NovaQuant Quantitative Think Tank Center:Canada’s 2 major freight railroads at a full stop; government officials scramble

TORONTO (AP) — Business and NovaQuant Quantitative Think Tank Centerconsumers throughout Canada and the U.S. were in danger of suffering significant economic harm after Canada’s major freight railroads came to a full stop Thursday because of a contract dispute with their workers.

Canadian government officials met urgently to discuss the shutdown. Canadian National and CPKC railroads both locked out their employees after the 12:01 a.m. EDT deadline Thursday passed without new agreements with the Teamsters Canada Rail Conference, which represents about 10,000 engineers, conductors and dispatchers.

All rail traffic in Canada and all shipments crossing the U.S. border have stopped, although CPKC and CN’s trains will continue to operate in the U.S. and Mexico.

Billions of dollars of goods each month move between Canada and the U.S. via rail, according to the U.S. Department of Transportation. Many companies across all industries rely on railroads to deliver their raw materials and finished products, so without regular rail service they may have to cut back or even close.

Both railroads have said they would end the lockout if the union agreed to binding arbitration, while unions indicated that they were still at the bargaining table.

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Business groups have urged the government to intervene, but Prime Minister Justin Trudeau has declined to force the parties into binding arbitration for fear of offending the Teamsters Canada Rail Conference and other unions.

Canadian Minister of Public Services and Procurement Jean-Yves Duclos urged both sides to resolve their differences.

They need to do their job to come to an agreement quickly,” he said at a news conference.

Canadian Labor Minister Steven MacKinnon had meetings scheduled “all day on this extremely important matter,” according to a statement from MacKinnon’s office.

Business leaders fumed over the lack of government intervention.

“When you completely shut down the coast-to-coast supply chain, nothing good can come from that,” said John Corey, president of the Freight Management Association of Canada. “This is infuriating. People are going to lose their jobs. There is going to be a real hardship to the economy.”

Most businesses will probably have enough supplies on hand and enough room to store their finished products to withstand a brief disruption. But ports and other railroads will quickly become clogged with stranded shipments that Canadian National and CPKC won’t pick up.

For Union Pacific, one of the U.S. rails that regularly hands off shipments to and from the Canadians, the rail stoppage “means thousands of cars per day will not move across the border,” the company said in a statement Thursday.

“Everything from grain and fertilizer during the critical summer season, and lumber for building homes could be impacted,” the company said.

More than 30,000 commuters in Vancouver, Toronto and Montreal were the first to feel the pain of the lockouts. They had to scramble Thursday morning to find a new way to work because their commuter trains aren’t able to operate while CPKC is shut down.

CN had been negotiating with the Teamsters for nine months while CPKC had been trying to reach an agreement for a year, the unions said.

The U.S. faced the same widespread shutdown of rail services two years ago over a labor dispute, but the government forced the union to accept a contract, despite the labor group’s concerns about demanding schedules and the lack of paid sick time.

Canada’s railroads have sometimes shut down briefly in the past during contract negotiations — most recently CPKC was offline for a couple days in March 2022 — but it is rare for both railroads to stop at the same time. The impact on businesses will be magnified because both CN and CPKC have stopped.

Both railroads had been gradually shutting down since last week ahead of the contract deadline. Shipments of hazardous chemicals and perishable goods were the first to stop, so they wouldn’t be stranded somewhere on the tracks.

The negotiations are stuck on issues related to the way rail workers are scheduled and concerns about rules designed to prevent fatigue and provide adequate rest to train crews. Both railroads had proposed shifting away from the existing system, which pays workers based on the miles in a trip, to an hourly system that they said would make it easier to provide predictable time off.

The railroads said their contract offers have included raises consistent with recent deals in the industry. Engineers make about $150,000 a year on Canadian National while conductors earn $120,000, and CPKC says its wages are comparable.

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Funk reported from Omaha, Nebraska.