News / Congestion 'rearing its disruptive and costly head' as Canada rail strike looms

© Mykhailo Polenok

More embargoes have been announced for Canada’s rail network as stakeholders brace for strikes on Thursday and the wide-spread repercussions.

After multiple rounds of negotiations between the TCRC union and its rail-operating employers Canadian National (CN) and Canadian Pacific Kansas City (CPKC) failed, the union issued a notice to strike on 22 August at 12:01am ET.

Yesterday, German carrier Hapag-Lloyd notified customers that from Thursday, it would embargo “all commodities originating in Canada, all commodities originating in the US destined for Canada and all carload traffic destined for Canadian interchange”.

CN will also restrict ingates on all remaining intermodal traffic in Canada and US intermodal traffic destined for Canada, explaining that there would not be enough certified management train crews to ensure intercity movements.

And Peter Freidmann, executive director of the Agriculture Transportation Coalition, said congestion was already “rearing its disruptive and costly head”.

Railroads issue embargoes when, in their judgement, an actual or threatened physical or operational impairment warrants movement restrictions.

“It is particularly critical in the event of labour disruption to prevent sensitive and dangerous goods from being stranded on the network,” explained CN.

The parties say they will continue to negotiate and, should a settlement  or arbitration be agreed, rail operators CN and CPKC will lift their embargoes and resume normal operations.

Mr Freidmann, said: “Most Americans have no idea how dependent we are on the Canadian railroads and the Canadian ports they serve. Those routes carry massive volumes of agriculture exports from US farms and processing facilities, and even more consumer imports from Asia destined for US stores.”

He said that while “there are some alternate routes via US ports, and US railroads”, capacity was limited, and warned: “Already, well before Canadian rail service/work stoppage actually happens, the congestion is rearing its disruptive and costly head.” he warned.

Mirko Woitzik, global director of intelligence for risk intelligence firm Everstream Analytics, has told The Loadstar: “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.

If the strike goes ahead on Thursday, affected ports would include Vancouver, Prince Rupert, Montreal, and Halifax.

In May, Maersk said it would offer inducement calls to the Seattle-Tacoma Northwest Seaport Alliance on four sailings of its TP1 service to manage US import and export rail cargo, rather than having it dispatched in Vancouver and transported cross-border to the US.

This led to concern that cargo diverted to Tacoma would cause significant bottlenecks across US rail networks. And yesterday, the Danish carrier halted any acceptance of rail cargo to Canada where the weight exceeds the maximum limit applicable for truck moves, in case cargo must be shifted from rail to road.

Indeed, a large North American shipper told The Loadstar: “Trucking is the main mitigation strategy.”