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The Canadian government has ordered a third party to mediate a dispute between the nation’s two main rail carriers and the Teamsters union after operations ground to a halt Thursday.
The railroad operators, Canadian National CNI+0.10% (CN) and Canadian Pacific Kansas City CP-0.89% (CPKC), locked out the roughly 9,000 union workers early Thursday morning after about a year of contract negotiations fell flat. It’s the first time that both major railroads have shut down at the same time due to a labor issue. The last time a work stoppage occurred was in 2022 when Canada Pacific workers went on strike for 60 hours.
Canadian Labor Minister Steven MacKinnon has ordered the dispute into arbitration, where a third independent party — the Canada Industrial Relations Board — will help mediate and resolve the conflict. The railroads are also required to eventually resume operations and extend their current labor deals until new agreements are signed. A decision is expected to be reached within days, MacKinnon said Thursday.
CN in a statement said it had ended its lock out and began a “recovery plan” while waiting for the board’s decision, adding that it is doing so to “expedite the recovery of the economy.” Teamsters members at CN will return to work Friday.
Canadian freight moves $380 billion worth of goods every year, according to the Railway Association of Canada. Almost a third of the freight handled by CN and CPKC crosses the U.S.-Canadian border and would disrupt industries across the U.S. in the event of a prolonged stoppage. Each day, the flow of some $730 million in goods stoppage could be affected, according to Canada’s Chamber of Commerce.
The Anderson Economic Group, a Michigan-based research firm, estimates that the Canadian and U.S. economies could lose $296.5 million from a three-day labor stoppage and about $1.03 billion from a seven-day labor stoppage. Industries most likely to be affected first by the stoppage are chemicals and grains.
“The Canadian government has recognized the immense consequences of a railway work stoppage for the Canadian economy, North American supply chains and all Canadians,” CPKC CEO Keith Creel said in a statement. “ We regret that the government had to intervene because we fundamentally believe in and respect collective bargaining; however, given the stakes for all involved, this situation required action.”
CPKC said it was prepared to resume operations, but claimed the Teamsters didn’t want to engage and plan to challenge MacKinnon’s order. The company said a case management conference is scheduled for 10 a.m. ET to hear submissions from both the union and company.
The Teamsters union did not immediately return a request for comment.
The labor union has contended that its proposals haven’t been taken seriously and protest the companies’ “push to weaken protections” around rest periods and scheduling. The Teamsters say that would increase the risk of fatigue and safety issues, although the companies deny that.
“The railroads don’t care about farmers, small businesses, supply chains, or their own employees,” Teamsters Canada Rail Conference President Paul Boucher said in a statement Thursday. “Their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy.”