Business groups have warned of “devastating” consequences for the North American economy as 9,300 workers threaten a strike against Canada’s two largest freight railways as soon as Thursday.
Canadian National and Canadian Pacific Kansas City said they plan to lock out railway workers and shut down their operations in the country if they cannot reach an agreement on pay and work schedules with the Teamsters Canada union before their labour contracts expire later this week.
The two railways stretch across Canada, into the US and in the case of Canadian Pacific, into Mexico. A strike would disrupt the operations of several critical industries across the continent, including agriculture, construction, meat processing and car manufacturing, and leave tens of thousands of commuters without transportation to Canada’s largest cities.
It would be the first time in Canadian history that both rail operators had a labour stoppage at the same time.
The US Chamber of Commerce and Canadian Chamber of Commerce issued a joint statement on Tuesday calling on Ottawa to “immediately intervene” to avert a disruption.
“A stoppage of rail service will be devastating to Canadian businesses and families and impose significant impacts on the US economy,” the business groups said.
Their comments were the latest in an escalating series of warnings as contract talks go down to the wire. Pete Buttigieg, US transportation secretary, said earlier this week that the Biden administration was monitoring the labour negotiations, engaging with the Canadian government and tracking flows of goods to the US.
Jim Vena, chief executive of US railroad Union Pacific, wrote to Canadian labour minister Steven MacKinnon asking him to intercede in the dispute, according to a copy of the letter seen by the Financial Times, saying a prolonged shutdown would have “significant cascading effects”.
A coalition of US food and agriculture groups wrote to Canadian Prime Minister Justin Trudeau urging action, as trucks are uneconomical for long-haul crop shipments. “Agriculture ships more than 25,000 cars per week and this figure will go to zero during a strike or lockout,” they wrote.
Keith Creel, chief executive at Canadian Pacific Kansas City, said on Monday that the railroad was “firmly committed” to reaching an agreement and had offered to enter binding interest arbitration with the union.
On Sunday, Canadian National said “no meaningful progress has occurred, and the parties remain very far apart”.
The dispute is the first big challenge for MacKinnon, who took over the labour portfolio in July after his predecessor left the post for personal reasons. MacKinnon is meeting both rail operators this week, his office said on Monday. Last week, he declined to impose binding arbitration at Canadian National’s request, telling the parties to bargain in good faith.
The strike threat had already begun to have an impact on supply chains across the continent, Union Pacific’s Vena wrote. Some ocean shipments bound for Canadian ports have rerouted to the US and trains have stopped carrying hazardous cargo, including fertiliser. It could take the railways three to five days to catch up from each day they were shut down, he estimated.
The concerns this week echoed those in 2022 when freight rail workers threatened to strike across the US. A shutdown was narrowly averted as federal officials mediated a deal days before the labour contracts expired.