By Promit Mukherjee
OTTAWA (Reuters) – Canadian Pacific (NYSE:) Kansas City said Saturday it would suspend all new rail shipments from Canada, and all new U.S. shipments bound for Canada, starting Tuesday if talks with the Canadian union do not make progress.
North American industry groups and shippers are bracing for an unprecedented simultaneous shutdown at both of Canada’s major rail companies, which could disrupt the movement of raw materials such as coal, potash and grains, and of manufactured goods ranging from cars to chemicals.
The Teamsters union’s talks with Canadian National Railway (TSX:) and CPKC have stalled, and the rail companies say they will begin locking out workers starting August 22 if they fail to reach a labor agreement. The union says it is prepared to call a strike before that date.
In an update on Saturday, CPKC said it is “taking prudent steps to prepare for a possible disruption to rail service next week.” It said negotiations will continue on Sunday.
Earlier this week, CPKC had already started halting new shipments of hazardous chemicals or dangerous goods.
In addition, CN Rail said on Friday that “no meaningful progress has been made at the negotiating table,” adding that it had also begun a phased and gradual closure of its network.
CN Rail said this will result in a lockout unless a deal is reached or binding arbitration is imposed.
Earlier this week, Canadian Labor Minister Steven MacKinnon rejected a call from CN Rail to initiate binding arbitration between the two sides, calling on the company and unions to negotiate in good faith.
Industry groups warn that a simultaneous work stoppage at both railroads could cause billions of dollars in economic damage.
It could also affect trade with both the US and Mexico. The CN and CPKC networks connect major U.S. rail and shipping hubs such as Chicago, New Orleans, Minneapolis and Memphis. CPKC’s network also extends further south to ports on the east and west coasts of Mexico.
