The two largest railroads in Canada, Canadian National (CN) and Canadian Pacific Kansas City (CPKC), are bracing for a significant recovery period following a brief shutdown that disrupted billions in freight, including vital transborder trade with the United States. Most of their unionized workforce returned to work on Monday after the Canada Industrial Relations Board upheld an order from Labor Minister Steven MacKinnon to end a lockout and mandated binding arbitration to resolve a contract standoff with the Teamsters Canada Rail Conference.
Both railroads had already imposed a shipment embargo for more than a week before the lockout deadline, even though train movements were stopped for less than twenty-four hours. This preemptive action led to substantial interruptions in supply chains, affecting a variety of customers who were forced to cut production shifts. Reports indicate that intermodal container flows into and out of Canadian ports were also halted, exacerbating issues at terminals already struggling to manage a surge of import traffic during the peak trans-Pacific shipping season.
According to the Bureau of Transportation Statistics, rail-served trade between Canada and the U.S. reached $9.1 billion in June, accounting for approximately 14% of all trade between the two nations. The recent disruptions have raised concerns among shippers, particularly those reliant on rail for containerized intermodal shipments. Scott Shannon, vice president for Canada at C.H. Robinson, noted that past experiences with rail strikes suggest it could take up to a week for each railroad to fully reset and resume smooth operations. He added that it would take even longer to address the backlog of shipments that accumulated during the shutdown.
Estimates indicate that the shutdown represented only a small fraction of the $52 billion in total freight moved per day, with railroads responsible for about 28% of that volume on a tons-mile basis.
Logistics services providers are closely monitoring the situation at major western Canadian gateways, particularly the ports of Vancouver and Prince Rupert in British Columbia. Paul Brashier, vice president of global supply chain for ITS Logistics, emphasized the importance of checking all import ocean container shipments arriving at U.S. rail ramps to ensure they do not include Canadian rail legs. He highlighted the ongoing concerns regarding potential port disruptions, particularly in light of recent longshore labor disputes that had previously affected cargo movements.
Since CN and CPKC rail services have resumed at the Port of Vancouver, the Vancouver Fraser Port Authority (VFPA) has announced that they are now concentrating on putting their recovery plan into action in collaboration with industry partners, including shipping lines, rail companies, and marine terminals. The plan includes prioritizing anchorage to balance the needs of various business sectors and commodities, as they work to restore full port operations and fluidity.
As the harvest of western Canadian wheat, a major export is currently underway, executives from both Canada and the U.S. are closely monitoring developments. Peter Friedmann, executive director of the Agriculture Transportation Coalition, expressed cautious optimism regarding the order to resume operations and proceed to arbitration. However, he cautioned that it is still too early for stakeholders in the agriculture and forest products sectors to celebrate, as some labor sectors are contesting the Canadian government’s arbitration order.
Friedmann underscored the importance of maintaining realistic expectations regarding the resolution of the situation, emphasizing that all freight modes, including rail, truck, and marine terminals, are critical to agricultural exports. The Agricultural Transport Coalition plans to continue its briefing this week with an update on the evolving situation and potential supply chain impacts.
As railroads work to recover from this crisis, they are focused on restoring normal operations and managing backlogs that could have lasting impacts on services and supply chains all over North America.
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