A strike at Canada’s railways went into effect today. In the absence of a labor agreement, both the Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) began locking out workers at midnight.

Both railroads had already started to slowdown and embargo freight earlier this week and are now closed. Approximately 2/3 of all container volumes going through the port of Vancouver move by rail. As a result, any prolonged rail work stoppage is expected to create significant backload and congestion. Moreover, this may have knock-on effects impacting US ports and rail movements.

Ocean carriers have yet to suspend services in Canada, but are preparing contingencies. There is the potential for vessel diversions from Canada to other ports; however, carriers have not announced firm details on this at this time. Canada has historically settled these disputes relatively quickly, and the carriers believe that should be a short-term event. We will be monitoring the situation closely.  

In section 107 of the Canada Labor Code, the Minister of Labor can refer the dispute to the Canada Industrial Relations Board and end any ongoing stoppage pending a resolution. Alternatively, the government can also reconvene Parliament and introduce back-to-work legislation. Pro-labor governments tend to be a little more patient with this process until the strike/lockout fallout begins to visibly impact the economy or the safety/welfare of the citizens.   

Any cargo at the Canadian rails is expected to be held where it is located until the labor dispute is resolved. However, for now, any work action would not impact port terminal workers who load cargo onto trucks or the gate operators letting drivers in and out of the terminal. For importers who have inland freight scheduled to arrive to Canadian ports in the coming days, a diversion request can be made for containers to become available for pickup at the port. Ocean carriers typically require these requests to be made at least 72 to 96 hours prior to vessel arrival to ensure containers are moved to proper location at port terminal for local pickup.

The Canadian rails provide essential support to the Canadian economy. The hope is that the work stoppage is short-lived; however, the timelines are unclear. RIM will continue to closely monitor this evolving situation and keep you updated of any pertinent updates. Please reach out to your RIM representative should you have any further questions.