• Canadian Pacific winds down operations as strike deadline looms

    29 May 2018

    Canadian Pacific (CP) Railway workers are set to begin a nationwide strike action on May 29, potentially forcing the railroad operator to shut down its freight services with the prospect of delayed shipments of vehicles, manufactured goods, chemicals and food products across Canada.

    The unions representing CP conductors and locomotive engineers served the railway a strike notice last weekend, a day after union members largely rejected the company’s latest contract offer over more predictable schedules to combat crew fatigue. The Calgary-based railway said it would keep meeting with union representatives until the 22:00 local time deadline and beyond, but the unions have accused the company of not negotiating seriously. Over the weekend, the Canadian government has met with both sides as federal mediators assisted negotiations and hoped to reach another last minute agreement. The last strike was averted just hours before it was set to begin on April 20.

    Even before the official strike deadline is reached, shipping volumes have already been reduced this week as the CP starts to wind down operations that will likely come to a complete standstill as of Tuesday night. Refrigerated containers moving inbound or outbound have not been allowed to in-gate at CP rail ramps since May 23. Should the strike go ahead, CP would impose an official ban for shipments routing to or from its locations, including all shipments from or to destinations in the United States and Canada. In an advisory sent out before the averted strike last month, CP stated that impacted rail services would include routes between the Canadian Ports of Montreal and Vancouver and hinterland destinations such as Toronto, Winnipeg, Edmonton, Calgary, Regina, Chicago, Detroit and Minneapolis as well as between the Port of New York and Montreal and Toronto. At the time, CP also stated that it did not expect impacts to rail services in all of Halifax, between Port of Montreal and Saskatoon, Indianapolis, Calgary and Halifax as well as between Port of Vancouver and Saskatoon, Indianapolis and Memphis.

    As a result of the labor dispute, industries ranging from car manufacturers to food producers are likely to face limited shipping capacity. Cargo backlogs caused by disruptions last winter have not yet been completely worked off and rail customers may have to seek capacity at Canada’s only other major railroad operator, Canadian National (CN) Railway. Customers with in an interest in rail freight services in North America should ensure a timely pick-up of import containers before May 30 as these would likely be inaccessible during a strike action if gated in to the CP network, causing extensive delays and additional detention, demurrage and storage costs. In case containers are not gated into the CP network, it is recommended to move containers from the port of discharge via a different railroad such as CN or arrange for truck haulage for future shipments. Container lines are likely to divert inbound shipments from Vancouver to Tacoma or Los Angeles-Long Beach, from where customers would have to make alternative plans to retrieve shipments at their own expense, while outbound shipments should be rebooked on ocean carriers not relying on CP.

    Outlook

    As previous strike threats by CP workers have been averted as recently as last month, there is still the potential for a last-minute agreement between CP management and the unions. An indicator supporting this argument is CP’s statement that it would keep meeting with union representatives until the deadline and beyond. Other sources in the shipping sector, however, expect talks to fail, which would result in only the third CP Rail strike since 2012.

    Agriculture and industry representatives have also asked the government to intervene to keep goods moving in case of a strike. Such a move would be unlikely, at least in the early stage of a strike, as the liberal government seems to support the collective bargaining process. However, the government could be forced to intervene should the strike last for several weeks and seriously disrupt commuter rail services in Canada’s largest cities.

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