CN And CPKC Issue Embargoes Ahead of Anticipated Rail Strike

The two railway companies are urging the federal government to intervene as labor negotiations with TCRC reach a critical stage.

Canada’s two major railways, Canadian National Railway Co. (CN) and Canadian Pacific Kansas City Ltd. (CPKC), are taking preemptive measures by issuing embargoes and blocking shipments ahead of a potential rail strike or lockout next week. This move aims to prevent sensitive and dangerous goods from being stranded on the network during the disruption.

Teamsters Canada Rail Conference (TCRC), which represents approximately 9,300 railway workers, criticized the lockout threats as “unexpected and needlessly antagonizing.”

Christopher Monette, TCRC’s Public Affairs Director, argued that with nearly two weeks of negotiations still ahead, the railways' move was an unnecessary escalation that undermined good faith bargaining.

CIRB decides railways not required to maintain service

On August 9, 2024, the Canada Industrial Relations Board (CIRB) determined that CN and CPKC will not be required to maintain service during a rail strike or lockout, as rail service is not considered “essential” under the Canada Labour Code.

This decision has paved the way for a potential work stoppage, with the CIRB ordering a 13-day cooling-off period before any strike action can begin on August 22.

In response, TCRC leadership expressed satisfaction with the CIRB’s decision, stating in a letter, “The board has decided that a work stoppage at either carrier would not result in such an immediate and serious danger. This verifies that the agreements previously entered were proper and appropriate. The TCRC considers this a successful decision that confirms the membership’s rights to withdraw services if required.”  

TCRC also emphasized its commitment to negotiating a settlement with both carriers, viewing the decision as a boost to their bargaining committee’s efforts to reach an agreement.

In a press release commenting on the CIRB’s ruling, Bridgitte Anderson, President of the Greater Vancouver Board of Trade (GVBOT), said the “CIRB ruling enables a full work stoppage on our rail system, which would leave Canadians with fewer access to goods and products, driving up prices and worsening the affordability crisis.”

“The livelihood of millions of workers will be put in jeopardy as our national economy grinds to a halt,” she continued. 

Railways release early lockout warnings

CN has stated that if the labor dispute is not resolved soon, it will have “no choice” but to begin a phased shutdown of its network, ultimately leading to a worker lockout.

Similarly, CPKC issued a lockout notice in an internal memo that highlighted early warning is meant to give customers and supply chains time to prepare for a potential work stoppage.

CN has publicly called on the federal government to impose binding arbitration in its ongoing dispute with TCRC, citing the need to “protect Canada’s economy.”  

With the TCRC refusing all proposals so far, both companies have expressed their willingness to enter binding arbitration to avoid disruption. However, tensions remain high as the TCRC continues to refuse arbitration. 

CN issues embargo schedule on sensitive and hazardous goods

Given the challenges of transporting sensitive and dangerous materials like Rail Security Sensitive Materials (RSSM), Poison Inhalation Hazards (PIH), and Toxic Inhalation Hazards (TIH), it’s essential to prioritize safety and regulatory compliance.

To address this, should a rail strike happen, CN has placed an embargo on all RSSM, PIH, and TIH shipments headed to any location in Canada and originating from either Canada or the U.S. It has issued the following schedule for its embargo on sensitive and hazardous commodities:

During this embargo, permits for transporting materials such as chlorine, bromine, ammonia, chloropicrin, and ethylene will not be granted.

However, intermodal shipments and U.S.-to-U.S. carload shipments of other commodities will continue as usual. If no agreement is reached with the TCRC, CN may extend the embargo to include additional commodities.

Once an embargo is issued, it typically takes effect within 48 hours. Should a settlement be reached, or arbitration be agreed upon, CN will remove its embargoes and resume its operations normally. 

CPKC has also announced it will embargo toxic-inhalation hazard products, according to its spokesman, in a letter to Supply Chain Dive. 

The economic impact of a potential rail strike

According to the Railway Association of Canada, rail is the “backbone of the Canadian economy,” with goods worth $380 billion transported on the country’s railways each year. A national rail strike could drive up prices for essential goods and strain the economy.

The possibility of a rail strike and shutdown has sparked significant concern among business groups and industry associations. The Business Council of Canada—and nearly 100 other organizations—have called for immediate federal intervention to prevent rail disruption.

The Canadian Manufacturers and Exporters (CME) have also raised alarms, estimating that a rail strike could cost manufacturers an average of $275,000 daily due to decreased output and increased expenses. The CME has urged the House of Commons transport committee to hold an emergency meeting next week to assess the potential economic impacts of a rail strike.

According to a statement from Dennis Darby, CME’s President & CEO, “This is the most important issue facing the Canadian economy, and all Members of Parliament must hear directly from employers about the supply chain chaos and economic costs that a nationwide rail stoppage will impose on our country.”

Moreover, GVBOT stated that Canada's railways transport $1 billion worth of goods per day and warned that a national rail strike would halt the Canadian economy. 

“Failing an agreement at the negotiation table we call on the Government of Canada to be on standby to use every tool in their toolkit to ensure that our rail system is back up and running as soon as possible to ensure that Canadians do not suffer at the hands of the few,” said GVBOT’s president.

If you transport your imported goods via rail, please reach out to one of our trade professionals to discuss how we can help you avoid disruptions to your operations.