‘Long tail’: Rail shutdown ends, but aftershocks ripple amid drawn-out ramp-up

Despite the relatively short rail standstill, Conifex’s reduction to one shift per day from two will last “for the foreseeable future,” said chief operating officer Andrew McLellan last week.

“It could be some time before our shipment levels normalize,” said Ken Shields, chairman and CEO at Conifex, in a phone interview.

Industries across the country are feeling the pain of a shutdown that fell far short of catastrophic levels, but whose ripple effects continue to play out in lost revenues and customers and a bruised national reputation.

The halt that kicked off Thursday at Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. is slated to end first thing Monday, following a Saturday decision from the federal labour board which ordered the companies and their workers to resume operations.

While the full financial impact of the stoppage remains unclear, Moody’s warned it could cost the Canadian economy $341 million per day. Agriculture, forestry and manufacturing were among the hardest-hit sectors, the credit rating agency said.

Fertilizer Canada, which represents fertilizer producers and distributors, said its members have lost tens of millions of dollars due to the stoppage. The industry was among the first to be affected by a phased wind-down at both railways that began roughly two weeks ago, as the companies sought to avoid stranding products such as ammonia and other dangerous goods as well as meat and medicine on the tracks.

“Disruptions cost us millions and millions of dollars a day in lost revenue,” said industry group CEO Karen Proud.

Canadians from coast to coast may not be immune to the ripple effects, either.

“These costs that go into the system, they go one way — and that goes to the consumer,” she said.

The greatest fallout from the stoppage may be a faltering belief abroad in Canada as a dependable place to do business, Proud said, noting the deadlock marked the latest in a string of labour disruptions over the past 18 months.

“My U.S. folks that were up here were really kind of astounded as to the fact that this could even happen in this country.”

Saturday’s ruling from the Canada Industrial Relations Board imposes binding arbitration on all involved parties following the stoppage that paralyzedfreight shipments and snarled commutes across the country.

The board’s decision dropped two days after Labour Minister Steven MacKinnon directed the arm’s-length tribunal to begin the arbitration process, saying the parties were at an impasse in contract talks and Canadian businesses and trade relationships were at stake.

The Teamsters union has vowed to appeal the ruling in court and plans to lead a protest of the government’s move on Monday at the Liberal cabinet retreat in Halifax.

MacKinnon defended the order for binding arbitration shortly before the cabinet meetings got underway on Sunday, rejecting the union’s position that it went against workers’ best interests.

“It’s hard to remember a decision that was more in the interest of Canadian workers,” MacKinnon said. “When you think of shutdowns in potash mines, when you think of car plants running out of inventory, when you think of forestry and aluminum operations … Those are major economic consequences, and there are also major consequences in terms of salaries for unionized workers across the country.”

Like the shutdown, the ramp-up will be drawn out, with Canadian Pacific saying a full recovery will likely take “several weeks.”

“This isn’t like a model train set down in the basement that you just flick a switch and it starts running again. It takes a while for things to get moving,” said Matthew Holmes, in charge of policy and government relations at the Canadian Chamber of Commerce.

“There will be a long tail here.”

The ripple effects could include lost customers — which was part of the fallout from the 13-day strike by 7,400 B.C. dockworkers last summer.

“We’ve already seen lost relationships coming from the U.S. and overseas, where they were shipping to our ports. Some of that business didn’t come back,” Holmes said in a phone interview.

Last year saw the most days of labour disruption since 1986, he said. Workers along the St. Lawrence Seaway, school support staff in Nova Scotia, federal government employees in various locations and, briefly, WestJet pilots all took job action in 2023. And more labour strife may be on the horizon, as Air Canada pilots and Montreal longshore workers face off against their employers.

Industry players have called for reforms to avert labour deadlocks in critical sectors.

Fertilizer Canada’s Proud called for updates to the Canada Labour Code, such as mandatory “pre-negotiation” around binding arbitration terms as a way to streamline the process.

Minimum term lengths for contracts and more cooling-off periods would also help avoid rail shutdowns “every couple of years,” she said.

Canadian Pacific workers hit the picket lines in 2022, 2015 and 2012. Canadian National employees last went on strike in 2019, and remained out for eight days.

Proud also said more products should be deemed essential goods, which would see them continue to move even during a work stoppage.

Earlier this month, the Canada Industrial Relations Board ruled that a rail shutdown would pose no “serious danger” to public health or safety, opening the gate to a full-fledged strike or lockout.

Canadian Pacific lifted its lockout after the labour board’s decision Saturday evening, but employees declined CPKC’s request to return to work for Sunday. Their strike will cease at 12 a.m. Monday, in line with the tribunal’s ruling.

CN, whose workers issued a 72-hour strike notice Friday after the company lifted its own lockout the day before, are already back on the job to carry out the complicated process of revving up operations across 32,000 kilometres of track.

This report by The Canadian Press was first published Aug. 25, 2024.

Companies in this story: (TSX:CP, TSX:CNR)