Supply Chain Scanner - Week of August 19, 2024

Weekly blog by Emily Atkins

Catastrophe, Paralysis and Devastation – How a Rail Strike May Impact Canada

Canadians may wake up to a quieter existence on August 22nd, as both CPKC and CN railways may be shut down due to failed labour negotiations. CN advised the Teamsters Canada Rail Conference (TCRC) that it plans to lock them out as of 12:01 on the 22nd unless an agreement is reached, while the Teamsters issued a strike notice to CPKC that takes effect at the same time.

The consequences of a complete shutdown of both national railways are predicted to be dire – and quick. Numerous national industry groups have spoken up about the impacts of a shutdown.

John Corey, president of the Freight Management Association of Canada, suggested in a radio interview that it would be a catastrophe for the Canadian economy, as goods stop moving inland from the ports and outbound for export. He predicted that within a couple of days, the ports themselves would have to stop operating as containers clog their terminals.

For its part, Canadian Manufacturers and Exporters (CME) said a rail strike would add to the already accumulating effects of previous strikes at BC ports and the St Lawrence Seaway, “putting significant strain on the entire supply chain.” The association backed up the claim with survey data from its members, suggesting a strike would have “dire consequences” for operations, with 66 percent of them saying those impacts would be significant or severe. Specific harms CME members foresee include delivery delays (92%), increased costs (76%), reduced sales (57%) and reduced competitiveness (49%). They estimated that the average daily hit to their business would be $275,000.

Jasmin Guenette, Vice-President, National Affairs, at the Canadian Federation of Independent Business (CFIB), suggested a rail strike could be “devastating for small businesses, their employees and communities”. He added that the longer a strike continues “the costlier it becomes for small firms who may lose sales and contracts if goods are not delivered or received on time.”

The Grain Growers of Canada also weighed in, saying that as the harvest season begins, it is critical that grain farmers continue to be able to get their grain to market and “support their livelihoods, uphold Canada’s trade reputation, and address both domestic and international food demand”.

The Chemistry Industry Association of Canada (CIAC) noted that its members rely heavily on the railways. “Chemicals needed for water treatment and sewage treatment are shipped by rail. Many of our members are captive to CPKC and/or CN – there are no viable alternatives for shipments,” said Bob Masterson, president and CEO of CIAC. Companies producing highly regulated goods – about one-third of CIAC members – begin shutdown procedures before 72 hours' notice is given. Other members can only operate for up to two days without rail service before having to be shut down. Most will be shut down within a week, the association said.

“The Canadian chemistry sector alone moves over 500 rail cars per day. It would require over 1,500 road-based tanker trucks to carry the same load. There is no Plan B due to the lack of availability of such trucks and drivers, the additional costs to move the products over long distances, and the fact that many chemistry products are restricted to movement on rail due to their hazardous nature,” Masterson said.

All of these organizations are sending the same message to the federal government: Don’t let a strike drag on.

CIAC said in a statement that should negotiations fail, “the Government of Canada must be prepared to act quickly to order the parties to return to work and the negotiating table to protect Canadians, Canadian workers directly affected by the disruption, and the Canadian economy.”

This is echoed by CFIB, which said despite the labour board decision prohibiting some activities from continuing during a work stoppage, “politicians still have the power to change labour laws. CFIB continues to call on the government to make ports and rails an essential service, so they remain fully operational at all times.”

GGC urges the government to use “all federal tools possible” to prevent a simultaneous work stoppage by both railways.

CME also asked the federal government to “take immediate and decisive action to prevent a rail stoppage and restore certainty and stability for Canadian manufacturers.”

At the time of writing, on August 20, federal labour minister Steve MacKinnon was meeting with the disputing parties and mediators to “urge CN Rail, CPKC and Teamsters to fulfil their responsibility to Canadians, reach agreements at the bargaining table, and prevent a full work stoppage," according to a statement from his office.   

It is expected that the minister would be undertaking these meetings, but it gives us no insight into what the government might be planning should negotiations fail and the strike begin on Thursday. All we can do now is watch and wait and prepare for the worst.

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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/