Looming Canada rail shutdown threatens US supply chains

A labour dispute between Canada’s two main national rail carriers and workers could lead to a possible lockout as soon as Thursday morning, threatening crucial supply chains across North America.

Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) plan to lock out nearly 9,300 workers as of 00:01 EST (04:01 GMT) failing an eleventh-hour deal.

Canada sends around 75% of all the goods it exports to the US, mostly over rail, and a prolonged dispute could disrupt shipments of a wide range of goods, from grains and beans to potash, coal and timber.

Negotiations have stalled over shift scheduling, fatigue provisions and wages.

On Wednesday, Prime Minister Justin Trudeau urged both sides to continue talks.

“Millions of Canadians, of workers, of farmers, of businesses right across the country are counting on both sides to do the work and get to a resolution,” he said in brief remarks, without taking questions.

Dozens of industry and trade organisations warned last week in an open letter that the disruption would have “an immediate impact” from coast-to-coast and damage Canada’s reputation as a trading partner.

“Factoring in the millions of Canadian jobs that would be impacted, the magnitude of the disruption is daunting,” it said.

On Tuesday, a joint statement from the US and Canadian chambers of commerce warned of the potential “devastating” impact of the stoppage.

It “will be devastating to Canadian businesses and families and impose significant impacts on the US economy”, they said.

A group of agriculture trade associations has urged Ottawa to step in, but the government has declined so far.

Federal Labour Minister Steve MacKinnon is meeting both sides this week but has resisted calls for binding arbitration.

Labour agreements for both railways expired at the end of last year.

Both CPKC and CN have told the union they will begin locking out members on Thursday. Teamsters Canada Rail Conference separately issued a 72-hour strike notice to CPKC on Sunday.

Rail networks in the US and Mexico will continue to operate but a stoppage north of the border could be felt across North America.

On Monday, US Transport Secretary Pete Buttigieg said on X/Twitter that he is monitoring rail negotiations and the potential impact on the cross-border flow of goods.

Some C$380bn (£214bn) in goods is moved by rail each year and railways move half of the country’s goods for export, according to the Railway Association of Canada.

This week, both CPKC and CN have already begun pausing some shipments in preparation for a stoppage. Embargoes are now in place on chemicals such as ammonia, used as a fertiliser, and chlorine, used in water treatment, to avoid them being stranded on the rails if work stops.

Shipping firm Maersk on Monday stopped accepting shipments destined for Canada meant to move by rail and that could not be transported on heavy trucks instead.

The Canadian Pork Council warned that since the industry relies on rail to get feed to its animals, their welfare is at risk.

“Canada’s red meat processors need stable, reliable supply chains to run their businesses,” said Chris White, CEO, Canadian Meat Council in a statement.

“Interruption in service will result in millions of dollars in losses, irreversible reputational damage, environmental disposal challenges, and enormous waste.”

The shutdown could also snarl commuter transit in major Canadian cities like Toronto or Montreal as some dispatchers will be on a work stoppage.

Professor Barry Prentice, director at the University of Manitoba Transport Institute, said the government would likely pass back-to-work legislation in the coming days if the sides couldn’t come to an agreement, as has been done in similar past disputes.

“This isn’t the best way to run the show,” he told the BBC.

“But it seems to be the playbook and and we’re back on this merry-go-round again,”

With additional reporting from Michelle Fleury