There will be other impacts as well, including on the more than 30,000 commuters in Vancouver, Toronto and Montreal who will be scrambling to find a new way into work because their trains won’t be able to operate over CPKC’s tracks while the railroad is shut down.
Many companies across all industries rely on railroads to deliver their raw materials and finished products, so without regular rail service they may have to cut back or even close.
That’s why the US government kept rail workers from going on strike two years ago and forced them to accept a contract despite their concerns about demanding schedules and the lack of paid sick time.
The railways move an average of 69,000 tons of fertilizer product per day, equivalent to four to five trains, said Fertilizer Canada spokesperson Kayla FitzPatrick.
Disruptions will cost the industry $40 million to $46 million per day in lost revenue, not including logistical and operational costs, she said.
Canadian meat producers warned that a rail stoppage would result in millions of dollars in losses and waste.
The Canadian Meat Council and Canadian Pork Council said some processing plants expect to lose millions of dollars a week, and noted these facilities would be forced to shut down within seven to 10 days of a rail stoppage.
Once the railways resume service, it would take two to five weeks for plants to return to normal capacity.
There is concern that the movement of Ontario soybeans to export markets, primarily Japan, will completely stop just before the harvest, said Crosby Devitt, CEO of Grain Farmers of Ontario.
With crop-shipment delays lasting beyond a week, companies must pay contract penalties and demurrage for ships waiting for grain to arrive, piling significant cost onto the industry, said Wade Sobkowich, executive director of the Western Grain Elevator Association.
“We’ll be playing catch-up for the rest of the harvest year, till next July,” he said.
Impact on US
Experts say the stoppage would eventually disrupt North America’s agricultural supply chain, snarling shipments of everything from wheat to fertiliser and meat.
Canada is the world’s top exporter of canola, used in food and biofuel, and of potash fertilizer, as well as the No. 3 wheat exporter.
While a lockout or strike would directly involve 10,000 Canadian employees of the railroads, not those in the US, it would have knock-on effects on the US economy due to the countries’ criss-crossing rail lines.
As per CNN, auto plants in the US could briefly shutter for lack of engines, transmissions or stampings.
Water treatment plants near the Canada border might also fall short of chlorine.
Which is why nearly three dozen North American agriculture groups, in a joint letter to the US and Canadian governments on Monday, urged action to avoid a stoppage.
“The impact of a strike would be particularly severe on bulk commodity exporters in both Canada and the United States as trucking is not a viable option for many agricultural shippers,” the letter said, citing large volumes and vast distances.
The stoppage will halt shipments of US spring wheat from Minnesota, North Dakota and South Dakota to the Pacific Northwest for export, said Max Fisher, chief economist at the National Grain and Feed Association.
CPKC ships grain from the Dakotas and Minnesota to west-coast export terminals via Canada, according to the US government.
US farmers still have nearly two-thirds of the spring-wheat crop to harvest, the US Department of Agriculture said on Monday. Soy, corn and canola harvests are still a few weeks away in North America.
Shippers are also concerned about U.S. corn products heading to Canada. In 2023, Canada was the top destination for US ethanol exports, and almost three-quarters traveled by rail, according to USDA.
“We just can’t have the railroads not operating,” Fisher said.
The US exported $28.2 billion of agricultural products last year to Canada, its third-largest destination for agricultural exports behind China and Mexico, USDA said.
The US imported $40.1 billion of Canadian agricultural products last year, making Canada the second-largest origin of U.S. agricultural imports behind Mexico, the agency said.
About 85 per cent of the 13 million metric tons of US potash imports last year came from Canada, nearly all of which crossed by rail, according to USDA.
US corn farmers apply fertilizers in fall and spring, but potash imports from Canada are consistent throughout the year, said Krista Swanson, chief economist for the National Corn Growers Association.
“Given constant trade flows and the importance of the trade relationship between the two nations, there is no good time for this to occur,” Swanson said.
Canada’s railroads have sometimes shut down briefly in the past during contract negotiations — most recently CPKC was offline for a couple days in March 2022 — but it is rare for both railroads to stop at the same time. The impact on businesses will be magnified because both CN and CPKC have stopped.
Both CN and CPKC had been gradually shutting down since last week ahead of the contract deadline. Shipments of hazardous chemicals and perishable goods were the first to stop, so they wouldn’t be stranded somewhere on the tracks.
As the Canadian contract talks were coming down to the wire, one of the biggest US railroads, CSX, broke with the US freight rail industry’s longstanding practice of negotiating jointly for years with the unions. CSX reached a deal with several of its 13 unions that cover 25 per cent of its workers ahead of the start of national bargaining later this year.
The new five-year contracts will provide 17.5 per cent raises, better benefits and vacation time if they are ratified. The unions that have signed deals with CSX include part of the SMART-TD union representing conductors in one region, the Transportation Communications Union, the Brotherhood of Railway Carmen and the Transport Workers Union.
TCU President Artie Maratea said he’s proud that his union reached a deal “without years of unnecessary delay and stall tactics.”
‘Best interest of both sides’
Trudeau has been reluctant to force arbitration because he doesn’t want to offend the Teamsters Canada Rail Conference and other unions, but he urged both sides to reach a deal Wednesday because of the tremendous economic damage that would follow a full shutdown.
It is in the best interest of both sides to continue doing the hard work at the table,” Trudeau said to reporters in Gatineau, Quebec. “Millions of Canadians, workers, farmers, businesses, right across the country, are counting on both sides to do the work and get to a resolution.”
Numerous business groups have been urging Trudeau to act.
The Guardian quoted them as saying in a joint statement that the government “has a responsibility to protect the Canadian public and maintain national security, and it is time to act decisively to fulfil that obligation”.
Trudeau said Labor Minister Steven MacKinnon met with both sides in the CN talks in Montreal on Tuesday and would be on hand for the CPKC talks in Calgary, Alberta. MacKinnon later said he wrapped up his meetings with the rail companies and the Teamsters.
‘Workers, farmers, commuters and businesses can’t wait. Canadians need urgency at the table. The parties need to get deals done now,” he posted on the social platform X.
With inputs from agencies
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Publish date : 2024-08-22 00:01:00
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