‘Unacceptable’: Business groups say rail stoppage would hit grain, groceries and more

An impending labour stoppage on Canada’s two national railways has riled industry groups who worry consumers and businesses will be hit hard if goods ranging from grains to french fries to petrochemicals can’t be moved.
Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. have already begun a phased shutdown of their networks as the deadline approaches to come to an agreement with the Teamsters Canada Rail Conference for a new labour contract.
Unless deals are reached, the companies plan to lock out workers early Thursday and the union says it’s prepared to call a strike that day.
Both railways move $1 billion worth of goods per day. Grain, fertilizer and lumber would be among the products most affected, say industry groups.
“We are right on the edge of harvest season, and harvest is food, and food is perishable. So any kind of a delay or even a backlog could really seriously impact this year’s harvest season,” Scott Crockatt, vice-president with the Business Council of Alberta, said in an interview.
“I think if there is a real stoppage on both national rail lines for the first time ever, it is going to, frankly, affect basically every area of our economy.”
Crockatt said some products, such as fungicide used for harvesting, have already stopped moving.
Perishable grocery store items like meat, french fries and bananas are also no longer being accepted by the railway companies, said Michael Graydon, the CEO of Food, Health and Consumer Products of Canada, an industry group.
“They certainly don’t want cars full of rotting fruit and vegetables and frozen foods,” Graydon said.
He said a shortage of those goods is possible.
“The domestic supply of fruits and vegetables is pretty good this time of year, but not enough to be able to satisfy the consumer demand,” Graydon said.
“You’ve got a lot of fruits and vegetables coming up from the United States and Mexico. They come by a train. And so those products aren’t making their way up to the Canadian marketplace.”
Graydon said products may end up getting shipped by truck, which is more expensive than rail. There’s also a shortage of truckers, he added.
“You’re going to see incremental costs on products that you get out there,” he said.
Manufacturers may also have to slow production because they might not receive larger supplies of raw materials to make their products.
“The disruptions will be long term,” Graydon said.
“For every week of the (stoppage), we estimate it’ll take five to six weeks to be able to get back to a normalized supply chain.”
Kurt Niquidet, the BC Council of Forest Industries vice president and chief economist, said a disruption may force mills to cut production, which would threaten jobs and economic activity.
“The broader economic fallout on British Columbia could be devastating, disrupting the flow of goods, triggering job losses, and creating profound uncertainty in the rural communities that are the backbone of our sector,” Niquidet said in a statement.
“Natural resources are the lifeblood of Canada’s economy, and our railways are the arteries that keep this lifeblood flowing.”
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 fertilizer, diesel, propane and processed chemicals move by rail.
“I don’t think anybody fully comprehends the knock-on effects that are going to happen here, because it’s going to be throughout the economy,” he said.
Business groups wrote a letter Wednesday urging the federal government to make sure rail services continue.
They say Ottawa can refer the dispute for binding arbitration, which would prohibit a strike or lockout pending a resolution. The federal government could also use back-to-work legislation, the groups added.
Deborah Yedlin, president of the Calgary Chamber of Commerce, said Canada’s reputation as a reliable trading partner is at risk.
“Anything that would cause our economy to grind to a halt is unacceptable,” she said.
Graydon said Ottawa needs to get all parties to the table.
“It is an embarrassment to this country,” he said.
“The U.S. depends very significantly on Canada as a trading partner, and those relationships are already strained. They’re going to get even further strained through this.”
This report by The Canadian Press was first published Aug. 21, 2024.
— With files from Lisa Johnson in Edmonton.