Canadian government ends major railway stoppage, ordering arbitration

The Canadian government on Thursday forced an end to a brief rail work stoppage that threatened the North American economy, by ordering Canada’s two largest rail companies and the Teamsters into binding arbitration.

The Canadian Pacific Kansas City railroad and the Canadian National Railway locked out workers at 12:01 a.m. Thursday after they failed to reach a deal with Teamsters Canada Rail Conference on a contract, after days of heated negotiations. While the work stoppage lasted less than 17 hours, it threatened to disrupt shipments of cars, timber, petroleum products and grain across Canada and the United States.

“I am using my authorities under the Canada labor code to secure industrial peace,” said Canada’s labor minister Steve MacKinnon at a news conference, adding that he had ordered “operations on both railways to resume,” a process that would likely take a few days.

The Canadian government had in recent days rejected mounting calls from business groups and railroads to intervene. Canadian Prime Minister Justin Trudeau and the Liberal Party of Canada have close ties to the country’s labor unions.

The lockout marked the first time that Canada’s two largest railroads had faced simultaneous work stoppages, in a critical transportation network that is interconnected with the United States.

MacKinnon said Thursday that he had used his legal authority to direct the Canada Industrial Relations Board to assist the railways and union in settling the outstanding terms of their contracts “by imposing final binding arbitration.”

He stressed that while the negotiations “belonged to these parties,” the shutdown’s impacts would be felt by all Canadians, including workers, farmers, ranchers, commuters and small businesses.

The Teamsters have said that the impasse centered on the two railways’ push for its members to make sacrifices “on crew scheduling, rail safety, and fatigue management.” Meanwhile, the railroads had said they have offered significant pay increases and addressed concerns about scheduling.

Teamsters Canada, which represents nearly 10,000 rail workers at the two companies, has been without contracts at the companies since the end of 2023.

MacKinnon said Thursday that he had also directed Canada’s labor board to “extend the term of the collective agreements until new agreements have been signed.”

The fallout of a Canadian rail strike could have been far-reaching in the United States and Canada had it continued for days or weeks. Businesses had warned of “devastating consequences” that could trigger inflated prices and supply-chain shortages across North America and beyond.

This week, in a letter addressed to President Joe Biden as well as other U.S. and Canadian officials, dozens of trade associations, including the American Farm Bureau Federation and the National Cotton Council, said a rail shutdown would trigger “harmful consequences for Canadian and American agricultural producers, the agricultural industry, and both domestic and global food security.”

Each day of a work stoppage would have required three to five days for the railroads to recover, said Jonathan Abecassis, a Canadian National spokesman.

The work stoppage had major implications for travelers on Canada’s passenger rail lines, forcing tens of thousands of commuters in Canada’s three largest cities to find alternate transportation.

The railroads started winding down operations this week in anticipation of a shutdown. Shipments of perishable and hazardous products - such as frozen food, propane and chlorine used to purify water - had been halted to avoid stranding dangerous or spoilable products. The companies in recent days began stopping rail shipments that start in Canada, as well as those originating in the United States and headed for Canada.

Murad Al-Katib, chief executive of AGT Foods, one of the world’s largest suppliers of staple foods such as beans and wheat, said the work stoppage would “immediately disrupt” commerce, noting that many commodities - such as peas, lentils, chickpeas and durum wheat used for pasta - travel across the Canadian border to U.S. processing and packaging facilities.

“This is a disastrous outcome that’s going to lead to higher prices and processing plants shutting down,” Al-Katib said.

Some companies had made contingency plans to transport goods by truck, but logistics experts had said that truckers would not be able to meet the excess demand.

The Brotherhood of Locomotive Engineers and Trainmen, one of the largest U.S. rail unions, which is affiliated with the Teamsters, had told some 51,000 stateside members that they could refuse to cross any picket lines operated by Canadian rail workers, according to a copy of the letter from this week obtained by The Post.

The Teamsters say the railroads are demanding workers submit to “grueling on-call schedules” and concessions around worker scheduling and safety provisions, “regardless of the risks” as the railroads face worker shortages. Canadian National is also forcing workers to relocate across the country for months at a time to combat understaffing, the union said. The union said it does not want to make sacrifices on its workers’ availability or relocations.

The union did not immediately respond to a request for comment after the government intervened Thursday, but Paul Boucher, president of Teamsters Canada Rail Conference, said in a statement on earlier Thursday that the companies “have shown themselves willing to compromise rail safety and tear families apart to earn an extra buck.”

The rail companies did not immediately respond to news of the government’s intervention but said in recent days that they’ve made generous offers to the union.

Canadian National said in a statement early Thursday that the company “had no choice but to finalize a safe and orderly shutdown and proceed with a lockout,” adding that the union had “not shown any urgency or desire to reach a deal that is good for employees, the company and the economy.”

Patrick Waldron, a spokesman for Canadian Pacific Kansas City, said in a statement Tuesday that the railway had offered “significant wage increases” but had withdrawn an improvement intended to address the union’s concerns about scheduling because of union leadership’s opposition to that offer.

Rail transport carries billions of dollars in goods between Canada and the United States every month, according to the U.S. Transportation Department. Roughly 30 percent of all freight rail operations in Canada cross into the United States each year, the Association of American Railroads said.

In 2022, Congress and Biden intervened in a dispute between U.S. railways and unions about concerns similar to those reported by Canadian rail workers, such as severe understaffing and grueling schedules, forcing a deal that averted a strike.