Leaders of Canadian food industry groups are calling for a resolution to potential strike action that could impact Canada’s two major railways.
As of Thursday (Aug. 22), more than 9,000 union workers from The Teamsters Canada Rail Conference could be off the job or locked out, potentially disrupting supply chains crucial to multiple industries.
“It’s tragic,” says Michael Graydon, CEO of Food, Health & Consumer Products of Canada (FHCP), who spoke with Grocery Business. “It is going to have a significant impact. When you look at the majority of goods shipped to Western Canada and Atlanta going by rail, almost 40 per cent of the manufacturing capacity is shipped to those regions, and it will be impacted because they’re there is no truck capacity to compensate for the two rail lines going down at the same time. So this is probably $40 million a week, I would suggest, in regards to lost sales, and you’re going to see empty shelves, delays and deliveries to retailers.”
He adds that for every week the rail strike lasts, retailers could take five to six weeks to recover.
“Currently, many manufacturers have shipped extra inventory to Western Canada, but only about one or two weeks’ worth of stock is available. If the strike drags on, the impact will be severe, with significant cost implications for manufacturers,” says Graydon.
He adds that while the trucking industry is trying to fill the gap, the impact of the trail strike is the equivalent of 20,000 truckloads per week. “There simply isn’t enough truck capacity to handle that volume,” he says.
Billions of dollars in goods at stake
The Teamsters Canada Rail Conference, representing thousands of workers at Canadian Pacific Kansas City Ltd. (CPKC), issued a 72-hour strike notice to the railway last week. The union warns that workers will go on strike if no agreement is reached by 12:01 a.m. Eastern time on Thursday.
In response, CN Rail has announced its intention to lock out workers at the same time unless a deal or binding arbitration is secured.
CPKC had already served its own lockout notice for Thursday. The Railway Association of Canada estimates that rail lines carry more than $1 billion worth of goods each day.
“I’m a strong supporter of collective bargaining and agreements, but we need to recognize that when monopolies are allowed in certain sectors, we need a different approach to labour disputes. We can’t afford to be held hostage in this environment. It’s ridiculous that the new board didn’t deem rail service as essential. I can’t believe they reached that conclusion, given the huge impact on consumers. The government doesn’t seem interested in intervening; they want the bargaining process to play out. However, I think binding arbitration would be a reasonable solution,” Graydon says.
The Canadian Produce Marketing Association (CPMA) also expressed concern about the potential strike action.
“If this occurs, it will likely create significant turmoil across the logistics industry, with trucking lines facing heightened demand, reduced availability, and potentially increased costs. This situation could have a cascading effect on our sector, intensifying pressure on our supply chains due to the added strain on trucking logistics,” the organization says in an email.
As a result, the CPMA is urging members to solidify their logistics plans and prepare for potential disruptions in the event of a rail lockout.
