Is the Canadian Rail Shutdown Really Over? Yes (At Least for Now). (UPDATED 9/3)
Receiving the CIRB order meant that the recent strike notice issued to CN by the Teamsters has been voided. CN, CPKC and the Teamsters said they would comply.
“While CN is disappointed an agreement could not be reached at the bargaining table, the company is satisfied that this order effectively ends the unpredictability that has been negatively impacting supply chains for months,” the railroad said in an Aug. 24 statement. “CN remains focused on safely getting goods moving again, as efficiently as possible.” It added that over the past nine months, it has “negotiated in good faith to reach a deal at the table” and has “consistently proposed offers with better pay, improved rest, more predictable schedules, and a voluntary mobile workforce.”
CPKC on Aug. 24 said it was executing its restart plan for resumption of rail service across Canada and working with customers on a “balanced return to normal operations.” Rail operations, it said, would restart in Canada by 00:01 ET on Aug. 26, following the CIRB order “requiring CPKC to resume operations and Teamsters Canada Rail Conference (TCRC) employees to resume their duties.” The railroad also said it was ending the lockout initiated Aug. 22 and “has asked the TCRC for employees to return to work for the day shift on Sunday [Aug. 25] so that we can get the Canadian economy moving again as quickly as possible and avoid further disruption to supply chains.”
The CIRB was to convene a case management meeting with the parties Aug. 29 to discuss the imposition of final binding interest arbitration, according to CPKC.
“CPKC looks forward to welcoming all our Canadian locomotive engineers, conductors, yardpersons and dispatchers back to work,” the railroad said in its Aug. 24 announcement. “We are focused on restoring our railway to full strength as we get back to serving our customers and moving Canada’s trade and commerce throughout North America. The CIRB order ends months of unnecessary uncertainty and disruption for the Canadian economy and North American supply chains. We anticipate it will take several weeks for the railway network to fully recover from this work stoppage and a period of time beyond that for supply chains to stabilize.”
The TCRC reported in an Aug. 24 statement it would appeal the CIRB ruling to federal court. “This decision by the CIRB sets a dangerous precedent,” TCRC President Paul Boucher said. “It signals to corporate Canada that large companies need only stop their operations for a few hours, inflict short-term economic pain, and the federal government will step in to break a union. The rights of Canadian workers have been significantly diminished today. The Trudeau Liberals have chosen to side against middle- and working-class Canadians, abandoning their supposed progressive values at the first sign of short-term supply chain disruptions.”
The CIRB’s order was issued following the Canadian Minister of Labor’s direction on Aug. 22, pursuant to his authority under Section 107 of the Canada Labor Code.
While the TCRC raised questions regarding the constitutionality of the Minister’s direction, the CIRB reported in its order (download below, courtesy of the TCRC) “that it does not have authority to review the Minister’s directions or to assess their validity” and that “[i]n the Board’s view, the Federal Court has the exclusive jurisdiction to review the Minister’s directions pursuant to section 18(1) of the Federal Court Act.” Additionally, “and considering the clear statutory language contained in section 107 of the Code,” the Board said “in this case, it has no discretion or ability to refuse to implement, in whole or in part, the Minister’s directions or to modify their terms.”
The Board concluded that it “understands the importance and consequences of this decision on the parties’ respective rights and obligations under the Code,” but “given the current circumstances and impact of work stoppages involving Canada’s two main rail companies, it has decided to issue its conclusions in the form of a bottom-line decision.”
According to The Wall Street Journal report, TCRC’s Aug. 30 appeals to Canada’s Federal Court of Appeal (download below, courtesy of TCRC) “challeng[e] federal Labor Minister Steven MacKinnon’s order to end the stoppage and push both sides into binding arbitration as well as a labor-relations board’s ruling enforcing the decision.”
“The right to collectively bargain is a constitutional guarantee,” said Paul Boucher, according to the newspaper. “Without it, unions lose leverage to negotiate better wages and safer working conditions for all Canadians.”
The Wall Street Journal reported that the “court filings won’t disrupt efforts by Canadian National Railway and Canadian Pacific Kansas City to fully recover freight-rail operations but adds to tensions in the long-running dispute over new labor contracts.”
CPKC “declined to comment on the appeals,” the newspaper said. A CN spokeswoman told the paper that “Arbitration is a neutral process that is agnostic to outcome. It does not favor one party over another. It is specifically designed to break an impasse, and in this case to prioritize the safety and economic security of all Canadians.”
The Canadian Class I’s “have said it would take several weeks to fully catch up on the effect the shutdown and preparations for a stoppage had on supply chains,” according to The Wall Street Journal.
What Happened?
CN and CPKC have been in separate negotiations at intervals with the TCRC in Canada to renew contracts that expired Dec. 31, 2023. Even with assistance of federal conciliators, the parties had not been able to agree on wages and work/rest provisions. TCRC represents approximately 10,000 engineers and conductors combined at the railroads.
