The promotional products industry is about to experience yet another supply chain disruption as Canada’s two major freight railroads have halted operations.

Canadian National (CN) and Canadian Pacific Kansas City Southern (CPKC) both locked out their employees on Thursday morning due to a contract dispute with the Teamsters union, The Associated Press reported.

The shutdown, which is impacting more than 9,000 unionized workers, could wreak havoc on both the Canadian and United States economies, as nearly a third of the freight handled by the two railroads crosses the U.S.-Canadian border, CNN reported.  

• For example, a three-day strike would cause $300 million ($407 million CAD) in economic damage, while a seven-day strike would bring losses to more than $1 billion ($1.4 billion CAD), according to the Anderson Economic Group, a research firm that specializes in estimating the economic impact of work stoppages.  

“We fully understand and appreciate what this work stoppage means for Canadians and our economy,” CPKC said in a press release. “CPKC is acting to protect Canada’s supply chains, and all stakeholders, from further uncertainty and the more widespread disruption that would be created should this dispute drag out further resulting in a potential work stoppage occurring during the fall peak shipping period. Delaying resolution to this labour dispute will only make things worse.”

• After Canada introduced new duty and rest period rules in 2023, CN wanted to increase shift durations from up to 10 hours a day to up to 12 hours a day, Reuters reported.

• Not surprisingly, the Teamsters rebuffed.

Without an agreement or binding arbitration, CN says it had no choice but to finalize a safe and orderly shutdown and proceed with a lockout.

• However, Canada doesn’t have the same law as the U.S. does that would allow Trudeau to prevent a lockout or strike while a panel weighs the demands of the union and the companies.

A similar situation occurred in the U.S. in 2022, but President Joe Biden and Congress intervened, forcing unions to accept a deal.

What Led To The Lockout?

All parties involved were aware that a shutdown was likely to happen: CPKC has been negotiating with the Teamsters for nearly a year and CN has been trying to reach an agreement for nine months, The Associated Press reported. 

The labor dispute is largely over wage increases, scheduling and demands for better work-life balance, according to the union and companies.

“Over the last nine months, CN has negotiated in good faith,” CN said in a press release. “The company consistently proposed serious offers, with better pay, improved rest and more predictable schedules. The Teamsters have not shown any urgency or desire to reach a deal that is good for employees, the company and the economy. We urge the Teamsters to engage in these negotiations with the urgency and importance that this situation requires.”

Despite the lockout, the union says it remains at the bargaining table with both companies. 

“Throughout this process, CN and CPKC have shown themselves willing to compromise rail safety and tear families apart to earn an extra buck,” says Paul Boucher, president of the Teamsters Canada Rail Conference. “The railroads don’t care about farmers, small businesses, supply chains or their own employees. Their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy.”

Less than 48 hours before the shutdown, the U.S. Chamber of Commerce and Canadian Chamber of Commerce issued a joint statement calling on Canada’s government to “immediately intervene.”

“A stoppage of rail service will be devastating to Canadian businesses and families and impose significant impacts on the U.S. economy. Significant two-way trade and deeply integrated supply chains between Canada and the United States mean that any significant rail disruption will jeopardize the livelihoods of workers across multiple industries on both sides of the border. The Government of Canada must take action to ensure goods continue to move reliably between our two countries,” the chambers said. 

Both railroad companies have also called on the government to intervene and refer the dispute to binding arbitration, but Prime Minister Justin Trudeau has declined thus far.

Written by: John Corrigan

Published with Permission from PPAI