Canadian National workers are poised to walk off the job during a critical shipping period for Western farmers, adding a new threat to wheat and oilseed sales already battered by trade tensions and difficult harvest conditions.
About 3,200 CN conductors, train and yard personnel could stop work at 12:01 a.m. ET Tuesday if the company and union are unable to bridge an impasse on items ranging from pharmaceutical benefits to time-off provisions. The Teamsters union gave Canadian National Railway notice Friday of its intent to strike after contract negotiations stalled.
“CN continues to bargain in good faith,” company spokesperson Alexandre Boule said in a statement Monday. “We believe, with the assistance of federal mediators, we can avoid a labor dispute which is very disruptive to the Canadian economy.”
Wheat and canola, Canada’s two largest commodity exports, are typically harvested in September and October and transported via rail to shipping ports in Vancouver and Prince Rupert. There, they are transferred onto large vessels and shipped to key export markets including China, Japan and Indonesia.
With little storage available at the ports, farmers rely on CN and Canadian Pacific Railway Ltd., Canada’s second-largest railroad, to continuously move grains on most days of the year. Indeed, during the current “peak shipping season,” CN alone deploys about 5,600 rail cars a week for this purpose, said Tom Steve, general manager of the Alberta Wheat Commission.
“That’s over half a million tonnes of grain that won’t move if those cars aren’t able to be delivered into the system,” Steve said.
This year’s wheat harvest has been delayed due to heavy snowfall across all three Prairie provinces, he added, leaving a significant amount of the crop under a blanket of snow. Farmers have also been struggling to dry canola and wheat due to unusually wet conditions.
“(Farmers) may not have harvested the crop yet and what they do have, well, if they can’t deliver it, they’re not paid,” Steve said. “So even a one-week interruption of rail service would be extremely concerning to us.”
Federal Labor Minister Patty Hajdu and federal Transportation Minister Marc Garneau were to meet with representatives from CN and the union in Montreal, Hajdu’s press secretary Veronique Simard said Monday, Reuters reported.
CN said it believes a strike can be averted “with the assistance of federal mediators,” after Teamsters declined to submit to binding interest arbitration. “We expect talks to continue up to (Tuesday),” CN said.
… even a one-week interruption of rail service would be extremely concerning to us.
Tom Steve, general manager, Alberta Wheat Commission
Canada will export 21 million tonnes of wheat this year and about nine million tonnes of canola seed.
Catching up on shipments of those commodities after rail service is disrupted is extremely difficult given the limited capacity in the system, said Neil Townsend, a senior analyst at FarmLink Marketing Solutions.
“There’s only so many trains that can go through the mountains in British Columbia,” he said. “You can’t just double them. So that’s our constraint. If we miss a week we never get it back.”
Lyndon Isaak, president of the Teamsters Canada Rail Conference, said the stumbling blocks in talks with CN include company proposals that would increase workloads for conductors, cut jobs, place a lifetime cap on pharmaceutical coverage and reduce time-off provisions.
The union declined a company offer of binding arbitration as it “rarely if ever goes our way,” Isaak said.
“It’ll be up to CN whether they want to shut down or not and it’s up to the government if they will order us back to work,” he said.
Farmers of canola and Durham wheat are already grappling with challenges due to ongoing trade disputes. China, which typically imports 40 per cent of Canada’s canola and canola products, halted all purchases of the crop in March in what many view as retaliation for the arrest of Huawei chief financial officer Meng Wanzhou in Vancouver.
Italy’s imports of Canadian Durum wheat plunged following the imposition of strict country-of-origin labelling rules.
A rail disruption would only add to those woes, analysts say.
“For the Canadian agricultural supply chain, where we export so much of our wheat and canola, this is a very big deal,” said Derek Brewin, head of the University of Manitoba’s department of agribusiness and agricultural economics. “Everything we grow ultimately gets moved by rail.”