Canada's
two largest railroads are starting to shut down their shipping networks as a labor dispute with the
Teamsters union threatens to cause lockouts or strikes that would disrupt
cross-border trade with the U.S.
Both the Canadian
Pacific Kansas City and Canadian National railroads, which haul
millions of tons of freight across the border, have stopped taking certain
shipments of hazardous materials and refrigerated products. Both
are threatening to lock out Teamsters Canada workers starting Thursday 15
August if deals are not reached. On Tuesday, CPKC will stop all shipments that
start in Canada and all shipments originating in the U.S. that are headed for
Canada, the railroad said.
The Canadian Press
reported that Canadian National barred container imports from U.S. partner
railroads.
Jeff
Windau, industrials analyst for Edward Jones & Co., said his firm expects
work stoppages to last only a few days, but if they go longer, there could be
significant supply chain disruptions. "If something would carry on more of
a longer term in nature, then I think there are some significant potential
issues just given the amount of goods that are handled each day," Windau
said. "By and large the rails touch
pretty much all of the economy."
Both
railroads have extensive networks in the U.S., and CPKC also serves Mexico.
Those operations will keep running even if there is 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 rail service interruption next week," spokesman
Patrick Waldron said in a statement. Shutting down the network will allow the
railroad to get dangerous goods off of its network before any stoppage, CPKC
said.
Union spokesman
Christopher Monette said in an email that negotiations continue, but the
situation has shifted from a possible strike to "near certain
lockout" by the railroads.
Negotiations
have been ongoing since last November, and contracts expired at the end of
2023. They were extended as talks continued.
Concerns
about the quality of life for rail workers dealing with demanding schedules and
no paid sick time nearly led to a U.S. rail strike two years ago before
Congress intervened and blocked a walkout. The major U.S. railroads have made
progress since then in offering paid sick time to most rail workers and trying
to improve schedules.
Windau said the trucking industry currently
has a lot of excess capacity and might be able to make up some of the
railroads' shipping volumes, but,
"You're not going to be able to replace all of that with trucking."