TORONTO (AP) — The Canadian government has forced Canada’s two largest freight railroads to strike a deal with its union, the labor minister confirmed Thursday.
Minutes after The Associated Press publicly reported the news, Labor Minister Steven McKinnon announced the decision at a news conference, citing a government official familiar with the situation.
The railway administration said that once the dispute comes to arbitration, the trains will resume.
Both Canadian National and CPKC railroads locked out their employees after the 12:01 a.m. EDT deadline. To settle a dispute Canada Railway Convention passed with Teamsters.
Talks resumed later in the day – as workers staged a sit-in outside as business groups urged the government to force mediation.
The official who spoke to AP did so on condition of anonymity because they were not authorized to speak publicly ahead of the announcement.
Almost all of Canada’s cargo is handled by rail — more than $1 billion Canadian (US$730 million) a day and more than 375 million tons last year — and rail shipments crossing the U.S. border have been halted. About 30,000 passengers in Canada are also affected because their trains use CPKC’s routes. CPKC and CN’s trains continue to operate in the United States and Mexico.
AP reporter Donna Warder A contract dispute involving Canada’s two major freight railroads could have significant economic consequences for Canada and the United States.
Many companies in both countries and across all industries rely on railroads to deliver their raw materials and finished products, so without regular rail service they may have to downsize or close. According to the U.S. Department of Transportation, billions of dollars in goods move between Canada and the United States by rail each month.
“They’re now holding the Canadian economy hostage to impose final binding arbitration and pressure the Liberal government to take away your rights,” said Paul Boucher, president of the Teamsters Canadian Rail Conference, which represents 10,000 engineers, conductors, and shippers. On social media platform X Before notification of Govt.
Locked-out rail workers marched back and forth across the road from CPKC’s headquarters in Calgary, Alberta on Thursday. A few passing cars honked their horns in support. A man in a white truck shouted out the window, “Get back to work!” He shouted.
Both railroads said they would end the lockout if the union agreed to binding arbitration. Trudeau has refused to immediately force the parties into binding arbitration for fear of offending unions and the left-leaning NDP, whose Liberal government relies on support to stay in power.
In anticipation of the shutdown, the White House convened a multi-agency Supply Chain Disruption Task Force to assess the potential impact on American consumers, businesses and workers, according to a Biden administration official. Administration officials are in contact with their Canadian counterparts and are encouraging all parties to stay at the bargaining table and negotiate in good faith, according to the official, who was not authorized to comment publicly and spoke on condition of anonymity.
Most businesses can keep enough materials on hand and in room to store finished products to withstand a short disruption. But ports and other railroads quickly become clogged with cargo that Canadian National and CBKC don’t pick up.
Edward Jones analyst Jeff Windau said many companies have made supply chain changes since the Covid-19 pandemic to help them withstand shorter disruptions. If it drags on the real trouble starts.
Earlier Canadian rail stops lasted only a day or two and usually involved only one of the major railroads, but some extended to eight or nine days. Pressure for government intervention will increase if the shutdown continues, with both railways shut down and affected.
“They’re very integrated and tied to the economy,” Windau said. “The breadth of things they’re hauling. … Ultimately, I think the railroads are going to need to continue operating. So at some point the government will start to get more involved.
Chemical businesses and food distributors will be the first to be affected. Railroads have stopped accepting new shipments of hazardous materials and perishables since they were phased out last week, but most chemical plants said they would be OK for another week.
The auto sector could also quickly see problems as it relies on just-in-time shipments, with significant cross-border deliveries of engines, parts and finished vehicles. Flavio Volpe, president of the Auto Parts Manufacturers Association, posted in X that nearly four out of every five cars manufactured in Canada are exported to the United States by rail. He said a prolonged shutdown could cause temporary work stoppages similar to the impact of the five-day 2022 Ambassador Bridge blockade.
Union Pacific, one of the U.S. railroads that regularly handles freight to and from Canadians, said the stoppage “will keep thousands of cars a day from moving across the border.”
“Everything from grains and fertilizers to lumber for building houses could be affected during the critical summer season,” Union Pacific said in a statement Thursday.
More than 30,000 commuters in Vancouver, Toronto and Montreal felt the pain of the lockdowns firsthand. They had to scramble on Thursday morning to find a new way to work as their passenger trains could not run while CPKC was closed.
CN has been negotiating with the Teamsters for nine months, while CPKC has been trying to reach an agreement for a year, the union said.
Canadian negotiations have been bogged down by concerns about the way rail workers are scheduled and rules designed to prevent fatigue, as well as issues related to providing train workers with adequate rest. Both railroads have proposed moving away from the existing system to an hourly system that pays workers based on miles traveled, which they say will make it easier to provide predictable hours. The union said it did not want to lose hard-fought fatigue protections.
The railways said the hikes are in line with recent deals in the industry and include their contractual concessions. Engineers already earn about $150,000 a year at Canadian National, while conductors earn $120,000, and CPKC says its pay is comparable.
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Funk reports from Omaha, Nebraska. Associated Press writer Amir Madani in Buellton, California, contributed to this report.
