Canada rail strike not imminent, rail carriers and union resume talks

TORONTO (ICIS)–A potential freight rail strike in Canada has been delayed because the matter has been referred to the Canada Industrial Relations Board (CIRB) and collective bargaining resumes today, Friday 17 May.

• Strike averted, for the time being
• Industrial board investigates potential strike impacts
• Rail strike would hit chemical and fertilizer logistics

After about 9,300 unionized conductors, train operators and engineers and other workers at freight rail carriers Canadian Pacific Kansas City (CPKC) and Canadian National (CN) earlier this month voted for a strike, federal labor minister Seamus O’Regan referred the matter to the CIRB, a quasi-judicial tribunal charged with keeping industrial peace in Canada.

The minister wants the board to investigate if disruptions to the supply of products such as heavy fuel, propane, food, and chlorine and other water treatment chemicals could pose safety and health issues, in particular in remote communities.

The board could decide that rail shipments of certain goods need to be continued during a strike.

The board has called on affected groups and organizations to make submissions on the matter by no later than 21 May. Trade group Chemistry Industry Association of Canada (CIAC) said it will make a submission about impacts on its industry.

It remains unclear how long it will take for the CIRB to reach a decision. After a decision, the union would have to give 72 hours of notice before starting a strike.

22 MAY STRIKE DEADLINE OFF THE TABLE
Labor union Teamsters Canada Rail Conference (TCRC), which previously said that a work stoppage could start as early as 22 May, has acknowledged that during the CIRB process there will be no strike.

Confusingly, the union on Friday still posted a notice on its website about a possible 22 May work stoppage as an “upcoming event”. A union official did not respond to an ICIS request for comment.

Rail carrier CPKC said in a statement that neither a legal strike nor a lockout can occur until the CIRB makes its decision.

It added that the referral to the board has created uncertainty about the timing of a potential work stoppage and interruptions of rail service.

CPKC, for its part, has proposed to the TCRC a “maintenance of services agreement” under which both parties agree on services that should be maintained in the event of a strike or lockout, it said.

“We believe this would eliminate the need for the CIRB referral process and bring much needed clarity regarding the timing of any potential strike or lockout,” it said.

If no such agreement is reached, it is unlikely the parties will be in a position to initiate a legal strike or lockout within the next 60 days, CPKC said.

A source at a major sulfur exporter told ICIS the referral to the CIRB was a “stall tactic” by the government that delays the risk of a strike, likely until the end of May.

IMPACTS ON CHEMICALS AND FERTILIZERS
Freight rail work stoppages can quickly affect logistics in the chemical, fertilizer and other industries, and a simultaneous stoppage at Canada’s biggest rail carriers would worsen impacts by far.

In Canada, chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail.

In the fertilizer industry, about 75% of all fertilizer produced and used in Canada is moved by rail and the industry depends on rail to move product across the country and into international markets.

In the run-up to potential strikes, producers need to prepare, longer strikes can force them to shut down plants, and after a strike ends it can take weeks for normal operations to resume.

Beyond chemicals and fertilizers, rail strikes affect the overall Canadian manufacturing sector.

Trade group Canadian Manufacturers and Exporters (CME) has warned that companies could not afford to have their businesses and workers threatened by “a critical supply chain labor disruption”.

“More than any other industry, we rely on railways to access critical inputs and bring goods to customers,” CME said in a statement.

According to the April purchasing managers’ index (PMI) survey by S&P Global, Canadian manufacturing has been weak for the past 12 months.

FREIGHT RAIL DATA
For the first 19 weeks of 2024, ended 11 May, Canadian chemical railcar loadings rose 3.9% year on year to 262,089, the American Association of Railroads (AAR) reported this week.

Total freight rail traffic – comprising railcar loadings and intermodal units – was at 3,064,779 for the first 19 weeks, up 0.9% from the same period in 2023.

Focus article by Stefan Baumgarten

Additional reporting by Julia Meehan

Please also visit Logistics: Impact on chemicals and energy

Thumbnail photo source: Canadian National