News / Strike threat to Canada's rail network rises as negotiations stall

Canadian rail operators are racing to cement a deal with labour unions before a “damaging” strike can take place, but early indications are that negotiations have started to derail.  

The Teamsters Canada Rail Conference (TCRC) union entered its latest round of bargaining last week with rail operators Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC). 

The parties’ collective agreement expired on 31 December 2023 and has been followed by five months of unsuccessful negotiations – it seems last week was no different. 

TCRC said: “During this round of bargaining the company has remained unreasonable and has continued to refuse our demands.” 

CN put forward a revised offer “in an attempt to avoid a work stoppage and end the unpredictability for Canada’s supply chains”. This included wage increases of 3% in 2024 and 2.5% in 2025. 

“With this new offer on the table, the company is trying to negotiate within the parameters of the current collective agreement to reach a negotiated settlement,” CN said. 

But the union dubbed this offer as “inadequate” and added that it “decimates collective agreements and compromises safety in favour of operational ease and profits”. 

It told its members: “They have continued to table offers that remove hard fought for work rules, renege on recently significant achievements, and place your health, wellness, and safety in jeopardy. 

“With little to no movement… the company appears to be oblivious to, nor recognise the gravity of the situation.” 

A nation-wide rail strike was scheduled to take place on 22 May should an agreement not be reached in time. This was set to cause widespread issues throughout Canadian rail supply chains and spill across into wider sectors of North America such as US rail and ports.  

However, Canadian labour minister Seamus O’Regan took steps with the Canadian Industrial Relations Board (CIRB) to halt this week’s impending strike on the grounds that services are “critical” and therefore disruption could “endanger the health or safety of the public”.   

While a strike or lockout cannot occur until the CIRB renders a decision, it can be safely assumed that the TCRC will move to strike soon after the CIRB process is finalised. There must be 72-hour notice given before action. 

The CIRB told The Loadstar that while an exact timeline to its investigation is unknown, it would conclude as “expeditiously as possible”.  

This ‘unknown’ has created anxiety for supply chain stakeholders in North America, who remain uncertain as to when a strike could take place. 

But CPKC assured: “It is unlikely the parties will be in a position to initiate a legal strike or lockout within the next 60 days.” 

Global director of intelligence for risk intelligence firm Everstream Analytics, Mirko Woitzik, told The Loadstar that the two rail operators account for 90% of Canada’s railroad traffic and are crucial to the movement of key goods such as agriculture, vehicles, fertilizers, petrochemicals, minerals, wood products and consumer goods. 

An analysis by S&P Global said: “While the Canadian government may count energy supplies and food as being critical, the automotive sector and other, consumer-oriented goods may not be so lucky.” 

Its data found that exports from Canada by rail to the US are led by the automotive sector, which made up 34% of shipments in the past 12 months.  

Mr Woitzik warned: “Companies should expect widespread disruptions to rail and ocean shipping across many industries, as well as potential production stoppages due to increased cargo backlog. 

“In addition to more imminent rail disruptions, CN and CPKC support intermodal cargo services at all Canadian container marine terminals, which could exacerbate port congestion throughout the country,” he added. 

Affected ports would include the Ports of Vancouver, Prince Rupert, Montreal, and Halifax.