Crucial supply chains are under threat across North America after a rail labour dispute in Canada led to shutdown of freight traffic on the country’s two largest railways.
Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), locked out nearly 9,300 workers after midnight on Thursday (04:00 GMT), after failing to clinch a late deal with the Teamsters union.
Canada sends around 75% of all the goods it exports to the US, mostly over rail. A prolonged dispute could disrupt shipments of a wide range of goods, from grains and beans to potash, coal and timber.
The lockout will also snarl commutes for tens of thousands of people in Toronto, Montreal and Vancouver, where lines rely on CPKC-owned tracks.
Canada, the world’s second-largest country by area, relies heavily on rail transport.
After months of talks, the increasingly bitter negotiations ground to a halt late on Wednesday evening, CBC reported, with both sides accusing the other of refusing to negotiate seriously.
In separate statements, CN and CPKC said they took the steps after months after “good faith” negotiations, which stalled over working conditions like shift scheduling and fatigue provisions.
“Without an agreement or binding arbitration, CN had no choice but to finalize a safe and orderly shutdown and proceed with a lockout,” CN said in a statement.
“CPKC is acting to protect Canada’s supply chains, and all stakeholders, from further uncertainty and the more widespread disruption,” CPKC said, adding that binding arbitration was the only “responsible” way to move forward.
Paul Boucher, president of Teamsters Canada Rail Conference, said the railways had “shown themselves willing to compromise rail safety and tear families apart to earn an extra buck”.
“The railroads don’t care about farmers, small businesses, supply chains, or their own employees. Their sole focus is boosting their bottom line,” he said.
Earlier on Wednesday, Prime Minister Justin Trudeau made a last-minute appeal to both sides to keep up their attempts to reach a deal.
“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,” he said in brief remarks, without taking questions.
Dozens of industry and trade organisations warned last week in an open letter that the disruption would have “an immediate impact” from coast-to-coast and damage Canada’s reputation as a trading partner.
“Factoring in the millions of Canadian jobs that would be impacted, the magnitude of the disruption is daunting,” it said.
The US and Canadian chambers of commerce followed up earlier this week, warning of the potential “devastating” impact of the stoppage on Canadian businesses and families, but also the US economy.
A group of agriculture trade associations has urged Ottawa to step in, but the government has so far resisted calls for binding arbitration.
Labour agreements for both railways expired at the end of last year.
During the lockout, rail networks in the US and Mexico will continue to operate. But a stoppage north of the border could be felt across North America.
US Transport Secretary Pete Buttigieg said earlier this week that he was monitoring rail negotiations and the potential impact on the cross-border flow of goods.
Some C$380bn (£214bn) in goods is moved by rail each year and railways move half of the country’s goods for export, according to the Railway Association of Canada.
Ahead of the full shutdown, both CPKC and CN had already begun pausing some shipments.
Shipping firm Maersk on Monday stopped accepting shipments destined for Canada meant to move by rail and that could not be transported on heavy trucks instead.
Professor Barry Prentice, director at the University of Manitoba Transport Institute, said the government would likely pass back-to-work legislation in the coming days if the sides couldn’t come to an agreement, as has been done in similar past disputes.
“This isn’t the best way to run the show,” he told the BBC on Wednesday.
“But it seems to be the playbook and and we’re back on this merry-go-round again.”
With additional reporting from Michelle Fleury
