Business groups warn of dire consequences unless feds step in as rail shutdown looms

Hours away from an unprecedented potential shutdown at the country’s two main railways, business groups ratcheted up their pleas for the federal government to step in and prevent a work stoppage that would upend supply chains — even as the prime minister stressed a deal at the table is the best outcome.

In a joint statement Wednesday, the Canadian Chamber of Commerce, Business Council of Canada, Canadian Federation of Independent Business and Canadian Manufacturers and Exporters said Ottawa needs to take action to ensure trains keep rolling.

“It affects everybody,” said Dennis Darby, CEO of Canadian Manufacturers and Exporters, in a phone interview. “Rail is that primary connection to the ports.

“You can’t roll the dice and say, well, let’s hope they’re going to come up with a plan.”

A phased wind-down at Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. is well underway as negotiators struggle to find common ground in contract talks with the Canada Teamsters Rail Conference.

Unless agreements are reached, rail service at both companies is poised to grind to a halt at 12:01 a.m. EDT on Thursday.

Under the Canada Labour Code, the federal labour minister can refer the dispute to the Canada Industrial Relations Board for binding arbitration and prohibit a strike or lockout in the interim, the business groups said.

Alternatively, they suggested the government recall Parliament and pass back-to-work legislation — a step taken by a previous Conservative government during a rail strike in 2012, and a move it threatened to make in 2015.

Prime Minister Justin Trudeau urged the parties on Wednesday to hammer out a deal themselves rather than rely on federal intervention.

“My message has been straightforward. It is in the best interest of both sides to continue doing the hard work at the table to find a negotiated resolution,” he told reporters in Ottawa.

“Millions of Canadians, workers, of farmers, of businesses right across the country are counting on both sides to do the work to get a resolution.”

A work stoppage by 9,300 engineers, conductors and yard workers at CN and CPKC would mark the first-ever simultaneous shutdown at the country’s biggest rail companies, experts say.

Their trains haul a combined $1 billion worth of goods per day, ranging from cars and clothes to salt and cement, according to the Railway Association of Canada. Industries affected include agriculture, mining, energy, retail, automaking and construction.

Some employees are already feeling the impact.

Conifex Timber said 250 workers will be affected as it cuts the operating schedule at its sawmill in Mackenzie, B.C., to one shift per day from two, starting this Monday.

Chief operating officer Andrew McLellan said the move, which will last “for the foreseeable future,” stems from the shutdown on new rail shipments — in place this week — coupled with poor market conditions.

“There’s not a whole bunch of trucks around that are available to move the volume that we require,” said Ken Shields, the company’s chairman and CEO, in a phone interview.

“And the trucking rates are much more expensive, so it’s a money-losing proposition to substitute truck deliveries for rail deliveries.”

Both railways have issued lockout notices for a minute past midnight on Thursday, while the union has served a strike notice to CPKC that would kick in at the same time.

Canadian Pacific barred virtually all new shipments on Tuesday morning, and CN did the same Wednesday to avoid leaving any goods stranded on the tracks.

Ports fear containers will pile up on the docks as cargo goes unmoved, causing congestion down the line and prompting some carriers to reroute to U.S. terminals.

“If railways are not picking up the goods that are coming in by ships, then pretty soon your terminals get filled up. And at that point you cannot take any vessels at the terminal anymore,” said Victor Pang, chief financial officer at the Vancouver Fraser Port Authority. 

He pointed to the 13-day strike by 7,400 B.C. dockworkers last summer as a cautionary tale, which manufacturers said blocked the flow of $500 million worth of goods each day.

“The kind of disruption that we had back in July, it took us multiple months to clear out,” Pang said.

The number of vessel arrivals at the Port of Vancouver has already fallen 22 per cent over the past four weeks as shippers sought to steer clear of potential disruptions, according to supply chain platform Everstream Analytics.

More than 32,000 rail commuters across the country will also have to find new routes to the office if there is a work stoppage at CPKC.

Transit authorities have said select commuter lines that run on Canadian Pacific tracks in Toronto, Montreal and Vancouver will be suspended should dispatchers walk off the job.

The commuter lines affected by the potential work stoppage are TransLink’s West Coast Express in the Vancouver area, Metrolinx’s Milton line and the Lakeshore line’s Hamilton GO station in the Greater Toronto Area, and Exo’s Candiac, Saint-Jérôme and Vaudreuil/Hudson lines in the Montreal area.

Riders on Via Rail’s 480-kilometre Sudbury-White River line, which runs three times a week in northern Ontario, would also be out of luck.

Retailers are worried about the ripple effects as well.

“Product is not being loaded onto various forms of transportation because of the expectation that it could just get backlogged and stuck,” said Michelle Wasylyshen, a spokeswoman at the Retail Council of Canada.

“We’re looking at holiday shopping products, Halloween products, even food items.”

This report by The Canadian Press was first published Aug. 21, 2024.

With files from Tara Deschamps in Toronto