Canada: Major Freight Railways Come to a Full Stop

[ExquisiteGerbil]

Canada: Major Freight Railways Come to a Full Stop, Leaving Food Rotting, After Trudeau Inaction

John Hayward
22 Aug 2024

Canada’s much-feared railroad stoppage began on Thursday after a last-ditch round of talks between railroad companies and the Canadian Teamsters Union failed to resolve their differences.



Two of Canada’s largest rail freight networks have shut down, while tens of thousands of commuters in major cities were left without transportation.



Canada’s two biggest freight lines, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), made good on their threat to lock out over 9,300 railroad workers, conductors, and engineers on Thursday after the midnight deadline for a new contract passed. The Teamsters Canada Rail Conference simultaneously voted in favor of going on strike.



The stoppage left a billion dollars’ per day worth of shipping in stasis and passenger trains were halted in Montreal, Toronto, and Vancouver because dispatchers from the rail freight companies normally handle passenger traffic in those areas.



Negotiations between the railroad company and the union were tense when they began early this year, and they quickly turned bitter. Each side accuses the other of making unreasonable demands and negotiating in bad faith.



One of the core issues is that the railroad companies want their highly-compensated employees to work longer hours and more flexible schedules to keep operational costs under control. The union says those work schedules would be exploitative and create more employee fatigue, which could lead to more railroad accidents.


“The railroads don’t care about farmers, small businesses, supply chains or their own employees. Their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy,” Canadian Teamsters president Paul Boucher charged in a statement released on Thursday morning.



“The company consistently proposed serious offers, with better pay, improved rest and more predictable schedules. The Teamsters have not shown any urgency or desire to reach a deal that is good for employees, the company and the economy,” CN riposted, while CPKC repeated its call for binding arbitration to resolve the dispute.



“We fully understand and appreciate what this work stoppage means for Canadians and our economy,” CPKC said on Thursday.



Binding arbitration would require the blessing of Prime Minister Justin Trudeau’s administration. Trudeau has been staying out of the dispute at the behest of the Canadian left, which believes binding arbitration would favor the railroad companies over their workers.



Trudeau on Wednesday said it was “in the best interest of both sides to continue doing the hard work at the table to find a negotiated resolution,” but he once again refused to take any action that could resolve the impasse.



“Millions of Canadians, of workers, of farmers, of businesses right across the country are counting on both sides to do the work and get to a resolution,” Trudeau said, stating the obvious as the clock ticked down to disaster.



The prime minister is under increasing pressure from Canadian business groups to get involved. The scale of the economic disaster that would result from a railroad stoppage focused many minds over the past few weeks, and now that the unthinkable has actually happened, a note of panic is creeping into the debate.



“From the perspective of Alberta’s rural municipalities, this is not simply a labor issue; it is an economic development issue, it is a community sustainability issue, it is even a food security issue,” warned Rural Municipalities of Alberta president Paul McLauchlin as the strike got underway.



“Not stepping in to protect rural livelihoods and communities will escalate this from a labor dispute into a situation that puts entire rural communities and industries at risk,” McLauchlin said.



“Canadians are already contending with a high cost of living. They need to see decisive leadership from government that puts their families and livelihoods first,” Canadian Chamber of Commerce president Perrin Beatty told CBC News on Thursday.



“The Minister of Labour must use the tools at his disposal to immediately resolve this conflict through binding arbitration,” Beatty demanded.



Minister of Labor Steve MacKinnon has thus far refused to order arbitration on the labor dispute. His office said on Thursday he is holding “meetings all day on this extremely important matter.”



Canada has experienced railroad strikes before but Thursday was the first time both of the major freight rail lines shut down at the same time. Contract negotiations with the two giant corporations are usually staggered to occur in different years to avoid just such a nationwide shutdown, but this time one of the companies asked for an emergency extension, so the labor contracts for both CN and CPKC came up for renewal at the same time.



The United States economy will certainly be impacted by Canada’s railroad shutdown. The National Airlines Council of Canada said on Thursday that rail transportation is critical for delivering fuel to Canada’s big airports, so air travel will soon be disrupted by fuel shortages, including routes connected to the United States.



America’s Union Pacific railroad estimated the Canadian shutdown will sideline over 2,500 rail cars that would normally pass between the U.S. and Canada on a typical day, which means freight capacity on American rail lines will diminish significantly due to the Canadian strike.



