News / Forwarders scramble for alternatives as Canadian rail strike looks set

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As the clock ticks down to a shutdown of the Canadian rail freight network tomorrow, forwarders are scrambling to keep cargo moving – but they find themselves hamstrung by a toxic cocktail of disruption.

Unless a last-minute resolution can be reached in the contract dispute between the Teamsters union and railways Canadian National (CN) and Canadian Pacific Kansas City (CPKC), the country’s rail freight operations will grind to a halt.

Since the union announced the industrial action would commence at 12.01 am on the 22nd, the rail carriers have given notice of a staff lock-out at that time, and have already embargoed some traffic.

Industry groups, including the Canadian International Freight Forwarders Association, have called on the government to intervene and mandate binding arbitration, warning of the crippling effect of a work stoppage.

But so far Ottawa has rebuffed the call. Labour minister Steven MacKinnon declared he wants the two sides to reach a resolution at the bargaining table – however, the parties remain far apart, according to multiple sources.

As with the labour contract negotiations on the US west coast last year, some cargo owners have chosen alternative routings, reported Karl-Heinz Legler, general manager of Rutherford Global Logistics in Montreal. Logistics firm CH Robinson has already diverted some traffic from Canadian ports, warning clients the gateways would be paralysed in the event of simultaneous work stoppages at CN and CPKC.

The Chamber of Shipping of British Columbia reported an incipient loss of market share from the port of Vancouver to other west coast gateways. About two-thirds of the port’s throughput moves on rail.

But the diversions have been limited, partly because cargo owners and logistics providers were counting on intervention from Ottawa, as happened in recent years in a labour dispute at the port of Montreal and in rail contract negotiations. Another reason that has held them back has been uncertainty about options for alternative routes.

“We’re facing issues with four entities – a potential port strike in Vancouver, a port strike on the US east coast and two rail strikes involving the Canadian Class I railroads,” Mr Legler said.

“It is not only our situation in North America. You have congestion in Singapore and Colombo, containers blowing up in Ningbo, disruption of Red Sea shipping,” he added. “We’re entering a period of total uncertainty and it has to be one step at a time. We solve problems day to day.”

Michelle McCaughan, senior director sales and operations at forwarder AGO Transportation said: “As of now we are trying to book shipments to Montreal so we can arrange local delivery or de-stuff from there. We are all scrambling to make other arrangements.”

So far, the ports of Montreal and Halifax have operated normally, with no signs of congestion, Mr Legler reported.

Vancouver Port has made some preparations to alleviate the impact of a rail shutdown. The Vancouver Fraser Port Authority has asked vessels en route to the port to slow down and delay their arrival, to prevent congestion.

CH Robinson, which uses Canadian gateways for some of its US freight, has lined up additional trucking capacity on both sides of the border. However, trucking is not going to resolve the problem. The British Columbia Trucking Association has said haulage cannot fill the gap left by the railways, an assessment echoed by the Canadian Trucking Alliance.

The past years are supposed to have made supply chains more resilient, with a major effort focused on improving data flow for enhanced visibility. Faced with the likely magnitude of a convergence of disruptions, Mr Legler does not have much faith in this.

“Having a lot of data doesn’t help you if your container is stuck in Vancouver, and you don’t know if it will be there for one week or one month,” he commented.

“This is the worst situation I’ve seen in this industry. If this strike is settled, we’ll wait for the next one.”