Why CP Rail may lock out its workers and what it means for Canada’s supply chain

A labour dispute at CP Rail is threatening to further cripple the flow of goods at a time when supply chains are already strained due to the COVID-19 pandemic and Russia’s invasion in Ukraine.

Canadian Pacific Railway Ltd. issued a 72-hour notice on Wednesday to the Teamsters Canada Rail Conference, planning to lock out almost 3,000 employees if the union and the company are unable to come to a negotiated settlement or agree to binding arbitration.

The two sides are at odds over 26 outstanding issues, including wages, benefits and pensions.

On Thursday, the Calgary-based railway said it had received strike notice from the union representing its engineers, conductors and other train employees in the latest escalation of the labour dispute that could result in a potential nation-wide work stoppage as soon as early Sunday morning.

However, the disruption to Canada’s freight capacity could still be avoided, as both CP Rail and the union say they’re committed to negotiating right up to the deadline.

Canadian business organizations and industry experts are calling on Ottawa to prevent a potential work stoppage, saying it could further hamper trade recovery from COVID-19 restrictions and supply chain problems.

IMPACT ON CANADIANS

Farm groups have warned any delay on the rail lines could lead to production cuts that would affect everything from shipments of fertilizer and other inputs during spring seeding season to deliveries of emergency livestock feed to drought-affected parts of the Prairies.

“At a time where there is significant global disruptions in the flow of goods, this labour disruption would directly damage Canada’s capacity to act as reliable source agricultural products to global consumers,” the Canadian Federation of Agriculture said Thursday in a news release.

“Disruptions such as this can reverberate and have consequences throughout the entire food supply chain.”

If there is no rail capacity to transport goods, experts say the work stoppage would lead to increased prices, especially at the grocery store.

“Make no mistake, this is a labour dispute the world cannot afford,” Sylvain Charlebois, Dalhousie University professor of food distribution and policy, told CTV National News.

As Canada’s economy grapples with inflation, supply chain issues brought on by the COVID-19 pandemic have already driven up the cost of food and other household items. Now, Russia’s invasion of Ukraine is threatening the worldwide supply of wheat and adding to increased gas prices at the pumps.

Charlebois said if the work stoppage at CP hinders Canada’s rail movement for long enough, Canadians won’t just see increased prices, but there will be product shortages.

“We could actually see empty shelves. We could see some grocers struggle to get products to feed Canadians,” he said.

Retail expert Heather Thomson told CTV National News that impact of a potential rail halt could be far-reaching.

“This could cause even higher inflation, longer delays. This could be a big, big hit to the Canadian economy,” she said.

Thomson added that Canadian consumers should brace for the impact, and adjust their budgets accordingly.