Canadian Rail Strike Set for Thursday would Wreak Havoc on US Supply Chains

The Canadian National Railway and Canadian Pacific Kansas City both served notice to it’s union employees that they would be locked out on the early hours of Thursday, August 22. On Sunday, the Teamsters Canada Rail Conference also served a strike notice for Thursday to its more than 3,000 union workers.

“We’re serving strike notice to defend the rights and safety of our members,” Paul Boucher, president of the Teamsters Canada Rail Conference said in the statement.

The stoppages could cripple the shipment of food grains, beans, potash, coal and timber which form a large part of Canada’s exports, while also impacting shipments ranging from petroleum products to chemicals and cars.

“If the railroad starts locking out workers this week and there is a subsequent strike, operations will grind to a halt and everything will have to move to the road for both domestic and international containerized freight,” said Paul Brashier, vice president of global supply chain, ITS Logistics. “When/if this happens it will drive rates through the roof overnight, if capacity can be obtained at all.”

Brashier previously warned of the effects on inland and coastal ports in its August US Port/Rail Ramp Freight Index, released this morning.

“Strike activity, or the potential of it, will affect the West Coast and inland rail legs of ocean container traffic entering Canada. Due to last week’s CIRB ruling, rail is not an essential service in Canada because reasonable alternatives exist in long haul trucking, a strike or disruption in Canada seems more likely,” said Brashier. “The West Coast is seeing an increase in volume due to reroutes to avoid strikes in Canada and labor disruption on the US East Coast. Transpacific spot rates to the North American West Coast are also less expensive and quicker than routing to the Gulf and East Coast, which also may have something to do with the increased volume.”

In addition to billions of dollars of economic damage, the stoppages could disrupt rail trade across the North American continent.

“Unless there is an immediate and definite resolution to the labor conflict, CN will have no choice but to continue the phased and progressive shutdown of its network which would culminate in a lockout,” CN said in a statement.

“Despite negotiations over the weekend, no meaningful progress has occurred, and the parties remain very far apart,” it said.