Potential Rail Shutdown in Canada Threatens U.S. Supply Chains

A looming labor dispute between Canada’s two major national rail carriers, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), threatens to disrupt vital supply chains across North America. With negotiations stalling over issues such as shift scheduling, fatigue provisions, and wages, nearly 9,300 workers are facing a potential lockout as early as Thursday morning.

If no agreement is reached, the lockout could severely impact the movement of goods between Canada and the United States. Canada exports around 75% of its goods to the U.S., with a significant portion transported via rail. This includes critical commodities such as grains, potash, coal, timber, and other goods essential to various industries.

The potential rail shutdown has sparked concern across multiple sectors. Industry and trade organizations have warned that the disruption would have immediate and widespread consequences, potentially damaging Canada’s reputation as a reliable trading partner. The U.S. and Canadian chambers of commerce issued a joint statement on Tuesday, highlighting the “devastating” impact the stoppage could have on both economies.

In the agriculture sector, the Canadian Pork Council raised alarms about the welfare of animals, as the industry heavily relies on rail for feed transportation. Additionally, other industries, including red meat processing and chemical shipping, could face millions of dollars in losses, environmental challenges, and irreversible reputational damage.

Prime Minister Justin Trudeau has called on both sides to continue negotiations, while Federal Labour Minister Steve MacKinnon has been meeting with the parties involved. However, the government has so far resisted calls for binding arbitration.

In preparation for a possible work stoppage, both CN and CPKC have already begun pausing shipments, including embargoes on chemicals such as ammonia and chlorine. Shipping firms like Maersk have also halted the acceptance of shipments destined for Canada that would typically move by rail.

The potential shutdown is not only a threat to supply chains but could also disrupt commuter transit in major Canadian cities such as Toronto and Montreal, further exacerbating the situation.