Work stoppage at Canadian railroads could disrupt US supply chain

DETROIT

Canada's two largest railroads are starting to shut down their shipping networks as a labor dispute with the Teamsters union threatens to cause lockouts or strikes that would disrupt cross-border trade with the U.S.

Both the Canadian Pacific Kansas City and Canadian National railroads, which haul millions of tons of freight across the border, have stopped taking certain shipments of hazardous materials and refrigerated products.

Both are threatening to lock out Teamsters Canada workers starting on Aug. 22 if deals are not reached.

On Tuesday, CPKC will stop all shipments that start in Canada and all shipments originating in the U.S. that are headed for Canada, the railroad said on Aug. 17.

The Canadian Press reported that on Aug. 16, Canadian National barred container imports from U.S. partner railroads.

Jeff Windau, industrials analyst for Edward Jones & Co., said his firm expects work stoppages to last only a few days, but if they go longer, there could be significant supply chain disruptions.

“If something would carry on more of a longer term in nature, then I think there are some significant potential issues just given the amount of goods that are handled each day,” Windau said. “By and large the rails touch pretty much all of the economy.”

The two railroads handle about 40,000 carloads of freight each day, worth about $1 billion, Windau said. Shipments of fully built automobiles and auto parts, chemicals, forestry products and agricultural goods would be hit hard, he said, especially with harvest season looming.

Both railroads have extensive networks in the U.S., and CPKC also serves Mexico. Those operations will keep running even if there is a work stoppage.

CPKC said it remains committed to avoiding a work stoppage that would damage Canada's economy and international reputation.

Union spokesman Christopher Monette said that negotiations continue, but the situation has shifted from a possible strike to “near certain lockout” by the railroads.