKC had been gradually shutting down since last week ahead of the contract deadline. Shipments of hazardous chemicals and perishable goods were the first to stop, so they wouldn't be stranded somewhere on the tracks.
As the Canadian contract talks were coming down to the wire, one of the biggest U.S. railroads, CSX, broke with the U.S. freight rail industry’s longstanding practice of negotiating jointly for years with the unions. CSX reached a deal with several of its 13 unions that cover 25% of its workers ahead of the start of national bargaining later this year.
The new five-year contracts will provide 17.5% raises, better benefits and vacation time if they are ratified. The unions that have signed deals with CSX include part of the SMART-TD union representing conductors in one region, the Transportation Communications Union, the Brotherhood of Railway Carmen and the Transport Workers Union. TCU President Artie Maratea said he’s proud that his union reached a deal “without years of unnecessary delay and stall tactics.”
Trudeau has been reluctant to force arbitration because he doesn't want to offend the Teamsters Canada Rail Conference and other unions, but he urged both sides to reach a deal Wednesday because of the tremendous economic damage that would follow a full shutdown.
“It is in the best interest of both sides to continue doing the hard work at the table," Trudeau said to reporters in Gatineau, Quebec. “Millions of Canadians, workers, farmers, businesses, right across the country, are counting on both sides to do the work and get to a resolution.”
Numerous business groups have been urging Trudeau to act.
By The Associated Press
A worker climbs aboard a locomotive at a CPKC rail yard on Wednesday, Aug. 21, 2024, in Kansas City, Mo.Charlie Riedel/AP
TORONTO — Both of Canada’s major freight railroads have come to a full stop because of a contract dispute with their workers, an impasse that could bring significant economic harm to businesses and consumers in Canada and the U.S. if the trains don’t resume running soon.
Canadian National and CPKC railroads both locked out their employees after the deadline of 12:01 a.m. Eastern Thursday passed without new agreements with the Teamsters Canada Rail Conference that represents some 10,000 engineers, conductors and dispatchers.
All rail traffic in Canada and all shipments crossing the U.S. border have stopped, although CPKC and CN’s trains will continue to operate in the U.S. and Mexico.
Billions of dollars of goods each month move between Canada and the U.S. via rail, according to the U.S. Department of Transportation.
“If rail traffic grinds to a halt, businesses and families across the country will feel the impact," Jay Timmons, president and CEO of the National Association of Manufacturers, said in a statement. "Manufacturing workers, their communities and consumers of all sorts of products will be left reeling from supply chain disruptions.”
There will be other impacts as well, including on the more than 30,000 commuters in Vancouver, Toronto and Montreal who will be scrambling to find a new way into work because their trains won’t be able to operate over CPKC’s tracks while the railroad is shut down.
Business groups had urged the government to intervene, but Prime Minister Justin Trudeau has declined to force both sides into arbitration yet.
CN said it was waiting for a response on one final offer made late Wednesday when it locked the workers out. CPKC spokesperson Patrick Waldron said the union rejected its last offer that CEO Keith Creel made at the table in person. Both railroads have said they would end the lockout if the union agreed to binding arbitration.
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“Despite the lockout, the Teamsters remain at the bargaining table with both companies,” the union said in a statement.
CN had been negotiating with the Teamsters for nine months while CPKC had been trying to reach an agreement for a year, the unions said.
Many companies across all industries rely on railroads to deliver their raw materials and finished products, so without regular rail service they may have to cut back or even close.
That’s why the U.S. government kept rail workers from going on strike two years ago and forced them to accept a contract despite their concerns about demanding schedules and the lack of paid sick time.
Author Interviews
How a quest for greater profits upended the global supply chain during the pandemic
Canada’s railroads have sometimes shut down briefly in the past during contract negotiations — most recently CPKC was offline for a couple days in March 2022 — but it is rare for both railroads to stop at the same time. The impact on businesses will be magnified because both CN and CPKC have stopped.
Both CN and CPKC had been gradually shutting down since last week ahead of the contract deadline. Shipments of hazardous chemicals and perishable goods were the first to stop, so they wouldn't be stranded somewhere on the tracks.
As the Canadian contract talks were coming down to the wire, one of the biggest U.S. railroads, CSX, broke with the U.S. freight rail industry’s longstanding practice of negotiating jointly for years with the unions. CSX reached a deal with several of its 13 unions that cover 25% of its workers ahead of the start of national bargaining later this year.
