The rail strike in Canada, albeit of short duration has ended. The Federal Government invoked Section 107 of the Canadian Labor Code requiring binding arbitration between the Teamsters Canada Rail Conference and the two major rail operators, Canadian National Railway (CNR) and Canadian Pacific Kansas City (CP-KC).
As noted in postings in the August 23rd edition of EGG-NEWS, the Union demanded increased wages and benefits and above all, rationalization of work schedules especially affecting long- distance freight to enhance safety and morale.
The Liberal Party government that is generally Union-friendly was forced to act by the impact of a rail strike on all aspects of the Canadian economy. Moody’s the multinational ratings agency estimated that the strike could impose a cost of $250 million per day.
Associations representing segments of Canadian agriculture including the Meat Council, Pork Council and others petitioned the Government for intervention since transport involving perishable commodities requires stable and reliable rail operation to support supply chains and avert waste. The associations cited the 2023 strike in the Port of Vancouver that extended over 35 days and disrupted trade to the value of $8 billion.
It is not only Canada that would have been affected by a major rail strike. The two operators intersect with U.S. operators, BNSF Railway, Union Pacific, Norfolk Southern and CSX. Canadian National Rail links extend to New Orleans, LA. and CP-KC extends to Gulfport, MS. and on to Tampico on the east and Lazaro Cardenas on the west coast of Mexico. Approximately one-third of all traffic moved by the two major rail operators in Canada crosses the border with the United States.
Commodities affected by even a short-term rail strike in Canada would include ethanol, potash, grains, oilseeds, oils and above all fresh meat. Apart from agriculture, industry would be impacted since Mexico manufactures automobile parts that are required to assemble vehicles in the U.S. and Canada. In turn, Canada exports wheat, meat and aluminum southward to the U.S. and Mexico.
In 2023, the U.S. exported $30 billion in agricultural products to Canada, balanced by imports of valued at $40 billion. Combined trade between Canada and Mexico amounted to $40 billion.
The economies of Canada, the U.S. and Mexico are interconnected requiring reliable and efficient transport. Disruption in any of the three conjoined USMCA partners will have serious impacts on the economies of the other two.
The consequences of rail strike in Canada should generate a sense of urgency to conclude negotiations for a labor contract between longshoremen along East coast and Gulf ports and operators of these critical facilities. Time is running out with a September deadline now imposed by the International Longshoremen’s Union.
As with Canada, strikes affecting major industries and especially the transport sector have political implications. This is even more critical in a U.S. election year and also in Canada where the governing party has a tenuous hold on power.