CN officials warned that it will take them up to five days to fully recover from each day of the nationwide shutdown, so disruptions in both Canada and the United States are likely to linger for weeks to come.



The situation could grow dramatically worse if American labor union employees decide to respect Canadian picket lines, as the U.S. Brotherhood of Locomotive Engineers and Trainmen gave them permission to do this week.



A large group of trade associations wrote a warning letter to both U.S. and Canadian officials this week, listing many of the “harmful consequences for Canadian and American agricultural producers, the agricultural industry, and both domestic and global food security” that would result from a prolonged rail stoppage.



American consumers already struggling with high inflation under the economic policies of Joe Biden and Kamala Harris will be dismayed to learn that their grocery bills will probably be going up again due to the Canadian rail debacle.



Agricultural company executives warned that food supplies will be immediately disrupted and spoilage will likely damage food stockpiles if the railroad strike persists. Neither the U.S. nor Canadian trucking industries have enough extra capacity to compensate for the loss of Canadian rail freight.



The strike happened at the worst possible time for farmers, as Canada’s harvest season is just getting underway. The Grain Growers of Canada said on Thursday that Canadian farmers will lose $43 million a day during the first week of the strike, and $50 million a day if it runs into a second week.



“The economic impact of this stoppage will be felt far beyond the farm gate. Consumers could see higher prices and shortages of food products that rely on grain, while farmers are left grappling with reduced income,” Grain Growers of Canada chair Andre Harpe warned.



Barry Prentice, director of the transportation institute at the University of Manitoba, sounded a cautiously hopeful note on Thursday by arguing that the impact of the railroad stoppage will be so enormous that both railroad executives and union officials will scramble to end it as quickly as possible.



“I don’t think it can last very long, simply because of the impact on the general economy,” Prentice told the New York Times. “In the past, every time these sorts of things occurred, the government was forced to recall Parliament and passed legislation that put the railways back to work.”



This time, the Canadian far left has disproportionate influence over the shaky Trudeau administration and it is absolutely determined to prevent the government from doing anything the left perceives as helpful to the corporations.



“For too long we have seen Liberals and Conservatives interfere in these types of labor disputes to the advantage of the employer, to the detriment of the worker. That is wrong, and we will oppose that,” Jagmeet Singh, head of the New Democratic Party (NDP), declared on Monday. The NDP is a creation of the Canadian organized labor movement.



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[ExquisiteGerbil]

Canada Orders Railroad Mediation, Even as Airline Pilots Plan Their Own Strike
John Hayward
23 Aug 2024
6:42


The Canadian government finally took action to resolve the railroad labor crisis on Friday, ordering Canadian National Railway (CN), Canadian Pacific Kansas City (CPKC), and the Teamsters union to accept mediation by a third party.



Even as a faint glimmer of light appeared at the end of the railroad tunnel, Air Canada’s pilots voted overwhelmingly to authorize their own strike.



Canada’s railroad drama, a confluence of bad timing and seemingly intractable demands by all parties, triggered a shutdown of railroad freight on Thursday. Both Canadian and American business groups pleaded with Prime Minister Justin Trudeau to take action, as consumers in both countries stood to suffer billions of dollars in damage, particularly in the food and agriculture sector.



Trudeau has been under enormous pressure from the left wing of his political coalition to stay out of the dispute because the left saw mediation of the dispute as inevitably favoring the railroad companies over labor.



On Friday, Labor Minister Stephen MacKinnon ordered the union and rail companies to accept binding arbitration from a third-party mediator, namely the Canada Industrial Relations Board.



“These collective bargaining negotiations belong to these parties, but their effects and the impacts of the current impasse are being borne by all Canadians. And there is an impasse,” MacKinnon said.


“It is the government’s responsibility to ensure industrial peace in this critically vital sector. Thus we will be examining why we experienced repeated conflicts in the railway sector and the conditions that led to the parallel work stoppages we are seeing,” he said.



MacKinnon insisted the Trudeau administration is still “committed totally to collective bargaining” and wants to give it “every possible opportunity to succeed,” but the government felt the consequences of a railroad shutdown were simply too dire to allow it to continue indefinitely.



The labor minister said he expected the arbitration process to deliver results within a matter of days. Meanwhile, he required the railroads to begin resuming services, and told union employees to return to work under emergency extensions of their existing contracts.



