As midnight struck Thursday, August 22, Canada's two top freight railroads were at full stop as the companies and union workers had failed to reach agreement on a new contract. Less than 24 hours later - as supply chain effects were more than percolating - the Canadian government stepped in to order binding arbitration, forcing an end to the work stoppage (but not yet an ending to the conflict).
The work stoppage and its effects
Backing up a bit, the leadup suggested a strike called by the Teamsters and its nearly 10,000 rail workers would represent the work stoppage. But this week's full-stop on the tracks was actually a lockout ordered by Canadian National (CN) and Canadian Pacific Kansas City (CPKC) - with a strike against CPKC mixed in. Service had already been drawing down for a number of days leading up to railroad-imposed deadline, but once it hit, the pressure increased.
That pressure included an almost immediate capacity crunch among over the road trucking providers attempting to cover for the lack of rail freight movement, which led to a significant jump in spot rates. Additionally, there were concerns about effects on the manufacturing industry, farming and North American supply chains in general, as Canada exports about 75% of its goods to the U.S. - with roughly 70% of its freight volume traveling by train. And passenger rail was impacted as well with no workers manning the freight-railroad owned infrastructure.
What now?
After initially resisting the idea, Canadian Labour Minister Steven MacKinnon announced about 17 hours after the stoppage began that he'd instruct the Canada Industrial Relations Board (CIRB) to impose final binding arbitration between the parties - essentially forcing an agreement. Additionally, the order directs the Board to "extend the term of the current collective agreements" until new ones are signed, and for railroad operations to "resume forthwith."
CN and CPKC had encouraged such a step previously, while the Teamsters opposed it. Prime Minister Justin Trudeau had also been hesitant to push such an order, but later said collective bargaining was "the best way forward," but "no longer a foreseeable option." He continued that the serious consequences to supply chains and workers forced the government to take the step. The railroads have said they'll get back up and running in response - and MacKinnon has suggested that will occur within days.
Union response
Teamsters Canada Rail Conference President Paul Boucher initially said the government allowed the railroads to "sidestep" the union, saying the union was "deeply disappointed by this shameful decision." This morning, the organization took it a step further, indicating plans to challenge the decision on constitutional grounds. Despite the order, a strike is still a possibility, something made more concrete by a notice served by the Teamsters to CN today. In other words, stay tuned as the story is not over just yet.
What led to this?
Contracts for locomotive engineers, conductors and yard workers for CN and CPKC - represented by TCRC expired at the end of 2023. A separate agreement which covers about 80 CPKC rail traffic controllers expired at the same time. Negotiations over the past several months have been generally fruitless, with the CIRB initially brought in to review whether a rail service disruption would cause an emergency in the country. After about two months of review, it decided such a shutdown would not have those implications.
While pay has been part of the negotiations, the larger issues identified by the union have been specific to each railroad. Teamsters have said CN is looking to include a "forced relocation" provision to order workers to fill labor shortages by moving across the country for months at a time. The conflict with CPKC appears to center on safety, as the union says the railroad is looking to force crews to stay awake longer - which would up the risk for accidents.
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