Due to a wage dispute with employees, traffic on Canada’s two largest freight railways came to a complete standstill. The companies fear extensive damage if train traffic is not resumed soon.
Both Canadian National and CPKC railroads locked out their employees after a 12:01 a.m. Eastern Time deadline passed Thursday without new agreements being reached with the Teamsters Canada Rail Conference, which represents about 10,000 train drivers, conductors and dispatchers.
More than 30,000 commuters in Vancouver, Toronto and Montreal must rush to find a new way to work because their trains cannot run on the CPKC line during the closure.
Business associations had called on the government to intervene, but Prime Minister Justin Trudeau has so far refused to force both sides into arbitration.
CN said it made a final offer and is still awaiting a response. CPKC spokesman Patrick Waldron said the union rejected its final offer, which was made personally by CEO Keith Creel at the bargaining table. Both railroads have offered binding arbitration as a way to resolve the contract dispute.
Many companies in all sectors rely on the railways to deliver their raw materials and finished products. Without regular rail services, they may have to limit or even stop production altogether.
That’s why the U.S. government prevented a railroad workers’ strike two years ago and forced them to accept a collective bargaining agreement, despite concerns about demanding working hours and the lack of paid sick leave.
All rail traffic in Canada and all shipments crossing the U.S. border have been suspended. However, CPKC and Canadian National trains continue to operate in the U.S. and Mexico.
Canada’s railways have sometimes been shut down briefly in the past during contract negotiations. Most recently, CPKC was offline for a few days in March 2022, but it’s rare for both railways to be shut down at the same time. The impact on businesses will be even greater now that both CN and CPKC are shut down.
Both Canadian National and CPKC had been gradually phasing out production since last week before the end of their contracts. The transport of dangerous chemicals and perishable goods was the first to be stopped so that they would not get stuck somewhere on the tracks.
As labor negotiations in Canada entered the home stretch, CSX, one of the largest U.S. railroads, broke with the U.S. freight rail industry’s longstanding practice of bargaining jointly with unions. CSX reached a settlement with several of its 13 unions, representing 25 percent of its workers, before nationwide collective bargaining begins later this year.
The new five-year contracts, if ratified, provide for a 17.5 percent wage increase, better benefits and more vacation time. Unions that have signed contracts with CSX include a branch of the SMART-TD union, which represents conductors in one region, the Transportation Communications Union, the Brotherhood of Railway Carmen and the Transport Workers Union. TCU President Artie Maratea said he was proud his union reached a contract without years of unnecessary delays and stalling tactics.
Trudeau is hesitant to force arbitration because he does not want to alienate the Teamsters Canada Rail Conference or other unions. However, he urged both sides to reach an agreement on Wednesday because a full shutdown would cause enormous economic damage.
It is in the best interest of both sides to continue the hard work at the negotiating table,” Trudeau told reporters in Gatineau, Quebec. Millions of Canadians, workers, farmers, businesses across the country are counting on both sides to do their work and reach a solution.
Numerous business associations are urging Trudeau to act.
Trudeau said Labour Minister Steven MacKinnon met with both sides at the Canadian National Talks in Montreal on Tuesday and will be present at the CPKC talks in Calgary, Alberta. Talks at both railroads continued on Wednesday.
MacKinnon later said he had completed his meetings with the railroad companies and the Teamsters.
“Workers, farmers, commuters and businesses cannot wait. Canadians need urgency at the negotiating table. The parties must make deals now,” he posted on the social platform X.
Negotiations have reached a deadlock over the allocation of railway employees and regulations to prevent fatigue and ensure sufficient rest periods for train staff. Both railway companies had proposed switching from the existing system, in which employees are paid by the number of kilometres travelled, to an hourly wage system, which they believe would make it easier to guarantee planned leisure time.
The railroads said their collective bargaining agreements included pay increases consistent with recent industry deals. Train drivers at Canadian National earn about $150,000 a year, while conductors earn $120,000. CPKC says the wages are comparable.
Almost 10,000 employees are affected by these contracts.
Similar quality of life concerns due to demanding work hours and lack of paid sick leave nearly led to a strike by U.S. railroad workers two years ago until Congress and President Joe Biden intervened and forced unions to agree to a deal.
If there are no rail connections, manufacturing companies may have to slow down or even stop production altogether. Ports and grain elevators will quickly become clogged with waiting shipments. And if the conflict drags on for a few more weeks, water treatment plants across Canada may have to go without new supplies of chlorine.
If the railway does not pick up the goods arriving by ship, the terminals will soon be full. And from that point on, no more ships will be able to dock at the terminal, says Victor Pang, chief financial officer of the Vancouver Fraser Port Authority.
He referred to the 13-day strike by 7,400 dockworkers in British Columbia last summer, which manufacturers said blocked the flow of goods worth 500 million Canadian dollars ($368 million) a day.
Some companies would no doubt resort to trucking to transport some of their products, but there is no way to offset the volume that rail delivers. It would take about 300 trucks to transport everything that a single train can carry.
In addition to the potential economic impact, more than 32,000 commuters in Toronto, Montreal and Vancouver could be stranded because these trains run on the CPKC railway tracks.
In the United States, all major railroads have made efforts to address workers’ concerns. CSX led the way with the first paid sick leave agreement. The Jacksonville, Florida-based railroad also relaxed its strict attendance policy and announced new efforts to work with unions.
The current national collective bargaining agreement for U.S. railroad workers expires at the end of this year. This is the first time TCU members have a new collective bargaining agreement in place before the old one expires. The agreement includes the first improvements to vacation policies in more than 50 years.
CSX has offered similar terms to all of its unions, so if they agree, more deals could be reached in the coming days.
“CSX and our union partners understand that our employees do not want to wait several years for their next raise,” said CEO Joe Hinrichs.
(Only the headline and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
