Market Matters Blog

If Canadian Pacific Kansas City (CPKC) doesn't reach an agreement in the next three days with the Teamsters Canada Rail Conference (TCRC) and Train & Engine (T&E) division and the TCRC and Rail Canada Traffic Controllers (RCTC) division, CPKC will lock out TCRC rail traffic engineers as of 12:01 a.m. EDT and rail traffic controllers as of 12:01 a.m. MDT, on Aug. 22, 2024.

The CN on their website said they were back at the bargaining table on Aug. 16 with TCRC. "We hope that the TCRC will engage meaningfully during this meeting." https://www.cn.ca/…

The CN had written a letter to Federal Labour Minister Steven MacKinnon Aug. 12, 2024, asking him for binding arbitration in their contract dispute with the TCRC.

The attorney representing the TCRC sent a letter to MacKinnon in response to the CN letter noting, "The TCRC objects to and opposes CN's request in these circumstances. The TCRC submits that CN's request is unfounded, unnecessary and at the very least premature in the circumstances. The TCRC requests that you reject CN's request at this time." https://media.linkedunion.com/…

In response, MacKinnon said in a letter on Thursday, Aug. 15, "After careful consideration of this request by Canadian National Railways Company, I have decided not to proceed with a section 107 referral. Consistent with our discussion on Aug. 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 toward a new collective agreement." https://www.teamstersrail.ca/…

Teamsters Canada said on Thursday, "We agree with Minister MacKinnon; agreements are within reach at the bargaining table. It bears repeating that the main sticking points at the bargaining table are company demands, not union proposals. The only way forward is for rail companies to engage in genuine negotiations at the bargaining table, and to back down from demands for concessions."

On Sunday, Aug. 18, the TCRC wrote members a letter on their website saying, "We are writing to inform you that your bargaining committee was served 72 hours notice that CN will be locking out all running trades TCRC Members. This means that at 0001 on Thursday morning, if we cannot reach a tentative agreement, the Company will utilize their rights under the Canada Labour Code to remove our ability to come to work and earn a living. As this situation at the bargaining table develops, we will keep you all as informed as possible in the coming days."

CPKC AND CN BEGIN PREPERTATIONS FOR WORK STOPPAGE

In their latest update on Aug. 17 to customers, CPC said the following on their website:

"Ahead of a potential work stoppage, CPKC's operational focus today is on ensuring a safe, structured shutdown of all of our Canadian train operations. As a result, CPKC will issue the following embargos effective 00:01 (12:01 a.m.) ET on Tuesday, Aug. 20, 2024:

"-- All carload shipments originating in Canada which are billed to any Canadian, United States or Mexican destinations;

"-- All carload shipments originating in the United States or Mexico which are billed to any Canadian destinations;

"-- The embargos can be rescinded at any time.

"The current embargos for toxic by inhalation (TIH) or poisonous by inhalation (PIH) shipments routing to and from CPKC Canadian locations will be amended effective at 00:01 (12:01 a.m.) ET on Monday, Aug. 19, 2024, to include all hazmat commodities.

"Any shipment that is impacted by the work stoppage will be secured in a safe location."

CN noted on their website Aug. 16, "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. This process started with embargoes. It will culminate in a lockout at 00:01 (12:01 a.m.) ET on Aug. 22 unless a deal is reached, or arbitration is imposed. CN is 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."

On Sunday, Aug. 18, CN on their website said, "CN has issued notice to the Teamsters Canada Rail Conference (TCRC) formally advising them of its intention to lockout Canadian TCRC-represented employees on Aug. 22 at 00:01 (12:01 a.m.) ET unless an agreement or binding arbitration is achieved before that time. Despite 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 will have no choice but to continue the phased and progressive shutdown of its network which would culminate in a lockout.

"CN must continue with the progressive and planned shutdown of its network, as we remain under the threat of an unpredictable strike notice. This planned shutdown helps to ensure the safety of the communities in which we operate and the safety of our customers' goods, and to optimize the network's recovery following a labour disruption. Additional embargoes will be issued on Monday Aug. 19." https://www.cn.ca/…

As a reminder, TCRC and Train & Engine (T&E) division represents CPKC's roughly 3,200 locomotive engineers, conductors and train and yard workers, and the TCRC and Rail Canada Traffic Controllers (RCTC) division represents approximately 80 rail traffic controllers, all in Canada. TCRC union represents approximately 6,000 conductors, conductor trainees, yard coordinators and locomotive engineers across CN's network in Canada.

WILL STOPPAGE AFFECT U.S. RAIL TRAFFIC?

If you are wondering how a stoppage will affect the U.S. if the lockout occurs, it can affect border shipments and the U.S. rail network and supply chain. According to Transport Topics, "The U.S. is Canada's largest trading partner, and a significant portion of cross-border freight relies on rail transportation." There are already trickle-down effects happening on other railroads that go in and out of Canada.

On Saturday, Aug. 16, Norfolk Southern said on their website, "Norfolk Southern continues to monitor the potential work stoppage affecting rail traffic to/from Canada. Previous guidance has indicated an all-commodity embargo could go into effect at 12:01 a.m. ET, Monday, Aug. 19. Absent any labor settlement, NS anticipates issuing an embargo for all traffic originating or terminating in Canada with an effective time of 12:01 a.m. ET, Monday, Aug. 19."

On Aug. 14, the BNSF on their website said, "While negotiations are ongoing, if no resolution is reached, the CN and CPKC have indicated plans for a proactive shutdown that will end with a lockout at 12:01 a.m. ET on Aug. 22. 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. 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."

Union Pacific on Aug. 16 said on their website, "Union Pacific is actively monitoring the Canadian railway labor negotiations and is in close contact with our Canadian interchange partners. The Canadian Pacific Kansas City (CPKC) and Canadian National (CN) have both issued embargos for certain traffic in advance of a potential lockout, and Union Pacific is adhering to their embargos. A listing of those active embargos can be found on the Association of American Railroads (AAR) Embargo Railinc website https://embargo.railinc.com/… (enter "CN" or "CPRS" in the Issuing Road field)."

So, now we wait. Once the clock strikes 12:01 a.m. on Aug. 22, the TCRC workers will be locked out. Note the difference between a strike and a lockout is that in a strike, the union workers stop working until their demands have been met. In a lockout, management stops workers from entering the workplace until their demands are met.

Mary Kennedy can be reached at Mary.Kennedy@dtn.com

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