Canada’s two largest railways have begun halting freight traffic in anticipation of a work stoppage that could also disrupt cross-border trade between Canada and the United States.
Canadian Pacific Kansas City (CPKC) and Canadian National Railways, which transport millions of tons of freight across the border, have both stopped handling some shipments of hazardous materials and refrigerated goods.
The two companies are threatening to lock out Teamsters workers starting Thursday if no deal is reached.
The CPKC warned on Saturday that it will stop all shipments from Canada to the United States and from the United States to Canada as of Tuesday.
The Canadian Press reported Friday that an internal CN memo indicated the company had begun embargoing certain dangerous goods from the United States in anticipation of a work stoppage.
Jeff Windau, an industrial analyst for Edward Jones&Co., said his firm expects the work stoppages to last only a few days, but if they continue, there could be significant disruptions to the U.S. supply chain.
“If something were to extend into the longer term, there would be significant potential problems, given the amount of freight that is handled every day,” Windau warned. “Railways generally touch almost the entire economy.”
The two railroads handle about 40,000 freight cars a day, worth about $1 billion, Windau said. The transportation of automobiles and auto parts, chemicals, forest products and agricultural products would be hit hard, he warned, especially as harvest season approaches.
Both railroads have extensive networks in the United States, and CPKC also serves Mexico. Those operations will continue to operate even in the event of a work stoppage.
An “almost certain lockout”
The CPKC said it remains committed to avoiding a work stoppage that would harm Canada’s economy and international reputation. “However, we must take responsible and prudent steps to prepare for a potential disruption to rail service next week,” spokesperson Patrick Waldron said in a statement.
The network closure will allow the railway company to remove dangerous goods from its network before any shutdown, the CPKC assured.
Union spokesman Christopher Monette said in an email Saturday that negotiations were continuing, but the situation had moved from a possible strike to an “almost certain lockout.”
The CPKC said negotiations are expected to continue Sunday with the union, which represents nearly 10,000 workers at both railway companies. The company said it continues to negotiate in good faith.
Canadian National said in a statement Friday that there had been no significant progress in negotiations and that it hoped the union would “engage meaningfully” at a meeting scheduled for Saturday.
“CN wants a resolution that allows the company to return to what it does best as a team: moving customers’ goods and the economy,” the rail group said.
Negotiations have been ongoing since last November and the contracts expired at the end of 2023. They were extended while talks continued.
The union said the company’s demands regarding crew scheduling, rail safety and worker fatigue are the main sticking points.
Windau said the trucking industry currently has significant excess capacity and may be able to offset some of the railroads’ shipping volumes, but “you’re not going to be able to replace all of that with trucking.”