By Robb M. Stewart


Canadian National Railway has taken the first step in a phased shutdown of its rail network in Canada with a halt to the movement of hazardous cargo, based on what it says is a lack of movement in talks with unionized workers.

The rail operator said it would have no choice but to push ahead with a lockout of employees as of one minute past midnight Aug. 22 if there were no meaningful progress in negotiations with Teamsters Canada Rail Conference or arbitration.

Canadian National said it started an embargo of certain hazardous goods, including chlorine used in household cleaners and to purify drinking water, and ammonia used as fertilizer. Such goods are carried daily but can't be left unsupervised out on the railroad in the event of a work stoppage.

Canada's labor-relations board late last week opened the door to a strike or lockout after it determined work stoppages at Canadian National and Canadian Pacific Kansas City wouldn't pose an immediate or serious danger to safety or public health. This effectively put the rail companies and the union back to where they were in early May, when the federal government averted disruption by calling on the board to rule on whether certain goods must be transported during a strike or lockout.

A Canadian Pacific embargo on the movement of goods that are toxic or poisonous by inhalation began on Monday.

In a notice to customers, Canadian Pacific said the halt applied to shipments originating in Canada or that are coming from the U.S. or Mexico and billed to any Canadian destination. It said any shipment that is affected by a work stoppage would be secured in a safe location, adding the embargo could be rescinded at any time.

Canadian Pacific has said it will lock out employees Aug. 22 if Teamsters leadership and the company can't reach a negotiated settlement or agree to binding arbitration. It last week cautioned it could stop accepting other cargoes during a 13-day cooling off period ordered by the Canada Industrial Relations Board in its ruling Friday.

A work stoppage at both railroads would idle around 10,000 workers and shut down both networks, slowing the movement of cargo across the country and cross-border trade. The government estimates that close to 400 billion Canadian dollars, or $291 billion, in goods is transported by railroads in Canada annually.

Canadian National warned that a prolonged shutdown of rail operations would have a serious impact on supply chains, creating delays and possible shortages, and increasing costs for businesses including mines, grain elevators, factories and mills.

In a joint letter to Prime Minister Justin Trudeau and other lawmakers last week, almost 100 industry organizations and business associations called on the federal government to prevent concurrent or sequential work stoppages at both major railways. They said the stoppages would have an immediate impact on thousands of businesses commuters in several major urban areas. Canada's international reputation and relation with trading partners would also be at stake if the movement of goods is disrupted, they said.

Teamsters Canada said the decisions by the rail companies to begin lockouts Aug. 22 was unexpected and antagonizing. "With close to two weeks of negotiations still ahead, this move represents an unnecessary escalation that goes against the principles of good faith bargaining that CN and CPKC claims to uphold," it said.

The union has declined binding arbitration and said it believes an agreement can still be reached at the bargaining table, something the government has pushed the sides to continue working toward.

The rail companies say they remain committed to bargaining in good faith, and Canadian Pacific is focused on a status quo-style renewal of a collective deal covering three years that also complies with new regulatory requirements for rest. Teamsters Canada said the main sticking points at the table are company demands on issues related to crew scheduling, rail safety and fatigue managements, rather than union proposals.

Teamsters Canada is bargaining for the renewal of two collective agreements covering 3,200 so-called running trades employees and a unit of 85 rail traffic controllers at Canadian Pacific and the renewal of a collective agreement covering about 6,000 railway transportation employees at Canadian National.


Write to Robb M. Stewart at robb.stewart@wsj.com


(END) Dow Jones Newswires

08-13-24 1450ET