Canada Orders Arbitration and End to Rail Freight Shutdown

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Canada Orders Arbitration and End to Rail Freight Shutdown

Less than 17 hours after almost all rail freight traffic in Canada came to a standstill Thursday following a lockout by the country’s two main rail companies of 10,000 employees, the federal government told a labor board to end the shutdown and ordered arbitration.

The lockout had threatened to cause supply-chain disruptions in the ******* States and serious economic consequences within Canada. The moves followed months of contract talks that had ******* to reach an agreement.

Steve MacKinnon, Canada’s labor minister, said at a news conference in Ottawa on Thursday that he had told the Canada Industrial Relations Board to formally order the railways to restart service. He said that he expected trains would be rolling “within days.”

He also told the labor board to extend the contracts between the Teamsters Canada Rail Conference — the union that represents the workers locked out — and the railway companies: ********* National and ********* Pacific Kansas City. The contracts expired at the end of the last year.

“The impacts of the current impasse are being borne by all Canadians,” Mr. MacKinnon said at the news conference. “Millions of Canadians rely on our railways every day.”

Last week, the two railway companies had asked Mr. MacKinnon to impose arbitration to in advance of a Thursday’s deadline for a strike or lockout. Mr. MacKinnon turned them down then, but he said on Thursday that the situation had changed.

“We gave negotiations every possible opportunity to succeed,” Mr. MacKinnon said. “But we have an impasse here.”

For Canada’s export-dependent economy, a prolonged shutdown could have brought severe economic repercussions. The railway association estimates that half of all ********* exports are moved on trains and that railroads carried 380 billion ********* dollars, about $279 billion, worth of goods during 2022.

About 6,500 containers enter the ******* States by rail from Canada every day along with other cargo, according to the Railway Association of Canada, an industry lobbying group. Many of those containers have come from Asia and Europe and landed at ********* ports.

The effects of a protracted strike would have been felt throughout the world. Canada is a major exporter of several globally important commodities. ********* mines are the world’s largest source of potash, an important fertilizer, and virtually all of their production moves by train at some point.

The temporary lockout did not, however, affect ********* National’s extensive operations in the ******* States or ********* Pacific Kansas City’s lines in the ******* States and Mexico.

The effect on intercity passenger trains, which mostly use ********* National’s tracks, and on commuter lines was less pronounced on Thursday. And while the railways move grains and other farm products for global export, they transport relatively few of the food products found in ********* grocery stores.

In 2015, a two-day strike by 3,000 locomotive engineers at ********* Pacific — as the company was known before it acquired an ********* competitor, Kansas City Southern, last year — ended with the two sides agreeing to arbitration hours before the then-************* government introduced back-to-work legislation. In 2019, workers at ********* National struck for eight days before negotiating a deal.

In recent decades, the two companies’ labor contracts had previously expired on alternating years, which avoided a near-total rail shutdown. But to accommodate changing federal regulations, ********* National secured a one-year extension of its last agreement. The contracts with both companies expired at the end of last year. Negotiations began last September.

The main points of contention for the railway workers appear to be scheduling, work hours and fatigue management. Hunter Harrison, a longtime ********* railway executive who ran both railways at separate times, introduced a system known as precision-scheduled railroading. To boost efficiency, he put trains on rigid, consistent schedules and cut back on equipment and employees through steps like running extremely long trains.

His approach bolstered profits, and the legacy of Mr. Harrison, who ***** in 2017, ******** significantly intact at both railways.

In June, the Teamsters Canada Rail Conference said the two railways were “trying to

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” out of workers. It said that would mean “train crews would be forced to stay awake even longer, increasing the risk of derailments and other accidents.”

“The railroads don’t care about farmers, small businesses, supply chains or their own employees,” Paul Boucher, the rail conference’s president, said in a statement on Thursday. “Their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy.”

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that it had proposed “a modernized agreement that improved safety, wages and work/life balance.” ********* Pacific Kansas City said its offer “does not in any way compromise safety.”

In a brief statement after the government’s orders,

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also said that while it was satisfied that the shutdown was ending, it was “disappointed that a negotiated deal could not be achieved at the bargaining table.”

The ******** government of Prime Minister Justin Trudeau keeps its hold on power in the House of Commons with the voting support of the New Democratic Party, which was partly founded by organized labor. Meeting with rail workers in Montreal on Thursday, Jagmeet Singh, that party’s leader, again warned Mr. Trudeau against passing legislation that would force rail employees to return to work or imposing arbitration.

Mr. Singh condemned the government’s arbitration announcement in a social media post.

“Justin Trudeau’s actions are cowardly, anti-worker, & proof that he will always ***** to corporate greed,”

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The effects of a long shutdown would have most likely stretched across several sectors of Canada’s economy, including agriculture, mining, forestry, oil and manufacturing.

Many shippers who use rail freight in Canada cannot simply move their cargo to trucks. Ships are not an alternative outside of the Great Lakes and St. Lawrence River system. And the overwhelming majority of cars and trucks made in Canada are sent to the ******* States largely by train.

“Parts and components come into the plants largely via trucks, and finished vehicles go out largely on rails,” said David Adams, the president and chief executive of Global Automakers of Canada, a group that includes Honda and Toyota. Both companies have major operations in Canada. “There would be very limited, if any, capability to transfer finished vehicle shipments from rail to truck.”

Wade Sobkowich, the executive director of the Western Grain Elevator Association, said before the government’s action that the shutdown had come just as his members were starting to purchase this year’s grain harvest from farmers. The job action, he said, meant farmers had to stockpile their grain and wait to be paid.

“We tend not to bring in grain unless we know we can load it onto a train and get it out,” he said from Winnipeg. “It’s terrible timing, right at the start of harvest. We’ll be playing catch up for the rest of the year.”

Via Rail Canada, the government-owned passenger system, said in an email that most of its trains, which run mainly on ********* National’s tracks, would be unaffected. Dispatchers at ********* National remain on the job, unlike their counterparts at ********* Pacific Kansas City.

Exo, a commuter rail service in the Montreal area, shut down service on three lines owned by ********* Pacific Kansas City that carry about 24,000 passengers a day.

Metrolinx, which runs commuter services in the Toronto area, had said that most of its trains travel on ********* National’s lines and would not be affected by the lockout. It canceled service, however, on a single route that carries about 6,000 passengers a day.

In British Columbia, commuter rail service is suspended on a line that runs to and from the

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on Vancouver’s waterfront. TransLink, its operator, estimates that the route carries 3,000 passengers on weekdays.

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