CN said it effectively lifted its lockout a matter of hours after it began on Thursday, in order to “expedite the recovery of the economy.”



CPKC, on the other hand, said that while it would like to resume railroad operations, the unions remain intransigent and may file a legal challenge against MacKinnon’s arbitration order.



The Teamsters insisted the “main obstacles to reaching an agreement remain the companies’ demands, not union proposals,” and on Friday they issued a 72-hour strike notice against CN. Meanwhile, the union representing about 3,300 CPKC employees did indeed announce they would file a legal challenge against the arbitration order.



“We are focused on getting back to work. The Teamsters are focused on getting back to the picket line,” CN spokesman Jonathan Abecassis said on Friday.



Writing at the Globe and Mail on Wednesday, columnist Bruce Curran dished out blame to everyone involved in the railroad calamity – “putatively greedy railway companies, allegedly lazy and demanding workers, and supposedly intransigent unions” – but argued that an arbitration order was unlikely to resolve the situation because the union right to collective bargaining will probably trump the government’s interest in getting trains moving under Canadian law.



Instead, Curran advised the Trudeau administration to quickly implement a “robust set of safety rules covering all railway workers in safety-sensitive positions,” essentially ceding the key issue of work schedule flexibility to the unions by fiat.



Curran speculated that taking this issue off the table would spur the rail companies and unions to resolve other issues quickly, although the current strategy of legal challenges and strike notices pursued by the unions would seem to call that hypothesis into question.



Meanwhile, Air Canada’s pilots voted 98 percent in favor of authorizing their own strike on Thursday. Such a strike could not be called immediately as collective bargaining rules stipulate a 21-day “cooling-off period” after the current reconciliation interval ends on Monday. This should hopefully give Canada enough time to resolve its railroad crisis before it has a comparable shutdown in the sky.



As with the railroad companies and unions, Air Canada pilots have been negotiating for about a year to secure a new contract. Their old contract ran from 2013 to 2023, during which time the union says Canadian pilot salaries fell too far behind their American counterparts.



Charlene Hudy, head of the Air Canada division of the Air Line Pilots Association (ALPA), told the Financial Post on Thursday that America’s four biggest airlines have signed new contracts with their pilots over the past 18 months, and some of their flight crews are now earning double what Air Canada crews make.



“We all fly passengers under the Star Alliance. So we’re flying the same passengers in the same airspace on some of the very same routes, and those pilots are being compensated dramatically more than us,” Hudy said.



The Star Alliance is an international aviation association that includes major airlines from the United States, Canada, and several other nations, plus a host of smaller regional airlines.



Hudy argued that the just-expired ten-year contract was negotiated just after Air Canada emerged from bankruptcy, so the compensation rates for air crews were abnormally low.



“Our goal is to avoid a strike and our focus remains on modernizing our contract for Air Canada pilots,” she said.



Air Canada executives sounded hopeful that a strike could be avoided, as the company has reached agreement with its employee union on some key points. The company issued a statement on Thursday describing the pilots’ vote to authorize a strike as a “normal step in the negotiation process.”



“Air Canada remains committed to the bargaining process and will continue to work towards a fair and equitable collective agreement with ALPA that recognizes the contributions of our pilots and supports the competitiveness and long-term growth of our company,” the company said.



Global News nevertheless reported that pilots will launch a nationwide “informational picket” on Tuesday, with demonstrations at the international airports in Toronto, Montreal, Vancouver, and Winnipeg. The pilots will not actually be on strike during these demonstrations, so normal flight operations are expected to continue.


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[ShofarSoGood]

Canadian rail shutdown leaves billions in U.S. trade stranded, with economic impact to grow day by day

Published Thu, Aug 22 20241:25 PM EDTUpdated Fri, Aug 23 20249:41 AM EDT


The lockout of over 9,000 rail union workers by Canadian National Railway and Canadian Pacific Kansas City has left billions of dollars worth of U.S.-bound trade in limbo during peak shipping season.


Approximately 20% of U.S. trade first arrives in the Canadian ports of Vancouver and Prince Rupert, while roughly two-thirds (66%) of cargo arriving at the Port of Vancouver is moved by rail to final destinations in Canada or in the U.S. Midwest.

