TORONTO — Businesses and consumers in Canada and the United States were at risk of significant economic damage after Canada’s major freight railways shut down Thursday due to a contract dispute with their workers.
Canadian government officials held an emergency meeting to discuss the shutdown. Canadian National and CPKC railways both locked out their employees after the 12:01 a.m. EDT deadline expired Thursday, without new agreements being reached with the Teamsters Canada Rail Conference, which represents about 10,000 engineers, conductors and dispatchers.
All rail traffic within Canada and all shipments crossing the U.S. border have been halted, although CPKC and CN trains will continue to operate in the United States and Mexico.
According to the U.S. Department of Transportation, billions of dollars worth of goods move between Canada and the United States by rail each month. Many businesses across all sectors rely on rail to deliver their raw materials and finished products. Without regular rail service, they could be forced to scale back operations or even close down.
Both railroads have said they will end the lockout if the union agrees to binding arbitration, while the unions have said they are still at the negotiating table.
Business groups have urged the government to intervene, but Prime Minister Justin Trudeau has refused to force the parties into binding arbitration for fear of offending the Teamsters Canada Rail Conference and other unions.
Canadian Minister of Public Services and Procurement Jean-Yves Duclos urged both sides to resolve their differences.
“They have to do their job to reach an agreement quickly,” he said at a news conference.
Canadian Labour Minister Steven MacKinnon had scheduled meetings “throughout the day on this extremely important issue,” according to a statement from MacKinnon’s office.
Business leaders are furious at the government’s lack of intervention.
“When the supply chain is completely paralyzed from coast to coast, nothing good can come of it,” said John Corey, president of the Freight Management Association of Canada. “It’s maddening. People are going to lose their jobs. The economy is going to have real challenges.”
Most companies will likely have enough supplies on hand and enough space to store their finished products to withstand a brief disruption. But ports and other rail lines will quickly become clogged with stranded shipments that Canadian National and CPKC will be unable to retrieve.
For Union Pacific, one of the U.S. railroads that regularly transfers shipments to and from Canadians, the rail shutdown “means thousands of carloads per day will not cross the border,” the company said in a statement Thursday.
“Everything from grain and fertilizers during the critical summer season to lumber for home construction could be affected,” the company said.
More than 30,000 transit riders in Vancouver, Toronto and Montreal were the first to feel the effects of the lockout, scrambling Thursday morning to find a new way to get to work because their commuter trains are unable to run during the CPKC shutdown.
CN had been negotiating with the Teamsters for nine months while the CPKC had been trying to reach an agreement for a year, the unions said.
Two years ago, the United States faced a similar widespread shutdown of rail services due to a labor dispute, but the government forced the union to accept a contract, despite the labor group’s concerns about demanding schedules and a lack of paid sick leave.
Canadian railways have occasionally been temporarily shut down in the past during contract negotiations (most recently CPKC in March 2022), but it is rare for both railways to shut down at the same time. The impact on businesses will be amplified because both CN and CPKC have ceased operations.
Both rail lines have been gradually shut down since last week in anticipation of the contract deadline. Shipments of hazardous chemicals and perishable goods were the first to be stopped, so that they would not get stuck somewhere on the tracks.
Negotiations have stalled over issues related to how rail workers are scheduled and concerns about rules designed to prevent fatigue and ensure adequate rest for train crews. Both rail companies have proposed moving from the current system, which pays workers based on the miles traveled on a trip, to an hourly system that they say would make it easier to provide predictable time off.
The railways said their contract offers included increases in line with recent industry agreements. Engineers earn about $150,000 a year at Canadian National, while conductors earn $120,000, and CPKC says its salaries are comparable.
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Funk reported from Omaha, Nebraska.
