TORONTO (AP) — Canada’s two major freight railroads have come to a complete standstill because of a wage dispute with their workers. If train service is not resumed soon, it could result in significant economic damage to businesses and consumers in Canada and the United States.
Both Canadian National and CPKC railroads locked out their employees after a 12:01 a.m. Eastern Time deadline passed Thursday without new agreements being reached with the Teamsters Canada Rail Conference, which represents about 10,000 train drivers, conductors and dispatchers.
All rail traffic in Canada and all shipments crossing the US border have been suspended. However, CPKC and CN trains continue to operate in the US and Mexico.
According to the U.S. Department of Transportation, billions of dollars worth of goods are transported by rail between Canada and the United States every month.
“If rail service comes to a halt, businesses and families across the country will feel the impact,” Jay Timmons, president and CEO of the National Association of Manufacturers, said in a statement. “Manufacturing workers, their communities and consumers of all types of products will be impacted by supply chain disruptions.”
There will also be other impacts, such as over 30,000 commuters in Vancouver, Toronto and Montreal being forced to find a new way to work because their trains cannot run along the CPKC line during the closure.
Business associations had called on the government to intervene, but Prime Minister Justin Trudeau has so far refused to force both sides into arbitration.
CN said it was waiting for a response to a final offer made late Wednesday when workers were locked out. CPKC spokesman Patrick Waldron said the union rejected its final offer, which CEO Keith Creel made in person at the bargaining table. Both railroads have said they would end the lockout if the union agrees to binding arbitration.
“Despite the lockout, the Teamsters remain at the bargaining table with both companies,” the union said in a statement.
CN has been negotiating with the Teamsters for nine months, while CPKC has been trying to reach an agreement for a year, the unions said.
Many companies in all sectors rely on the railways to deliver their raw materials and finished products. Without regular rail services, they may have to limit or even stop production altogether.
That’s why the U.S. government prevented a railroad workers’ strike two years ago and forced them to accept a collective bargaining agreement, despite concerns about demanding working hours and the lack of paid sick leave.
Canada’s railways have sometimes shut down briefly in the past during contract negotiations – most recently CPKC was offline for a few days in March 2022 – but it is rare for both railways to shut down at the same time. The impact on companies will be even greater because both CN and CPKC are shut down.
Both CN and CPKC had been gradually phasing out production since last week before the end of their contracts. The transport of dangerous chemicals and perishable goods was the first to be stopped so that they would not get stuck somewhere on the tracks.
As collective bargaining in Canada entered the home stretch, one of the largest U.S. railroads, CSX, broke with the U.S. freight rail industry’s longstanding practice of bargaining jointly with unions for years. CSX reached a settlement with several of its 13 unions, covering 25% of its workforce, before nationwide collective bargaining begins later this year.
The new five-year contracts, if ratified, will provide for a 17.5% wage increase, better benefits and more vacation time. Unions that have signed contracts with CSX include a branch of the SMART-TD union, which represents conductors in one region, the Transportation Communications Union, the Brotherhood of Railway Carmen and the Transport Workers Union. TCU President Artie Maratea said he was proud his union reached a contract “without years of unnecessary delays and delaying tactics.”
Trudeau is hesitant to force arbitration because he does not want to alienate the Teamsters Canada Rail Conference or other unions. However, he urged both sides to reach an agreement on Wednesday because a full shutdown would cause enormous economic damage.
“It is in the best interest of both sides to continue the hard work at the negotiating table,” Trudeau told reporters in Gatineau, Quebec. “Millions of Canadians, workers, farmers, businesses across the country are counting on both sides to do their work and come to a solution.”
Numerous business associations are urging Trudeau to act.
Trudeau said Labour Minister Steven MacKinnon met with both sides at the CN talks in Montreal on Tuesday and will be present at the CPKC talks in Calgary, Alberta. MacKinnon later said he had completed his meetings with the railroads and the Teamsters.
“Workers, farmers, commuters and businesses cannot wait. Canadians need urgency at the negotiating table. The parties must make deals now,” he posted on the social platform X.
Negotiations have reached a deadlock over the allocation of railway employees and regulations to prevent fatigue and ensure sufficient rest periods for train staff. Both railway companies had proposed switching from the existing system, in which employees are paid by the number of kilometres travelled, to an hourly wage system, which they believe would make it easier to guarantee planned leisure time.
The railroads said their collective bargaining agreements included pay increases consistent with recent industry deals. Train drivers at Canadian National earn about $150,000 a year, while conductors earn $120,000. CPKC says the wages are comparable.
Similar quality of life concerns due to demanding work hours and lack of paid sick leave nearly led to a strike by U.S. railroad workers two years ago until Congress and President Joe Biden intervened and forced unions to agree to a deal.
If there are no rail connections, manufacturing companies may have to slow down or even stop production altogether. Ports and grain elevators will quickly become clogged with waiting shipments. And if the conflict drags on for a few more weeks, water treatment plants across Canada may have to go without new supplies of chlorine.
“If the railway does not pick up the goods arriving by ship, the terminals will soon be full. And from that point on, no more ships will be able to dock at the terminal,” says Victor Pang, chief financial officer of the Vancouver Fraser Port Authority.
He referred to the 13-day strike by 7,400 dockworkers in British Columbia last summer, which manufacturers said blocked the flow of goods worth 500 million Canadian dollars ($368 million) a day.
Some companies would no doubt resort to trucking to transport some of their products, but there is no way to offset the volume that rail delivers. It would take about 300 trucks to transport everything that a single train can carry.
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Funk reported from Omaha, Nebraska.
Prime Minister Justin Trudeau makes a statement on the possible rail strike following an event in Gatineau, Quebec, Wednesday, Aug. 21, 2024. (Sean Kilpatrick/The Canadian Press via AP)