The new five-year contracts will provide 17.5% raises, better benefits and vacation time if they are ratified. The unions that have signed deals with CSX include part of the SMART-TD union representing conductors in one region, the Transportation Communications Union, the Brotherhood of Railway Carmen and the Transport Workers Union. TCU President Artie Maratea said he’s proud that his union reached a deal “without years of unnecessary delay and stall tactics.”
Trudeau has been reluctant to force arbitration because he doesn't want to offend the Teamsters Canada Rail Conference and other unions, but he urged both sides to reach a deal Wednesday because of the tremendous economic damage that would follow a full shutdown.
“It is in the best interest of both sides to continue doing the hard work at the table," Trudeau said to reporters in Gatineau, Quebec. “Millions of Canadians, workers, farmers, businesses, right across the country, are counting on both sides to do the work and get to a resolution.”
Numerous business groups have been urging Trudeau to act.
Prime Minister Justin Trudeau delivers a statement on the potential rail strike following an event in Gatineau, Quebec, on Wednesday, Aug. 21, 2024.Sean Kilpatrick/AP/The Canadian Press
Trudeau said Labor Minister Steven MacKinnon met with both sides in the CN talks in Montreal on Tuesday and would be on hand for the CPKC talks in Calgary, Alberta. MacKinnon later said he wrapped up his meetings with the rail companies and the Teamsters.
'Workers, farmers, commuters and businesses can’t wait. Canadians need urgency at the table. The parties need to get deals done now," he posted on the social platform X.
The negotiations are stuck on issues related to the way rail workers are scheduled and concerns about rules designed to prevent fatigue and provide adequate rest to train crews. Both railroads had proposed shifting away from the existing system, which pays workers based on the miles in a trip, to an hourly system they said would make it easier to provide predictable time off.
The railroads said their contract offers have included raises consistent with recent deals in the industry. Engineers make about $150,000 a year on Canadian National while conductors earn $120,000, and CPKC says its wages are comparable.
Similar quality-of-life concerns about demanding schedules and the lack of paid sick time nearly led to a U.S. rail strike two years ago until Congress and President Joe Biden intervened and forced the unions to accept a deal.
Canadian workers reach deal to end strike that shut down Great Lakes shipping artery
Manufacturing companies may have to scale back or even shut down production if they can't get rail service, while ports and grain elevators will quickly become clogged with shipments waiting to move. And if the dispute drags on for a couple weeks, water treatment plants all across Canada might have to scramble without new shipments of chlorine.
“If railways are not picking up the goods that are coming in by ships, then pretty soon your terminals get filled up. And at that point you cannot take any vessels at the terminal anymore,” said Victor Pang, chief financial officer at the Vancouver Fraser Port Authority.
Sponsor Message
He pointed to the 13-day strike by 7,400 British Columbia dockworkers last summer, which manufacturers said blocked the flow of $500 million Canadian (US$368 million) worth of goods each day.
Some companies would undoubtedly turn to trucking to keep some of their products moving, but there's no way to make up for the volume railroads deliver. It would take some 300 trucks to haul everything just one train can carry.
Canada's largest railroads have ground to a halt. Here's what you need to know.
August 22, 2024
Canada's two largest railroads have ground to a halt after an ongoing labor dispute couldn't be resolved before the overnight deadline Thursday.
Canadian National and Canadian Pacific Kansas City (CPKC) have shut down all their trains in Canada and stopped shipments into the U.S. after failing to reach new agreements with the Teamsters Canada Rail Conference union. The impasse could bring significant economic harm to business and consumers in both countries, which rely on billions of dollars of goods running on trains each month.
The big questions are how long the shutdown will last and whether the government will intervene. Some Wall Street analysts said that previous rail halts suggest the impasse might be resolved in a matter of days.
"While a longer strike duration period is a possibility, we think history makes the probability of a shorter strike period much more likely (i.e., less than a week and more likely a few days of work stoppage once strike occurs)," Goldman Sachs analysts said in an August 20 report.
Here's what to know.
What is the dispute about?
It boils down to a labor-contract dispute.
CPKC and CN locked out nearly 10,000 engineers, conductors and dispatchers after the deadline passed. As a result, none of their trains are moving in Canada, but both railroads continue operating in the United States and Mexico.
Bargaining resumed Thursday, with picketing already underway. Both railroads have said they would end the lockout if the union agrees to binding arbitration. But in a Thursday post to X, Teamsters Canada Rail Conference President Paul Boucher accused CPKC and CN of "holding the Canadian economy hostage" in order to pressure the government to impose binding arbitration.
What are the railroads offering?
