CN Preps for Possible Strike by Pausing Intermodal Cargo into Canada

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Canada National Railway (CN) will halt all intermodal traffic out of the U.S. entering Canada starting Friday as the railway implements the next phase of its network shutdown.

The move is another proactive measure from the railway, which is anticipating employees to go on strike on Aug. 22, which would shutter operations at both CN and the other Class I railroad operating in the country, Canadian Pacific Kansas City (CPKC).

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In a customer notice, CN said it would stop accepting all intermodal traffic into the country from the Port of New York & New Jersey, as well as various points in Pennsylvania, Illinois, Georgia and Indianapolis.

Intermodal services involve the movement of cargo in containers by more than one mode of transportation, usually rail and truck. This freight largely consists of consumer products, as well as international cargo taken into North America via ports. CN already saw intermodal volume drop 17 percent from May 12 to July 14, the company revealed in an earnings call last month.

CN and CPKC moved 1.24 million intermodal containers in 2023 across the U.S. and Canada, representing 8 percent of the Class I railroad total, according to carload data submitted to the U.S. Department of Agriculture.

All U.S. domestic intermodal shipments will continue to move per normal operations.

Canada’s iteration of the Teamsters is seeking a new labor agreement for roughly 9,300 employees at both railroads, but the talks has seemingly brought neither sign closer to a deal, leading to the union to call for a strike. In response, both railroads said they would lock out the union employees if they didn’t agree to a new deal.

The two prior collective agreements expired on Dec. 31, 2023, but have been extended under Canadian law until the parties reach a new deal.

The union has declined requests for binding arbitration from both railroads in favor of continued bargaining, but called lockout threat an “unnecessary escalation” by the rail operators.

As the labor drama unfolds, Brian Kempisty, founder of drayage and transloading services provider Port X Logistics, says importers of containerized cargo must consider alternative port destinations such as Los Angeles, Long Beach or Seattle to hedge against more embargoes.

“If you’re a Tier 1 supplier, it’s probably prudent at this point to divert and transload 10 or 15 percent just to make sure that you’re not in jail and shutting lines down ,” Kempisty told Sourcing Journal.

A potential rail strike would have major impacts on the Port of Prince Rupert due to its distance from more densely populated areas, Kempisty said. The port is a major hub for CN and is the closest major North American port to Asia, but if the railroad doesn’t run, shippers will have to divert the product to a different port or shift their operations to pick up the cargo.

“When it works, it works very, very effectively, but when there’s disruptions—say you need to transload something in Prince Rupert—there’s not a lot of labor in a town of 10,000 people. There’s not a lot of truck drivers,” Kempisty said. “So that pre-planning if you are going to try to transload in Prince Rupert is ultra important, because you’re basically deadheading 923 miles to go get the freight, and you need to ensure the four or five warehouses there that you have labor and capacity to handle that throughput of transloading.”

In the first iteration of the network shutdown, CN and CPKC halted the transport of hazardous goods that were toxic or poisonous by inhalation on the grounds that they couldn’t be left out on the railroad unsupervised in the event of a labor stoppage.

CPKC has not released its schedule of embargoes, but freight companies are anticipating a release, according to a Wall Street Journal report.

Canada’s government, which estimates the two railroads transport close to 400 billion Canadian dollars ($292 billion) in goods annually, has called on all sides to remain at the bargaining table.

The U.S. would also be impacted if a strike went beyond the current embargoes, with Canada sending roughly 75 percent of all goods exports to the country.

The U.S. Surface Transportation Board said Wednesday that it is actively monitoring the potential for a rail labor strike, and said it is aware that embargoes have been issued and that their scope could expand in the coming days. The Board is monitoring the implementation and effects of those embargoes on the network.

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CN Preps for Possible Strike by Pausing Intermodal Cargo into Canada

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