A potential rail strike in Canada could pose serious risks to US supply chains. Canadian Pacific Kansas City (CPKC) and Canadian National railroads are preparing for potential labor disputes with the Teamsters union. These railroads are critical to the automotive, agriculture, and manufacturing industries, and a halt in operations could lead to shipment delays and increased costs. Several US businesses are now bracing themselves for economic repercussions.
The impact could be immediate since both railroads have already stopped accepting certain shipments of hazardous materials and refrigerated products. Lockouts or strikes could begin as early as Thursday if deals are not reached, threatening the daily flow of approximately 40,000 carloads of freight worth around $1 billion. The supply chains of many US industries rely heavily on the seamless operation of these railroads.
Industries Most Affected
The agricultural and automotive industries are particularly vulnerable to a potential strike. A prolonged work stoppage could disrupt the supply chains for essential goods like grains, automotive parts, and forest products. More than 32,000 commuters in major Canadian cities such as Toronto, Montreal, and Vancouver would also feel the pinch.
A shift from rail to trucking could exacerbate the situation, leading to a spike in trucking spot market rates. Shippers may have to pay a 10-20% premium for alternative shipping methods during a strike. The agricultural and automotive industries, among others, should prepare for these logistical and financial challenges.
Government Responses and Worker Issues
Government officials are involved in the negotiations, but Prime Minister Trudeau has shown reluctance to force arbitration. The main sticking points in the negotiations include crew scheduling, rail safety, and worker fatigue. Nearly 10,000 workers are covered by these contracts.
“CPKC is pressuring the union for concessions that would make it even harder for workers to predict when they might be called for work, creating a fatigue-related safety risk,” the Teamsters said in a statement. – Source
A simultaneous work stoppage will create chaos in North America, according to experts like Margaret Kidd, an associate professor and director for the University of Houston’s supply chain and logistics program. “Estimates on the port side indicate a one-week strike would take four to six weeks to clean up — you can do the math and see that a prolonged strike would take us into 2025 to play catch up,” she says.
What Can Businesses Do?
Businesses are advised to prepare for potential disruptions by familiarizing themselves with their supply chains, identifying critical shipments, and gearing up for alternative transportation methods. The U.S. and Canadian chambers of commerce warn of significant economic impact and call for Canadian government intervention. “The Government of Canada must take action to ensure goods continue to move reliably between our two countries,” the group said.
Companies should brace for potential cost spikes and logistical hurdles. Shifters are preparing contingency plans to navigate these turbulent times. As the clock ticks, urgent action is required to forestall what could be a significant economic disruption on both sides of the border.
