Work stoppage begins at Canadian railroads

Operations at Canada's two largest railroads ended Thursday morning at 12:01am ET as a work stoppage began following the failure of labor contract talks.

Canadian Pacific Kansas City (CPKC) and Canadian National (CN) locked out union members, while the Teamsters Canada Rail Conference (TCRC) launched a strike at CPKC. The union has not yet issued a strike notice to CN, but its workers are barred from the property.

The work stoppage freezes ongoing train shipments even if they have not reached their destinations.

The railroads last week stopped loading railcars with shipments of certain toxic and poisonous materials to keep products from being abandoned in unsafe locations, and this week stopped loading all commodities and other freight within Canada. Operations along CN and CPKC's US lines continue but trains cannot cross into Canada.

The union confirmed just after midnight that work stoppages at CN and CPKC had begun. Most Teamsters members stopped work at 12:01am ET, though rail traffic controllers at CPKC will keep working until 2:01am ET.

CPKC and CN announced they had formally locked out employees represented by the Teamsters union. CN said the union did not respond to an offer it had made in a last attempt to avoid the strike.

Wide range of commodities in crosshairs

The work stoppage will affect freight deliveries for a variety of goods across North America, including shipments of propane to rural communities, grain and coal deliveries to Canadian export terminals, and chemical inputs to manufacturing facilities.

CN said Wednesday that grain prices were already being affected and that sawmills in British Colombia were cutting shifts.

Coal exports from Canadian mines would be held because those operations are only served by CN and CPKC. But western US coal exports are not expected to see much of a disruption since US carrier BNSF has rail lines going directly to Westshore Terminals near Vancouver. BNSF will not be able to interchange railcars with CN and CPKC in Canada, however.

Crude markets are also not expected to see significant disruption from a strike in the short term because of pending maintenance at upstream oil sands facilities and spare pipeline capacity.

Prices for Canadian propane and butane — which rely heavily on rail to move product from an oversupplied market to the US — fell Wednesday ahead of the strike.

Wide gap between workers, railroads

The railroads and the Teamsters remain far apart on contract terms. The union — which represents roughly 9,300 train operators and support staff at CN and CPKC and 85 rail traffic controllers at CPKC — said forced relocation and scheduling and fatigue management that will lead to safety risks are the key points of dispute.

CN said its offers, which have been turned down repeatedly, would have improved safety, increased wages, and provided employees with better schedules.

CPKC chief executive Keith Creel on 19 August claimed union leadership had made "wildly inaccurate characterizations" about the railroad's proposals in order to "create a false public narrative" about negotiations. He said the railroad did not unilaterally change or cancel the terms of the most recent collective agreement or make proposals that compromise safety.

Creel said most recently CPKC has focused on a status quo-style contract renewal with a duration of three years. That proposal would have no work rule changes and the railroad only wanted to negotiate "reasonable adjustments" to the timing of held-away pay to address regulatory changes made by Transport Canada last year.

CN called on Canadian minister of labour Steven MacKinnon to intervene this week. He has already been meeting with each railroad and the Teamsters. CPKC this week reiterated earlier calls for binding arbitration, but MacKinnon rejected that request on 15 August.

By Abby Caplan