Canada-wide freight rail stoppage looms this week as two firms issue lockout notices

By Promit Mukherjee

OTTAWA (Reuters) -Canada's freight rail network could come to a grinding halt this week, inflicting a huge economic toll after the country's two largest railroad operators on Sunday issued lockout notices to the Teamsters union that represents nearly 10,000 workers.

Failing last-minute deals, both Canadian National Railway (TSX:CNR ) (CN) and Canadian Pacific (NYSE:CP ) Kansas City (CPKC) plan to lock out workers from the early hours of Thursday.

It marks the first time that the country has faced a simultaneous labor stoppage at the railroad firms as they normally negotiate their labor agreements in alternate years.

The stoppages could cripple the shipment of food grains, beans, potash, coal and timber which form a large part of Canada's exports, while also impacting shipments ranging from petroleum products to chemicals and cars.

In addition to billions of dollars of economic damage, the stoppages could disrupt rail trade across the North American continent.

"Unless there is an immediate and definite resolution to the labour conflict, CN will have no choice but to continue the phased and progressive shutdown of its network which would culminate in a lockout," CN said in a statement.

"Despite negotiations over the weekend, no meaningful progress has occurred, and the parties remain very far apart," it said.

The Teamsters union argues CN wants to implement a forced relocation provision which would see workers ordered to move across Canada for months at a time to fill labor shortages.

CN says it has made four offers this year on wages, rest, and labor availability while remaining fully compliant with government-mandated rules overseeing duty and rest periods.

The dispute with CPKC centers on safety issues with the union arguing the firm wants "to gut the collective agreement of all safety-critical fatigue provisions", meaning crews will be forced to stay awake longer, boosting the risk of accidents.

CPKC says its offer maintains the status quo for all work rules, "fully complies with new regulatory requirements for rest and does not in any way compromise safety."

The Teamsters, which represents yard workers, rail traffic controllers, locomotive engineers and conductors, earlier on Sunday issued a 72-hour strike notice to CPKC ahead of the company's lockout notice.

It also said in a separate statement to members that the lockout notice issued by CN should be treated "as if we were on strike."

"We're serving strike notice to defend the rights and safety of our members," Paul Boucher, president of the Teamsters Canada Rail Conference said in the statement.



Both CN and CPKC have said their networks outside of Canada will continue to operate but the stoppages could have ripple effects. The two Canadian rail operators' networks connect with several key U.S. rail and shipping hubs such as Chicago, New Orleans, Minneapolis and Memphis. CPKC's network also extends further south connecting with ports on both the east and west coasts of Mexico.

The federal Liberal government has so far dismissed pleas from business groups to intervene, saying it wants the companies and the unions to sort out their differences via negotiations.

Source: Investing.com