TORONTO (AP) — Businesses and consumers across Canada and the U.S. faced significant economic damage after Canada’s major freight railroads halted operations Thursday over a wage dispute with their workers.
Canadian government officials met urgently to discuss the closure. Both Canadian National and CPKC Railroads locked out their employees after the deadline passed at 12:01 a.m. EDT Thursday without new agreements being reached with the Teamsters Canada Rail Conference, which represents about 10,000 train drivers, conductors and dispatchers.
All rail traffic in Canada and all shipments crossing the US border have been suspended. However, CPKC and CN trains continue to operate in the US and Mexico.
According to the U.S. Department of Transportation, billions of dollars worth of goods are transported by rail between Canada and the United States every month. Many companies in all industries rely on rail to deliver their raw materials and finished products. Without regular rail service, they may have to reduce or even stop production altogether.
Both railroads said they would end the lockout if the union agreed to binding arbitration, but the unions themselves indicated they were still at the negotiating table.
Business associations called on the government to intervene, but Prime Minister Justin Trudeau refused to force the parties into binding arbitration for fear of angering the Teamsters Canada Rail Conference and other unions.
Canadian Minister of Public Services and Procurement Jean-Yves Duclos called on both sides to resolve their differences.
They have to do their job to reach an agreement quickly,” he said at a press conference.
Canadian Labour Minister Steven MacKinnon has scheduled meetings “throughout the day on this extremely important matter,” according to a statement from MacKinnon’s office.
Business leaders were angry at the government’s lack of intervention.
“If you completely shut down the supply chain from coast to coast, nothing good can come of it,” said John Corey, president of the Freight Management Association of Canada. “It’s annoying. People are going to lose their jobs. It’s going to really hurt the economy.”
Most companies will likely have enough supplies and storage space for their finished products to survive a brief disruption, but ports and other rail lines will quickly become clogged with stranded shipments that Canadian National and CPKC will not pick up.
For Union Pacific, one of the U.S. railroads that regularly transports shipments to and from Canada, the rail stop means that “thousands of rail cars per day cannot cross the border,” the company said in a statement on Thursday.
“Everything from grain and fertilizer during the critical summer season to lumber for home building could be affected,” the company said.
More than 30,000 commuters in Vancouver, Toronto and Montreal were the first to feel the impact of the lockouts, scrambling to find a new way to get to work Thursday morning as their commuter trains cannot run during the CPKC closure.
CN has been negotiating with the Teamsters for nine months, while CPKC has been trying to reach an agreement for a year, the unions said.
In the United States, a similar large-scale disruption to rail service occurred two years ago due to a labor dispute. At that time, the government forced the union to agree to a collective agreement despite concerns about the demanding schedules and the lack of paid sick leave.
Canada’s railways have sometimes shut down briefly in the past during contract negotiations – most recently CPKC was offline for a few days in March 2022 – but it is rare for both railways to shut down at the same time. The impact on companies will be even greater because both CN and CPKC are shut down.
Both railways had already gradually stopped their operations since last week before the end of the contract. The transport of dangerous chemicals and perishable goods was the first to be stopped so that they did not get stuck somewhere on the tracks.
Negotiations have reached a deadlock because of the allocation of railway employees and rules 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.
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Funk reported from Omaha, Nebraska.
