Note: This story was updated Aug. 23.
Canada's labor minister ordered both sides of a Canadian rail work stoppage into binding arbitration.
The Canada Industrial Relations Board will step in and, additionally, Labor Minister Steven MacKinnon requires the railways to eventually resume services and extend the current collective bargaining agreement until new ones are signed.
Canadian National Railway (CN) lifted its lockout Thursday evening. Canadian Pacific Kansas City (CPKC) says it was prepared to resume operations. It claims, however, that Teamsters did not want to discuss the matter. Teamsters plan to rally at CPKC headquarters in Calgary on Friday and plan to challenge the constitutionality of the order.
Original story:
Supply chain disruptions, unfortunately, are nothing new for the heavy-duty aftermarket since the massive upheaval of the COVID-19 pandemic. Once again, supply chains are being threatened by a Canadian rail strike.
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Canadian National Railway Co. and Canadian Pacific Kansas City (CPKC) locked out more than 9,000 unionized workers from the Teamsters Canada Rail Conference on Thursday. Both sides blamed the other on the stoppage. Prime Minister Justin Trudeau says the Canadian government is working on a solution, Reuters reports.
Railroads carry more than $730 million worth of goods each day in Canada. Last year, they delivered more than 375 million tons of freight. According to the Bureau of Transportation Statistics, total trade between Canada and the U.S. by rail totaled $9.1 billion in June, roughly 14% of trade between the countries. Autos and auto parts were the top commodity transported via rail that month, totaling $4.1 billion. Roll Call reports U.S. auto plants have up to four days of stuck before they would have to halt production.
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Earlier this week, CPKC stopped all shipments that start in Canada and all U.S. shipments that are headed for Canada, the Associated Press says. Canadian National also stopped container imports from U.S. partner railroads. On the U.S. side, CSX and Norfolk Southern railways have also closed cross-border shipments.
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Because the U.S. and Canadian rail systems are operationally integrated, a stoppage of work would affect more than just cross-border shipments. Union Pacific CEO Jim Vena says as many as 2,500 of his railway's cars could be stuck in Canada, he said in a letter to Canadian Labor Minister Steve MacKinnon.
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"For every one day of disruption, you can expect at least 3-5 days of recovery — perhaps even more, given two Canadian railways are impacted," Vena says. The pinch could raises costs and even shutter some companies if it stretches on.
The trucking industry would struggle to keep up with increased demand.
"The industry can help out in the short term in reallocating assets, but in the long term, you simply cannot replace long-haul rail distribution," Alberta Motor Transport Association President Robert Harper told Reuters.
Avery Vise, vice president of trucking for FTR Transportation Intelligence, says he doesn't see a major affect on the U.S. trucking industry in the near term.
"Most of Canada's rail traffic is in commodities that are not easily moved by truck, so we would not expect to see any major increased demand," Vise says. "Nor would we anticipate lost trucking volume due to disruptions in the supply chain unless the strike were to drag on for weeks or more."
Aftermarket parts on the U.S. side should remain unaffected, he says, as most of the intermodal containers coming into Canada are headed to Canadian destinations. High American production and inventories, combined with lower freight rates, means the U.S. market has some leeway.
"We might see some cross-border volume that normally moves by intermodal needing to move by truck instead," he says, "but the levels of traffic would not be such that it would put much stress on what is still rather fluid capacity in the market."