When the parties’ cooling off period expired just after midnight on Aug. 22 with no agreements or binding arbitration in place, both Class I’s formally locked out TCRC-represented employees and finalized network shutdowns.
But the move was short-lived. CN at 6 p.m. ET on Aug. 22 ended the Teamsters lockout and initiated its recovery plan, and CPKC at 6:22 p.m. ET announced that preparations were under way to restart service in Canada. Why?
Minister of Labor Steven MacKinnon at 5 p.m. ET on Aug. 22 invoked Article 107 of Canada’s federal labor code and ordered the CIRB “to assist the parties in settling the outstanding terms of their collective agreements, including by imposing final binding arbitration.“ Additionally, he directed the Board “to extend the term of the current collective agreements until new agreements have been signed and for operations on both railways to resume forthwith.“ Earlier this month, he rejected calls to do so and instead encouraged CN, CPKC, and the TCRC to work out deals at the bargaining table, but on Aug. 22 he said the parties are at a “fundamental impasse,” the impacts of which “are being borne by all Canadians.” See his full statement below:
According to Reuters, MacKinnon told reporters: “We gave negotiations every possible opportunity to succeed … but we have an impasse here. And that is why we have come to this decision.“
MacKinnon also said “he was confident the board would issue a back-to-work order within the next few days,” the media outlet reported. “‘I assume that the trains will be running within days, he said.’“
“CN spokesperson Jonathan Abecassis told the Canadian Broadcasting Corp it could take the company a week or more to catch up on shipments,” according to Reuters.
CPKC released a statement saying “it is preparing to restart railway operations in Canada following the Canadian Minister of Labour’s announcement.” The Class I railroad said that it “will follow the order of the CIRB once it executes the Minister’s direction,” and that its “teams are already preparing for the safe and orderly resumption of our rail network.” Further details about timing, it said, “will be provided once we receive the CIRB’s order.”
CPKC President and CEO Keith Creel commented: “The Canadian government has recognized the immense consequences of a railway work stoppage for the Canadian economy, North American supply chains and all Canadians. The government has acted to protect Canada’s national interest. We regret that the government had to intervene because we fundamentally believe in and respect collective bargaining; however, given the stakes for all involved this situation required action. CPKC looks forward to welcoming all of our employees back to work to restore our railway to full strength and get back to serving our customers and moving Canada’s trade and commerce throughout North America.”
After the Minister of Labor announced his decision, TCRC President Paul Boucher issued a statement, saying, in part, that “[d]espite claiming to value and honour the collective bargaining process, the federal government quickly used its authority to suspend it, mere hours after an employer-imposed work stoppage. This action mirrors their earlier interference this year, where they used the CIRB to stifle bargaining for months [Editor’s note: Negotiations in May were put on hold when former Minister of Labor Seamus O’Regan requested clarity from the CIRB regarding essential services during a potential work stoppage; O’Regan resigned from his post on July 19; and on Aug. 9, the CIRB issued a decision determining that no services need to be maintained during a railway strike or lockout in order to protect Canadian public health and safety.] … The Teamsters Canada Rail Conference (TCRC) is deeply disappointed by this shameful decision. The government took this unprecedented step, using this seldom utilized section of the labour code [Article 107], only because they knew their minority could not gather the support needed to pass a legislated resolution to appease the railways.”
According to Reuters, the TCRC said late on Aug. 22 that its members would return to work at CN, but “the work stoppage at Canadian Pacific Kansas City would continue pending an order from the Canadian Industrial Relations Board (CIRB).”
CIRB held case-management conferences with the parties late on Aug. 22. Following those conferences, CPKC released this statement: “Unfortunately, the Teamsters Canada Rail Conference (TCRC) representing the Train and Engine division and Rail Canada Traffic Controller division refused to discuss any resumption of service, and instead indicated that they wish to make submissions to challenge the constitutionality of the Minister’s direction, as well as the CIRB’s discretion to proceed with any order. Another case management conference is now scheduled for 10:00 a.m. ET, tomorrow, Friday, Aug. 23 to further hear submissions by the parties. While the Minister directed that the CIRB proceed expeditiously, any decision by the CIRB on the resumption of service will be delayed. CPKC remains prepared to resume service as soon as it is ordered to do so by the CIRB. CPKC is disappointed by this delay, which will affect our ability to resume serving the Canadian economy.”
“We will move all the trains we can with management crews, shifting resources from yards to road,” Keith Creel told Railway Age. “We cannot run them all, but we can advance some strategically.”
On Aug. 23, hours after TCRC-represented employees returned to work at CN, the union served the Class I with a 72-hour strike notice.
CN reported that the TCRC intended to strike as of 10 a.m. ET on Aug. 26, 2024. “While CN is focused on its recovery plan to get back to powering the economy, the Teamsters are focused on returning to the picket line and shutting down the economy, impacting people and jobs across the country,” the railroad said in an Aug. 23 statement. “Over the last nine months, CN has negotiated in good faith. The company consistently proposed serious offers, with better pay, improved rest, and more predictable schedules. This latest development confirms that the Teamsters never took negotiations seriously and that they had no desire to reach a deal. The impacts of this notice will depend on the timing of the CIRB. It is in the national interest of Canada that the CIRB rule quickly, before even more harm is caused.”
