Canada tells rail companies, union to work harder to avert crippling stoppage

By David Ljunggren and Promit Mukherjee

OTTAWA (Reuters) -The Canadian government, trying to head off a crippling transport stoppage, on Monday told the country's two main railway companies and the Teamsters union to work harder to reach labor deals.

Unless agreements are reached, both Canadian National Railway (TSX:CNR ) and Canadian Pacific (NYSE:CP ) Kansas City will shut down at the same time early on Thursday for the first time in history.

Canada - the world's second-largest country by territory - relies heavily on rail to ship grain, fertilizer and commodities, and the country's main business lobby group estimates losses would hit C$1 billion ($733 million) a day during a stoppage.

Federal mediators are working with the companies and the union, but those involved in the discussion say little progress has been made. The union says CN Rail and CPKC want to dilute safety provisions, a charge the companies deny.

In a post on the X social network, federal Labour Minister Steve MacKinnon said the effects of the talks would be borne by all Canadians.

"The parties must do the hard work necessary to reach agreements at the bargaining table and prevent a full work stoppage," he said.

MacKinnon has the power to force the union and railway companies into binding arbitration, but has so far said he wants them to sort out their differences at the negotiating table.

Labor talks started early this year but progress has been slow, with both the union and the companies accusing each other of bad faith.

CN Rail and CPKC have already stopped accepting shipments of hazardous goods and are winding down their operations.

Maersk said on Monday it would stop accepting some Canada-bound shipments.

Canada is a major agricultural producer, and farmers will start bringing in their harvests in August and September.

The Quorum Corporation, which monitors grain handling and transportation, said daily volumes in early September would increase to 138,000 tonnes with a value of around C$75 million.

"After a period of time, sales will be lost and the value of Canada's grain will decrease ... the largest concern is a further degradation of Canada's reliability as a supplier, which is already suffering due to past labor disruptions," Quorum President Mark Hemmes said in an emailed statement.

Concerns are rising that container shipments coming into and departing Pacific Northwest ports and Canadian Pacific ports will be halted as port workers' unions have indicated they would not handle cargo slated for the Canadian railroads.

Refrigerated containers with meat and some highly perishable produce are of particular concern because delays would likely mean spoilage.



Shippers of those goods have started holding back containers, said Peter Friedmann, executive director of the Agriculture Transportation Coalition.

($1 = 1.3641 Canadian dollars)

Source: Investing.com