Canadian government presses freight trains to get moving

Some workers at Canadian railways are preparing to return to their jobs today after the country’s government intervened in a work stoppage that had frozen freight trains operated by Canadian National (CN) and Canadian Pacific Kansas City (CPKC) for about a day.

The trains had stopped rolling just past midnight on Thursday morning, when the two rail companies locked out their employees after reaching an impasse in talks with the Teamsters Canada Rail Conference (TCRC) to renew a union labor contract.

But by the end of that same day, Canada’s national government had stepped in when the country’s Labor Minister ordered the Canadian Industrial Relations Board (CIRB) to launch binding arbitration talks between the feuding parties.

As a result, CN said it had ended its lockout and initiated its recovery plan as of 6pm Thursday. However, on Friday the Teamsters renewed their threat to strike against CN.

Likewise, CPKC trains remained stopped on Friday, as the company said it “remains prepared to resume service as soon as it is ordered to do so by the CIRB” but that the Teamsters union was challenging the government’s move in court. Negotiations before the Canada Industrial Relations Board (CIRB) were scheduled to resume today.

Although the talks continue to be fractious, analysts were optimistic that all issues would be resolved. In a note to investors, analyst Jason Seidl of TD Securities said, “Rail operations are expected to resume in a few days despite some tactical delays from Teamsters workers at CPKC disputing the CIRB's expected intervention and preventing an immediate reopening (this is likely to be resolved today).”

But even if the rail stoppage proves to be short-lived, it has already made impacts on freight flows, with some shippers pre-emptively diverting cargo ahead of the deadline, Seidl said. For example, the firm has seen some Canadian port volume shift to the U.S. West Coast, Western rails' share of intermodal volumes jump sharply to near 7-year highs, and Canadian spot truckload rates spike significantly.