Industry groups call for uninterrupted rail service

by Emily Atkins

Canada’s industry associations are asking the federal government to prevent a stoppage of rail service.

With CP Rail and The Teamsters Rail Conference of Canada (TCRC) at the bargaining table, and a lockout notice issued for Sunday March 20, associations say a further disruption of rail service “would create a freight capacity crisis that would have a profound impact on rail shippers throughout the broader Canadian economy”.

A group of 30 associations (click here for a list of participating associations) sent a letter to the federal government in which they said economic recovery after the pandemic, extreme weather, inflationary pressures, labour shortages and global supply chain disruptions would be threatened by a work stoppage at CP.

“Canada’s rail network is a key driver of economic growth for many of the country’s major industries. It is also crucial for exporting Canadian goods,” the letter stated.

The letter went on to assert that Canadian businesses would be forced to decide whether they can continue to operate in the event of a strike or lockout at CP. “The Canadian economy and our supply chains need certainty. Prolonged uncertainty would have a deep and adverse impact for all Canadians who rely on the essential rail supply chain and for the broader Canadian economy,” the associations said.

The letter stopped short of requesting the government step in to prevent a strike, requesting instead that it “do what is best for Canada’s economy and facilitate a negotiation between CP and the Teamsters Canada Rail Conference. While we support the right to collective bargaining, this issue requires the government’s full attention to preserve jobs and protect Canada’s economy.”

Critical timing for farmers

In a separate statement, Fertilizer Canada, which represents manufacturers, wholesale and retail distributors of nitrogen, phosphate, potash and sulphur fertilizers, called on CP and TCRC to commit to binding arbitration to prevent disruption of rail service. It also asked the federal government to be prepared to enact back-to-work legislation if a work stoppage takes place.

“Fertilizer is the most important input for crops and is responsible for half of the world’s current food production,” says Karen Proud, president and CEO of Fertilizer Canada.

“While we respect the collective bargaining process, Canada cannot afford another disruption to our supply chain. With 75 per cent of all fertilizer in Canada moved by rail, our members are critically dependent on rail service to move products across the country and into international markets.”

The only option

In an op-ed article, four groups – Responsible Distribution Canada, the Freight Management Association of Canada, the Chemistry Industry Association of Canada (CIAC), and the Forest Products Association of Canada – wrote that rail is often the only transportation option for their industries.

“Countless sectors vital to Canada’s economic well-being continue to rely on robust and reliable rail infrastructure to get essential products to market. This infrastructure is particularly critical in sectors like agriculture, chemistry, and forestry that operate in more rural and remote parts of the country where rail lines are often among the limited options to transport goods. In the forestry sector for example, 80 percent of the country’s mills are served by just one railway,” the article said.

“Fully $31 million worth of industrial chemical products rely on CP’s network to get to their destinations every single day and the economic impact of a work stoppage is $1 million per day per facility that is shutdown,” said Bob Masterson, president and CEO of CIAC.

“Some of those goods are also essential to core public services such as water treatment. We urge both sides to consider the far-reaching and urgent economic implications the work stoppage at CP will have on industry.”

The groups went on the say that in recent years, “transportation systems in Canada have proven to be fragile, unreliable, and under-performing. This challenges our ability to grow our businesses and is impacting customer relationships and investor confidence in Canada”.

Small business

The Canadian Federation of Independent Business (CFIB)also weighed in, saying a rail stoppage could jeopardize the recovery of small businesses across the country. CFIB said only 35 percent of businesses have returned to normal sales, while debt levels and share of businesses considering bankruptcy remain high.

CFIB’s research shows 89 percent of small businesses are affected by supply chain challenges, with retail, manufacturing, and construction businesses the hardest hit. Business owners are also seeing increased prices of their goods and services, delays in receiving shipment and an increased cost of shipping to customers.

“The timing could not be worse for our members,” the association said in a statement. “As many businesses rely heavily on rail services to send and receive their goods from Canadian and international suppliers, the work stoppage will further disrupt their operations and create more uncertainty at a time that is already challenging for many businesses.”

CFIB is asking the federal government to make sure both parties stay at the negotiation table until an agreement is reached and keep rail services fully active.