Canadian rail lines restore service but supply snags need to be smoothed

Canada’s rail disruption has ended after Ottawa imposed binding arbitration but cargo piled in loading yards could take a few weeks to sort out, officials said.

Workers at Canadian National Railway (TSX: CN; NYSE: CN) returned to work on Friday after federal Labour Minister Steven MacKinnon referred negotiations to binding arbitration, which ended a CN lockout that began midnight Wednesday.

Employees at Canadian Pacific Kansas City Railway (TSX: CP; NYSE: CP) resumed work just after midnight Monday morning although the company had wanted them at work on Sunday.

The Teamsters union told its thousands of members to delay their return. It called off a new strike at CN on Monday morning that it had circulated before the weekend. But it said on Monday it would take the Canada Industrial Relation Board to federal court for its back-to-work order.

“This decision by the CIRB sets a dangerous precedent,” Paul Boucher, president of the Teamsters Canada Rail Conference, said in a statement. “It signals to corporate Canada that large companies need only stop their operations for a few hours, inflict short-term economic pain, and the federal government will step in to break a union.”

Operations slowed

The work stoppage may have cost $341 million a day, according to a Moody’s rating company estimate last week. With the rail companies slowing some operations before the labour action began on Wednesday, CN said it may take a week or more to sort out supply chains, The Globe and Mail reported. The head of Canadian Manufacturers & Exporters, a Toronto-based industry lobby group, said normal operations would take a month.

It’s a rare occurrence for both of Canada’s major rail networks to stop operating at the same time. Industries depend on them for transport across the country and thousands of kilometres of tracks in the United States and Mexico, in CPKC’s case. However, the lockout only affected Canadian operations.

Mining products account for more than half of Canada’s rail-freight volume, with over 160 million tonnes of crude and processed minerals transported in 2022. The sector typically generates over $6 billion annually in rail freight expenditures.

The Mining Association of Canada, the Saskatchewan Mining Association and numerous companies such as Nutrien (TSX: NTR; NYSE: NTR), one of the world’s largest potash producers, copper producer Teck Resources (TSX: TECK.B) and Canada’s largest uranium miner, Cameco (TSX: CCO; NYSE: CCJ), expressed frustration with the labour dispute when reached by The Northern Miner.

Damaged reputation

Canada frequently sees rail disruptions. The 2023 West Coast Ports strike, the pandemic and civil disruption in the form of random and sporadic rail blockades have damaged Canada’s reputation as a reliable trading partner, the national mining association contends.

“Canada can and must do better at creating a stable and predictable logistics supply chain that restores greater confidence in Canada’s reliability as a trading partner,” Pierre Gratton, the Pierre Gratton, association’s president and CEO, said in a statement. “Government should make every effort and use every tool at their disposal to address this unprecedented disruption.

“Failure to do so is an abdication of leadership and an abandonment of responsibility.”

Canadian rail lines restore service but supply snags need to be smoothed

Operations slowed

Damaged reputation

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