Both railroads are offering raises to what are already well-paying jobs that they say are consistent with other recent deals in the industry. The negotiations are primarily hung up on issues related to worker schedules and concerns about rules designed to prevent train crew fatigue.
CN had been negotiating with the Teamsters for nine months while CPKC had been trying to reach an agreement for a year, the unions said. While the full stop came to head Thursday, both railroads began shutting down shipping networks last week.
What is the impact on businesses and consumers?
Billions of dollars of goods move between Canada and the U.S. via rail each month. The current impasse is halting all rail traffic from CPKC and CN in Canada as well as shipments from these two railroads crossing into the U.S., although trains will continue operating within in the U.S. and Mexico.
Chemical businesses and food distributors will be among the first to be affected. The railroads already stopped accepting new shipments of hazardous materials when they began gradually shutting down last week, in order to keep dangerous commodities from being stranded along the tracks. Perishable goods were also put on hold early.
But Greg Moffatt, executive vice president of the Chemistry Industry Association of Canada, said most chemical manufacturers have said they will be OK for about a week. It just depends on how many supplies they have on hand, how much room they have to store their products, and whether they can cut production.
The auto industry may see problems, too. If the lockouts last more than two weeks, people who want to buy a new vehicle in the U.S. and Canada could start to see spot shortages, industry analysts say.
That's because General Motors, Stellantis, Ford, Honda and Toyota either assemble whole vehicles in Canada or ship engines and other components across the border. About 80% of vehicles put together in Canada are shipped to the U.S., largely by rail. Michael Robinet, executive director at S&P Global Mobility, notes that most auto assembly plants operate on "just-in-time" inventories of parts — making it difficult to stockpile farther out.
Automakers could try to divert vehicles built overseas to U.S. ports, or ship parts over the border by truck, but capacity is limited, Robinet added.
Is there an impact on the U.S.?
Yes, although the rail hike will likely only disrupt a small part of U.S. trade, according to Goldman Sachs analysts, which estimated the disruption at 1% to 2% of total U.S. shipping.
Some shipments between the U.S. and Canada are likely to be rerouted onto trucks, while other companies may bypass the situation by diverting shipments into U.S. ports, they added.
August 22, 2024
Canada's two largest railroads have ground to a halt after an ongoing labor dispute couldn't be resolved before the overnight deadline Thursday.
Canadian National and Canadian Pacific Kansas City (CPKC) have shut down all their trains in Canada and stopped shipments into the U.S. after failing to reach new agreements with the Teamsters Canada Rail Conference union. The impasse could bring significant economic harm to business and consumers in both countries, which rely on billions of dollars of goods running on trains each month.
The big questions are how long the shutdown will last and whether the government will intervene. Some Wall Street analysts said that previous rail halts suggest the impasse might be resolved in a matter of days.
"While a longer strike duration period is a possibility, we think history makes the probability of a shorter strike period much more likely (i.e., less than a week and more likely a few days of work stoppage once strike occurs)," Goldman Sachs analysts said in an August 20 report.
Here's what to know.
What is the dispute about?
It boils down to a labor-contract dispute.
CPKC and CN locked out nearly 10,000 engineers, conductors and dispatchers after the deadline passed. As a result, none of their trains are moving in Canada, but both railroads continue operating in the United States and Mexico.
Bargaining resumed Thursday, with picketing already underway. Both railroads have said they would end the lockout if the union agrees to binding arbitration. But in a Thursday post to X, Teamsters Canada Rail Conference President Paul Boucher accused CPKC and CN of "holding the Canadian economy hostage" in order to pressure the government to impose binding arbitration.
What are the railroads offering?
Both railroads are offering raises to what are already well-paying jobs that they say are consistent with other recent deals in the industry. The negotiations are primarily hung up on issues related to worker schedules and concerns about rules designed to prevent train crew fatigue.
CN had been negotiating with the Teamsters for nine months while CPKC had been trying to reach an agreement for a year, the unions said. While the full stop came to head Thursday, both railroads began shutting down shipping networks last week.
What is the impact on businesses and consumers?
Billions of dollars of goods move between Canada and the U.S. via rail each month. The current impasse is halting all rail traffic from CPKC and CN in Canada as well as shipments from these two railroads crossing into the U.S., although trains will continue operating within in the U.S. and Mexico.
Chemical businesses and food distributors will be among the first to be affected. The railroads already stopped accepting new shipments of hazardous materials when they began gradually shutting down last week, in order to keep dangerous commodities from being stranded along the tracks. Perishable goods were also put on hold early.