TCRC reported that it was taking strike action “[t]o protect workers’ right to collectively bargain and frustrate CN’s attempt to force arbitration,” and “to pressure CN into negotiating an agreement.”
Prior to these latest developments, in an Aug. 21 interview with Railway Age Editor-in-Chief William C. Vantuono, Alberta Minister of Transportation and Economic Corridors Devin Dreeshen, a member of the United Conservative Party, blamed politics—specifically, Prime Minister Justin Trudeau’s Liberal Party government—on the situation. “How is it that the federal government has dealt with past labour issues, and did nothing with this one?” he said, referring to the 2023 British Columbia dock worker strike. “This is the first time that both of Canada’s major railways were forced to negotiate new contracts at the same time,” which is something that could have been avoided with federal intervention.
MacKinnon’s initial refusal to invoke Article 107 of Canada’s federal labor code and Trudeau’s hands-off policy “made no sense,“ Dreeshen said. ”The effects of this stoppage will have lasting impacts on the nation’s supply chain, a horrible cascade effect that will result in lost wages for millions of Canadians. Here in Alberta and in Saskatchewan, both of which are land-locked provinces, there are few options to rail. CN and CPKC are essential to our economies.”
The TD Cowen Insight (Aug. 25, 7 p.m.)
By Cherilyn Radbourne and Patrick Sullivan
“We do not anticipate a material share-price reaction, because the Canadian Industrial Relations Board (CIRB) has simply affirmed the decision by Canada’s Labour Minister, as expected. The sooner the industry can return to normal operations, the better, in our view. The TCRC’s plans for a legal challenge will likely take time to play out, but we believe they are not helpful to the global reputation of the Canadian supply chain.
Event
“The CIRB has affirmed the decision by Canada’s Labour Minister to end the work stoppages at CN and CPKC, requiring the railroads to resume operations as of Monday, August 26 as of 12:01 am ET, and imposing binding arbitration between the railroads and the TCRC.
Impact: SLIGHTLY NEGATIVE, based on the TCRC’s plans to launch a legal challenge
“CN and CPKC plan to resume operations on Monday, and the TCRC will comply, as ordered. However, the TCRC intends to challenge the arbitration order in court. (CNR-T, HOLD, C$158.71; CP-T, HOLD, C$110.84).
“The CIRB will commence the binding arbitration process on Thursday, August 29, at 11:00 am ET, with separate meetings between the railroads and the union.
“The CIRB has ordered that no further labour stoppage, including a lockout or strike, can occur during the arbitration process; therefore, CPKC has ended the lockout initiated on Thursday, August. 22, and the strike notice issued by the TCRC to CN on Friday is voided.
“Even though the work stoppage was brief, it will likely take several weeks for the Canadian rail supply-chain to return to normal.”
TD Cowen on Aug. 22 reported that in final binding arbitration, “both sides present their final offer to the arbitrator, and the arbitrator renders a decision, based on the issues and respective arguments of the parties, other recent contract precedents, etc. Our base case is a two- to three-year contract, with an ~3% annual wage increase, and no other changes to existing contract terms.”
Industry Reaction to Canadian Government Order
The Western Grain Elevator Association (WGEA), which is an association of grain businesses operating in Canada which collectively handle in excess of 90% of western Canada’s bulk grain exports, on Aug. 23 issued the following statement:
The WGEA “is extending gratitude to the federal government of Canada for recognizing the negative impacts of the CN and CPKC work stoppage to the Canadian grain sector and the broader Canadian economy, by directing the Canadian Industrial Relations Board to assist the parties with Final Binding Arbitration.”
“’We are extremely pleased that Minister MacKinnon, Minister MacAulay and their cabinet colleagues recognized that a negotiated deal was not possible, and imposed arbitration to resolve these disputes,” said Wade Sobkowich, WGEA Executive Director. ‘The grain sector would have been playing catch up for the remainder of the year with a lasting strike or lockout.’
“Unfortunately, some damage has been done as grain companies took steps to halt grain movements. The week of shipping prior to the August 22nd stoppage has been impacted, and every day of lost shipping results in approximately one week of recovery time. Grain shippers and exporters will now be working hard to re-engage with their customers and re-schedule farmer deliveries as the rail network winds back up.
“For more than a decade, a labour disruption (strike or lockout) has occurred or been threatened every year or two at one or both national railways. And on each occasion, Canada’s food processors and international customers are told that they may not receive the grain they need to manufacture food products that eventually make their way to store shelves. They are then left scrambling to determine how they will manage their operations and they are forced to consider alternative, non-Canadian, sources of supply.
