Two Canadian railroads have done exactly what they threatened to do yesterday (my post here) in the face of a looming simultaneous railway strike - lock their workers out before the strike deadline.

Channeling Mills Lane in Celebrity Deathmatch, owners of the Canadian National (CN) and Canadian Pacific Kansas City (CPKC) have basically said to the unions...

As of a tad before midnight last night, negotiations between the companies and the Teamsters handling both groups of employees broke down, and it was over. It's not a pretty picture this morning.

In a first for Canada, freight traffic on its two largest railways has simultaneously ground to a halt, threatening to upend supply chains trying to move forward from pandemic-related disruptions and a port strike last year.

In the culmination of months of increasingly bitter negotiations, Canadian National Railway Co. (CN) and Canadian Pacific Kansas City Ltd. (CPKC) locked out 9,300 engineers, conductors and yard workers after the parties failed to agree on a new contract before the midnight deadline.

The impasse also affects tens of thousands of commuters in Toronto, Montreal and Vancouver, whose lines run on CPKC-owned tracks. Without traffic controllers to dispatch them, passenger trains cannot run on those rails.

I believe this is what's known in the game as "playing hardball."

We don't see it here very often anymore.

For their part, the Teamsters are all about setting work parameters.

...The union contends CPKC is seeking contract concessions that would make it harder for employees to predict when they would be called to work, “creating a fatigue-related safety risk,” that the railroad is attempting to undermine provisions of the Canada Labour Code, and that it seeks to change work rules relating to workers being held away from home.

...Boucher, the TCRC president, responded to the notification by saying the railroad “is demanding concessions that would drag working conditions back to another era.” The union claimed the company is demanding to extend work days in provinces west of Ontario, “creating a fatigue-related safety risk,” and wants to impose a forced-relocation policy.

“The biggest sticking points are company demands, not union proposals,” Boucher said. “If a work stoppage occurs, blame will rest squarely on CN.”

From a purely financial aspect, there's a lot of money on the table right now. According to the CBC, the rail companies "haul a combined $1B in goods each day," but the interruption is international in scope...

...Affected industries include agriculture, mining, energy, retail, automaking and construction. U.S. railways have also had to turn away Canada-bound shipments.

Shippers south of the border also rely on Canada's two main railways, whose tracks run to the Gulf of Mexico and, in CPKC's case, to several Mexican ports.

...affecting a tremendous number of industries on both sides of the Canadian border.

Price of the brick is going up:

Canada's top two railroads locked out +9,000 unionized workers, triggering an unprecedented rail stoppage that could cause billions of dollars worth of economic damage and roil North American supply chains

Canadian National Railway & Canadian… pic.twitter.com/XTlWC7s0y6

— Prodigal (@ProdigalThe3rd) August 22, 2024

...Canadian National Railway & Canadian Pacific Kansas City rail stoppage would halt shipments of Canadian fertilizer, Canadian crops, Canadian coal, US spring wheat shipments to West Coast, US corn to Canada, etc. 

US DOT: Rail transport accounted for 14% of total bilateral trade of $382.4B in the first half os 2024 

US exported $28.2B of agricultural products last year to Canada (#3 Market); US imported $40.1B of Canadian agricultural products last year 

Canada is the world's top exporter of canola & potash fertilizer, as well as the No. 3 wheat exporter. 85% of the 13 million metric tons of US potash imports last year came from Canada, nearly all of which crossed by rail. Railways move an average of 69,000 tons of fertilizer product per day, equivalent to four to five trains 

Stoppage estimated to cost over +$251M per day. Fertilizer sector would lose +$40-$46M per day  

Canadian Meat Council and Canadian Pork Council said some processing plants expect to lose up to $2.2M a week. Facilities would be forced to shut down within 7-10 days of a rail stoppage.

Besides the obvious supply chain interruptions and, as we're in harvest season for many agricultural products that transit the border by rail, worries about spoilage losses and missing overseas shipping deadlines begin to pile up, the additional cost of trying to take up some of the slack by moving it to trucks is pretty significant. That's going to make its way to the consumer, particularly in a NetZero Kool-Aid country like Canada with its carbon taxes on fuel.

...Roughly 70 per cent of Saskatchewan’s imports are transported by rail with the remaining 30 per cent moved by truck.

