Top industry trade groups have warned in a letter to Canadian Prime Minister Justin Trudeau to avert a rail strike that could snarl supply chains of critical commodities across North America.
"We request that you take action to ensure railroad operations continue before a lockout or strike occurs to prevent serious damage to the Canadian and US economies," 35 US industry groups wrote in a letter to PM Trudeau.
Bloomberg highlights the commodities that would be most impacted by a potential rail strike:
Two of Canada's largest railroad companies said they'll shut down operations Thursday if they fail to reach an agreement with more than 9,000 of their unionized workers. The two companies account for 80% of Canada's rail network.
The agriculture industry ships more than 25,000 rail cars a week of goods on Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. and that figure would "go to zero" during a strike or lockout, according to Monday's letter signed by groups including the US Grains Council, American Farm Bureau Association and the National Grain and Feed Association.
Larry Avila of SupplyChainDive provides more information on the potential labor action at Canada's major rail carriers, which could unfold as early as Thursday unless 10,000 union workers receive a new deal before then.
The Teamsters Canada Rail Conference served a strike notice Sunday to Canadian Pacific Kansas City, stating its estimated 3,300 union-represented workers employed by the railroad will withdraw services effective 12:01 a.m. ET Thursday unless they receive a new contract. In response, CPKC said it would lock out all union employees beginning Thursday.
Canadian National Railway followed suit Sunday, informing the union of its intent to lock out the roughly 6,000 represented workers employed by the railroad on Thursday unless the parties agreed on a new labor deal or the union agreed to binding arbitration.
While talks between the Teamsters and the two rail carriers have been ongoing since the last contract expired at the end of last year, a deal has yet to be reached.
The union previously rejected calls for binding arbitration, and Canadian Minister of Labour and Seniors Steven MacKinnon denied Canadian National's request for such a solution last week. In his letter to Canadian National, MacKinnon stressed the need for the parties to reach an agreement and offered mediation assistance.
Avila continued:
A work stoppage at Canada's main rail carriers would have widespread implications to supply chains, according to logistics experts. Over 900,000 metric tons of goods move daily on Canada's railways, according to the Railway Association of Canada.
The threat of service disruption due to a work stoppage led CPKC and Canadian National to begin shipping embargoes last week to avoid leaving critical freight unattended. Executives from both rail carriers have reported shippers diverting freight to other transportation modes, including trucking, in anticipation of a work stoppage.
CPKC in a statement said it recognizes disruption already is occurring "and will intensify until this dispute is resolved."
Separately, unionized dockworkers across the East and Gulf Coast are threatening to strike in October.
The worst-case scenario, which would almost certainly re-ignite inflation, involves multiple strikes across various transportation modes in North America that could begin as early as Thursday.
