Rail giants plan to close Canadian network after union talks fail – Butler Eagle

Canada’s two largest rail companies will close operations on Thursday unless a deal is reached with unions, forcing the industry to brace for billions of dollars in losses.

Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. have sent strike notices to the union representing more than 9,000 employees of both companies, starting the countdown to a nationwide strike if the sides cannot reach a last-minute agreement.

The impending strike has already begun to affect shipping of products including wheat, chemicals and fertilizers across Canada and the U.S. Two rail operators began phased network shutdowns last week, and AP Moller-Maersk said Monday it was no longer accepting shipments to Canada that must be moved by rail and are too heavy for trucks.

“The economic damage will be significantly greater than the C$1 billion ($732 million) of goods moved by rail each day,” Goldy Hyder, CEO of the Business Council of Canada, said in an email.

“This will result in billions of dollars in lost revenue from goods that will not be sold, lost wages from workers who will not be able to do their jobs, and the potential loss of contracts with international carriers and consumers.”

The strike is also expected to affect commuter rail in Canada’s three largest cities. Vancouver’s West Coast Express runs on Canadian Pacific tracks, so it would have to cease operations and its more than 3,000 daily passengers would have to find alternatives, regional transit authority TransLink said.

In the Toronto area, GO Trains services on the Milton Line and at Hamilton Station will be temporarily suspended due to disruptions to Canadian Pacific rail service, public transit agency Metrolinx said.

Canadian Pacific also said Exo trains in the Montreal area could be affected, while Via Rail’s network in Canada should not be affected. Neither company immediately responded to a request for comment.

The Teamsters Canada Rail Conference said negotiating issues include provisions to combat crew fatigue. A strike notice was also served, effective Thursday.

CN said despite negotiations over the weekend, the sides remained “very far apart,” while Canadian Pacific said it had offered competitive wage increases and working rules consistent with regulatory rest requirements.

The disruption is expected to affect some of Canada’s biggest industries. The country is the world’s largest potash producer, and 75% of fertilizer is transported by rail, said Karen Proud, CEO of Fertilizer Canada.

Fertilizer producer Nutrien Ltd. said it relies on rail transport to deliver its products to farmers and has taken proactive measures such as pre-positioning stocks.

“We are concerned that strikes could impact the movement of our products, which could ultimately negatively impact farmers and food security around the world,” a company spokesperson said in an email.

With more than 90% of Canadian grain transported by rail, grain transportation could come to a near complete halt.

“There is no plan B,” said Wade Sobkowich, executive director of the Western Grain Elevator Association. “Nothing compares to rail for moving the volume of grain that needs to be moved at economical prices.”

The country is also a major wheat producer and if exports are halted, suppliers could face demurrage charges, contract extension penalties or failure to meet trade obligations.

In the chemical industry, many products must be transported by rail due to specialized containers for safety reasons. Before the suspension, both railways stopped transporting new shipments of hazardous chemicals that cannot be left unattended.

While some rail-dependent industries may be able to switch to trucks, it’s no easy feat. A typical freight train carries the equivalent of 300 trucks, and switching modes typically comes with a premium of up to 20%, said Scott Shannon, vice president of transportation firm CH Robinson.

“Freight rates could increase as many cargoes will have to find alternative ways to travel,” he said.

Some companies have moved to U.S. ports in preparation, which has already weighed on domestic rail profits. Canadian National lowered its annual guidance in July, with its CEO Tracy Robinson telling analysts there was a sharp decline in international volumes.

Canada’s labor minister told railroads and unions last week he would not impose binding arbitration on them. Steven MacKinnon said Monday that the parties must work hard to reach agreements at the bargaining table.

Meanwhile, dock workers in British Columbia are threatening to strike over the impact of automation, with concerns about the country’s international reputation growing after disruptions at Canada’s ports last year.

“Customers have a choice of where they buy their goods from,” said Greg Moffatt, executive vice president of the Chemistry Industry Association of Canada. “If the supply chain they’re dealing with on the Canadian side isn’t reliable, they’re going to want to change it.”