Rail Shutdowns in Canada: Disruptions and Impacts on Supply Chains
Key Highlights:
Worker Lockout: Over 9,000 workers at Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) have been locked out following failed contract negotiations.
Economic Threat: The shutdown threatens billions of dollars in economic losses and could severely disrupt North American supply chains.
Supply Chain Disruptions: Key industries are affected, with significant impacts on goods transport and trade routes.
Commuter Impact: Major commuter rail lines in Toronto, Vancouver, and Montreal have been halted, affecting tens of thousands of daily passengers.
Brief Summary: Unprecedented Rail Shutdown
Canada’s two largest railways, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), have locked out over 9,000 workers, resulting in a major halt in rail operations. This unprecedented shutdown could lead to billions in economic damage and disrupt both domestic and cross-border trade. The conflict arose from failed negotiations over a new contract, with both rail companies and the Teamsters union blaming each other for the work stoppage.
CN’s tri-coastal network spans Canada from east to west and down through the Midwest to the Gulf of Mexico.
CPKC is the only transnational rail network in North America. CPKC moves essential goods across our 20,000-mile network to support economic growth throughout Canada, the U.S. and Mexico.
Description of the Conflict: Negotiations and Disputes
The lockout followed months of failed negotiations between CN, CPKC, and the Teamsters union, centering on issues like shift scheduling and fatigue provisions. CN and CPKC stated that the lockout was necessary after negotiations reached an impasse.
CN emphasized the need for a safe and orderly shutdown due to the lack of agreement or binding arbitration.
CPKC expressed that binding arbitration was the only viable way forward to protect supply chains and avoid further disruption.
In contrast, Teamsters Canada Rail Conference President Paul Boucher accused the rail companies of prioritizing profits over safety and worker welfare. Prime Minister Justin Trudeau called for continued negotiations, highlighting the widespread impact on Canadian workers and businesses.
Industry and trade organizations warned of severe economic consequences and potential damage to Canada’s reputation as a trading partner.
Background: Context of the Shutdown
For the first time in Canada, freight traffic on its two largest railways has simultaneously stopped, disrupting supply chains that were already strained from pandemic-related issues and a previous port strike. The lockout of 9,300 workers by CN and CPKC came after the expiration of their labor agreements at the end of last year. The Teamsters Canada Rail Conference has mobilized picket lines across the country, adding to the complexity of the situation.
Rail Shutdowns Supply Chain Affectations: Economic and Industry Impact
The rail shutdown has caused significant disruptions in the supply chain, including:
Goods Transport: CN and CPKC handle approximately $1 billion in goods daily. The shutdown has led to pre-emptive halts in shipments to prevent cargo stranding and has caused U.S. railways to turn away Canada-bound shipments.
Affected Industries: Key sectors impacted include agriculture, mining, energy, retail, automaking, and construction. For example, agricultural shipments, including grains and fertilizers, have been halted, affecting food supply and farming.
Trade Routes: Canadian ports are facing potential congestion as cargo remains unmoved. Some shipments are being rerouted to U.S. terminals, which could disrupt trade routes and affect the flow of exports to the U.S.
Logistical Strain: The disruption is impacting the supply of frozen and refrigerated goods, creating potential delays and challenges in the North American supply chain.
Commuting Affectations: Impact on Public Transit
The rail shutdown has also halted commuter services on CPKC-owned lines serving major cities such as Toronto, Vancouver, and Montreal. This disruption has affected tens of thousands of daily passengers, exacerbating the impact of the rail stoppage on public transportation.
Sources
https://www.cpkcr.com/en/our-advantage/connecting-a-continent
https://www.cpkcr.com/en/about-cpkc
https://www.reuters.com/business/autos-transportation/canadian-national-railways-canadian-pacific-lock-out-teamsters-union-workers-2024-08-22/
https://www.bbc.com/news/articles/cy76nnpyrnlo