“’Providing a framework for the fair and orderly resolution of labour disputes between railways and their unions through binding arbitration, and thereby avoiding the needless harm resulting from rail service interruption has unquestionable merit—particularly if both parties truly believe their negotiating positions to be reasonable,’ added Sobkowich. ‘Concerns that such an approach threatens the integrity of labour relations fail to take into account the unique market dynamics of single-carrier rail service and are far outweighed by the harm caused to the Canadian economy by incessant rail service interruptions.’
“The grain sector is part of a growing chorus of business groups across Canada urging the federal government to make rail an essential service.”
Aug. 22 Lock Out
CN in a statement said it formally locked out employees who are TCRC members as of Aug. 22 at 12:01 a.m. ET, after the union did not respond to another offer by the railroad in a final attempt to avoid a labor disruption. According to CN, this offer “improved wages and would have seen employees work less days in a month by aligning hours of service in the collective agreement with federally mandated rest provisions.” Additionally, it “proposed a pilot project for hourly rates and scheduled shifts on a portion of the network as CN continues to believe this is a better and more predictable framework for our employees.” The railroad noted that over the past nine months, it has “negotiated in good faith,” proposing “serious offers, with better pay, improved rest, and more predictable schedules.” However, the Teamsters ”have not shown any urgency or desire to reach a deal that is good for employees, the company and the economy,” according to the railroad, which urged the union ”to engage in these negotiations with the urgency and importance that this situation requires.”
CPKC in an Aug. 22 statement said that it locked out 3,200 locomotive engineers, conductors, and train and yard workers who are members of the TCRC–Train and Engine (T&E) division effective 12:01 a.m. ET, and approximately 80 rail traffic controllers who are members of the TCRC–Rail Traffic Controller (RCTC) division effective 12:01 a.m. MT. “Throughout nearly a year of negotiations, CPKC has remained committed to doing its part to avoid this work stoppage,” the railroad said. “CPKC has bargained in good faith, but despite our best efforts, it is clear that a negotiated outcome with the TCRC is not within reach. The TCRC leadership continues to make unrealistic demands that would fundamentally impair the railway’s ability to serve our customers with a reliable and cost-competitive transportation service. At this time, the responsible path forward for the union, the company, our customers, the Canadian economy and North American supply chains and the public interest is for TCRC and CPKC to engage in binding arbitration to resolve all outstanding disputes. Binding arbitration is an effective, reasonable and fair process that ultimately has been used many times in the past to resolve disputes with this union. CPKC reiterates its standing offer to resolve this matter through binding arbitration. Acceptance of that offer by the TCRC would immediately end this work stoppage and mitigate further harm and disruption to supply chains and our economy.” CPKC said that it “fully understand[s] and appreciate[s] what this work stoppage means for Canadians and our economy,” and is acting “to protect Canada’s supply chains, and all stakeholders, from further uncertainty and the more widespread disruption that would be created should this dispute drag out further resulting in a potential work stoppage occurring during the fall peak shipping period.“
For the TCRC–T&E division, CPKC said it has focused on negotiating a three-year “status-quo contract renewal with competitive wage increases that are consistent with recent settlements with other railway unions“ and that the proposal has no work rule changes. According to the railroad, it presented “an enhanced final offer to avoid a work stoppage that includes: enhanced wages that exceed inflation, an engineers’ guaranteed extra board, increased shift differentials, and resetting rest only at the home terminal, among other items that the TCRC negotiating committee requested.“ The only item the railroad said it wants to negotiate “remains reasonable adjustments to the timing of held-away from home pay that resets the negotiated buffers that existed before Transport Canada implemented work rest rule changes last year, that by default eliminated the buffer.“ CPKC said the status quo-style offer “fully complies with new regulatory requirements for rest and does not in any way compromise safety.“
For the TCRC-RCTC division, CPKC said it has proposed a renewed agreement with the rail traffic controllers that would deliver competitive wage increases.
CPKC said that working with customers, it has executed a “safe and structured shutdown“ of its train operations across Canada, which will enable it to “safely and efficiently resume full rail operations across the entire network once the work stoppage ends.“
The TCRC in a statement said that despite months of “good faith negotiations,“ the parties remain “far apart.“ Over the past several days, the union said it has “put forward multiple offers, none of which were seriously considered by either company,“ and the “main obstacles to reaching an agreement remain the companies’ demands, not union proposals.“ The Teamsters “remain at the bargaining table with both companies,“ despite the lockout, according to the union.
“All rail traffic in Canada and all shipments crossing the U.S. border have stopped,“ reported the Associated Press on Aug. 22, “although CPKC and CN’s trains will continue to operate in the U.S. and Mexico. Billions of dollars of goods each month move between Canada and the U.S. via rail, according to the U.S. Department of Transportation.“
Ahead of the work stoppage, traffic embargoes were issued by both Canadian Class I carriers and U.S. Class I’s CSX, Norfolk Southern, BNSF and Union Pacific for traffic that interchanges with them.
“‘If rail traffic grinds to a halt, businesses and families across the country will feel the impact,’” National Association of Manufacturers President and CEO Jay Timmons said in a statement to the Associated Press. “Manufacturing workers, their communities and consumers of all sorts of products will be left reeling from supply chain disruptions.”
