Less than a day into a nationwide railroad shutdown , the Canadian federal government is intervening by calling on an independent arbitrator to hash out a long-running contract dispute between the country’s two major railroads and their union workers.
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Labour Minister Steve MacKinnon announced Thursday afternoon that he has sent the ongoing labor negotiations to binding arbitration and ordered operations on both Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) to resume as quickly as possible.
This means the Teamsters-represented 9,300 workers across both railroads that have been locked out since 12:01 a.m. Thursday will be back on the job—but it won’t be immediately.
MacKinnon said during a press conference that he thinks trains will begin rolling again “within days,” and that he expects a resolution “very quickly.”
Sourcing Journal reached out to CN and CPKC. CN officially ended its lockout at 6 p.m.
A labor stoppage, either by an anticipated strike or a lockout by the two railroads, temporarily backlogged the movement of goods across the country’s supply chain, including grain, lumber, iron ore, coal and consumer goods. One report from research firm Anderson Economic Group said a three-day strike would cause $407 million Canadian dollars ($300 million) of economic damage.
In total, $1 billion Canadian dollars ($732 million) of goods are transported by rail each day, according to the Business Council of Canada.
“It is a big deal for the economy,” Matt Muenster, chief economist at transportation management solutions provider Breakthrough, told Sourcing Journal Wednesday afternoon before the lockout went into effect. “I think the major impact is that headline number is probably going to drive the federal government to act sooner rather than later, and ensure that this doesn’t last very long, because it’s in their best interest to keep this freight moving on the rail.”
Ahead of the arbitration decision, Danny Ramon, director of intelligence and response at supply chain risk management provider Overhaul, said Thursday that he expected “minimal” disruption if there was a resolution to the shutdown this week.
“If it were to end tomorrow, we probably see pretty minimal disruption, except for the fact that we’d still have very high spot rates for the next probably week or two, for trucking in these areas,” Ramon told Sourcing Journal. “A lot of the forward-looking shippers and logistics companies have already made contingency plans for this, and they’re already moving things through alternate methods other than the rail so that capacity has kind of already been set. Those spot rates have already been set.”
Labor Battle Shuts Down Canada's Railroads, Leaving Supply Chain at Standstill
Pressure on the federal government had come from lawmakers and industry associations alike to enforce arbitration from a third party as the talks got contentious. Both railroads had offered the Teamsters binding arbitration throughout the summer-long negotiations, with the union denying the proposal each time. CN had formally called on the federal government to select an arbitrator after the denial, but the request was denied ahead of the lockout.
Parties bargained late into the night Wednesday at hotels in Montreal and Calgary before talks broke off shortly before midnight.
Thursday morning, MacKinnon shared in a post on X that he “just spoke” with U.S. counterpart Acting Labor Sectary Julie Su regarding work stoppages in the rail sector. The parties “discussed the importance of the sector and its workplaces to countries’ economies,” he said.
Two years ago, government intervention in the U.S. prevented a nationwide rail strike, putting an end to a nearly three-year collective bargaining process.
The two prior collective agreements expired on Dec. 31, 2023, but have been extended under Canadian law until the parties reach a new deal.
The Teamsters said the parties were “far apart” in negotiations on Thursday morning, with the union and both railroads accusing each other of being unable to negotiate seriously. MacKinnon agreed, saying during the news conference that “the parties remain very, very far apart on these issues.”
CPKC and CN said their contract offers have included raises consistent with recent deals in the industry. Engineers at CN make about $150,000 a year, whereas conductors earn $120,000. CPKC says its wages are comparable.
Other areas beyond wages remained sticking points for the Teamsters, including the implementation of rest periods, fatigue management and scheduling.
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