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Canada’s two largest railroads, Canadian Pacific Kansas City (CPKC) and Canadian National (CN), are on the brink of a labor dispute that could significantly disrupt the U.S. supply chain next week. With negotiations between the railroads and the Teamsters union stalling, the possibility of strikes or lockouts is becoming increasingly likely, threatening cross-border trade.
The impact of a potential work stoppage could be severe. Both railroads, which have extensive networks across the U.S., have already begun shutting down parts of their operations as a precaution. CPKC announced that it will halt all shipments originating in Canada and all U.S. shipments destined for Canada starting Tuesday. Similarly, CN has stopped accepting container imports from U.S. partner railroads.
The stakes are high. Together, these two railroads handle approximately 40,000 carloads of freight daily, valued at around $1 billion. Key industries such as automotive, chemicals, forestry, and agriculture are particularly vulnerable, with the looming harvest season amplifying the potential disruption. Jeff Windau, an industrial analyst at Edward Jones & Co., cautioned that while the work stoppage might only last a few days, any prolonged disruption could lead to significant issues, given the integral role these railroads play in the economy.
The railroads’ decision to stop taking certain hazardous and refrigerated shipments reflects their need to mitigate risks ahead of any service interruption. “Shutting down the network will allow the railroad to get dangerous goods off of its network before any stoppage,” said CPKC spokesperson Patrick Waldron. The company stressed its commitment to avoiding a work stoppage but acknowledged the need for precautionary measures.
Negotiations have been ongoing since last November, with contracts having expired at the end of 2023. The main points of contention include crew scheduling, rail safety, and worker fatigue—issues that have long plagued the industry. The union, representing nearly 10,000 workers at both railroads, warned that the situation is rapidly escalating toward a near-certain lockout by the railroads, despite ongoing negotiations.
The possibility of a work stoppage has raised concerns about the broader impact on the economy. Although the trucking industry may have the capacity to absorb some of the railroads’ shipping volumes, it is unlikely to fully compensate for the disruption. Windau noted, “You’re not going to be able to replace all of that with trucking.”
Both CPKC and CN have expressed their desire for a resolution that would allow them to resume normal operations and minimize damage to the economy. However, with negotiations showing little progress, the risk of significant supply chain disruptions in the U.S. and Canada is growing.
Source: NBC News
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