CP shuts down rail service amid labor dispute

Canadian Pacific began a “structured shutdown” of its rail service across Canada after a breakdown in talks with the Teamsters union on Saturday led to a work stoppage by 3,000 train engineers, conductors and yard workers.

The union and railroad management blamed each other for causing the shutdown that places more pressure on U.S.-Canadian agriculture markets already straining from pandemic-related issues.

“We are very disappointed with this turn of events,” Dave Fulton, spokesperson for the Teamsters Canada Rail Conference (TCRC), which is negotiating the contract with CP (NYSE: CP), said in a statement late Saturday.

“Canadian Pacific management must be taken to task for this situation. They set the deadline for a lockout to happen tonight, when we were willing to pursue negotiations. Even more so, they then moved the goal post when it came time to discuss the terms of final and binding arbitration.”

While the Teamsters characterized the work stoppage as a lockout initiated by CP, the railroad said the shutdown is a result of the union failing to negotiate in good faith.

“We are deeply disappointed that, in the final hours before a legal strike or lockout was to potentially occur, the TCRC Negotiating Committee failed to respond to the company’s latest offer that was presented to them by the federal mediators,” said CP President and CEO Keith Creel early Sunday.

“Instead, the TCRC opted to withdraw their services before the deadline for a strike or lockout could legally take place. The TCRC is well aware of the damage this reckless action will cause to the Canadian supply chain.”

U.S. lawmakers warned earlier in the week in a letter to Canadian Prime Minister Justin Trudeau that, with supply chains already constrained, shutting down CP service “would create a freight capacity crisis.”

American agribusiness relies on Canada for potash and nitrogen fertilizers, they asserted. “At a time when agricultural input costs are already skyrocketing, major agriculture-producing nations are at war and global food prices are at an all-time high, all steps necessary must be taken to ensure producers have access to the inputs they need.”

They also noted that U.S. producers rely on CP to move products to ports in the Pacific Northwest for export to Asia.

“Asian markets are currently turning to the U.S. to fill their demand. A work stoppage would cripple our producers’ ability to meet the demand, and the U.S. and Canada would lose the opportunity to expand our market footprint throughout the world.”

The two sides, meanwhile, are still trying to hammer out an agreement.

The union contends that wages and pensions remain stumbling blocks in the latest contract talks after the last four-year labor agreement expired Dec. 31. “Working conditions that call into question the railway’s capacity to recruit and retain workforce members” are also at issue, the union stated.

Earlier in the week CP said it had offered a package that addressed 26 outstanding issues between the parties, “including an offer to resolve the TCRC’s key issues of wages, benefits and pensions through final and binding arbitration.”

Seamus O’Regan, Canada’s minister of labor, has been monitoring the situation and has urged the two sides to resolve their issues.

“There are always challenges in bargaining, but you push through them to get the agreement you need,” O’Regan said in a statement issued Sunday. “CP and TCRC continue their work today. Canadians are counting on a quick resolution.”

Credit FreightWaves by John Gallagher,