**Normal Operations May Take Over a Week to Resume**
The two largest Canadian railroads could take a week or longer to fully recover from the shutdown that briefly halted billions in freight, including cross-border trade with the United States.
Canadian National (CN) and Canadian Pacific Kansas City (CPKC) saw most of their unionized workers return to their jobs on Monday, just days after the Canada Industrial Relations Board supported Labor Minister Steven MacKinnon’s decision to end the lockout imposed by the rail carriers and mandated binding arbitration to resolve the ongoing contract dispute with the Teamsters Canada Rail Conference.
Although train operations were suspended for less than 24 hours, CN and CPKC had already embargoed shipments for over a week leading up to the lockout. This disruption interrupted supply chains for numerous customers, some of whom were forced to cut production shifts, according to reports. Imports and exports via intermodal containers were also affected, with some terminals struggling to manage an influx of import traffic during the peak trans-Pacific shipping season.
In June, rail-based trade between Canada and the U.S. reached $9.1 billion, accounting for approximately 14% of total trade between the two nations, as reported by the Bureau of Transportation Statistics.
“Based on experiences from previous rail strikes in Canada, we anticipate it will take up to a week for each railroad to be fully operational and running smoothly again,” stated Scott Shannon, vice president for Canada at C.H. Robinson. “It will take considerably longer to address the backlog of shipments.”
The shutdown is estimated to represent a small percentage of the $52 billion in total freight moved daily, with railroads responsible for about 28% of that on a ton-mile basis. Shippers reliant on rail for containerized intermodal shipments are closely monitoring the western Canadian gateways of Vancouver and Prince Rupert in British Columbia. Logistics service providers are coordinating with customers to prevent potential disruptions, especially in light of recent longshore labor disputes.
Before the lockout, ITS Logistics was actively “collaborating with shippers to verify that their incoming ocean container shipments at U.S. rail ramps did not include Canadian rail legs,” according to Paul Brashier, vice president of global supply chain for ITS Logistics.
Brashier noted that a longshore strike at Canadian western ports in 2023 impacted an estimated $800 million worth of cargo daily. For months, ITS has warned of potential port disruptions in its Port/Rail Index, marking it as a top concern for 2024. Two-thirds of cargo at the Port of Vancouver—90% of which comprises international exports—depend on rail transport, according to the Vancouver Fraser Port Authority.
“With CN and CPKC rail services resuming at the Port of Vancouver this week, our focus now shifts to implementing a recovery plan alongside our industry partners, including shipping lines, rail companies, and marine terminals,” stated the VFPA. “This includes prioritizing anchorages to balance the needs of various business sectors and commodities as we work to restore full port operations and efficiency.” The port is also closely monitoring operations to support time-sensitive cargo movements and ensure fair distribution of anchorages and other shared resources.
As the harvest for western Canadian wheat—a significant export—unfolds, executives from both sides of the border are awaiting further updates.
“While we are optimistic about the order to resume operations and move forward with arbitration, it remains too early for our members in the U.S. (and Canadian) agriculture and forest products exporting sectors to celebrate,” remarked Peter Friedmann, executive director of the Agriculture Transportation Coalition based in Washington. “Some labor groups are contesting the Canadian government’s arbitration order, and anyone familiar with transportation labor relations knows to be cautious. This applies to all freight modalities, including those critical to agriculture—rail, truck, and marine terminals. This week, we will continue our briefings with the Agriculture Transportation Coalition to ensure a realistic understanding of when and how this situation may ultimately be resolved.”
This story was updated on August 26 at 6:36 p.m. ET with comments from the Vancouver Fraser Port Authority.
