Canada’s two major rail lines locked out rail workers Thursday morning amid tense contract negotiations between the railways, which represents about 10,000 rail workers, and the Canada Teamsters Rail Conference. Although Canadian Prime Minister Justin Trudeau did He said that his government will take measures to resolve the dispute. A work stoppage could have a severe impact on the Canadian economy as well as supply chains in both the United States and Canada.
The rail companies, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), and the union have been negotiating for months. So far, the Canadian government has not forced either side’s hand to avoid a work stoppage. But if the situation escalates, the federal government could step in and lay off 9,300 workers Return them to their jobs through legislation, as has been the case in past labor disputes.
The two railroads facilitate the movement of people and about $740 million worth of goods across the country’s vast interior every day. Stoppages are the result of rail companies stopping their workers from working, rather than strikes. The companies argued that a lockout was necessary to ensure a safe and controlled drawdown of operations, and that if they waited for operators to leave their jobs, the companies would not have had time to secure hazardous materials or work out supply arrangements with key customers.
For now, the impact of the work stoppage is mainly on the Canadian economy, but since about 75 percent of Canadian exports — including coal and agricultural products — are sold to the United States, the dispute could affect the U.S. supply chain. Not resolved soon.
What went wrong with Canadian railways and what it means for Canada’s supply chain
The two railroad systems had contracts with the Teamsters union that expired December 2023. Since then, each side has allegedly refused to accept reasonable terms.
The primary concern of the Union, According to his public relationsExceeded worker safety and rest periods, as well as predictable schedules. They also claim that Canada National is issuing them ineffective relocation notices – forcing workers to move for months at a time to deal with staffing shortages.
Rail workers voted to authorize a strike as early as May this year, claiming rail companies were not bargaining in good faith and were trying to slow progress on working conditions, proposing a shift to hourly wages instead of salaries. Some location, and removal Provision for adequate rest.
“We have trains across Canada [that] They’re carrying goods, they’re carrying energy, they’re carrying chemicals,” said Francois Laporte, national president of Teamsters Canada. told the BBC Thursday “And we want to make sure that they are [trains] Conducted by those who are properly rested, who are safe, who are not tired.”
Canadian railways carry commodities such as coal and potash —An important component of fertilizers – as well as cooking oil, propane, and frozen food.
Many shipments within Canada and between Canada and the United States have already been halted; By Tuesday, CPKC had already stopped shipments that originated in the US and were bound for Canada Under the work stoppage, about 2,500 US trains bound for Canada will be halted each day.
Some organizations, such as the US Chamber of Commerce, the American Farm Bureau Federation and the National Cotton Council, have warned of a devastating impact on the US supply chain and economy if the work stoppages occur.
The American Farm Bureau Federation and the National Cotton Council, among others, claimed in a Monday letter to President Joe Biden that the work stoppage would have “harmful consequences for Canadian and American agricultural producers, the agricultural industry, and domestic and global food security.” If it continues, The Washington Post reported.
While it’s hard to say exactly what the impact will be on the U.S. economy, extending the shutdown could raise prices for some agricultural products, affecting consumers already struggling with high food costs. Sanitation may be affected, as many sanitation departments rely on chlorine to treat wastewater shipped from Canada. The automotive industry may also be affected; According to the June issue from the Bureau of Transportation StatisticsAutomobiles and auto parts made up the bulk of rail shipments from the United States to Canada in June No labor deal could force some U.S. auto plants to close before the end of the week.
Container ships unable to unload at Canadian ports will likely have to re-route to the US, potentially causing backups at US ports, which could disrupt the supply chain.
Supply chain problems will become more pronounced the longer the lockout lasts, although the Canadian federal government could pass back-to-work legislation in the coming days, said Barry Prentice, director of the University of Manitoba’s Transport Institute. told the BBC. The government also has the power to compel companies and unions into private arbitration; Although companies have signaled openness to that idea, unions — as well as Trudeau and his allies — are cool on it.
If it comes down to legislation, it will probably only be on paper rather than resolving real disputes. As did the US return-to-work law in December 2022. Without a resolution and a new contract, forcing workers to return to their trains only pushes the problem further down the tracks.
