Industry braces for impact as CN lockout deadline nears

(Photo courtesy CN)

Toronto | Reuters –– A looming lockout at Canada’s biggest railway threatens to delay imports from Asia and may compound a U.S. West Coast port logjam unless last-ditch contract talks succeed Monday.

Canadian National Railway (CN) and Unifor, the union representing its 4,800 mechanical, clerical and trucking workers in Canada, resumed talks on Monday, hours before CN’s 11 p.m. ET Monday deadline to lock the workers out if no deal is reached.

CN declined to comment on the talks on Monday. The two main unresolved issues are pay and benefits, said Unifor rail director Brian Stevens.

A lockout could spur disruptions of shipments of grain and other commodities and goods across Canada and impede operations at the country’s biggest port, Vancouver. It would have threatened commuter train service in the Montreal area, but the two sides struck a deal to keep those trains running.

Ontario-based automakers such as Ford, Honda and General Motors and crude by rail shippers such as Keyera Corp. are monitoring the situation.

On the Pacific Coast, a lockout would hit the Port of Prince Rupert as well as Port Metro Vancouver.

Prince Rupert is only served by CN and “practically all” of its cargo moves via rail on about 20 trains a day, a port spokesman said. Roughly 50-70 per cent of the port’s containers are bound for the U.S.

“We’re concerned that any issue would impact our terminals’ ongoing ability to operate and fulfill our duty to support Canadian trade,” the spokesman wrote via email.

Port Metro Vancouver said a disruption would affect cargo movement to its terminals and have “potential long-term effects.”

U.S. West Coast ports only resumed full operations over the weekend after a tentative labor deal late Friday ended a dispute that has caused months of disruption to trade, but port officials said it would take six to eight weeks to clear a backlog of containers.

In Canada, even a short disruption could have a major impact on retailers as many keep only minimal inventory, according to the Retail Council of Canada.

“We are calling on the Canadian government to work with the parties, whether it’s through binding arbitration or other mechanisms, to bring this potential disruption to a conclusion before it indeed becomes a disruption,” said Dave Wilkes, the council’s senior vice-president.

“Bad things”

A lockout would have a direct effect on imports as Unifor truck drivers haul some containers from ports to CN’s rail lines and union members load them onto rail cars, Unifor said

The federal Conservative government said it would not introduce back-to-work legislation on Monday. In 2012, the government ended a nine-day Canadian Pacific Railway (CP) strike with such legislation.

“They’ve been meticulous about trying to avoid any kind of work stoppage,” said George Smith, a labor relations expert at Queen’s University and a former Air Canada executive. “My guess is the minister will be nosing around somewhere, telling somebody bad things are going to happen if they don’t get a deal.”

Federal Labour Minister Kellie Leitch is expected to monitor talks at a hotel in Gatineau, Que. on Monday night, a Unifor official said.

Canada’s two major railways have had fraught relationships with their unions. They have pushed hard to bring down operating costs and move freight more efficiently, putting pressure on unions to relax strict work rules.

Last week, with back-to-work legislation ready for introduction in Parliament, train crews at CP halted a one-day strike after the two sides agreed to seek arbitration on a new contract. It was the second strike at Canada’s No. 2 railway in three years.

CN, which carried about 5.6 million carloads of freight in 2014, said it has a contingency plan in the event of a lockout and that trained management will fill in for Unifor members to maintain service as much as possible.

Unifor president Jerry Dias said some progress has been made in negotiations. “Let’s just say I’m feeling a little better today than I did yesterday, but we still have a lot of work to do,” he told Reuters in Gatineau.

CN said late Sunday that while it would return to the bargaining table, it believes binding arbitration may be the best way to resolve the dispute.

Separately on Monday, Canada’s transportation safety watchdog released an update on its investigation into a recent CN derailment and said it showed the need for tougher rail car standards.

— Allison Martell reports on the transport sector for Reuters from Toronto. Additional reporting for Reuters by Julie Gordon in Vancouver, Solarina Ho in Toronto, Nia Williams in Calgary, Randall Palmer in Ottawa and Mike De Souza in Gatineau.

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