More supply chain disruption as shutdown of CP Rail system begins

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Manufacturer fears of a national rail shutdown that could further damage Canada’s struggling supply chains have become reality. A shutdown of the Canadian Pacific Railway system began Sunday as the railway and its union remained at loggerheads over contract negotiations and took turns blaming each other for the service disruption.

The Teamsters Canada Rail Conference, representing about 3,000 engineers, conductors, yard workers, and other train employees, issued a release saying was lockout was being initiated by CP Rail. But the railway shot back that it while it was still engaged in contract talks facilitated by federal mediators, the TCRC “withdrew its services and issued a news release misrepresenting the status of the talks.” TCRC issued another release stating its members were on strike with picketing underway at various CP Rail locations.

“As a result, CP has had to shut down its Canadian rail network and thus has effectively been, and continues to be, prevented from providing rail transportation services and other affected services in Canada, and to some extent, in the U.S.,” CP Rail said in a notice to customers.

Regardless of which side hit the work stoppage button first,  both had issued a March 20 deadline for lockout or strike action should there be no progress in contract talks. CP Rail had already announced that it had “commenced and will continue to execute” a structured shutdown of its train operations in Canada and that an “embargo application for shipments routing to and from CP Canadian locations is now in place to be effective 00:01 Sunday March 20, 2022.”

The two sides are at odds over 26 outstanding issues, including wages, benefits and pensions.

Canadian manufacturers are among the biggest users of rail transportation services and CP Rail is a critical link in manufacturing supply chains. Manufacturers were very vocal last week in their opposition to any service disruption, calling on both the railway and its union to find a way to avoid it and on the federal government to act immediately should a work stoppage occur.

“A work stoppage of any length will have a deep and adverse impact for all Canadians who rely on the essential rail supply chain and for the broader Canadian economy. Any disruption would further cripple Canada’s freight capacity and have a profound impact on not only rail shippers, but all shippers, including trucking and air, throughout the broader Canadian economy, “ a group comprised of more than 45 businesses stated in a plea to the government. “It would do irrevocable damage to Canadian supply chains that would extend beyond our borders and harm our reputation as a reliable partner in international trade.”

The group, which includes the Canadian Chamber of Commerce and Canadian Manufacturers and Exporters, pointed out that CP has stated that it is willing to immediately enter binding arbitration to resolve this matter without a work stoppage.

“The government must do everything in its power to get the union to agree,” the group demanded.

The office of federal Labour Minister Seamus O’Regan said in a statement that while the work stoppage had begun, both parties are continuing with contract talks with the help of mediators and it expected “the parties to keep working until they reach an agreement.”

“CP and Teamsters Rail continue their work today. Canadians are counting on a quick resolution,” O’Regan said on Twitter.

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