Additionally, more than 32,000 Canadian rail commuters will be affected, according to an Aug. 22 report by The Canadian Press. “Transit authorities have said select commuter lines that run on Canadian Pacific [Kansas City] tracks in Toronto, Montreal and Vancouver will be suspended should dispatchers walk off the job,” the media outlet reported. “The commuter lines affected by the work stoppage are TransLink’s West Coast Express in the Vancouver area, Metrolinx’s Milton line and the Lakeshore line’s Hamilton GO station in the Greater Toronto Area, and Exo’s Candiac, Saint-Jérôme and Vaudreuil/Hudson lines in the Montreal area, among others.” Additionally, it said, VIA Rail Canada would suspend trains 185 and 186 on its Sudbury–White River service without alternative transportation in the event of a CPKC work stoppage.
Industries Urged Action
Union Pacific (UP) CEO Jim Vena, a 40-plus-year U.S. and Canadian railroad veteran, in an Aug. 19 letter urged Canadian Minister of Labor Steven MacKinnon to intervene to prevent a work stoppage. In the letter, obtained by Railway Age, Vena said he was requesting “urgent intervention to avoid freight rail service disruption in Canada, which would have devastating consequences for the Canadian and U.S. economies.” He continued: “North American railways are highly integrated—a Canadian rail shutdown would directly impact cross-border traffic, causing a significant ripple effect in the U.S.
“About a third of the traffic moved by Canadian railways crosses the Canada-U.S. border, impacting Union Pacific and our customers. For Union Pacific specifically, in the event of a shutdown, more than 2,500 cars per day would not move across the border. Some of these impacts have already begun. While some Canadian port traffic is shifting to the U.S., any strike or lockout will have a negative impact on the entire rail industry. For every one day of disruption, you can expect at least 3-5 days of recovery – perhaps even more, given two Canadian railways are impacted.
“I spent most of my life and career in Canada, including 40 years working at the CN where I started as a unionized employee, so I deeply understand both the Canadian and U.S. rail systems. I am in a unique position to share my thoughts and perspectives on these dynamics with you, if you believe I can be helpful.
“Ultimately, I must reiterate how imperative it is that you intervene to prevent a work stoppage. The impacts of a prolonged shutdown will have devastating consequences on the North American economy, with significant cascading effects. Along with supply chain delays and shortages, mines, grain elevators, factories, mills and other industries will incur increased costs when they lose their rail service. They will be forced to shut down or find costly, last-minute temporary alternatives—and in many cases, there are no alternatives to rail. Consumers and workers across multiple industries in both Canada and the U.S. will be severely impacted. Specifically, cross-border commodities such as chemicals, lumber products, automobiles, auto parts, agricultural products and other customer goods will be impacted.
“Thank you for considering the serious impacts at hand and the urgent need to act using any and all available resources. Do not hesitate to call me personally if my perspective can be of assistance as you intervene to avoid a work stoppage.”
According to an Aug. 19 Reuters report, “[r]oughly 30% of freight rail operations in Canada cross the northern border annually, the Association of American Railroads said … In the first half of the year, rail transport accounted for about 14% of the total bilateral trade of $382.4 billion between the U.S. Canada, according to the U.S. Department of Transportation.”
The Canadian Federation of Independent Business (CFIB) also called “on all parties to reach an immediate agreement to prevent a work stoppage. Any disruptions to railway operations could be devastating for small businesses, their employees and communities,” said Jasmin Guenette, Vice President, National Affairs. “Many small businesses rely on rail services to send and receive goods, products and essential materials. The longer the work stoppage goes on, the costlier it becomes for small firms who may lose sales and contracts if goods are not delivered or received on time. These shutdowns will also disrupt public transit and commuting to big cities such as Toronto or Montreal and lead to increased business costs and supply chain disruptions. Although the decision by the Canada Industrial Relations Board (CIRB) prohibited the maintenance of certain activities during a work stoppage, politicians still have the power to change labour laws. CFIB continues to call on the government to make ports and rails an essential service, so they remain fully operational at all times.”
According to the Aug. 22 report by The Canadian Press, business groups “pleaded for Ottawa to step in and prevent the work stoppage that would upend supply chains—while Prime Minister [Justin Trudeau] stressed a deal at the table is the best outcome.”
“Under article 107 of the federal labor code, Labour Minister Steven MacKinnon has broad powers and can order the sides to enter binding arbitration,” Reuters reported Aug. 19. “In 2023, his predecessor, Seamus O‘Regan, issued such an order to end a dockworkers strike in British Columbia. In that case, unlike the current rail dispute, the sides had largely agreed on the outlines of a deal.”
Alternatively, business groups “suggested the government recall Parliament and pass back-to-work legislation — a step taken by a previous Conservative government during a rail strike in 2012, and a move it threatened to make in 2015,” according to The Canadian Press.
