Canadian Rail Workers Authorize Strike, Potential Disruption to North American Supply Chains

Source: The Canadian Chamber of Commerce; Yahoo Finance; Sourcing Journal
Date: 3rd May 2024

Canada may be facing a nationwide rail shutdown that could slow down North American supply chains later this month as union railroad workers voted in favor of striking.

With a vote in place, more than 9,300 workers at Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) can go on strike as early as May 22. The workers are represented by Teamsters Canada, which is the country’s largest transportation union.

Conductors, locomotive engineers and yard workers at CN voted 97.6 percent to authorize a strike, while 99 percent of staff in those same positions at CPKC voted to permit the strike.

Such a rail strike could come a year after 7,400 workers at ports on Canada’s West Coast walked off the job for about two weeks in July 2023, disrupting shipping operations across the Pacific Northwest. According to the country’s transportation regulatory body, Transport Canada, that work stoppage cut the country’s gross domestic product by between $533 million and $716 million, and impacted $7.3 billion in merchandise shipments.

A professor and Haslam Chair of Logistics at the University of Tennessee called CPKC “the one truly transcontinental railroad,” acknowledging that a rail strike could have impacts across the U.S., Canada and Mexico alike.

While truck could pick up the slack for many goods and would be most welcomed by that transport sector, shippers would be looking at substantially higher costs and, perhaps, a degree of delay and bottlenecking as those volumes migrate from the rails to the roads.

CPKC president and CEO expressed serious concerns of the possible work stoppage in an earnings call on April 24.

It’s certainly not going to come at a good time for the country of Canada. If we’re going to have a strike, the uncertainty of that in and of itself is damaging.

The shared concerns of a long-term strike seeping into the crop harvesting season starting in July, which is “when the demands for service and the needs of the country have never been greater, describing it as “the absolute worst time for it to occur.”

CN said negotiations with the Teamsters Canada Rail Conference (TCRC) are ongoing, holding meetings Monday and Tuesday, supported by federal conciliators. The firm said its new proposal provided “significant” wage increases and offered scheduled consecutive days off, provisions for no layoffs and reduced hours away from home.

CPKC said it made two offers to the TCRC leadership, with one providing significant pay increases, alongside schedule predictability and set days off. The second offer proposed “competitive” wage increases and maintains the status quo for work rules within Transport Canada’s updated regulatory framework for rest.

Both rail companies say the next meeting with union leadership will take place May 13.

The workers are represented by three separate collective agreements at the two companies—two at CPKC and one at CN.

The previous contracts expired at the end of 2023, and negotiators have been in talks since the fall. But those talks have gotten nowhere.

“After six months of negotiations with both companies, we are no closer to settling when we first began,” said the president of the TCRC, in a statement. “Both companies are trying to strip our collective agreements of safety-critical rest provisions. We are at an impasse, with the companies failing to understand that the Teamsters will never compromise on safety or bargain with Canadian lives.”

Montreal-based CN operates tracks connecting Canada’s West and East Coasts and includes service from Chicago to both New Orleans and Mobile, Ala. The Montreal-based railroad generated $11.9 billion in freight revenue last year.

CPKC’s network also covers the country’s coasts, but extends through the central U.S. through to Mexico, ending at the western Port of Lazaro Cardenas and the eastern Port of Veracruz. In 2023, the Calgary-based company brought in nearly $9 billion in freight revenue.

Both rail networks cover roughly 20,000 miles each.

“A simultaneous work stoppage at both CN and CPKC would disrupt supply chains on a scale Canada has likely never experienced,” added TCRC. “I would like to make it very clear that provoking a crisis on that scale has not been, and never will be, our goal. The reality is that we would very much like to avoid a work stoppage.”

The professor and Haslam Chair of Logistics at the University of Tennessee said that he didn’t want to diminish the impact of a sustained strike, and how it could affect North American economies. But he was more bullish about the supply chain’s ability to maneuver slowdowns in the wake of so many recent disruptions.

“I think that something like this would have proven crippling just a handful of years back, and supply chain managers now think: Okay, what’s next?” the professor and Haslam Chair of Logistics at the University of Tennessee said.

The stalling of the current negotiations puts even more eyes on the contract talks at U.S. East Coast ports, with the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) currently at an impasse. The parties have stalled in talks on a new master contract for roughly 45,000 of the ILA’s 70,000 dockworkers.

The professor and Haslam Chair of Logistics at the University of Tennessee pointed out that while Sept. 30 is the official expiration for the master contract, the local contracts need to be finalized by May 17 before master negotiations will resume.

NEOLink cooperated with our order processing system. He did not replace it or force solutions. Logfret did it better than other companies on the market – it adapted its system to ours. Logfret didn’t come to us saying, “We have this solution, and you either use it or we won’t cooperate.

Procurement Director

Pumps Manufacturer

We made a huge improvement in global visibility with a global platform—anyone can log into NEOLink and look at a shipment anytime, anywhere in the world. We wanted a freight forwarder with a good technology platform, which could handle the complexities of our business and we found NEOLink!

A global leader in performance materials and specialty chemicals

My suppliers have less or zero experience with international logistics. Thus, not able to create proper documentation which leads to tremendous delay. Thanks to Logfret who provide training to all suppliers and work with us to build up a consolidation hub to reduce transportation costs significantly.

One of the world’s leading designers, manufacturers and distributors of ride control products