Canadian Pacific Set to Shut Down if Labor Talks Fail

A work stoppage means CP can’t operate the railway and will create a “freight capacity crisis,” the railway said. (Nathan Denette/The Canadian Press via AP)

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One of Canada’s largest railways is gearing up to halt operations after failing to reach a labor deal with unionized workers.

Canadian Pacific Railway Ltd. has issued a 72-hour notice to the Teamsters Canada Rail Conference of plans to lock out employees early March 20 if the union’s leadership and the company fail to negotiate a settlement or agree to binding arbitration, CP said on its website. The parties have been in daily discussions but “remain far apart.” Canadian Pacific will continue to bargain with the union to achieve a settlement.

CP “has commenced its work stoppage contingency plan and will work closely with customers to achieve a smooth, efficient and safe wind-down of Canadian operations,” the company said.

A work stoppage means CP can’t operate the railway and will create a “freight capacity crisis,” the railway said earlier this month in a note to its customers. The Teamsters represents about 3,000 of CP’s locomotive engineers and conductors.

The disruption is poised to create more uncertainty in fertilizer markets just as farmers need key nutrients to plant spring crops. Canada, along with Russia and Belarus, is one of the main sources for the world’s potash, a mined mineral used in crop nutrients. Sanctions on Belarus and Russia following the invasion of Ukraine have already created a global shortfall and skyrocketing prices.

CP is the primary rail transportation provider for the delivery of Saskatchewan potash to overseas markets, according to the provincial government.

Lumber prices soared 5% after the news March 17, with futures trading by the exchange limit of $57, to $1,207 per $1,000 board feet in Chicago. In addition to Canada’s potash, disruptions to CP’s railway could strand large volumes of lumber and other goods.

Nutrien Ltd., one of the top crop nutrient suppliers, and Saskatchewan’s government have asked Canada’s federal government to act swiftly to stop a strike.

The federal labor and transportation departments are monitoring the situation closely, according to a statement issued late March 16.

“The government strongly encourages both parties to consider making the compromises necessary to reach a deal that is fair for workers and the employer,” Labor Minister Seamus O’Regan said.

— By Jen Skerritt, Robert Tuttle and Allison Nicole Smith. With assistance from Brian Platt.