Canada tells rail companies, union to work harder to avert crippling stoppage

By David Ljunggren and Promit Mukherjee

OTTAWA (Reuters) -The Canadian government, which is trying to head off a crippling rail transport stoppage, on Monday called on the country's two main railway companies and the Teamsters union to work harder to reach labour deals.

Unless labour agreements are reached, both Canadian National Railway and Canadian Pacific Kansas City will shut all freight rail services in Canada at the same time early on Thursday for the first time in history.

Canada - the world's second-largest country by territory - relies heavily on CN and CP to ship food grains, fertilizers and other commodities, along with manufactured goods like chemicals and automobiles. The country's main business lobby group said it estimates losses would hit C$1 billion ($733 million) a day in case the rail stoppages proceed.

Federal mediators are working with the companies and the union, but those involved in the discussion say little progress has been made. The union says CN Rail and CPKC want to dilute safety provisions, a charge the companies deny.

In a post on the X social media platform, federal Labour Minister Steve MacKinnon said the effects of the talks would be borne by all Canadians.

"The parties must do the hard work necessary to reach agreements at the bargaining table and prevent a full work stoppage," he said.

MacKinnon has the power to force the union and railway companies into binding arbitration, but has so far said he wants them to sort out their differences at the negotiating table.

In a statement on Monday, the left-leaning New Democratic Party called on Prime Minister Justin Trudeau to not intervene in the labour disputes. Trudeau's government is being kept in power by the New Democratic Party, which has traditionally enjoyed strong union support.

Labor talks started early this year, but progress has been slow, with both the union and the companies accusing each other of bad faith.

CN Rail and CPKC have already stopped accepting shipments of hazardous goods and have begun phased shutdowns of operations in Canada.

Maersk said on Monday it would stop accepting some Canada-bound shipments.

Separately, U.S. freight forwarder C.H. Robinson, said on Monday it was diverting some of its U.S. customers' ocean cargo away from Canadian ports as the threat of a rail strike looms.

"Both railroads simultaneously being out of commission would paralyze the ports and put instant pressure on trucking," the company said.

Canada is a major agricultural producer, and farmers will start bringing in their harvests in August and September.

Quorum Corp, which monitors grain handling and transportation, said daily volumes in early September would increase to 138,000 metric tons with a value of around C$75 million.

"After a period of time, sales will be lost and the value of Canada's grain will decrease ... the largest concern is a further degradation of Canada's reliability as a supplier, which is already suffering due to past labor disruptions," Quorum President Mark Hemmes said in an emailed statement.

Refrigerated containers with meat and some highly perishable produce are of particular concern because delays would likely mean spoilage. Shippers of such items have already begun holding back containers, said Peter Friedmann, an executive director at the Agriculture Transportation Coalition.

In a statement, the Greater Vancouver Board of Trade warned a full work stoppage would drive up prices and exacerbate an affordability crisis in the country.

"Every facet of daily life would be impacted as our national economy grinds to a halt," it said.

($1 = 1.3641 Canadian dollars)

(Reporting by David Ljunggren and Promit Mukherjee in Ottawa; Additional reporting by Karl Plume in Chicago; Abhijith Ganapavaram and Abhinav Parmar in Bengaluru; Anna Paperny in Toronto and Allison Lampert in Montreal; Editing by Franklin Paul, Paul Simao and Jonathan Oatis)