On Aug. 19, Steven MacKinnon‘s office announced that he would “be in Montreal tomorrow [Tuesday, Aug. 20] and Calgary on Wednesday [Aug. 21] to meet with the parties and federal mediators and urge CN Rail, CPKC and Teamsters to fulfill their responsibility to Canadians, reach agreements at the bargaining table, and prevent a full work stoppage,” according to a CBC News report. In a statement earlier on Aug. 19 (see below), the Minister encouraged the parties to reach a deal.
However, the meetings with MacKinnon did not end in deals or binding arbitration, which would end a work stoppage (see MacKinnon’s post on social media platform X, below).
MacKinnon on Aug. 9 received from CN a request to order binding arbitration, but MacKinnon rejected it.
“After careful consideration of this request by Canadian National Railways Company, I have decided not to proceed with a section 107 referral,” MacKinnon wrote in a Aug. 14 letter released by the TCRC. “Consistent with our discussion on August 5, 2024, I would like to clarify that it is your shared responsibility—Canadian National Railways Company and the Teamsters Canada Rail Conference—to negotiate in good faith and work diligently towards a new collective agreement. To support this process, mediators from the Federal Mediation and Conciliation Service remain available to work with you to facilitate productive negotiations and help bridge any gaps. I trust that with continued effort, an agreement can be achieved promptly. The Government firmly believes in the collective bargaining process and trusts that mutually beneficial agreements are within reach at the bargaining table.”
In an Aug. 15 media statement, CN spokesperson Jonathan Abecassis said that “[w]hile we are disappointed the minister is choosing not use section 107 of the Canada Labour Code at this time, we hope TCRC will listen to the minister’s strong message that they must get serious and engage meaningfully at the negotiating table. The minister must reconsider his decision if they don‘t.” Abecassis reported that CN since January has made four offers to the TCRC, covering “important points such as compensation, availability and improving safety,” but the “TCRC has rejected all offers and has not proposed a single counter offer.” As noted on Aug. 9, he said that “CN has initiated a phased shutdown of its Canadian network,” and “unless there is meaningful progress at the negotiating table, the company will have no choice but lockout employees on August 22.” A prolonged shutdown of rail operations, he continued, “will have a significant impact on supply chains: creating delays, possible shortages, and increasing costs as mines, grain elevators, factories, mills and other industries lose their rail service and must either shutdown or find costly, last-minute and temporary alternatives, when possible.”
TCRC in a media statement “said that it agrees with the minister’s conclusion that a negotiated settlement is within reach,” according to an Aug. 15 CBC News report.
CN on Aug. 16 reported returning to the bargaining table with TCRC, saying that it hoped the union “will engage meaningfully during this meeting.” It noted that “[a]s there has been no meaningful progress at the bargaining table, CN has initiated the phased and progressive shutdown of its network to ensure the safety of the communities in which we operate and our customers cargo.” The process started with embargoes and “will culminate in a lockout at 00:01 ET on August 22 unless a deal is reached, or arbitration is imposed.” The railroad said it was doing this because “it takes more than 72-hours, which is the required notice before any work stoppage, to help ensure a safe, predictable, and orderly shutdown of our network.”
Additionally, the railroad shared “facts about the negotiations to clear up any misconceptions about key issues that are the subject of rumors or questions”:
- “None of CN’s offers have compromised employee health and safety in any way. In fact, CN’s offers aim to improve safety. And all of CN’s proposals respect government-mandated rest provisions (Duty and Rest Period Rules), which were developed in consultation with the Union to ensure best practices are in place to manage fatigue.”
- “CN has made four different offers to the TCRC since January. The first three offers addressed a wide range of topics, including wages, rest, health and safety, and labour availability. The latest offer proposed third-party arbitration to avoid a strike or lockout. The third-party essentially plays the role of a judge, resolving the dispute. The Union rejected all of those offers. The Union has not made any counteroffers. CN remains ready to engage in constructive dialogue with the Union.”
- “CN does care. CN knows that employees are spending more time at the away from home terminal (AFHT). CN offered to remove employees being put to bed enroute or tied up between terminals (except in emergency situations), and the removal of turn around trips at the “away from home” terminal (AFHT). This offer was rejected by the Union. Held-away is an important element in this round of bargaining. CN wants to set a standard maximum time that all employees can spend at the AFHT. This is part of the efforts to make all TCRC-represented employees equal.”
- “12-hour shifts are common in the railway industry and exist currently for some TCRC-represented employees on CN’s network. CN is offering to ensure employees spend more time at home, in exchange for working 12-hour shifts. Under the Duty Rest Period Rules, employees can work up to 12-hour shifts.”
- “No employees will be forced into a Mobile Workforce. Bidding this job would be 100% voluntary. Assignments would be for a maximum of three months, and employees would have three cycles of 28 days away with a 7-day break to return home. Travel (i.e., airfare, train, taxi, etc.), hotel, and food are entirely paid by CN. On top of their earnings, employees who choose Mobile Workforce positions would receive a $1,000 premium per week.”
