Canada needs to act on rail stoppage, now – chem group CIAC

TORONTO (ICIS)–Canada’s federal government needs to exercise its authority and act quickly on the complete freight rail stoppage, set to start midnight at 00:01 Eastern Time, trade group Chemistry Industry Association of Canada (CIAC) said.

The simultaneous rail disruption at both of the country’s freight railroads, Canadian National (CN) and Canadian Pacific Kansas City (CPKC), has been looming over the chemical and other industries for months.

It was apparent that the rail labor dispute could not be resolved through collective bargaining, CIAC told ICIS in an update on Wednesday.

The government therefore should impose binding arbitration, with a prohibition on the right to strike/lockout, the group said.

Failing that, parliamentarians could be recalled to pass back-to-work legislation, CIAC said.

“We believe it is important for the government to act sooner rather than later to mitigate any impacts to the Canadian economy and the workers who support it, and our trading relationships,” it said.

It was government’s and parliament’s role to protect the public interest, from both a public safety perspective and in terms of protecting Canadian workers and businesses broadly from the economic harm that was already being caused by the pending rail stoppage, the group said.

As for public safety, CIAC noted in particular the continued rail supply of chlorine to municipalities to ensure safe drinking water.

LEARNING FROM THE US
Compared with Canada, the US under its Railway Labor Act (RLA), 1926, was more adept at ensuring that railways keep operating during labor disputes, CIAC said.

The RLA nearly eliminates the risk of shutdowns while allowing for business and labor to negotiate, the group said.

In fact, there have been very few rail labor disruptions in the US over the past 100 years, CIAC said, adding: “Just one, lasting one day.”

CIAC is advocating that Canada follow the US approach in order to avoid the near-annual disruptions of Canada’s rail and port infrastructure, it said.

CHEMICALS AND RAIL
In Canada, about 80% of chemical production goes into export, with about 80% of those exports going to the US, according to CIAC.

At the same time, Canada-based chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail.

US-Canada chemical trade, 2023:

• Canadian exports of industrial chemicals to the US: Canadian dollar (C$)18.9 billion ($13.9 billion), according to CIAC data.
• Canadian imports of industrial chemicals from the US: C$17.5 billion in 2023.

More than C$76 million of industrial chemical products move on Canada’s rail network daily, which comes to about C$28 billion a year.

Industrial chemicals include basic chemicals, synthetic resins, rubbers and synthetic fibers. Chemicals account for nearly 10% of total Canadian freight rail traffic.

CIAC members see reliable rail services as a key factor in deciding whether to locate a new facility or expand operations in Canada, the group said.

Likewise, investors see rail service as essential when they are “looking to Canada to take advantage of our skilled labor and abundant and well-priced natural resources”, it added.

CANADIAN POLITICS
Although the chemical and other industries have repeatedly warned about the impacts simultaneous disruptions at both railroads could have on Canada’s weakening economy and on trade with the US, the federal government under Prime Minister Justin Trudeau has yet to act decisively.

While CIAC declined to speculate about the reasons for the government’s hesitation, political commentators noted that Trudeau’s Liberal-led minority government relies on the left-leaning New Democratic Party (NDP) to keep it in power.

Earlier this week, the NDP, which is close to labor unions, warned Trudeau against imposing binding arbitration or back-to-work legislation, as this would undermine the rail workers’ right to bargain for collective agreements.

If the NDP withdraws its support in parliament, the government would fall. In current opinion polls, the Liberals are well behind the opposition Conservatives.

Map by Miguel Rodriguez Fernandez

Rail labor union Teamsters Canada Rail Conference (TCRC) on Sunday served the required 72-hour strike notice on CPKC, following CPKC’s earlier lockout notice, and CN served a 72-hour lockout notice on TCRC.

The railroads continued to wind down operations on Wednesday ahead of the start of the work stoppage on Thursday.

Trudeau said in webcast remarks to media on Wednesday that the government was following the issue “extremely closely”, adding that it was in the best interest of the railroads and the union to find a negotiated resolution.

Federal labor minister Steven MacKinnon, who met with the railroads and TCRC on Tuesday, continues to press for a negotiated settlement of the labor dispute, which is about wages, benefits, work scheduling and safety issues.

“Get a deal at the table. Workers, farmers, businesses and all Canadians are counting on it,” he said on social media.

MacKinnon last week rejected CN’s call to refer the dispute to the Canadian Industrial Relations Board (CIRB) for binding arbitration.

Industry commentators said that the government could not allow the rail stoppage to last more than 7-10 days, after which it would likely need to use back-to-work legislation or binding arbitration to end the dispute.

The following table by the American Association of Railroads (AAR) shows Canadian freight rail traffic, including chemicals, for the week ended 17 August and the first 33 weeks of 2024:

($1=C$1.36)

Thumbnail photo source: CPKC