Canadian Rail Strike? – What We Know So Far

On May 1st, CN (Canadian National Railway) and CPKC (Canadian Pacific Kansas City) rail workers voted overwhelmingly to authorize a strike as soon as May 22nd if they are unable to reach new agreements around higher wages and better scheduling, as well as other benefits.

The CIRB (Canadian Industrial Relations Board) is currently reviewing whether this strike would jeopardize Canadians’ health and safety. This review is aimed at determining whether any critical shipments must continue in the event of a strike or lockout.

Jean-Daniel Tardif, spokesman for the CIRB, has stated that “It is unlikely a decision will come down by May 22. Written submissions alone will likely take longer.”

The TCRC (Teamsters Canada Rail Conference), a union representing CN and CPKC workers, has expressed frustration at the decision to delay the strike while CIRB reviews the agreements, stating to their members in a letter posted on their website: “The employers know what our membership thinks of their proposals, and your union will be there to move your demands forward.” … “This recent development is incredibly frustrating, and we believe undermines the entire process. The TCRC will challenge any result that impacts our charter rights, whether it be this dispute or any decision that may hinder future collective bargaining.”

CN has stated that they continue to seek a negotiated agreement with the union. “CN strongly believes that the current uncertainty around a labor disruption must be resolved decidedly and as soon as possible for employees, customers, and Canadians who depend on rail to get everyday essential goods,”

CPKC and TCRC leadership will resume meeting on May 17th with the assistance of federal mediators in an effort to achieve a new collective agreement. If no agreement is reached, it is unlikely the parties will be in a position to initiate a legal strike or lockout within the next 60 days.

If the Strike Goes Through, What Will Be Impacted?

Should the strike occur, there will be widespread significant impact to the supply chain not just for Canada, but the US as well.

• Crops, grain exports, and potentially produce availability will be impacted later this year and into spring of next year.
• Automotive assembly plants may not be able to stay in full operation due to parts shortages.
• Pricing on logistics and trucking services will see significant increases in the range of 2-10x due to the sudden spike in demand a rail strike would cause. This is already happening in some respects, as carrier availability shrinks due to shippers proactively moving things from rail to over-the-road transportation.
• Ports on both coasts will be overloaded with containers that will be unable to get in or out, creating a backlog that will ripple across not just Canada but all of North America. A common rule of thumb in reference to port strikes: “For every 1 day of a strike, it adds a week of disruption.” This will be the same or potentially longer with a rail strike, as it will affect ports on both sides of the continent.

Legacy’s Approach to Contingency Planning

Legacy is keeping a close eye on these negotiations and is taking measures to mitigate the impact should this strike go through.

• For imports arriving over the next few weeks, Legacy has access to cross-dock locations near ports on both the east and west coasts of Canada for cargo transference from containers to trucks. We also have options on the US side should Canadian ports become overwhelmed.
• Exports will be treated similarly. Shipments that are normally loaded into containers and put on the rail will instead be trucked across the Canada/US border for container loading at alternative ports.
• This is a great example of a moment when having a 3PL that maintains strong relationships with their carriers matters. Transactional brokers will find it difficult to find carriers as the over-the-road capacity contracts. Legacy maintains a strong network of over 20,000 carriers allowing us to adapt to these situations better than most other providers.

Looking Ahead…

Although at this stage we do not believe that the strike will be legally possible in the next 60 days, we will continue to monitor the situation and provide updates as it develops. This serves as a strong reminder of the importance of contingency planning and flexibility in your supply chain. For any business, it’s important to proactively adjust to these kinds of marketplace events rather than react flat-footed. To learn more about how Legacy ensures that our customers are protected from events like this, check out our article on 5 Key Components in International Contingency Planning.