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Canada’s freight rail service might come to a grinding standstill this week as workers at the two main railways received lockout notices and are poised to strike.
The railroad companies Canadian National Railway CNI-1.28% and Canadian Pacific Kansas City CP-1.31% both issued the lockout notices for Thursday. Unless a last-minute deal is secured with the Teamsters, it would mark the first time the two biggest rail companies experience a work stoppage at the same time.
The looming strike could cause billions of dollars in economic damage to Canada, the U.S., and Mexico.
Here’s what you need to know.
Why are both major Canadian rail companies poised to strike?
Canada has two main freight train companies: Canadian National Railway CNI-1.28% (CN) and Canadian Pacific Kansas City CP-1.31% (CPKC).
Workers at the two companies are both represented by the Teamsters, which usually negotiates with railroads at different times.
But in 2022, CN asked for an extension for its current deal as it worked to understand new federal regulations on worker fatigue. As a result, contracts for some 10,000 workers at CN and CPKC both expired last year.
The Teamsters have been negotiating with both railways since the expiration, and both sides say it hasn’t been going well.
What are the key issues for the Teamsters and the railroads?
Paul Boucher, president of the Teamsters Canada Rail Conference, said, “Despite reaping billions in profits over the years, CN is demanding concessions that would drag working conditions back to another era.”
Boucher is particularly opposed to a CN proposal that he says would force members to relocate to different parts of Canada for long periods to accommodate labor shortages.
CN, meanwhile, told CBC that it has made four different offers on wages, work locations, and rest periods.
The dispute with CPCK is largely about safety issues. The union claims that the company wants “to gut the collective agreement of all safety-critical fatigue provisions,” CBC reported. It says the railroad will force workers to work more and rest less, which would increase the risk of accidents.
“This highly profitable company is playing hardball with the Canadian economy, doing whatever it can to line the pockets of its managers and shareholders, no matter the consequences,” Boucher said.
CPKC, meanwhile, says it “fully complies with new regulatory requirements for rest and does not in any way compromise safety.”
What happens if they strike?
The Teamsters said they have been forced to serve strike notices to protect their members. If a strike happens, freight rail service in Canada will just about grind to a halt.
It will also affect the U.S. too. CPKC was formed in 2023 after a merger between Canadian Pacific and Kansas City Southern. Although the company says its U.S. and Mexico routes will operate normally, the strike will still lead to major disruptions for cross-border shipments, CBC reported. Some U.S. companies have been turning down cargoes relying on CN and CPKC in anticipation of the strike.
While laws exist in Canada that allow the federal government to break the strike, the leading Liberal party has said it doesn’t want to get involved and would prefer if the Teamsters and the railroads to come to an agreement independently.
What are the economic effects?
The scale of the economic impact is unclear and depends on how long a potential strike lasts. That said, experts are estimating it could cause billions in economic damage.
Exports account for a sizable amount of Canada’s economy and much of the goods rely on the rail network to exit the country. A strike would hold up about $1 billion in goods that travel via train each day, according to CTV news.
Industries that would take a hit include fertilizers, trucking, coal, crude oil, grains, timber and even cars, Reuters reported.