Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) are imposing more freight embargoes in anticipation of a potential work stoppage. CN has announced an intermodal embargo on U.S. shipments destined for Canada starting Friday. Simultaneously, CPKC has outlined restrictions for refrigerated container movements, with the start dates varying based on the shipment’s origin.
Response to Potential Strike Action
These measures are a response to the potential strike action by members of the Teamsters Canada Rail Conference. The union’s contract with the railroads expired last year, and despite renewed talks, all parties are currently at a deadlock. If no agreement is reached, a work stoppage could occur as early as August 22.
The escalating labor conflict between Canada’s major railroad operators and the union has triggered logistics contingency planning to mitigate potential supply chain disruptions. Jason Hilsenbeck, president of LoadMatch and Drayage.com, warns that embargoes can create chaos for other freight modes.
Impact on Other Freight Modes and Supply Chains
A likely alternative for transporting domestic intermodal containers by rail will be over-the-road trucking, potentially causing a surge in cross-border and intra-Canada dry van rates. Hilsenbeck also suggests that rerouted ocean containers could be driving recent spikes in international container volume at ports in Washington, New York, and New Jersey.
C.H. Robinson Worldwide is prioritizing the avoidance of service disruption. Scott Shannon, VP for Canada, said the company is already handling inquiries from shippers seeking help with spot freight. However, he warns that any event causing a surge in trucking demand and sudden tightening of capacity can dramatically increase costs in the spot market.
The United States’ Surface Transportation Board is closely monitoring the potential disruption to rail networks in Canada, recognizing its potential impact on U.S. supply chains.
In light of the potential work stoppage, the rail industry is on edge, bracing for further embargoes and disruptions that could reverberate through North American supply chains. The coming days will be critical as negotiations continue, and the industry watches for any signs of progress or setbacks.
