Canadian Rail Labor Dispute Talks Restart; CN Revises Offer
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Canadian National Railway made a revised offer May 16 to the Teamsters Canada Rail Conference, raising hopes of a settlement in a labor dispute portending major disruptions for shippers, carriers and logistics specialists across North America.
CN’s revisions to its offer center on nixing hourly rates and scheduling proposals.
Meantime, talks between fellow railroad operator Canadian Pacific Kansas City Railway and the TCRC restarted May 17. CPKC, whose railroad network spans large parts of the U.S. and Canada, said talks between the leadership teams restarted with the help of federal mediators. CN also planned to hold talks May 17, the railroad said.
Union members at CPKC and CN authorized strike action May 1 by a combined 9,300 railroad employees.
About 70% of freight moving among Canadian metropolitan areas and half the country’s export volume is transported by rail, sources say. However, historically, industrial action at the two largest Canadian railroads has not been simultaneous — allowing shippers to switch to the other network.
McKendry
“A labor disruption at both Canadian railways simultaneously would gridlock the nation’s supply chain and, with every day that passes, build networkwide congestion,” Mark McKendry, NFI Industries senior vice president of intermodal, told Transport Topics.
“The ‘bunching’ of shipments would take weeks to work through once both railways receive legislative relief or a negotiated settlement,” McKendry said.
NFI ranks No. 16 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
Before CN revised its offer and CPKC and TCRC returned to the negotiating table, the strike timetable already was slipping from its original May 22 start after federal Minister of Labour Seamus O’Regan stepped in.
O'Regan
O’Regan on May 9 sought a Canadian Industrial Relations Board ruling on whether the action would cause immediate and serious danger to the safety or health of the public.
CIRB was tasked with determining the movement of propane on the CPKC network and shipments of heavy fuel, propane, food and water treatment materials on CN’s network had to be maintained.
The administrative tribunal set an initial submissions and rebuttal deadline of May 21, but the union said it did not expect submissions to be complete before May 31.
No matter the pace of talks, major shippers are putting contingency plans in place.
“Some diversion has already occurred, with supply chain managers reducing disruption risk by shifting some volume away from dependency on Canada railroads in Canada until the contract is negotiated,” Paul Bingham, S&P global market intelligence director of global Intelligence and analytics,told TT.
Bingham
Global shipping giant Maersk said May 9 it was “working closely” with CN, CPKC and terminal operator DP World to speed up Canadian West Coast port operations to reduce congestion, including diverting cargo from Centerm in Vancouver to Prince Rupert, British Columbia.
Across the border, Maersk said it was putting the Port of Tacoma, Wash., on the schedule for four upcoming transpacific voyages should a strike be imminent. Maersk also said it was reviewing all feasible rail routings and transit times to U.S. destinations via Tacoma. Maersk ranks No. 2 in the TT Global Freight Top 50.
Shannon
“We jumped into contingency planning for our customers as soon as the vote was taken because we have 100 years of experience moving freight to, from and in Canada, and know how much impact a simultaneous strike at both railroads could have,” Scott Shannon, C.H. Robinson Worldwide vice president of North American surface transportation, told TT.
C.H. Robinson ranks No. 2 on the TT Top 100 list of the largest logistics companies.
“At this point, our customers are primarily looking for over-the-road options. We’re helping shippers make alternative plans now because a typical freight train carries the equivalent of 300 truckloads, and trucks will fill up fast,” Shannon said.
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“I have advised our shippers to ship early and build up inventory wherever possible,” McKendry said. “NFI is offering temporary warehousing solutions to aid shippers in accomplishing this goal, as their customers are unlikely to accept goods early.”
Refrigerated shippers’ contingency plans are likely advancing especially quickly.
“Cutoff dates have already been announced for some refrigerated loads to avoid temperature-sensitive freight from getting stranded,” Shannon said.
Costello
Automotive manufacturers, meanwhile, have had to factor in freight shipping up from Mexico, too, which American Trucking Associations Chief Economist Bob Costello said had the potential to hurt motor carriers.
Were a strike to take place, pressure on carriers in the intermodal and truckload sectors would increase in the U.S. and Canada, boosting spot rates, sources said.
“If workers at both railroads strike, it could paralyze the ports, and trucking rates could spike because a whole lot of freight would have to find another way to travel,” Shannon said.
Gridlock due to a strike on both rail networks would see unprecedented Canadian over-the-road trucking rates, McKendry said, adding that national over-the-road capacity cannot absorb the volume of freight that rail presently moves.
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