CN and CPKC Potential Strike: What Canadian Shippers Need to Know
UPDATE 08/23/2024:
At 12:01 a.m. yesterday, both CN and CPKC locked out their employees. By early Thursday morning, union members were on picket lines from Halifax to Vancouver.
In response, Federal Labour Minister Steve MacKinnon announced late Thursday afternoon that he would invoke his powers under Section 107 of the Labour Code of Canada, directing the Canada Industrial Relations Board (CIRB) to impose final binding arbitration. The CIRB is the same body that ruled earlier this month that rail services are non-essential.
Prior to this, both railways had requested binding arbitration, but the union declined, stating that the issue should be resolved at the bargaining table.
Following MacKinnon's announcement, CN said late Thursday that they would immediately end their lockout and begin implementing a recovery plan. However, CPKC stated that they would only resume activities once they receive an order from the CIRB regarding binding arbitration.
In a statement Thursday night, the union announced that they would be working with legal counsel to determine their next steps, but that picket lines would remain in place for now.
Some legal experts suggest that the CIRB referral could face a legal challenge, citing a 2015 Supreme Court of Canada ruling that solidified union rights.
This isn't the first time this summer that the CIRB has been called upon to impose binding arbitration to resolve contract disputes. In June, then-Federal Labour Minister Seamus O’Regan made a similar move in an attempt to avert a strike between WestJet and the Aircraft Mechanics Fraternal Association. However, in that case, the strike proceeded regardless, indicating that this railway strike could still move forward.
UPDATE 08/19/2024:
The ongoing negotiations between the Teamsters Canada Rail Conference (TCRC) and Canada’s two largest rail companies, CPKC and CN, continue to be contentious, and a strike or lockout is imminent if there are no last minute deals. The TCRC, which represents 9,300 engineers, conductors, yard workers, and rail traffic controllers, continues to raise serious concerns about proposed changes to the collective agreements by both companies.
CPKC, according to the union, is seeking to "gut the collective agreement of all safety-critical fatigue provisions." This move has been met with strong opposition from the TCRC, as it could significantly impact worker safety. Meanwhile, CN has proposed a controversial "forced relocation scheme" that would require employees to be moved far from their homes for extended periods to fill labor gaps, a plan the union believes could tear families apart.
Paul Boucher, President of the TCRC, emphasized that "from the beginning, rail workers have only sought a fair and equitable agreement." He warned that the demands from both CPKC and CN not only jeopardize family life but also pose serious risks to rail safety.
In response, both rail companies have asserted that their offers comply with all safety regulations. However, the union has rejected offers of binding arbitration from both companies, signaling a deepening rift in negotiations.
Adding further tension to the situation, a ruling from the national labor tribunal on Friday ordered a 13-day cooling-off period. The tribunal's decision, which deemed rail service non-essential, paves the way for a potential work stoppage—either through a strike or a lockout—as early as this week (August 22, 2024). Both rail companies have communicated that a lockout is likely and TCRC has given their 72 hour strike notice.
UPDATE 07/01/2024:
Rail workers voted to reauthorize strike action with 99% of union workers in favour. Teamsters Canada Rail Conference president Boucher says the union wants to go back to the bargining table with its renewed strike mandate and work with federal government mediators. Boucher also stated “CN and CPKC are t5rying to force changes in the collective agreements that would move the clock back on working conditions and rail safety.” CPKC issued a statement on Friday saying they are waiting on the decision from the Canadian Industrial Relations Board (CIRB) regarding if any of the rail services at risk would be considered essential services. Previously CPKC, CN, the teamsters and other interested parties were able to submit documents to CIRB. Both the rail companies and union do not believe that “essential services” would be affected by a strike. It is unlikely that strike action will happen before mid-July based on typical time-frames from CIRB in the past. Also the rail companies requested a 30 day cooling period before strike action can commence (typically only 72 hours notice is required after a CIRB ruling).
UPDATE 05/23/2024:
The strike has been put on hold for the time being. The strike was originally set to start May 22, but a request was made by the Canadian Labour Minister to the Canadian Industrial Relations Board (CIRB) to examine if the strike would pose a threat to public safety.
CIRB will assess what (if any) critical shipments need to continue during the strike. Legally a strike cannot commence until CIRB makes a decision, however, the negotiations are continuing.
In some cases, unions will have a mutual agreement with the company for “maintenance of activities”, which states which services would continue to be fulfilled during a strike to “protect the public from immediate and serious danger”. With CN, CPKC and the union there are no such agreements in place. In this case, it could be seen that energy supplies and food are deemed items that should continue to be serviced for the safety of the public.
After a long weekend of unsuccessful negotiations with both railways, TRCR (Teamsters Rail Canada Conference) has implied they will still strike as soon as legally possible.
So Canada’s two rail companies may go on strike as early as May 22nd. Both of them, at the same time.
This is a big issue, the landscape of transportation in Canada will be very chaotic if this strike goes forward. And if it persists, it will affect cross-border shipping as well.
Companies that typically use rail will have to switch to over-the-road (OTR) or air. Air is expensive, so they will likely be turning to trucks, dumping a ton of volume onto a blah market. At first, it won’t be too bad, some companies will try and wait out the strike. However, if it goes on for a while, more and more companies will have to make the switch to OTR. As the pressure mounts on the current carriers that do cross-country, more and more carriers will adjust as the rates climb. Regional carriers and cross-border carriers will opt to take the cross-country journies for the big paychecks.
So what do you do if your business already ships cross-country?
If you have warehouses in different parts of Canada, ship extra inventory now. Have buffer inventory so if rates go crazy you can wait it out for a bit.
Work with your best carriers and discuss with them a modest increase for them for a longer period of time to avoid having to play the market with everyone else.
If you ship cannabis or other light high-value products, consider air freight, the rates will increase as well but should stay pretty consistent.
Be wary of carriers offering what seem to be relatively low rates during the strike, you may be their back-up and they could bail if they hear the right number from another shipper.
If this strike happens, rates will go up and most shippers will have to pay more, it is inevitable. But being a little proactive can help you and your business weather the storm that may be coming.
