Canada’s two largest railroads, Canadian Pacific Kansas City and Canadian National, are starting to shut down their shipping networks due to a labor dispute with the Teamsters union. These disruptions could impact cross-border trade with the U.S. Both railroads have already stopped taking certain shipments of hazardous materials and refrigerated products, and they are threatening to lock out Teamsters Canada workers starting Thursday if agreements are not reached.
The shutdown of the rail networks could have significant consequences on the economy, as the two railroads handle about 40,000 carloads of freight each day, worth about $1 billion. Shipments of fully built automobiles, auto parts, chemicals, forestry products, and agricultural goods would be particularly affected, especially with harvest season approaching. Despite the potential disruptions, the railroads’ operations in the U.S. and Mexico will remain operational even if there is a work stoppage in Canada.
Canadian Pacific Kansas City stated that it remains committed to avoiding a work stoppage that would harm Canada’s economy and international reputation. The railroad is taking prudent steps to prepare for a potential rail service interruption, including getting dangerous goods off its network before any stoppage occurs. While negotiations continue between the railroads and the union, the situation has shifted from a possible strike to a nearly certain lockout by the railroads.
Negotiations between the railroads and the union have been ongoing since last November, as contracts expired at the end of 2023. The main sticking points in the negotiations are company demands on crew scheduling, rail safety, and worker fatigue. The union has expressed concerns about the quality of life for rail workers, citing demanding schedules and lack of paid sick time. Similar concerns nearly led to a U.S. rail strike two years ago, before Congress intervened and prevented the walkout.
While the trucking industry may have excess capacity to make up for some of the railroads’ shipping volumes, it is unlikely that all of the freight can be replaced with trucking. The major U.S. railroads have made progress in offering paid sick time to rail workers and improving schedules in recent years. Both Canadian Pacific Kansas City and Canadian National are hopeful that negotiations will lead to a resolution that allows them to return to normal operations and continue moving customers’ goods efficiently.