The cargo includes fertilizer, iron ore, grain, cement, salt, potash, coal, cars, timber and containers loaded with consumer goods or intermediate parts, and the economic impact will compound for both the U.S. and Canadian economies the longer the labor unrest remains unresolved.


Teamsters Canada President Francois Laporte on Canada Rail shutdown (Video at link at bottom of article) 

Hours after the Canadian labor minister told a labor board to review his request for binding arbitration and restart rail operations, CNBC has learned both the railroad companies and the worker’s union have been called for individual management conferences with the board.



Canada’s Labor Minister Steven MacKinnon said at at press conference that he was “confident” the Canada Industrial Relations Board (CIRB) would accept his referral.



“Negotiated agreements have and always will be the best way forward,” a statement from MacKinnon said. “Collective bargaining is how the strongest, longest lasting deals are made – deals that are good for unions and employers alike.”



MacKinnon’s office told CNBC that the CIRB gets to decide whether to move forward with the request.



The highly integrated trade relationship between the Canadian and U.S. economies has left billions worth of cargo in limbo after over 9,000 freight rail workers represented by the Teamsters Canada union were locked out by Canadian National Railway

(CN) and Canadian Pacific Kansas City

(CPKC) after months of failing negotiations.



CNBC has reached out to CIRB for comment. MacKinnon’s office told CNBC that it can take up to 24 hours for the CIRB to announce its decision.


Shortly after MacKinnon’s comments, both Canadian railroads announced their plans to restart operations.



CN told CNBC that they have ended their lockout. In a statement, the company wrote, “while CN is satisfied that this labor conflict has ended and that it can get back to its role of powering the economy, the Company is disappointed that a negotiated deal could not be achieved at the bargaining table despite its best efforts.”



CPKC said it was preparing for a “safe and orderly resumption” of operation and “will follow the order of the CIRB once it executes the Minister’s direction.” They have not lifted their lockout.



“The Canadian government has recognized the immense consequences of a railway work stoppage for the Canadian economy, North American supply chains and all Canadians,” said Keith Creel, CPKC president and CEO. “The government has acted to protect Canada’s national interest. We regret that the government had to intervene because we fundamentally believe in and respect collective bargaining; however, given the stakes for all involved, this situation required action.”



Both railroads told CNBC it will take at least several days to clear out the buildup of freight, as it takes time to ramp down and ramp up operations.



The Teamsters Canada Rail Conference told CNBC that picket lines would remain in place while they reviewed MacKinnon’s referral and the CIRB’s response and consulted with their legal counsel to determine next steps. “By resorting to binding arbitration, the government has allowed CN and CPKC to sidestep a union determined to protect rail safety,” the statement said. “Despite claiming to value and honour the collective bargaining process, the federal government quickly used its authority to suspend it, mere hours after an employer-imposed work stoppage. This action mirrors their earlier interference this year, where they used the CIRB to stifle bargaining for months,”



Teamsters Canada confirmed to CNBC they met with the CIRB Thursday night and would again on Friday morning to participate in their case management conference.



Rail cross-border trade with the U.S. is at a standstill, which according to the U.S. Department of Transportation, accounted for 14% of total bilateral trade of $382.4 billion between the countries for the first half of the year. Approximately $572 million in container trade arrives daily in the U.S. from Canada, according to U.S. Census data.



Rails are a large component of logistics for companies, from Dow Chemical to automakers in Detroit like Ford and General Motors, which use the rails to transport auto parts. Retailers such as Walmart, Target, Nike, Procter & Gamble and Canada Goose also import some of their goods into Canadian ports which are then transported by rail and truck. According to Everstream Analytics, 66% of cargo arriving at the Port of Vancouver is moved by rail to final destinations in Canada or in the U.S. Midwest, which includes fertilizer, iron ore, grain, cement, salt, potash, coal, cars, wood/timber as well as containers loaded with consumer goods or intermediate parts.



American Apparel & Footwear Association President and CEO Steve Lamar urged the representatives of the unions and management to return to the negotiating table until a long-term deal is reached.



“Rail is an essential part of the ecosystem that helps you get dressed every day,” said Lamar. “A work stoppage/lockout at Canadian National and a strike at Canadian Pacific Kansas City comes at a critical time for back-to-school and just at the start of the holiday inventory rush. Approximately 30% of clothes, shoes, and accessories move by rail. Keeping goods moving supports not only the rail jobs at issue, but also the jobs of millions of other workers up and down our supply chains.”


