‘Nothing moves’: Uncertainty hangs over shippers as potential rail strike looms
Shippers and producers held their breath ahead of a possible strike by thousands of railworkers this month that would halt freight traffic, clog ports and disrupt industries.
“The railways are two ribbons that go east to west, and there’s not much alternative if you cut those two ribbons,” said John Corey, president of the Freight Management Association of Canada, whose members include port authorities, manufacturers and other large shippers such as retailers Canadian Tire and Home Depot.
"The ports become useless. Nothing moves anywhere."
Canadian railways haul more than $350 billion worth of goods and more than half of the country's total exports each year, according to the Railway Association of Canada.
Anxiety over a strike by some 9,300 employees at Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. has already cost the companies business after some customers started to reroute cargo following approval of a strike mandate by union members on May 1.
READ: Rail strike could cost manufacturers millions, industry says
Then-labour minister Seamus O’Regan, in an apparent move to delay the disruption, asked the country’s labour board later that month to review whether a work stoppage would jeopardize Canadians’ health and safety.
The Canada Industrial Relations Board is examining whether there are critical shipments—chlorine for water and gasoline for cities, for example—that must continue in the event of job action, putting any potential work stoppage on pause until a ruling is made.
Either way, observers says the possibility of a strike will likely remain on the table after the decision—expected this Friday (August 9)—as players in industries ranging from agriculture to big-box retail fret over the fallout.
"By kicking it down the road, all he did was really increase the uncertainty," said Corey, referring to the former labour minister's move. "Now nobody knows what's going to happen, and uncertainty is bad for business."
O'Regan's replacement as federal labour minister, Steven MacKinnon, met Monday morning with leaders from the two main railways and the Teamsters Canada Rail Conference union to discuss the consequences for the economy and supply chain.
In a phone interview Friday, MacKinnon said the parties have failed to treat the issue with "sufficient urgency," noting that talks have all but broken down over the past few weeks. The minister, who stepped into the role barely two weeks ago when O'Regan resigned from cabinet, suggested that the two sides need to hash out a deal themselves rather than rely on government intervention, such as back-to-work legislation.
"The approach that we have found that works is where parties reach agreement at the bargaining table. Those provide the most enduring benefits to employers, to employees and the most satisfactory outcomes. And that is our plan in this case," MacKinnon said.
All parties say they want to continue negotiating, but each blames the other side for the communication breakdown. CN and CPKC are bargaining separately with the Teamsters union toward distinct collective agreements, though two strikes could happen simultaneously.
Teamsters spokesman Christopher Monette said members are growing increasingly "frustrated and impatient" with the two railways—and with the suspension of workers' right to strike while the labour board writes up a decision.
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"Absent the threat of a work stoppage, neither company appeared willing to compromise or show any flexibility in their demands," he said in an email.
The stumbling blocks are crew scheduling, fatigue management and safety, he said. The union has rejected binding arbitration with both companies.
The railways framed the impasse differently.
"We've proposed three different options to the union, which has refused to bargain and has just presented us with more demands," said CN spokesman Jonathan Abecassis in a phone interview.
"We want a resolution to this conflict. That's what we're hopeful that all of this will lead to."
CN and the union were in agreement on at least one point, however. The government's move to hand the issue to the labour board has "just perpetuated the uncertainty," said Abecassis.
CPKC said shipping demand hits peak levels in the fall, when millions of tonnes of grain and consumer products roll to market. CEO Keith Creel said last week he expects a strike later this month, with the financial hit baked into the company's earnings forecast for the year.
"We're far apart," Creel told analysts on a conference call, referring to the railway and the union representing 3,300 CPKC workers.
Nonetheless, the company committed Monday to return to the bargaining table this week. Its proposals comply with new regulatory requirements for rest and "do not in any way compromise safety," said spokesman Patrick Waldron in a release.
A work stoppage cannot occur until the industrial relations board hands down its ruling, which may spell out a potential cooling-off period. The Canada Labour Code also requires 72 hours' notice ahead of a strike.
Canada’s supply chain has faced several labour disruptions over the past four years, on top of the backlogs and bottlenecks of the COVID-19 pandemic. That inconsistency has begun to wear on confidence in Canadian supply chains.
"There are costs that you can't produce an invoice for, like reputational damage," said Wade Sobkowich, who heads the Western Grain Elevator Association.
"The grain industry is viewed as a banana republic when it comes to getting product to our customers," he said, referring to instability around delivery.
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Last summer, a strike by 7,400 B.C. dockworkers dragged on for 13 days, shutting down the country’s biggest port and costing the economy billions of dollars. In October, an eight-day strike by employees on the locks of the St. Lawrence Seaway halted shipments of grain, iron ore and gasoline along the trade corridor.
And in Montreal, the threat of a strike looms four years after longshore workers walked off the job for 12 days and left 11,500 containers languishing on the waterfront.
Job action at rail companies has been resolved in various ways. In March 2022, a strike by conductors, engineers and yard workers at Canadian Pacific lasted several days before both parties agreed to binding arbitration toward a new contract.
In November 2019, a rail strike gripped the country for eight days until CN and 3,000 railroaders reached a tentative deal. In 2012, the Conservative government tabled back-to-work legislation five days after 4,800 Canadian Pacific workers walked off the job, citing a risk to the country's economy and reputation.
