Major damage threatens trade in North America as two major rail freight carriers halted operations in Canada. The two companies are increasingly at loggerheads with the largest rail workers’ union.
Coal, grain and fertilizer shipments between Canada and the United States are at risk of major disruptions in the coming days. About 14 percent of trade between Canada and the United States is by rail. Researchers at the Moody’s agency estimate that rail strikes threaten to cost the equivalent of 226 million euros a day. Affected companies and various industry groups spoke of “devastating effects” on trade in Canada, the United States and Mexico.
Wage negotiations between two railroad companies, Canadian National Railway (CN Rail) and Canadian Pacific Kansas City (CPKC), broke down on Thursday. CN Rail and CPKC have now declared a so-called ‘lock-out’. This means companies are forcing their employees to stop working.
CN Rail and CPKC together form a virtual duopoly in Canadian rail. Not only do they own over three-quarters of all railroads, but they also account for almost the same share (in tons) of all freight carried by rail. A significant portion of the inbound and outbound traffic at the ports of Vancouver and Montreal, for example, is by rail.
Together, CN Rail and CPKC have almost a dual line of railroads
CN Rail operates a network from Vancouver in western Canada to Halifax in the east of the country and New Orleans in the southern United States. CPKC connects major industrial centers in Canada with US ports in Corpus Christi (Texas) and New Orleans, and ports on the east and west coasts of Mexico.
Wage contracts and work schedules
The two trucking companies and the union have been in discussions for some time over wage contracts and work schedules for more than nine thousand unionized employees. The Teamsters, among other things, want drivers, conductors and other railroad employees to work ten-hour shifts a day, as they do now. CN Rail and CPKC want to go twelve hours a day. The mandatory rest period between two shifts should also be changed from the present 24 hours to twelve hours in case of employers.
Tens of thousands of train passengers in major cities like Toronto, Vancouver, and Montreal were also affected. The track in these cities is owned by CPKC and rail traffic has come to a complete standstill there.
The Canadian government has invited the two carriers and the union to resolve the conflict at the negotiating table. Canadian Prime Minister Justin Trudeau’s government could submit the dispute to an independent arbitration agency, but this has yet to be selected.
In 2019, clashes between CN Rail and unions resulted in an eight-day national rail strike. The strike caused severe fuel shortages in Canada. (Reuters, Bloomberg)