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Canada on Strike? Update on Rail Negotiations

June 27, 2024 Kevin Baxter

Canada Train

While the potential East Coast port strike is the most direct threat to U.S. freight, potential strikes in Canada could send supply chains - at least temporarily - off the rails. The headliner in logistics is the possible rail strike, but there is also a recently averted border worker strike and, on the passenger side of the transportation industry, a potential strike affecting WestJet. It's a labor situation that recalls a South Park episode from 2008.

Will there be a Canada rail strike in 2024?

Negotiations have dragged on between rail workers and the major Canadian railroads as a second strike authorization vote nears its conclusion.

The parties involved

Teamsters Canada Rail Conference (TCRC): The TCRC represents about 9,300 rail workers who are negotiating new contracts - with one 95% strike authorization vote already in the books from the spring and another underway now.

Canadian National Railway Co. (CN): CN is Canada's largest railway, owning nearly 50% of trackage.

Canadian Pacific Kansas City (CPKC): CPKC is the second largest railway in Canada, with the distinction that it is the first single-line rail network to connect the North American continent (Canada, the U.S. and Mexico).

Canada Industrial Relations Board (CIRB): The CIRB is a government panel that interprets and administers the Canada Labour Code's Industrial Relations and Occupational Health & Safety sections. It was brought in at the request of the Canadian Minister of Labour Seamus O'Regan to determine whether a strike would cause "immediate and serious danger" to the public.

The Background

The labor issues affecting Canadian freight rail involve multiple fronts. The contracts for both CN and CPKC locomotive engineers, conductors and yard workers represented by TCRC - also known as Running Trades - expired Dec. 31 of last year. Concurrently, TCRC is also renegotiating a separate agreement which covers about 80 CPKC rail traffic controllers that expired the same time.

One reported disagreement had to do with the railroads' plans to shift crews from traditional mileage-based pay to an hourly model, though both have since moved off that stance.

As negotiations remained unresolved, all three worker groups voted to authorize a strike to begin as soon as May 22 (the day after a 21-day period of federal mediation), however, the CIRB review forced a delay until the results of the Board's decision are released - depending on what that decision is. That decision may be soon (though there's no set timeline), as a submission deadline passed earlier this month with neither the union or the railroads indicating they believe a strike would disrupt "essential services."

The Latest

The railroads and TCRC have expressed some frustration at the uncertain pace of the review. The railroads believe no strike could begin until mid-July based on the likely timing of a decision, plus a mandated 72 hours notice. They've also asked the Board to require an additional 30 days of a freeze to allow preparations for a potential strike - something the TCRC is against.

In the meantime, all parties seem to agree that negotiations have not been robust, with the railroads continuing to push the option of a binding interest arbitration to resolve the stalemate. 

Because Canadian law considers a strike authorization vote valid for 60 days, the TCRC is wrapping up a second strike authorization vote - set to conclude on June 29 to restart that clock and ensure they are "ready for any situation and are able to respond accordingly."

Supply chain implications of a Canada rail strike

While a strike would only directly stop operations along Canadian railways, its effects would most certainly go beyond the border. About 70% of freight volume around Canadian cities - and half the country's overall export volume - travels by rail.

Additionally, labor action has not typically occurred at both railroads at the same time. In fact, TCRC has proposed staggering negotiations by two weeks between the two railroads - a proposal that hasn't been accepted.

Contingency plans were already well underway when a May strike was on the table, as shippers who could looked to shift loads away from the rail in Canada to other options. This month, ocean carriers have started diverting some sailings away from Vancouver to U.S. West Coast ports - with Tacoma an added option for Maersk, particularly.

The diversions suggest the U.S. could absorb more volume both via intermodal and truck, with trucks needed to move freight between Canada and U.S. ports (or at least to cross the U.S.-Canada border - which will have border agents on the job). Spot rates would likely rise accordingly, and at a much greater percentage for over-the-road options within Canada.

Some Canadian cargo would simply have to wait as well, since the trucking industry in the country lacks the capacity to take on all current rail freight volume. And the Canadian rail labor issue is not one in isolation. If a strike occurred north of the border while East Coast ports also saw a strike-related shutdown (a very real possibility as timelines get closer together), West Coast ports could be in for a tremendous increase in volume.

Need a solution to navigate potential supply chain disruptions throughout North America? Reach out to us and we'll be happy to discuss solutions tailor-made to your business. For more information about InTek, or logistics and supply chain issues in general, check out our Freight Guides.

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