CN added that, currently, “by combining Duty and Rest Period Rules (DRPR), paid sick days, personal leave days, and existing rest and vacation provisions in their collective agreements, conductors and locomotive engineers currently work approximately 160 days a year.” As far as wages, “in 2023, the average locomotive engineer earned approximately C$150,000, not including pension and medical benefits. In 2023, the average conductor earned approximately C$121,000, not including pension and medical benefits. In January, CN offered the TCRC a modernized agreement that improved safety, wages, and work/life balance while protecting acquired rights. This offer was refused. The offer was then improved in April with a focus on better wages (C75$/hour for Locomotive Engineers and C65$/hour for Conductors), job security, and guaranteed earnings for employees. The TCRC refused the improved offer. In May, CN then presented a simplified offer within the framework of the existing collective agreement with improved wages and predictable days off, which the TCRC also refused. In the absence of a path forward, CN offered to voluntarily submit to binding arbitration in June. Binding arbitration is a process where both parties empower a mutually agreed upon independent arbitrator to determine the terms of a settlement. It is an impartial approach that would achieve a resolution while avoiding a costly disruption to supply chains, Canadian consumers, and the Canadian economy. The TCRC refused this offer.”
CPKC on Aug. 16 said it remains committed to “bargaining in good faith,” with bargaining scheduled to continue Aug. 18. “As previously indicated, CPKC has served notice to lock out Teamsters Canada Rail Conference (TCRC) Train and Engine (T&E) and Rail Traffic Controller (RCTC) employees at 00:01 Aug 22, unless TCRC leadership and the company are able to come to negotiated agreements or agree to binding interest arbitration,” the railroad reported. “For the T&E division, CPKC is focused on a status quo-style contract renewal covering three years with competitive wage increases that are consistent with recent settlements with other railway unions and maintains the status quo for all work rules. The status quo-style offer fully complies with new regulatory requirements for rest and does not in any way compromise safety. For the TCRC – RCTC division, CPKC has also proposed a renewed agreement with the rail traffic controllers which would deliver competitive wage increases.”
While CPKC said it “continues to move as much freight as possible prior to a potential work stoppage, we are taking steps for a safe and orderly shutdown of railway operations in Canada:
- “On Monday, Aug. 12, embargo for all toxic by inhalation and poisonous by inhalation dangerous goods traffic originating in Canada or destined to a Canadian location took effect.
- “As of Thursday, Aug. 15, CPKC is not accepting loaded intermodal shipments classified as dangerous goods. This applies at all intermodal facilities for both domestic and international shipments destined to, or originating from, terminals and ports located in Canada.
- “Effective Saturday, Aug. 17, embargo expanded to other dangerous goods including all Rail Security Sensitive Materials (RSSM) as well as the Time Sensitive Commodities.
- “Effective Monday, Aug. 19, embargo expanded for all other dangerous goods shipments.
- “Effective Tuesday, Aug. 20, embargos for all shipments originating in Canada, all shipments originating in the United States destined to Canada, and all carload traffic destined to Canadian interchange.”
The railroad said it is communicating directly with its customers “as additional embargoes and intermodal terminal restrictions for temperature controlled containers and other intermodal containers are implemented, as necessary.”
CPKC also reiterated “its standing offer to resolve this matter through binding arbitration should negotiations be unsuccessful.” Binding arbitration, it said, is a “responsible, reasonable, and fair path forward that would resolve this dispute without causing even more unnecessary harm and disruption to supply chains and our economy. All this uncertainty and disruption could be ended today if the TCRC would agree to binding arbitration.”
Late on Aug. 18, TCRC reported online that it had served CPKC a ”72-Hours-Notice to withdraw our services, to be effective Thursday August 22 at 0001 Eastern Time, to protect the TCRC’s statutory and Charter protected rights to engage in a lawful strike.” It said it is ”continuing to bargain with the Company and will remain at the table as long as it takes”; it ”remains committed to achieving an agreement that is acceptable and in line with the demands received by each Division.” This move follows CPKC’s recent notice to lock out TRTC employees.
Also late on Aug. 18, CN reported issuing notice to the union ”formally advising them of its intention to lockout Canadian TCRC-represented employees on Aug. 22 at 00:01 ET unless an agreement or binding arbitration is achieved before that time.” It said that “[d]espite negotiations over the weekend, no meaningful progress has occurred, and the parties remain very far apart.” Unless there is ”an immediate and definite resolution to the labour conflict,” CN said it will have ”no choice but to continue the phased and progressive shutdown of its network which would culminate in a lockout.” It noted that additional embargoes will be issued Aug. 19.
All Class I’s Issued Customer Advisories
Ahead of the potential work stoppage on Aug. 22, traffic embargoes were issued by both Canadian carriers and U.S. Class I’s CSX, Norfolk Southern, BNSF and Union Pacific for traffic that interchanges with them.
