TORONTO– In Canada, freight trains could be running again within days after the government forced the country’s two largest railroad companies into arbitration with their union on Thursday. The move is intended to avert potentially devastating economic consequences for the entire country and the United States if the trains are grounded for an extended period.
The government’s action came more than 16 hours after Canadian National and CPKC locked out their workers over a deadlock on the collective bargaining agreement. Both rail companies said they would work to resume train service as soon as possible.
The union, which represents 10,000 train drivers, conductors and dispatchers, reacted angrily to the order, accusing the rail companies of deliberately creating a crisis to force the government to intervene. It also said it would maintain its picket lines while the decision was reviewed.
The government ordered the railroad to begin arbitration before the Teamsters Canada Rail Conference to end the lockout, which began at 12:01 a.m. Thursday after both sides failed to resolve the contract dispute.
Labour Minister Steven MacKinnon announced the decision to initiate arbitration at a press conference on Thursday. MacKinnon said he expected trains to be running again within days. Ending the lockouts would be the first step.
The mediation process moved quickly. The railroad met with the Canada Industrial Relations Board on Thursday evening, according to a person familiar with the schedule who spoke on condition of anonymity because they were not authorized to discuss it. The Teamsters confirmed that the union also met with the board on Thursday evening.
Both sides negotiated unsuccessfully throughout Thursday, while workers went on strike outside the buildings and business associations urged the government to force arbitration.
Paul Boucher, president of the Teamsters Canada Rail Conference, criticized the government’s decision to intervene so quickly.
“Canada’s two major railroads have created this crisis, held the country hostage and manipulated the government to once again disregard the rights of Canada’s working class,” Boucher said. “The Teamsters Canada Rail Conference (TCRC) is deeply disappointed by this shameful decision.”
Railway companies welcomed the decision and said the government had no other choice.
“The Canadian government recognizes the immense impact of a rail work stoppage on the Canadian economy, North American supply chains and all Canadians,” said Keith Creel, President and CEO of CPKC. “The government acted to protect Canada’s national interests. We regret that the government had to intervene because we fundamentally believe in and respect collective bargaining. However, given the risks to all involved, this situation required action.”
MacKinnon said the government wanted to give the negotiations every chance of success, but ultimately the economic risk was too great to allow the lockouts to continue. He had refused to order arbitration a week ago.
“Canada’s economy cannot wait for an agreement that has been delayed for a very long time, when there is a fundamental disagreement between the parties,” he said.
All of Canada’s freight transport by rail – worth more than $1 billion Canadian ($730 million) a day and over 375 million tonnes of freight last year – was halted on Thursday, as was rail traffic across the US border. About 30,000 commuters in Canada were also affected because their trains use CPKC lines. CPKC and CN trains continued to run during the US and Mexican lockouts.
Many companies in both countries and across all industries rely on rail for the delivery of their raw materials and finished products, and feared that without regular rail service, a crisis could ensue. 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.
Trudeau decided not to force the parties into binding arbitration before the deadline, fearing he would anger unions and the left-wing NDP, whose support his government relies on to stay in power, but ultimately concluded he had no other choice.
“Collective bargaining is always the best way forward. When that is no longer a foreseeable option – when we face serious consequences for our supply chains and the workers who depend on them – governments must act,” Trudeau said.
Most companies probably have enough supplies and storage space for finished products to survive a short disruption, but ports and other rail lines would quickly become clogged with stranded shipments that Canadian National and CPKC do not pick up.
Many companies have made changes to their supply chain following the COVID-19 pandemic that can help them survive a short disruption, says Jeff Windau, an analyst at Edward Jones. The real problem begins when the disruption drags on, he says.
Most Canadian rail outages have lasted only a day or two and usually only affected one of the major railroads. However, some have lasted up to eight or nine days. This time, the impact was even greater because both railroads were shut down.
“They are so integrated and involved in the economy,” Windau said. “Just the range of products they transport. … Ultimately, I believe we have to continue rail transport.”
Chemical companies and food retailers would have been the first to be affected. Railways stopped accepting new deliveries of hazardous materials and perishable goods when they began to gradually shut down operations last week. However, most chemical plants have said they would continue to operate without problems for about another week.
The auto industry could also quickly run into trouble, as it relies on just-in-time deliveries and ships large quantities of engines, parts and finished vehicles across borders. Flavio Volpe, president of the Association of Auto Parts Manufacturers, wrote on X that about four out of five cars made in Canada are exported to the U.S. almost entirely by rail. He said a prolonged lockout could lead to temporary work stoppages similar to the impact of the five-day Ambassador Bridge blockade in 2022.
More than 30,000 commuters in Vancouver, Toronto and Montreal were the first to feel the impact of the lockouts. They may have to take the bus again on Friday. Their commuter trains cannot run while CPKC dispatchers are locked out.
CN has been negotiating with the Teamsters for nine months, while CPKC has been trying to reach an agreement for a year, the union said.
Negotiations in Canada have reached an impasse over the scheduling of rail workers and regulations to prevent fatigue and ensure sufficient rest for train crews. Both rail companies had proposed switching from the existing system, in which employees are paid by the number of kilometres they travel, to an hourly system, which they believe would make it easier to grant scheduled time off. The union said it did not want to give up the hard-fought fatigue protection.
The railroads said their collective bargaining agreements included pay increases consistent with recent industry deals. Train drivers at Canadian National already 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. Associated Press writer Aamer Madhani in Buellton, Calif., contributed to this report.
