North American industrial groups and transporters, Canada's two largest railway companies Canadian National Railway (TSX:CNR) and Canadian Pacific (NYSE:CP) face the possibility of a significant outage as Kansas City may experience a simultaneous downtime. This situation, which could lead to billions of dollars in economic damage, has led to widespread concern due to Canada's great dependence on rail transport for various goods such as grain, cars and coal.
Greg Northey, Pulse Canada's vice president of public affairs, described the possible pause as a catastrophe, stressing the severity of the impact it would have on the transport of goods.
The stalemate of negotiations between the railway companies and the Teamsters union led to accusations of mutual misconduct. Both rail operators said they would start laying off workers on August 22 if an employment agreement was not reached, and the union said it was ready to go on strike on the same date.
Sector groups are calling on the Liberal government, led by Prime Minister Justin Trudeau and Labour Minister Steven MacKinnon, to intervene and prevent work stoppage action. The importance of railways is about 380 billion C per year.$ of $277 billion. $) is emphasized by the transportation of goods of value. The Canadian Business Council described the cut as eerie, citing the potential impact on millions of Canadian jobs.
The impending pause also threatens to affect U.S. freight traffic due to close economic ties between Canada and the United States. Canada's Approximate %It exports 75 ⁇ to ABD ⁇ and the railway networks of CN and CPKC ⁇ are connected to many major railway and transportation centers of ABD ⁇ .
CN has announced that it will impose embargoes on new reservations for dangerous goods, safety-sensitive cargoes or refrigerated containers from Canada starting Thursday, and on all intermodal traffic from various U.S. hubs starting Friday.
U.S. rail operator Norfolk Southern (NYSE:NSC) has also imposed embargoes on dangerous and safety-sensitive cargo to or from CN and CPKC ⁇ 's networks.
The possible rail disruption prompted U.S. logistics firm C.H. Robinson ⁇ u to look for additional truck capacity on both sides of the border. Scott Shannon, one of the company's senior executives, highlighted the unprecedented level of disruption that could occur if all trains in Canada stopped.
As pressure on the government to address the situation increases, industry groups point out that Minister MacKinnon ⁇ has the authority to refer the dispute to the country's labour relations board, which could prevent a pause. MacKinnon said he prefers a solution that has been negotiated so far.
The economic repercussions of the railway stoppage are already being calculated. Morgan Stanley warned customers earlier this week that Glencore ⁇ un (OTC:GLNCY) could lose more than $100 million a week in pre-tax earnings due to a disruption of coal shipments from its Elk Valley Resources unit. Meanwhile, the Chemical Industry Association of Canada has raised concerns about chlorine shipments, which are vital to maintaining drinking water quality.
CEO Bob Masterson highlighted the inadequacy of trucking resources to compensate for rail capacity, stressing that there is typically no viable alternative to rail transport for the volume of goods transported.
The currency conversion rate mentioned is 1 $ ⁇ 1.3721 Canadian dollars.
Reuters contributed to this article.
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