“Our economic advantages, which are our exports … the trucking industry is proud to be part of that and move it,” STA executive director Susan Ewart said. “I don’t think that (truck drivers) can do it all alone.”

...Using trucks as an interim alternative to rail road shipments means the cost of goods will increase significantly, and Ewart believes the bill will fall to the public.

“On average, one truck per year is an extra $20,000 in fuel costs based on the carbon tax,” Ewart said. “That’s a lot of money. Those costs get ultimately passed to the end user or the consumer to pay for that.”

As of late yesterday, logistics experts were warning that a Canadian freight interruption would 'paralyze' ports besides causing trucking rates to skyrocket.

...“If the railroad starts locking out workers this week and there is a subsequent strike, operations will grind to a halt and everything will have to move to the road for both domestic and international containerized freight,” said Paul Brashier, vice president of global supply chain, ITS Logistics, based in Reno, Nevada, in a statement. “When/if this happens, it will drive [trucking] rates through the roof overnight, if capacity can be obtained at all.”

In its August U.S. Port/Rail Ramp Freight Index, ITS rated as “severe” port container and dray operations throughout the west coast of North America. It offered the same forecast for ocean/domestic rail ramp operations throughout the U.S.

...“Both railroads simultaneously being out of commission would paralyze the ports and put instant pressure on trucking,” said Scott Shannon, vice president of Canada for C.H. Robinson Worldwide, headquartered in Eden Prairie, Minnesota. “Railroads are like an outdoor conveyor belt that never stops running. They’re designed to operate 24/7, not stop and start, so they can’t just flip a switch at midnight. They need to be finished shutting down at midnight [Wednesday].” 

Shippers who had cargo being diverted to U.S. ports in anticipation of the strike, as some have been from as far back as the first strike vote in May, now also have to play a delicate game of catch-up chicken. Those ports have already seen increased traffic, with big importers bringing in extra ahead of a potential US East Coast/Gulfcoast dockworker strike that is looming on the horizon as if anything else was needed to throw matters into further chaos. Smaller shipments, like Brother Bingley's coffee, are already being squeezed out when Walmart or the like want to bulk up on orders "just in case." There's only so much room on any given boat.

Concern is mounting over the impact of looming US east and Gulf coast port strikes on the nation’s airfreight, with e-commerce already hoovering-up capacity as peak season nears.

As reported in The Loadstar last week, the International Longshoremen’s Association (ILA) will finalise contract demands and prep US east and Gulf coast port members for a 1 October strike, should agreement not be reached with employer group the United States Maritime Alliance.

That timing has left cargo owners and their partners building-in contingencies for the strikes increasingly worried over the viability of the obvious solution, airfreight.

Nothing like living on the edge to keep the blood pumping.

US importers of Europe-sourced goods are facing an autumn of disruption with a possible rail shutdown potentially snarling Canada’s gateway ports to North America later this week and a dockworker strike at marine terminals along the US East and Gulf coasts looking ever more likely at the end of September.

Just as the Trudeau government has been asleep on the rails, and the Biden administration didn't wake up until they heard the whistle at their bedroom door two years ago, you well might be asking yourself, "Where, oh, where is...say...the Secretary of Transportation?"

This is a legitimate question for any other administration during any time of potential crisis.

But it's not now.

Because the Biden-HARRIS administration hasn't been legit from day one, and that SecTrans?

According to the introduction at the DNC last night, they confirmed what we always knew - 

Why was Pete Buttigieg introduced as the former South Bend Indiana mayor instead of the Biden-Harris Secretary of Transportation?

Is EVERYONE trying to make us forget they're members of that administration that destroyed the country & economy, and distance themselves from it? 🤷‍♂️

— ⭐️The FJC⭐️ (@The_FJC) August 22, 2024

- that we've never had a real one.

Why wouldn't they introduce Mayor Pete as Secretary of Transportation?

— Margot Cleveland (@ProfMJCleveland) August 22, 2024

A rail strike this morning, thirty-nine days to a multi-coast port strike at the end of September, and all we've got to count on is an "administration" in the middle of a collective vanishing act.

Thanks, 81M/LOL voters.

Stay frickin' home this time, would ya?