Article by: Rick Walker, Vice President, TradeInsights, LCB/CCS

Canada’s two main rail companies said on Friday they would lock out employees on Aug. 22 if talks to negotiate a labor contract fail, a move that would bring the country’s transport of goods to a halt. If workers strike at both of Canada’s rail systems and the Port of Vancouver, the ramifications on the supply chain would extend throughout North America, says Gregory D. DeYong, a Southern Illinois University Carbondale associate professor of operations management.

The Canada Industrial Relations Board (CIRB) on Friday, Aug. 9, issued its decision that none of the services provided by the two Canadian railways—CN and CPKC—are essential by law. As a result, no rail services are required to be maintained in the event of a work stoppage initiated by either the union or the railroads. The decision also includes a 13-day cooling off period during which no work stoppage is possible. Prior to any work stoppage, a 72-hour notice must be provided. The earliest possible date of a work stoppage is now Aug. 22 at 12 a.m. ET.

Following the Canada Industrial Relations Board’s (CIRB) decision that does not bring the labour conflict any closer to a resolution, CN is formally requesting the Minister of Labour’s intervention under section 107 of the Canada Labour Code to protect Canada’s economy from the impacts of prolonged uncertainty.

Negotiations with the Teamsters Canada Rail Conference (TCRC) resumed on Wednesday; however, no progress has been made as the TCRC has not engaged meaningfully at the negotiating table. While CN is willing to keep negotiating with the TCRC, the Company has lost faith in the process and is concerned that a negotiated deal is no longer possible without a willing partner. Therefore, the Company formally requests the Minister of Labour’s intervention.

Since the beginning of the year, CN has made four offers to the TCRC. The offers included points on wages, rest, and labour availability while remaining fully compliant with the government-mandated rules overseeing duty and rest periods. None of CN’s offers compromised safety in any way. The latest offer proposed third-party arbitration. The union rejected all offers and has made no counterproposals.

“If no resolution is reached during bargaining through the extended cooling off period, and the TCRC continues to refuse binding interest arbitration, CPKC will have no choice but to take this action,” the railroad said. “CPKC is acting to protect Canada’s supply chains, and all those who depend on them, from the more widespread disruption that would be created should a work stoppage occur during the fall peak shipping period. Delaying resolution to this dispute only makes things worse, causing more disruption and damage to Canada’s international reputation as a reliable trading partner.”

“The TCRC will continue to push for a negotiated settlement with both carriers,” the union said in a statement to its members. “Discussions will immediately take place to continue the process and arrange dates to meet,” adding that the Aug. 9 CIRB decision “strengthens your bargaining committee’s resolve to achieve a settlement, and we thank the membership for your patience during this process.”

We will continue to monitor this situation and issue updates when available.

Please contact your V. Alexander account team, or you may also contact our Trade Compliance team at tradeinsights@valexander.com with any questions