Major Canadian freight rail traffic halted as officials struggle to keep up

TORONTO (AP) — Freight trains are expected to start moving again soon in Canada after the government forced the country’s two major railway companies into arbitration with their union on Thursday, averting a shutdown. Potentially serious economic consequences Across the country and in the United States

Canadian National Railway said it ended its shutdown immediately Thursday evening in an effort to get its trains running quickly. The Canadian National Railway did not say exactly when the shutdown would end. The company said in a statement it would follow the guidance of the Canadian Industrial Relations Board, which is overseeing the arbitration.

The Engineers, Conductors and Supervisors Syndicate, which represents 10,000 engineers and conductors, reacted angrily to the decision, accusing the railway companies of deliberately creating a crisis to force the government to intervene. The syndicate said it would keep the protest lines in place while the decision was reviewed.

The government has ordered rail companies to go to arbitration with the Canadian Trucking Congress to end the blockade. Started at 12:01 AM on Thursday After the two parties failed to resolve the contractual dispute.

Labor Secretary Stephen McKinnon announced the arbitration order at a news conference Thursday moments after The Associated Press reported the news, citing an official familiar with the situation who was not authorized to speak publicly before the statement.

MacKinnon said he expected trains to resume within days, and that ending the shutdown was the first step.

Throughout Thursday, the two sides negotiated unsuccessfully as workers staged a sit-in outside the building and business groups urged the government to impose arbitration.

Canadian Trucking Federation President Paul Boucher criticized the government’s decision to intervene too soon.

“Canada’s two major railway companies have created this crisis, held the country hostage and manipulated the government into ignoring the rights of working-class Canadians once again,” Boucher said. “The Trucking Congress of Canada is deeply disappointed by this shameful decision.”

Rail companies hailed the decision, saying the government had no other choice.

“The Government of Canada recognized the serious consequences of the railway disruptions on the Canadian economy, North American supply chains, and all Canadians,” said Keith Creel, CPKC Chairman and CEO. “The Government acted to protect Canada’s national interest. We regret that the Government had to intervene because we fundamentally believe in and respect collective bargaining; however, given the risks to all involved, this situation requires action.”

MacKinnon said the government wanted to give the negotiations every chance of success, but ultimately the economic stakes were too great to allow the shutdowns to continue. He had rejected the arbitration request a week ago.

“The Canadian economy cannot afford to wait for an agreement that has been delayed for too long and in the presence of a fundamental disagreement between the two parties,” he said.

All freight transported by rail in Canada — worth more than C$1 billion ($730 million) a day and amounting to more than 375 million tonnes of freight last year — was halted Thursday, along with rail freight crossing the U.S. border. About 30,000 passengers in Canada were affected because their trains use CPKC lines. CPKC and CN trains continued to operate in the U.S. and Mexico during the shutdown.

Trudeau decided not to force the parties into binding arbitration before the deadline for fear of angering unions and the left-wing New Democrats, on whom his government relies for support to stay in power, but he ultimately decided he had no choice.

“Collective bargaining is always the best way forward,” Trudeau said. “When that is not a predictable option — when we face dire consequences for our supply chains and the workers who depend on them — governments must act.”

Most companies probably have enough supplies and storage space to withstand the temporary disruption. But ports and other rail lines quickly become congested with stranded cargo that Canadian National and CPKC will not be able to pick up.

Many companies have made changes to their supply chains in the wake of the Covid-19 pandemic that could help them weather any short-term disruption, said Jeff Windau, an analyst at Edward Jones. The real trouble starts if the disruption lasts a long time, he added.

Most train stoppages in Canada have previously lasted only a day or two, usually involving one major rail company, but some have extended to eight or nine days. This time the impact has been compounded because both rail companies have stopped.

“They are integral and linked to the economy,” Windau says. “Just by the breadth of the products they move… Ultimately, I think we need to keep the railroads running.”

Chemical companies and food distributors were the first to be affected by the strike. Railroads stopped accepting new shipments of hazardous materials and perishable goods as they began to gradually shut down last week, but most chemical plants said they would be fine for about a week.

The auto industry could also quickly see problems because it relies on just-in-time shipments, with large cross-border deliveries of engines, parts and finished vehicles. Flavio Volpe, president of the Automotive Parts Manufacturers Association, posted on X that about four out of every five cars made in Canada are exported to the U.S. almost exclusively by rail. He said a prolonged shutdown could cause a temporary shutdown similar to the five-day blockade of the Ambassador Bridge in 2022.

More than 30,000 commuters in Vancouver, Toronto and Montreal were the first to feel the pain of the closures and may have to board buses again on Friday. Their commuter trains can’t run while CPKC employees are locked out.

The union said CN had been negotiating with truck drivers for nine months while CPKC had been trying to reach an agreement for a year.

Canadian negotiations have stalled over issues related to how railway workers are scheduled and concerns about rules designed to prevent fatigue and provide adequate rest for train crews. Both rail companies have proposed moving away from the current system, which pays workers based on miles traveled, to an hourly system that they say would make it easier to provide predictable rest time. The union has said it doesn’t want to lose hard-won fatigue protection.

The rail companies said their contract offers include increases that are in line with recent industry deals. Engineers already earn about $150,000 a year at Canadian National while drivers earn $120,000, and CPKC says their wages are comparable.

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Funk reported from Omaha, Nebraska. Associated Press writer Aamer Madhani in Buellton, California, contributed to this report.