Major Canadian railroads suspend shipments amid labor dispute

The labor dispute between Canada's two largest railroads and the Teamsters union poses a significant risk to cross-border trade with the U.S. The Canadian Pacific Kansas City (CPKC) and Canadian National (CN) railroads have halted certain shipments and are threatening lockouts if agreements are not reached.

Economic Impact and Supply Chain Disruptions

The halted shipments and potential work stoppages could have profound economic impacts, affecting various industries and potentially leading to supply chain disruptions. The railroads handle approximately 40,000 carloads of freight daily, valued at around $1 billion, including crucial goods such as fully built automobiles and auto parts, chemicals, forestry products, and agricultural goods.

Negotiations between the railroads and the Teamsters union have been ongoing since November, with contracts expiring at the end of 2023. The union has expressed concerns over the company's demands related to crew scheduling, rail safety, and worker fatigue as the main points of contention. Despite the halting of certain shipments and the looming threat of lockouts, both CPKC and CN continue to engage in negotiations with the union in good faith.

Impact on the Trucking Industry

While the trucking industry may have some excess capacity to compensate for the railroads' shipping volumes, it is important to note that it cannot fully replace the capacity and reach of the railroads. The trucking industry may absorb some of the railroads' volumes, but it cannot completely fill the gap left by a disruption in rail services.

Continued Operations and Commitment to Avoid Stoppages

Despite the potential work stoppages, both CPKC and CN continue to operate their extensive networks in the U.S. and, in the case of CPKC, Mexico. Both railroads remain committed to avoiding a work stoppage that would have detrimental effects on Canada's economy and international reputation. They are taking responsible and prudent steps to prepare for a potential rail service interruption while actively engaging in negotiations with the union.