Canada’s two largest railways are beginning to shut down their shipping networks as a labour dispute with the Teamsters union threatens to lead to lockouts or strikes that would disrupt cross-border trade with the United States.
Canadian Pacific Kansas City and Canadian National Railways, which transport millions of tons of freight across the borderhave stopped handling certain shipments of hazardous materials and refrigerated products.
Both sides are threatening to lock out Teamsters Canada workers starting Thursday if no agreement is reached.
On Tuesday, CPKC will stop all shipments originating from Canada and all shipments originating from the United States destined for Canada, the railway said Saturday.
The Canadian Press reported that on Friday, Canadian National banned container imports from U.S. partner railroads.
Jeff Windau, an industrial analyst at Edward Jones & Co., said his firm expects the work stoppages to last only a few days, but if they last longer, there could be significant supply chain disruptions.
“If something were to continue in the long term, I think there would be significant potential problems, given the amount of freight that is handled every day,” Windau said. “Rail, overall, touches almost the entire economy.”
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The two railways carry about 40,000 wagons loaded with goods Every day, exports of cars and spare parts, chemicals, forest products and agricultural products will be hit hard, he added, especially as the harvest season approaches.
Both railroads have extensive networks in the United States, and CPKC also serves Mexico. These operations will continue to operate even in the event of a work stoppage.
The CPKC said it remains committed to avoiding a work stoppage that could harm Canada’s economy and international reputation. “However, we must take responsible and prudent steps to prepare for a potential rail service disruption next week,” spokesperson Patrick Waldron said in a statement.
The network closure will allow the railway to remove dangerous goods from the IT before any shutdown, the CPKC said.
Union spokesman Christopher Monette said in an email Saturday that negotiations are continuing, but the situation has moved from a possible strike to an “almost certain lockout” of the railroads.
The CPKC said negotiations were expected to continue Sunday with the union, which represents nearly 10,000 workers at both railways. The company said it continued 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 seeks a resolution that allows the company to return to what it does best as a team: moving customers’ goods and the economy,” the railway said.
Negotiations have been ongoing since last November and the contracts expired at the end of 2023. They were extended as the talks progressed.
The union said the company’s demands over 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.”
