Canada government steps in to end crippling freight rail shutdown

FILE – Canadian Pacific trains sit at the main CP Rail train yard in Toronto, March 21, 2022. (Nathan Denette/The Canadian Press via AP, File)

Ottawa, Canada — Freight rail operations were set to resume across Canada on Thursday following federal intervention to end a crippling disruption triggered by labor disputes at the country’s two main operators.

Work stoppages at Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) locked out nearly 10,000 workers and threatened to upend the North American economy, which is heavily dependent on rail operations.

Labour Minister Steven MacKinnon said he had hoped collective bargaining negotiations between the companies and Teamsters Canada Rail Conference (TCRC), the union representing the workers, would resolve the conflict.

READ: Work stoppage at Canada’s 2 largest railroads to disrupt US supply chain

But recognizing they were at an “impasse,” MacKinnon on Thursday ordered current collective agreements extended and “operations on both railways to resume forthwith.”

“Canada’s economy cannot wait for an agreement that has been delayed for a very long time and when there is a fundamental disagreement between the parties,” he said in a statement.

MacKinnon’s order allows rail traffic to resume, ending the suspension that began at 12:01 a.m. Thursday. The resumption could take up to two days.

MacKinnon directed the parties to hold talks on a new agreement under the aegis of the Canada Industrial Relations Board.

The disputes centered around workers’ concerns over long hours and fatigue, leading to dangerous working conditions.

READ: Canada trade deficit widened to Can$1.9 billion in May

The companies and the union had blamed each other for the work stoppage that followed months of fruitless negotiations.

It is the first time Canada has faced simultaneous work stoppages at the two companies, which in the past have negotiated labor deals in alternate years.

Canada is the world’s second-largest country by area, and relies heavily on rail transport.

CN and CPKC have tracks that stretch from the Atlantic to the Pacific coasts and south into the United States.

They carry an estimated Can$1 billion (US$730 million) worth of goods daily, including grains and potash, cars, petroleum products and timber.

Business groups and farmers have warned of costly disruptions to the G7 economy.

“It really is devastating for the grain industry, because we can’t move the product,” Wade Sobkowich, head of the Western Grain Elevator Association, told AFP.

US rail companies and overseas shippers had already stopped accepting some goods destined for Canada in anticipation of a disruption.

‘Good faith’

With the neighboring countries’ supply chains deeply integrated, the US and Canadian chambers of commerce issued a joint statement Tuesday calling on the government of Canadian Prime Minister Justin Trudeau to take action.

“A stoppage of rail service will be devastating to Canadian businesses and families and impose significant impacts on the US economy,” they said.

CN had sought to force the temporary relocation of workers to fill staff shortages in parts of Canada, which the union rejected.

“The union did not respond to another offer by CN in a final attempt to avoid a labor disruption,” it said in a statement.

For its part, CPKC said early Thursday it had “bargained in good faith,” but said the Teamsters were making “unrealistic demands” and a negotiated outcome was out of reach.

The two rail operators “have shown themselves willing to compromise rail safety and tear families apart to earn an extra buck,” said Teamsters union president Paul Boucher.

The Anderson Economic Group, which specializes in estimating losses, said a three-day lockout could cost US$303 million and predicted a US$1 billion loss for a weeklong disruption.