‘Unacceptable’: Business groups say rail shutdown will hit grain, groceries and more

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Work stoppages on Canada’s two national railways have left industry groups worried that consumers and businesses will be hit hard if goods from grains to French fries to petrochemicals cannot be moved.

Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. has started a gradual shutdown of the network as a deadline to come to an agreement with the Teamsters Canada Rail Conference for a new labor contract.

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If no deal is reached, the company plans to lock out workers early Thursday and the union said it was prepared to call a strike that day.

Both railroads move $1 billion worth of goods each day. Grain, fertilizer and timber will be among the most affected products, industry groups said.

“We are at the end of the harvest season, and the harvest is food, and food is perishable. So, any delay or even a backlog could affect the harvest season this year,” said Scott Crockatt, vice-president of the Alberta Business Council, in an interview.

“I think if there is a real stoppage on both national rail lines for the first time, it will, frankly, affect every area of ​​our economy.”

Crockatt said some products, such as fungicides used on crops, have been discontinued.

Perishable grocery items like meat, French fries and bananas are also no longer accepted by rail companies, said Michael Graydon, CEO of Food, Health and Consumer Products Canada, an industry group.

“They definitely don’t want a car full of fruits and vegetables and frozen foods,” Graydon said.

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He said there was a shortage of the item.

“Domestic supply of fruits and vegetables is quite good this year, but not enough to meet consumer demand,” Graydon said.

“You get a lot of fruits and vegetables that come from the United States and Mexico. They come by train. So the products can’t reach the Canadian market.

Graydon said products can be shipped by truck, which is more expensive than rail. There is also a shortage of trucks, he added.

“You’re going to see additional costs in the products that come out there,” he said.

Manufacturers also have to slow down their production as they may not get a larger supply of raw materials to make their products.

“The disruption is going to be long-term,” Graydon said.

“For every week (outage), we estimate it will take five to six weeks to get back to a normal supply chain.”

Mark Plamondon, executive director of Alberta’s Industrial Heartland Association, a non-profit that promotes investment in industrial processing in and near Edmonton, said 80 per cent of products from the region, including fertilizers, diesel, propane and processed chemicals go by rail.

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“I don’t think anyone knows the effect that’s going to have here, because it’s going to be throughout the economy,” he said.

Business groups wrote a letter Wednesday asking the federal government to keep train service going.

He said Ottawa could refer the dispute to binding arbitration, which would prohibit strikes or lockouts pending a resolution. The federal government could also use the labor law again, the group added.

Deborah Yedlin, president of the Calgary Chamber of Commerce, said Canada’s reputation as a reliable trading partner is at risk.

“Anything that will bring our economy to a standstill is unacceptable,” he said.

Graydon said Ottawa should get all parties to the table.

“This is a shame for this country,” he said.

“The US is very dependent on Canada as a trading partner, and that relationship is already strained. They’re going to get even more strained through this.

This report by The Canadian Press was first published on August 21, 2024.

– With files from Lisa Johnson in Edmonton.

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