Labor Dispute Could Shut Down Canada's Biggest Rail Lines

A new Canadian labor dispute could upend trade for shipping interests across North America. Canada's largest rail union faces a lockout on Wednesday night, potentially impacting businesses from Vancouver to the U.S. Midwest and beyond. Rail freight is essential for Canadian shippers, especially for commodities and for intermodal transport, and a shutdown would have an immediate effect.

Canadian National (CN) and Canadian Pacific Kansas City (CPKC) are negotiating with Teamsters Canada Rail and its 9,000-plus members on terms for a new collective bargaining contract, and the talks have been contentious. According to the Teamsters, CN and CPKC are demanding more flexibility for worker scheduling and fatigue management, as well as the ability to require workers to relocate for long periods as needed. "If the companies get their way, train crews would be forced to stay awake even longer, raising the risk of derailments and other accidents," warned the Teamsters in a statement. CN and CPKC say that their proposed work rules are fully compliant with all regulations and do not compromise safety. 

In early August, the Canadian Industrial Relations Board confirmed the Teamsters' right to stage a walkout, and Canada's labor minister turned down a request from the rail lines to force the union into binding arbitration. After further negotiations failed, CN and CPKC notified the Teamsters that they would initiate a lockout at 0001 hours on August 22. Both sides blamed the other for the impasse.

"Despite negotiations over the weekend, no meaningful progress has occurred, and the parties remain very far apart," said CN in a statement. "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."

The Teamsters have instructed members to treat the lockout as the equivalent of a strike.

In Canada, business associations for retailers, restaurants, meat producers, farmers and other sectors all warned that a rail strike would cut into margins and impact customers' pocketbooks. U.S. businesses are also worried, since Canadian rail lines carry about 15 percent of all trade across the northern border. U.S. rail line Union Pacific warned Monday that a shutdown would affect cross-border transport of 2,500 UP rail cars per day.  

The U.S. and Canadian Chambers of Commerce issued a joint statement Monday, warning of "devastating" effects on business. "The government of Canada must take action to ensure goods continue to move reliably between our two countries," the chambers said. 

The looming rail lockout could overlap with a worsening labor dispute between the International Longshore Association (ILA) and the employers' association for U.S. East Coast and Gulf Coast ports. Talks between the union and terminal operators have been difficult, and if negotiations fail, a walkout could begin as early as October - effectively shutting down half of America's container port capacity.