Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) are already taking the opening steps to shutting down their rail networks as the clock ticks on a potential strike later this month.
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Due to what CN called “the absence of progress at the negotiating table and the absence of arbitration,” the railroad has initiated the first step of a “phased and progressive” shutdown of its Canadian rail network in halting the transport of certain hazardous goods.
On Monday, CN put the kibosh on hazardous goods originating in the U.S. from entering Canada. Goods out of Canada will cease movement starting at 12:01 a.m. Thursday.
The railroad’s rationale for the embargo pointed out that while the cargo was safely transported by rail every day, it couldn’t be left out on the railroad unsupervised in the event of a labor stoppage.
CPKC issued its embargo for all hazardous goods that are toxic by inhalation on Monday to allow this traffic to safely exit the rail network prior to any work stoppage. Other embargoes will be issued during the cooling off period, as necessary.
Unlike CPKC, which first said it would prep this “safe and orderly shutdown of railway operations” in its Friday collective bargaining update, CN was more descriptive of the types of goods that would no longer be transported ahead of the possible stoppage.
CN gave five specific examples of chemicals that were impacted by the embargo: chlorine used to purify drinking water and used household cleaners; bromine used as a cleaning agent; ammonia used as fertilizer in farms; chloropicrin, a fungicide used to fumigate stored grain and to treat soil against fungi, insects and nematodes; and ethylene, a product used as an anesthetic, a refrigerant and to make other chemicals.
In line with the embargoes from both railroads, Norfolk Southern and CSX notified customers that it would halt the movement of certain hazardous materials to and from CN and CPKC.
To counter the strike threat of the Teamsters Canada Rail Conference, which represents 9,300 workers across the two railroads, CN and CPKC said they would lock out the employees if the parties didn’t agree upon a new contract.
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The negotiations, and the possibility of a strike, had been largely stalled from May through August after then-Labour Minister Seamus O’Regan requested the Canada Industrial Relations Board to review whether labor action might have national safety implications.
The board determined Friday that a work stoppage posed no “serious danger” to public health and safety, enabling a strike date to occur as early as Aug. 22. In kind, CN and CPKC set the same date as the start of their own lockout. For a strike to occur that day, the Teamsters first need to file a 72-hour notice on Aug. 19.
Negotiations opened back up on Aug. 7, two days ahead of the board’s ruling, with recently sworn in Labour Minister Steven MacKinnon urging the two sides to hash out a deal.
The two prior collective agreements for workers at CN and CPKC expired on Dec. 31, 2023, but have been extended under Canadian law until the parties reach a new deal.
After the railroads unveiled their embargo plans, The Business Council of Alberta urged the Canadian federal government to intervene in the negotiations, like national counterpart the Business Council of Canada and fellow trade association the Canadian Manufacturers & Exporters.
“A stoppage in rail commerce would be simply too costly to Canadians at this critical time—harming our economy and worsening the affordability issues affecting so many,” the The Business Council of Alberta wrote. “It is the role of the federal government to protect the broad interests of all Canadians, and those interests would be best served at this time by keeping our railways rolling.”
Importers have already been shifting some freight away from the Canadian West Coast ports to their U.S. counterparts due to the concerns. Although U.S. rail and truck carriers and Canadian trucking firms can likely pick up most of the impacted freight, this could lead to tighter shipping capacity, potential delays and higher shipping costs.
“The last rail strike sent rates skyrocketing for freight moving across Canada,” according to C.H. Robinson’s Aug. 1 freight market update. “Prices tripled and even quadrupled during winter 2021-2022. A potential strike really dampens Canada as a viable trade partner internationally and could be worrisome for companies looking to sell and expand into Canada, due to the unknown cost of transportation and potential supply chain disruption that could hinder delivery.”
Canadian Railroads Threaten Worker Lockout if No Deal Done by Aug. 22
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