Billions in US trade at risk after thousands of workers locked out in union dispute

Billions of dollars worth of U.S. trade could be affected after Canadian railroads locked out more than 9,000 employees Thursday after failing to reach new labor agreements, according to the Wall Street Journal.

Canadian National Railway and Canadian Pacific Kansas City locked out the employees after reaching an impasse in negotiations with the Teamsters Canada Rail Conference, with the two parties failing to come to deals by the 12:01 a.m. Eastern time deadline, the WSJ reported. The decision disrupts much of the hundreds of millions of dollars in trade that occurs daily along the U.S.-Canada border and could thrust American supply chains into disarray.

“The economic repercussions of a rail work stoppage of this magnitude would be devastating locally, and given the interconnectivity, consequently impact the movement of goods in the United States and beyond,” the U.S. Agriculture Department wrote in an August 15 on the implications of a Canadian railway work stoppage.

**Canada’s Rail Crisis**

**Lockout in Effect:** CN and CPKC lock out 9,000+ workers, halting rail operations.

**Economic Impact:** Estimated daily cost to Canada at C$341 million, with $740 million in daily trade affected.

**Supply Chain Snarls:** Key commodities like… pic.twitter.com/uZ8MJwpPgQ

— The Interlane Hub (@interlanehub) August 22, 2024

The lockout could cost over $251 million per day and crush Canadian exports of grain, coal, and petroleum while simultaneously crippling U.S. agricultural exports to the country, according to Reuters. Canada purchased $28.3 billion worth of U.S. agricultural products in 2023.

It could also result in risks to America’s water supply as Canada provides roughly 60% of the chlorine used in water treatment plants in the western U.S., the WSJ reported.

“If this isn’t addressed and the chlorine [from Canada] cannot flow again, you are talking about boil-water advisories to protect public health,” Bob Masterson, president of the Chemistry Industry Association of Canada, told the WSJ.

Canadian Pacific Kansas City and Canadian National each operate around 20,000 miles of track, with lines running from Canada’s east and west coasts all the way down to the U.S. South. Canadian National alone ships roughly 300 million metric tons of cargo each year.

Despite the enormous costs, the Canadian government has been unwilling to involve itself in the negotiations, with Canada’s labor relations board ruling a shutdown in rail operations did not have public health implications and thus did not qualify for federal intervention, the WSJ reported.

“I would like to clarify that it is your shared responsibility, Canadian National Railways Co. and the Teamsters Canada Rail Conference, to negotiate in good faith and work diligently towards a new collective agreement,” Canada’s Federal Labor Minister Steven MacKinnon wrote in an August 15 note obtained by the WSJ.

The Teamsters Canada Rail Conference claims the dispute centers around the “fatigue provisions” in the collective bargaining agreement, with union representatives claiming the companies want to force crews to work longer hours, reducing safety, according to the Canadian Broadcasting Channel (CBC News). Canadian Pacific Kansas City has denied this, claiming its offer “fully complies with new regulatory requirements.”

Meanwhile, as of August 18, Canadian National claimed it had offered its workers contracts four different sets of wage, rest, and labor availability provisions, all of which have been rejected, CBC News reported Sunday.

The Teamsters Canada Rail Conference, Canadian National, and Canadian Pacific Kansas City all did not immediately respond to requests for comment.

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