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A strike by CP Rail is hampering the movement of goods across Canada including mined commodities coal and potash.
Nearly 5,000 workers at Canadian Pacific walked off the job on Wednesday morning. Management and the Teamsters Canada Rail Conference union are deadlocked over pensions, with the union saying that CP is unfairly seeking to slash employees’ retirement benefits.
The Canadian government is poised to intervene in the work stoppage, following a similar move earlier this year to legislate Air Canada pilots back to work. The labour standoff comes just days after disgruntled investor Bill Ackman emerged victorious in a proxy fight against the railway, resulting in the resignation of the company’s CEO, Fred Green.
Federal Labour Minister Lisa Raitt will table back to work legislation on Monday, according to media reports Thursday.
The strike has the potential to cripple Canada’s supply chain, with 40% of the country’s rail traffic moved by CP. The companies likely to be hit hardest are those with no transportation alternatives, such as BC-based Teck Resources, which ships all of its metallurgical coal from its five mines in southeastern BC to the port of Vancouver via CP Rail.
CBC News reports that Teck, which sends 650 coal cars a day from the mines and is CP Rail’s largest customer, “will have a huge problem if the CP strike drags on.” However, Teck is not yet planning on declaring force majeure, which would allow the company to default on contracts without being held liable, The Globe and Mail reported Thursday.
Meanwhile the work stoppage is also striking fear in the hearts of Canadian farmers who rely on CP Rail to transport key supplies such as fertilizer, of which potash is a key ingredient.
CBC reports Richard Downey, spokesman for fertilizer producer Agrium, saying “Anything that interrupts nutrient movement to the grower in the middle of the season in Western Canada is not good news for the farmer.” The Western Grain Elevator Association is warning the agriculture and food industry could face a crisis within days.
Other companies are looking at alternative transportation options, including turning to Canada’s other main carrier, CN, or moving the goods on trucks instead of trains. CN, however, is unlikely to have the crews or equipment needed to fill even a temporary void left by CP according to an analyst at BMO Capital Markets quoted by CBC. Trucking is more expensive and takes longer, although some companies, including Chrysler and major retailer Canadian Tire, are reportedly looking at the trucking option.
The Mining Association of Canada is urging the Canadian government to step in to resolve the issue before it damages the health of the economy. The government estimates the strike could cost over $500 million a week.
