Huge Canadian railway work stoppage threatens U.S. economy

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Canada’s two largest railroads shut down early Thursday in response to a labour dispute that could have dire consequences for North America’s economy, threatening deliveries of cars, timber, petroleum products, grain and other crucial supplies.

The Canadian Pacific Kansas City railroad and the Canadian National Railway locked out Teamsters union members at 12:01 a.m. after they failed to reach a deal with Teamsters Canada Rail Conference on a contract late Wednesday, despite days of heated negotiations.

The Canadian government has rejected calls to intervene, but Canadian Prime Minister Justin Trudeau on Wednesday urged parties to “get to a resolution.”

The Teamsters say the railways are requesting that the union make concessions “on crew scheduling, rail safety, and fatigue management” – echoing union concerns at the heart of a threatened 2022 rail strike in the United States. Meanwhile, the railroads say they have offered significant pay increases and addressed concerns about scheduling.

Teamsters Canada, which represents nearly 10,000 rail workers at the two companies, has been without contracts at the companies since the end of 2023.

The fallout of a Canadian rail strike could be far-reaching in the United States and Canada. Businesses have warned of “devastating consequences” that could trigger inflated prices and supply-chain shortages across North America and beyond. The U.S. railway Union Pacific has said a shutdown would sideline more than 2,500 railcars that normally cross the U.S.-Canada border each day, according to a company document reviewed by The Washington Post.

This week, in a letter addressed to President Joe Biden as well as other U.S. and Canadian officials, dozens of trade associations, including the American Farm Bureau Federation and the National Cotton Council, said a rail shutdown would trigger “harmful consequences for Canadian and American agricultural producers, the agricultural industry, and both domestic and global food security.”

Each day of a work stoppage would require three to five days for the railroads to recover, said Jonathan Abecassis, a Canadian National spokesman.

The strike will also have major implications for travelers on Canada’s passenger rail lines, forcing tens of thousands of commuters in Canada’s three largest cities to find alternate transportation.

The railroads started winding down operations this week in anticipation of a shutdown. Shipments of perishable and hazardous products – such as frozen food, propane and chlorine used to purify water – had been halted to avoid stranding dangerous or spoilable products. The companies in recent days began stopping rail shipments that start in Canada, as well as those originating in the United States and headed for Canada. Now that massive flow of goods has screeched to a complete halt.

Murad Al-Katib, chief executive of AGT Foods, one of the world’s largest suppliers of staple foods such as beans and wheat, said food supply chains would be “immediately disrupted,” noting that many commodities – such as peas, lentils, chickpeas and durum wheat used for pasta – travel across the Canadian border to U.S. processing and packaging facilities.

“This is a disastrous outcome that’s going to lead to higher prices and processing plants shutting down,” Al-Katib said.

Some companies have made contingency plans to transport goods by truck, but logistics experts say truckers will not be able to meet the excess demand.

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The Brotherhood of Locomotive Engineers and Trainmen, one of the largest U.S. rail unions, which is affiliated with the Teamsters, has told some 51,000 stateside members that they can refuse to cross any picket lines operated by Canadian rail workers, according to a copy of the letter obtained by The Post.

Canadian Pacific Kansas City served a lockout notice to the union on Aug. 9. Then the union on Sunday issued a strike notice to the company. Separately, Canadian National issued the union a lockout notice on Sunday.

The Teamsters said the railroads are demanding “grueling on-call schedules” and concessions around worker scheduling and safety provisions, “regardless of the risks” as the railroads face worker shortages. Canadian National is also forcing workers to relocate across the country for months at a time to combat understaffing, the union said. The union said it does not want to make sacrifices on its workers’ availability or relocations.

Paul Boucher, president of Teamsters Canada Rail Conference, said in a statement on Thursday that the companies “have shown themselves willing to compromise rail safety and tear families apart to earn an extra buck,” adding that “their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy.”

Both rail companies said they’ve made generous offers to the union.

Canadian National said in a statement Thursday that the company “had no choice but to finalize a safe and orderly shutdown and proceed with a lockout,” adding that the union had “not shown any urgency or desire to reach a deal that is good for employees, the company and the economy.”

Patrick Waldron, a spokesman for Canadian Pacific Kansas City, said in a statement Tuesday that the railway had offered “significant wage increases” but had withdrawn an improvement intended to address the union’s concerns about scheduling because of union leadership’s opposition to that offer.

Rail transport carries billions of dollars in goods between Canada and the United States every month, according to the U.S. Transportation Department. Roughly 30 percent of all freight rail operations in Canada cross into the United States each year, the Association of American Railroads said.

In 2022, Congress and Biden intervened in a dispute between U.S. railways and unions about concerns similar to those reported by Canadian rail workers, such as severe understaffing and grueling schedules, forcing a deal that averted a strike.