CPKC on Aug. 9 reported that it “will issue an embargo for all toxic by inhalation (TIH) dangerous goods traffic to allow this traffic to safely exit the rail network prior to a work stoppage. Other embargoes will be issued during the cooling off period, as necessary.” CN on Aug. 13 initiated what it called “the first step of a phased and progressive shut down” of its rail network in Canada, “due to the absence of progress at the negotiating table and the absence of arbitration.” The railroad started to embargo certain hazardous materials, such as chlorine, bromine, ammonia, chloropicrin, and ethylene, which “can’t be left out on the railroad unsupervised in the event of a labor stoppage.”
“By stopping the shipment of hazardous goods while ensuing that the railcars containing them currently on the network are safely delivered, CN aims to remove as much of them from its Canadian network ahead of a possible labour stoppage,” the railroad said.
In an Aug. 12 notice to customers, CSX said it is “proactively taking measures to safeguard the transportation of highly hazardous, toxic inhalation hazards (TIH) and poisonous inhalation hazards (PIH) materials amid the potential rail labor disruption affecting Canadian railroads.” Effective immediately, the Class I railroad said it is placing an embargo on all TIH/PIH shipments to and from CN and CPKC. Should the labor negotiations reach an impasse, it noted, delays and service suspensions may occur. “We will continue to monitor the situation and provide updates as warranted,” CSX said. “CSX is committed to ensuring the highest standards of safety during this time. We appreciate your understanding and cooperation.” Additionally, on Aug. 15, customers were told that “effective 48 hours from now, CSX will implement an embargo on cross-border shipments to and from the CN and CPKC railroads.” Shipments on CN and CPKC with U.S. originations and destinations are not included in the embargo, the railroad said, and the embargo on “all hazardous and security-sensitive materials, including Toxic Inhalation Hazards (TIH) and Poisonous Inhalation Hazards (PIH), originating or terminating on the Canadian railroads, remains in effect.”
Similarly, in an Aug. 13 alert, Norfolk Southern (NS) told customers that it is “closely monitoring a potential labor work stoppage“ and is “subsequently issuing an embargo on TIH, PIH, and RSSM materials to/from the CN and CPKC railroads effective immediately to allow time for these materials to exit the system before the potential work stoppage.” Additional embargoes may be issued as a result of the potential work stoppage, the railroad said. On Aug. 16, NS issued another alert, telling customers that it continues to monitor the potential work stoppage affecting rail traffic to and from Canada. “Previous guidance has indicated an all-commodity embargo could go into effect at 12:01 am, Monday, August 19,” it reported. “Absent any labor settlement, NS anticipates issuing an embargo for all traffic originating or terminating in Canada with an effective time of 12:01 am, Monday, August 19.” On Aug. 19, NS told customers that it “continues to monitor the potential work stoppage affecting rail traffic to/from Canada.” CN and CPKC, it said, “have issued all-commodity embargoes”: CPKC (Embargo: CPRS002121), effective 12:01 am August 20, 2024, and CN (Embargo: CN001224) effective 12:01am August 22, 2024. “These two embargoes cover all NS originated traffic destined to Canada and all Canadian originated traffic destined for NS destinations for all commodities,” the railroad said. “Current NS embargoes NS001524 (Haulage traffic to Rouses Point) and NS001424 (TIH/PIH shipments) remain in effect.” On Aug. 25, NS said: “All embargoes associated with the potential Canadian work stoppage have been cancelled, and affected traffic has begun to move again.”
Union Pacific in a customer advisory referenced CN Embargo #CN001524, which covers all intermodal traffic destined to all points in Canada from U.S. origins and U.S. interchange: “Effective Friday, August 16, 2024 at 00:01, waybills for traffic originating at UP terminals destined to CN terminals in Canada will not be accepted for the duration of the embargo. Waybills originating at a Mexico origin, including Falcon Premium shipments, will also not be accepted. Shipments in the pipeline can continue to be cross-towned to CN in Chicago through Wednesday, Aug. 21, 2024. We continue to closely monitor the Canadian railway labor negotiations and are in close contact with our interchange partners, adhering to other Class I railroad embargos. As always, we will work to support our customers’ needs.”
“While the potential Canadian lockout does not impact BNSF operations, shipments moving to and from Canada through interchange with the Canadian railroads will not be moved during a work stoppage,” BNSF said in a customer advisory. “Should a work stoppage occur, BNSF will continue to work closely with the Canadian railroads and be prepared to get shipments moving safely and quickly when normal interchange operations are able to resume.”
The Surface Transportation Board (STB) on Aug. 14 said it was “actively monitoring” the potential for a rail labor strike. Aware that embargoes have been issued related to it and that their ”scope could expand in the coming days,” the Board noted that it is “monitoring the implementation and effects of those embargoes on the network.”
The STB encouraged rail carriers, shippers, and other stakeholders experiencing rail service disruptions related to the potential strike to contact its Rail Customer and Public Assistance program. To request assistance, interested persons may email RCPA@stb.gov or call (202) 245-0238 or (866) 254-1792.
For more background on the negotiations, click here and here.
