The economic impacts of the Canadian rail shutdown are expected to come into sharp focus next week as shippers and producers begin to take stock of delays and losses.
The unprecedented shutdown that began Thursday at Canadian National Railway Company (CN) and Canadian Pacific Railway Kansas City (CPKC) is expected to end Monday morning, following a decision Saturday by the Canada Industrial Relations Board (CIRB) ordering the companies and their workers to resume operations.
While the full financial impact of the shutdown remains uncertain, Moody’s has warned it could cost the Canadian economy $341 million per day. The rating agency said agriculture, forestry and manufacturing were among the hardest-hit sectors.
And workers at Conifex Timber, a sawmill in British Columbia, quickly noticed the effects of the work stoppages.
The management decided to halve working hours from Monday and maintained its decision despite the CCRI order.
Despite the brevity of the train shutdown, Conifex’s reduction from two shifts a day to one shift will last “for the foreseeable future,” chief operating officer Andrew McLellan said last week.
“It may be some time before our shipping levels normalize,” Ken Shields, Conifex’s president and CEO, said in a telephone interview.
Fertilizer Canada, which represents fertilizer producers and distributors, said its members have lost tens of millions of dollars because of the shutdown. The industry was among the first to be hit by a wind-down of operations at both railways that began about two weeks ago as companies sought to avoid leaving products like ammonia and other dangerous goods as well as meat and medicines on the tracks.
“The disruptions are costing us millions and millions of dollars a day in lost revenue,” said Karen Proud, CEO of the industry group.
Canadians from coast to coast to coast may not be immune to the impacts either.
“These costs that come into the system go one way, and it’s the consumer who’s at the end of the line,” she said.
The biggest consequence of the ruling could be a loss of confidence abroad in Canada as a reliable place to do business, Mr.me Proud, noting that the standoff marked the latest in a series of labor disruptions over the past 18 months.
My American colleagues who were here were really amazed that this could even happen in this country.
Karen Proud, CEO of Fertilizer Canada
Slow recovery in sight
The decision issued Saturday by the Canada Industrial Relations Board (CIRB) imposes binding arbitration on all parties involved following the shutdown that has paralyzed freight shipments and hampered travel across the country.
The commission’s decision came two days after Labour Minister Steven MacKinnon ordered the independent tribunal to begin the arbitration process, saying the sides were at an impasse in contract negotiations and Canadian businesses and trade relations were at stake.
The Teamsters union has vowed to appeal the decision in court.
As with the shutdown, the recovery will be slow, with Canadian Pacific saying a full recovery will likely take “several weeks.”
PHOTO PATRICK SANFAÇON, LA PRESSE ARCHIVES
The Teamsters union has vowed to appeal the decision in court.
“It’s not like a model train set down in the basement that you just flip a switch and it starts up again. It takes a while for things to get moving,” said Matthew Holmes, manager of policy and government relations at the Canadian Chamber of Commerce. “There’s going to be a long line up here.”
The ripple effects could include the loss of customers, which was part of the fallout from the 13-day strike by 7,400 British Columbia longshoremen last summer.
“We’ve already seen lost relationships from the United States and overseas, where they were shipping to our ports. Some of that business has not been restored,” Holmes said in a telephone interview.
Last year, the number of strike days reached its highest level since 1986, he said. Workers along the St. Lawrence Seaway, school support staff in Nova Scotia, federal government employees at various locations and, briefly, WestJet pilots have all taken strike action in 2023. And more labour disputes could be on the horizon, as Air Canada pilots and Montreal longshoremen negotiate with their employers.
Demands for reforms
Industry players have called for reforms to avoid labour deadlocks in key sectors.
Karen Proud of Fertilizer Canada called for updates to the Canada Labour Code, such as mandatory “pre-negotiation” around binding arbitration terms to streamline the process.
Minimum contract durations and more cooling-off periods would also help avoid rail closures “every two years,” she added.
Canadian Pacific workers have gone on strike in 2022, 2015 and 2012. Canadian National employees last went on strike in 2019 and were on strike for eight days.
Mme Proud also said more products should be considered essential goods, allowing them to continue to be transported even during a work stoppage.
Earlier this month, the Canada Industrial Relations Board ruled that a rail shutdown would not pose a “serious danger” to public health or safety, paving the way for a full-blown strike or lockout.
Canadian Pacific lifted its lockout after the CIRB ruling Saturday night, but employees refused the CPKC’s request to return to work Sunday. Their strike will end at midnight Monday, in accordance with the court’s ruling.
CN workers, who issued a 72-hour strike notice Friday after the company lifted its own lockout the day before, are already back on the job to complete the complex process of restarting operations on 32,000 kilometres of track.