Inside Logistics

Industry calls for government action on CP strike

Associations anticipate pain, ask for help


May 23, 2012
by Carolyn Gruske

OTTAWA, Ontario: Canadian industry is starting to react to the hours-old strike at CP Rail.

As reported earlier, the Mining Association of Canada (MAC) has already called on the federal government to step-in and “resolve the labour disruption”.

The reason the the association took this step is because its members are already suffering negative consequences from the strike by the Teamsters Canada Rail Conference (TCRC) which has cause freight shipments to be halted.

“We have heard from some of our members that it is having a direct and immediate impact on their ability to intake supplies, to continue operations and also to deliver their products to market,” said MAC vice-president of governmental relations Paul Hebert.

Even though the union gave CP its strike notice in April, Hebert says that the advance warning wasn’t of much help the mining industry.

“In a lot of cases alternatives aren’t available, so there wasn’t very much the members could do to prepare for this, even though they had advanced notice,” he said. “On the supply side, they could do things to mitigate the situation, but for the delivery of product there was very little they could do.”

Like the Mining Association’s members, members of the Canadian Manufacturers and Exporters (CME) trade association found they had limited options.

“It’s not as simple as switching to a different mode of transportation or stocking up ahead of time. We’d like to think it’s that simple, but in terms of cash on hand or delivery schedules, it all has an impact. We would like to think that we could see this coming and we could anticipate it, but there was not a lot of time in the production cycle to prepare and adjust. This is still having a significant impact and will continue to have a significant impact until it’s resolved,” said Derek Lothian, CME national communications manager.

Since the strike is just in its first day—it began at 12:01 AM—Lothian said it’s a bit too early to feel its effects, but they will be felt very quickly.

“The feedback that we’ve received thus far has been that there hasn’t been an immediate disruption, however what we’ve been hearing is it is expected to happen very quickly. In some cases it can be as soon as today.

“There has also been a lot of concern about impacts on the supply chains to the United States and how the disruption of rail service affects such a highly integrated supply chain between Canada and the United States.”

Like MAC, CME also hopes the government will take action.

“We are encouraging immediate resumption and a resolution as quickly as possible to this. We are asking that the labour minister intervene and definitely facilitate a resumption of service.”

Despite this common call-to-action, not all of the countries business and industrial associations are aboard. The Canadian Steel Producers Association (CSPA), for example is still encouraging the disputing parties to come together to find a resolution.

“CSPA is monitoring the situation with its member firms. Rail plays an important role in steel producers receiving their input raw material and in getting their products to customers in a timely manner. Any disruption in service is therefore a concern to us. We hope that both sides to the dispute are able to arrive at a mutually acceptable agreement that will restore rail freight services provided by CP,” said Ron Kane, director of trade and economics for the CSPA.

For Kane, monitoring the situation involves “canvassing members to gauge the extent of any immediate impacts and what contingency plans they have to receive or ship.”

Labour minister Lisa Raitt suggested that businesses turn to alternative methods, including trucks, to ship their goods, but Lothian said that that isn’t always a viable alternative.

“Rail service is definitely one important element in the transportation system in Canada. In terms of supply chains, it’s a core element. You can’t simply remove one of those elements and switch to a different one, so to speak, particularly in certain sectors of the economy and certain sectors in Canada where logistics are at capacity. Look at the resource sector, for example. It is a significant issue outstanding for sure.”

Raitt also suggested that CN might be able to handle extra freight to compensate, but that doesn’t seem likely.

CN spokesperson Mark Hallman said the rail company has no immediate plans to increase its schedule to accommodate CP customers.

“We are focused on serving CN customers and ensuring the fluidity of our network,” he said.

On the two directional running zones CN shares with CP—one between Kamloops, British Columbia and Vancouver, and one in northern Ontario south of Sudbury—”where CP is not dispatching, CN will continue service along those lines and will continue to focus on our customers.”

For companies that rely on all components of the Canadian rail system to keep goods coming in and products going out, strikes are something that need to be reconsidered, said Hebert.

“I think that essential services like these that are integral to the functioning of major components of the economy should perhaps be subject to alternate modes of resolution that preclude work stoppage.

“It’s not to say there isn’t value in collective bargaining, but maybe something in the way of binding arbitration might be preferable if it can lead to the avoidance of work stoppages.”

“Our concern is over any prolonged stoppage of shipment. That would have a profound effect on the industry and on the economy as a whole.”

Although there is a lot of discussion about the economic affects a “prolonged” strike might have, there is little agreement about just what defines prolonged.

CITA president Bob Ballantyne said rail strikes tend to be settled pretty quickly but that a prolonged strike would definitely hurt the economy, especially since CP accounts for approximately 40 percent of the rail freight in Canada.

“I would say anything more than a week would start to bite pretty hard,” he said.

“Rail really has an impact on so many industries.”