But Greg Moffatt, executive vice president of the Chemistry Industry Association of Canada, said most chemical manufacturers have said they will be OK for about a week. It just depends on how many supplies they have on hand, how much room they have to store their products, and whether they can cut production.
The auto industry may see problems, too. If the lockouts last more than two weeks, people who want to buy a new vehicle in the U.S. and Canada could start to see spot shortages, industry analysts say.
That's because General Motors, Stellantis, Ford, Honda and Toyota either assemble whole vehicles in Canada or ship engines and other components across the border. About 80% of vehicles put together in Canada are shipped to the U.S., largely by rail. Michael Robinet, executive director at S&P Global Mobility, notes that most auto assembly plants operate on "just-in-time" inventories of parts — making it difficult to stockpile farther out.
Automakers could try to divert vehicles built overseas to U.S. ports, or ship parts over the border by truck, but capacity is limited, Robinet added.
Is there an impact on the U.S.?
Yes, although the rail hike will likely only disrupt a small part of U.S. trade, according to Goldman Sachs analysts, which estimated the disruption at 1% to 2% of total U.S. shipping.
Some shipments between the U.S. and Canada are likely to be rerouted onto trucks, while other companies may bypass the situation by diverting shipments into U.S. ports, they added.
Does it impact more than cargo?
Yes, as more than 30,000 commuters in Vancouver, Toronto and Montreal were the first to feel the pain of the lockouts. They had to scramble Thursday morning to find ways to get to work because their commuter trains aren't operating while CPKC is shut down.
What is the Canadian government doing?
Prime Minister Justin Trudeau declined to immediately force the parties into binding arbitration, out of fear of offending the Teamsters Canada Rail Conference and other unions.
But that could change.
"We are not taking this lightly because Canadians across the country are worried about it," Trudeau told reporters in Sherbrooke, Quebec, Thursday. He added that "we will have more to say" shortly on finding a solution.
Still, the lack of early government intervention angered business leaders.
"When you completely shut down the coast-to-coast supply chain, nothing good can come from that," said John Corey, president of the Freight Management Association of Canada. "This is infuriating. People are going to lose their jobs."
How long will the rail halt last?
It's hard to predict. Most previous Canadian rail stoppages have only lasted a day or two and usually involved only one of the big railroads, but some have stretched as long as eight or nine days.
Edward Jones analyst Jeff Windau said the biggest problems will emerge if the lockout drags on. But many companies will likely be able to withstand a short disruption, partly because of changes they made to their supply chains after the pandemic, he said.
Still, pressure for government intervention will increase as the lockout continues, with the impact magnified because both railroads are stopped.
For now, all eyes are on the ongoing contract talks and whether there will be any significant government intervention.
"It won't take much time for it to become untenable," said Daniel Béland, a political science professor at McGill University, noting potential economic consequences for both Canada and the U.S. "Pressures to end it ASAP come from both sides of the border and they can only increase rapidly over time if and when the situation on the ground deteriorates."
Yes, as more than 30,000 commuters in Vancouver, Toronto and Montreal were the first to feel the pain of the lockouts. They had to scramble Thursday morning to find ways to get to work because their commuter trains aren't operating while CPKC is shut down.
What is the Canadian government doing?
Prime Minister Justin Trudeau declined to immediately force the parties into binding arbitration, out of fear of offending the Teamsters Canada Rail Conference and other unions.
But that could change.
"We are not taking this lightly because Canadians across the country are worried about it," Trudeau told reporters in Sherbrooke, Quebec, Thursday. He added that "we will have more to say" shortly on finding a solution.
Still, the lack of early government intervention angered business leaders.
"When you completely shut down the coast-to-coast supply chain, nothing good can come from that," said John Corey, president of the Freight Management Association of Canada. "This is infuriating. People are going to lose their jobs."
How long will the rail halt last?
It's hard to predict. Most previous Canadian rail stoppages have only lasted a day or two and usually involved only one of the big railroads, but some have stretched as long as eight or nine days.
Edward Jones analyst Jeff Windau said the biggest problems will emerge if the lockout drags on. But many companies will likely be able to withstand a short disruption, partly because of changes they made to their supply chains after the pandemic, he said.
Still, pressure for government intervention will increase as the lockout continues, with the impact magnified because both railroads are stopped.
For now, all eyes are on the ongoing contract talks and whether there will be any significant government intervention.
"It won't take much time for it to become untenable," said Daniel Béland, a political science professor at McGill University, noting potential economic consequences for both Canada and the U.S. "Pressures to end it ASAP come from both sides of the border and they can only increase rapidly over time if and when the situation on the ground deteriorates."
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