Supply Chain Scanner - Week of July 15, 2024
Weekly blog by Emily Atkins
Are you ready for a rail strike?
A rail strike this summer remains a possibility, however, the Canada Industrial Relations Board (CIRB) has yet to rule on the minister of transport’s request to determine whether any rail services are to be deemed essential. The hearings have delayed potential strike action until they are resolved.
The Teamsters Canada Rail Congress (TCRC), the union representing 10,000 conductors, locomotive engineers, and yard workers, at both CN and CPKC railways, has taken second strike votes to reaffirm workers’ interest in taking labour action. This was needed after the CIRB intervention allowed a May strike vote to expire – they’re only good for 60 days. The union confirmed that its workers do indeed favour a strike, with 98.6 voting in favour with an 89.5 percent turnout.
For its part, the union said the railways are trying to “move the clock back on working conditions and rail safety,” in order to alleviate labour shortages. TCRC claims CPKC is trying to remove safety-critical fatigue provisions from the contract to eke the most working time out of employees.
CN’s offer is contingent on the acceptance of a forced relocation scheme, the union asserts. Their proposal would see workers ordered to move across the country to fill labour shortages in remote areas of Canada. CN’s offer is also contingent on the union agreeing to extend workdays in all provinces west of Ontario.
“With this renewed strike mandate, we intend to go back to the bargaining table, work with federal mediators, and do everything in our power to reach a fair deal for our members and protect all Canadians,” said Paul Boucher, president of TCRC. Both railways offered the union binding arbitration in May and TCRC refused.
With the situation in limbo, while the CIRB deliberates, carriers have been preparing contingency plans and then scrapping them for several months. Maersk, for example, issued a bulletin updating vessel calls back in May, but has been quiet since.
Shippers are cautioned to make their own contingency plans in case of a rail shutdown. Be prepared for sudden surges in freight rates on alternate modes, cautions vice-president of carrier sales for Canada with Traffix Jaime Howlett.
In a blog on the company’s website, Howlett said “If the railways go on strike, the OTR (over-the-road) market suddenly floods with freight. In a lean year when carriers have been struggling with tight rates, the basic principles of supply and demand will dictate the market, so shippers need to prepare themselves for that. Overnight, you will have everyone going after the same capacity. When demand spikes but capacity doesn’t change, rates will increase significantly and rapidly for all OTR shippers.” As the price of transportation rises, so too will landed costs, and prices for consumers will follow suit. In our current economic environment, price increases, especially for grocery items, will be extremely unpopular.
Politicians will hear about it from their constituents and pressure will be applied for government to legislate the union back to work.
Hopefully, the costs will not be too high. In a letter to Labour Minister Seamus O’Regan and Transport Minister Pablo Rodriguez, Canadian Manufacturers and Exporters (CME) shared the results of a recent survey of its members about the potential effects of a strike. Two-thirds of respondents said a strike would have a significant or severe impact on their operations. More than 90 percent expect a delivery delay, 76 percent expect increased costs, 57 percent foresee reduced sales and 49 percent are concerned about lost competitiveness. Respondents suggested their average daily losses in the face of a rail freight strike would be about $275,000 per company.
CME reported that 88 percent of respondents support federal intervention to prevent strikes at critical infrastructure sites (i.e. ports), while 90 percent support legislation that would allow the government to impose binding arbitration in the event of strikes that cause significant economic harm.
What are you doing to prepare for a possible strike? Do you favour legislation that would prevent “essential services” from shutting down? What do you think Canada should do to prevent transportation disruption?
Join the conversation on Canada’s Logistics Community forum!
Emily Atkins
President
Emily Atkins Group
Emily Atkins is president of Emily Atkins Group and was editor of Inside Logistics from 2002 to 2024. She has lived and worked around the world as a journalist and writer for hire, with experience in several sectors besides supply chain, including automotive, insurance and waste management. Based in Southern Ontario, when she’s not researching or writing a story she can be found on her bike, in a kayak, singing in the band or at the wheel of her race car. LinkedIn: https://www.linkedin.com/in/emilyatkinsgroup/