Railway Strike Disrupts Commerce in Canada and U.S.

A further wrinkle for shipping is an announcement by U.S. railroad Union Pacific Corp. that it will comply with CN’s strike embargo requirements. Union Pacific will no longer accept shipments to or from CN until operations return to normal. The embargo will likely impact shipments of steel, aluminum and copper between Canada and the U.S.

The Canadian Steel Producers Association said the strike will affect both raw materials and finished products.

“Our members rely on railways to receive raw materials and to ship finished products to key markets within Canada and the United States. Other shipping options are in short supply and are more costly,” said CSPA President Catherine Cobden in a note to SMU.

“The current labor strike is putting Canada’s domestic steel industry and other industries who rely on our product at risk and may result in serious economic consequences for the country,” she added. “The longer the strike persists, the more dire the circumstances become for Canada’s steel producers.”

EVRAZ NA reports that shipment of some finished products originating out of Regina has been delayed, but production has not been impacted.

Algoma spokeswoman Brenda Stenta emphasized the importance of quickly resolving the strike. “One of the competitive advantages Algoma Steel enjoys is access to multiple modes of transport. This has enabled us to ensure no disruption to customer shipments to date. However this comes at a cost, one that becomes increasingly significant as the work stoppage is prolonged. In today’s challenging market environment, it is exceedingly important that the parties come to a speedy resolution and that rail service is restored.”

Stelco Chairman Alan Kestenbaum said that his company also has various alternatives to CN, including barge, ship and trucks as well as their own rail cars and an alternative rail line.

The Canadian Association of Petroleum Producers expressed concern over closure of a key export artery, “particularly in light of the current shortage of available pipeline capacity relative to oil production in Western Canada,” said CAPP Vice President Ben Brunnen in comments to the Canadian Press.

Why are Workers Striking?

Union members at Teamster Canada are negotiating for better safety regulations as well as opposing a lifetime cap on prescription drug coverage proposed by CN. Wages are not in dispute.

“CN currently requires workers to operate trains alone, from the outside of the train, hanging on to moving train cars with one hand while operating a remotely controlled locomotive with the other. Railroaders are expected to do this in rain and in freezing temperatures, sometimes for distances of up to about 17 miles,” said the Teamsters Canada Rail Conference in a press release. “The union’s demands to cease these dangerous practices have fallen on deaf ears.”

Fatigue has also been an issue for workers who find it difficult to take time off under company rules.

“We are fighting for the safest workplace possible. We’ve lost nine of our members in various railway accidents over the past 24 months, including three from the group at CN that’s currently on strike,” said TCRC President Lyndon Isaak.

Negotiations between the TCRC and Canadian National Railway have been in progress for seven months, with federal mediators intervening during the last five months. No substantive progress has been made on the union’s key workplace safety and health issues since the strike began, says TCRC.

Union officials took umbrage at being blamed for the propane shortage. The shortage “appears to be largely manufactured by Canadian National Railway,” said TCRC, noting that over 1,800 locomotive engineers and 600 supervisors are free to cross picket lines and operate trains despite the strike.

“While CN is nowhere near operating at full capacity, we think enough trains are running to allow CN to supply Ontario and Québec with propane,” said Isaak. “We wonder if CN is choosing not to ship goods like propane in order to manufacture a crisis and force back-to-work legislation.”

Meanwhile, the strike continues to worry Canadian businesses.

“The big manufacturers who trade from east to west are very affected,” said Veronique Proulx, head of the Manufacturers and Exporters of Quebec. “They have no other solutions to turn to. As we know, road transport is congested, so what are the alternatives?