Jim Vena, CEO of Union Pacific, wrote in a letter to Canadian Labor Minister Steve MacKinnon that upwards of 2,500 of his railroad’s cars could be stuck in Canada. “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.”



Ocean carriers and U.S. rail companies announced contingency plans and fees ahead of the lockouts, including Hapag-Lloyd, which added a $350 per Bill of Lading diversion fee for imports to North America that were slated for Canadian ports with inland U.S. delivery. Maersk and Norfolk Southern adjusted their business plans ahead of a potential strike. CMA CGM issued a notice breaking out the potential rerouting of vessels to U.S. ports and restrictions on rail shipments. Ocean carriers began declaring force majeure on Thursday, the legal power to waive contractual requirements due to a situation beyond their control, according to a client advisory seen by CNBC sent by Ocean Network Express (ONE), one of the largest global shipping companies.



Companies also started embargoes across their networks on specific intermodal shipments, including hazardous materials and temperature-controlled containers.



According to Rob McRae, vice president of transportation for Univar Solutions, the largest chemical and ingredient distributor in North America, the U.S. exported $28.5 billion of chemical exports to Canada in 2023, accounting for 17.4% of total U.S. chemical exports.



“These types of disruptions have massive downstream impacts to our supply chain,” said McRae. “With Canada ranked No. 1 for U.S. exports and with the U.S. importing $24.3 billion of chemical imports from Canada on an annual basis, we look to both sides to come to an agreement soon and not allow this strike to negatively impact not only our industry, but our country.”


Chemicals caught up in the rail battle include sulfuric acid, which is used in drain cleaning products, phosphates used in laundry detergent, and acetone, which is used in the nail industry and as a solvent that breaks down grease and wax. Sodium fluoride, found in toothpaste, and sodium bicarbonate, also known as baking soda, come through the West Coast ports of Canada and are then transported via rail. Additional products transported into the U.S. include paint, food, power drinks, water purification, and personal care products.



Paul Brashier, vice president of global supply chain at ITS Logistics, warned of higher trucking rates as customers look to move their rail-bound freight by road.



“Operations will grind to a halt and everything will have to move to the road for both domestic and international containerized freight,” Brashier said. “This demand can drive rates through the roof.”



Logistics experts tell CNBC they are still hopeful of a quick settlement, either through a negotiated contract settlement, or Canadian government intervention (such as action by Parliament).



The CN MacMillan Yard is shown on August 22, 2024 in Vaughan, Canada. A labor dispute between Teamsters union members and Canada's two main rail carriers, Canadian National Railway and Canadian Pacific Kansas City, could disrupt supply chains in the United States and Canada.

The CN MacMillan Yard is shown on August 22, 2024 in Vaughan, Canada. A labor dispute between Teamsters union members and Canada’s two main rail carriers, Canadian National Railway and Canadian Pacific Kansas City, could disrupt supply chains in the United States and Canada.

Ian Willms | Getty Images

The length of rail worker shifts, and the rest periods granted to workers between shifts, are sticking points in the talks.



Paul Bingham, director of transportation consulting at S&P Global Market Intelligence said a disruption of a day or two would have a minimal lasting impact on the economy, while a disruption extending beyond that will tend to increase in impact every day due primarily to the increasing amount of time after the disruption is over for the transportation system and supply chains to recover. “As backlogs grow at production and rail network interchange locations, it will take longer and longer to work through the backlogs, which takes time and increases the costs,” Bingham said.



Data reflected a limited number of front loading of energy and chemicals.



Companies felt the supply chain pinch last summer when the ILWU Canada labor union went on a 13-day strike which impacted Canadian rail service. The Canadian Manufacturers & Exporters Association estimated last year that the port strike disrupted $380 million a day in trade, and logistics experts are warning the dual rail strike could be even more devastating for the Canadian economy.



Around $277 billion worth of goods are moving annually on the Canada’s railways, and 75% of all exports are moved into the U.S via CN and CPKC. The Canadian rails connect the pivotal U.S. hubs of Chicago, New Orleans, Minneapolis, and Memphis.

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Last year’s strikes at the Canadian West Coast ports slammed rail freight and it took months for the backlog to be eliminated.