CANADIAN RAILWAYS: COLLECTIVE BARGAINING TALKS REACH BOILING POINT
The months-long, heated collective bargaining talks between Canada’s two major railways, Canadian National Railway Company (CN) and Canadian Pacific Kansas City (CPKC), and the Teamsters Canada Rail Conference (TCRC) reached a boiling point yesterday. Both CN and CPKC officially announced a labor lockout effective August 22, 2024, if the TCRC does not agree to the proposed labor agreement terms. Both Class 1 Canadian railways began slowly phasing down operations with embargoes on hazardous and time-sensitive freight last week. CPKC and CN implemented embargoes on ALL FREIGHT effective August 20th and 22nd respectively. At issue is work/life balance, safety, and wages.
RAIL STOPPAGE: IMPACT TO CANADA
A complete work stoppage at Canada’s busiest Class 1 railways will have ripple effects through Canada, the United States, and global trade despite CN and CPKC’s assertion that their operations outside Canada will continue unabated. Analysts suggest the impact on the Canadian economy may be significant as the country’s main exports – food grains, beans, potash, coal, and timber – typically move through the Canadian rail network while businesses, government, and private citizens may feel the impact of the rail lockout from the shortage of imports such as petroleum products, chemicals, and cars.
Over 35 agricultural businesses and business associations representing both U.S. and Canadian interests sent an open letter to Prime Minister Justin Trudeau on August 19, 2024, requesting government involvement to prevent a rail labor strike or lockout. The agricultural organizations stated that rail shutdowns may lead to food security concerns in addition to the potential damage to agricultural businesses that move their products and fertilizer by rail.
“A lockout or strike would lead to shutdowns or slowdowns of rail-dependent facilities resulting in harmful consequences for Canadian and American agricultural producers, the agricultural industry, and both domestic and global food security.”
Canadian businesses whose employees use commuter rail service may also feel the squeeze of a rail operations stoppage. Analysts estimate that 33,000 Canadian rail commuters will be without transport in the event rail dispatchers are locked out or go on strike. Commuter rail lines that may be impacted include TransLink’s West Coast Express in the Vancouver area, Metrolinx’s Milton line and the Lakeshore line’s Hamilton GO station in the Greater Toronto Area, and Exo’s Candiac, Saint-Jérôme and Vaudreuil/Hudson lines in the Montreal area.
RIPPLE EFFECT: NORTH AMERICA, GLOBAL TRADE
Both CN and CPKC rail networks connect with key U.S. rail and shipping hubs such as Chicago, New Orleans, Minneapolis, and Memphis. CPKC’s network also extends further south connecting with ports on both the east and west coasts of Mexico. The ripple effect from work stoppages by Canada’s busiest railways will impact the U.S., North America, and the global trade networks. Major Class 1 railways in the U.S. are reporting potential service impacts to their customers including delays, schedule changes, and potential congestion at both inland intermodal and ocean ports. The effects will ripple throughout the North American and global network leading to potential schedule changes, increased port congestion, and equipment scarcity. U.S. Senator Kevin Cramer spoke with the Canadian Ambassador to the U.S., Katherine Hillman stressing the interdependence between the U.S. and Canadian rail networks stating, “Our two countries enjoy close economic, trade, agricultural, and security ties, but we are very different politically, and in our traditions. I stressed the importance of timely intervention to avoid a work stoppage rather than respond to a work stoppage, a big difference. I’d rather avoid one than respond to one.”
CANADA GOVERNMENT RESPONSE
Pressure from the railways, U.S. government, business lobbyists in both Canada and the U.S., and the Canadian public continues to mount as the collective bargaining talks reach the August 22, 2024 deadline and a complete Canadian Class 1 rail network outage looms. In response, Canadian Labor Minister Steven MacKinnon and federal mediators are meeting with the parties on August 20, 2024, and August 21, 2024.
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