Trains from Canada’s two major freight railroads aren’t currently running, with more than 9,000 workers away from their jobs. But don’t call it a rail strike. Unlike a strike, where employees make the decision themselves to stop working, the situation with Canadian rail workers is a lock out: Railroad management were the ones who told the members of the Teamsters union that they can’t come to work.
Canadian National (CN) and Canadian Pacific Kansas City Southern (CPKC) announced on Thursday that they have locked out their workers after an impasse in contract negotiations with the union. CN and CPKC are blaming the union, saying they have negotiated in good faith and that it’s the Teamsters who failed to respond to offers. The Teamsters, however, say they’ve put forward multiple offers, “none of which were seriously considered by either company.”
With CN and CPKC locking out their workers, there are serious economic effects that will ripple not only across Canada, but also the U.S. and Mexico. The Canadian railways transport some 380 billion Canadian dollars ($277 billion USD) worth of goods and commodities every year. Every day, about $572 million in “container trade” comes into the U.S. from Canada.
CN and CPKC are the two major freight railways in Canada, and each have about 20,000 route miles of track. The railways also own a majority of those tracks, and that means more than 30,000 commuters in Vancouver, Toronto, and Montreal will be affected as well because their trains won’t be able to operate over CPKC tracks while they’re shut down.
“Throughout this process, CN and CPKC have shown themselves willing to compromise rail safety and tear families apart to earn an extra buck. The railroads don’t care about farmers, small businesses, supply chains, or their own employees,” said Paul Boucher, president, Teamsters Canada Rail Conference. “Their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy.”
Not a rail strike: Why there’s a lock out
When workers and management get into contract disputes and reach an impasse, there are two possible escalations: workers can cause a disruption by going on strike or management can lock out workers from their jobs.
The situation with Canadian rail workers is the latter. “It’s not that the union is saying, ‘We refuse to work because we need more money,” says Art Wheaton, director of labor studies at the Cornell University School of Industrial and Labor Relations. “This is the company saying, ‘You won’t agree to our demands, so we’re not going to let you work anymore.’”
That decision lets management take control, he adds. If workers were to strike, they could choose to stop certain trains, hopping around to different facilities just like the United Auto Workers did during their actions last fall. Stopping specific trains, or forcing unexpected freight issues, would have rolling effects, just like weather delays at an airport: Later flights are messed up because they’re waiting on other planes to make it to the airport at specific times.
“A strike or unpredicted work stoppage is harder for them to recover from,” Wheaton says, adding that unexpected issues from a union work stoppage can create a sort of “chaos.” With a lockout, the Canadian rail companies are basically keeping operations static. “Management is freezing everything, saying ‘we’re not going to let you disrupt us. We’ll stop it and pull the plug,’” Wheaton adds. “So it will hopefully make it easier to recover. But any strike or any lockout is always messy and unpredictable.”
The impacts are already expected to be massive and have implications for supply chains across North America. With Canadian rail workers locked out, there are now no shipments of chlorine for water treatment plans, no fertilizer for farmers, no auto-equipment deliveries—both within and outside Canada. “The supply chain has always been delicate,” Wheaton says. “A small disruption creates bigger problems down the way, and there’s nowhere near enough trucks to move the [freight].”
What are the next steps for Canadian rail workers?
When U.S. rail workers faced bargaining challenges in 2022, Congress and President Joe Biden were able to intervene. That’s because rail workers operate under a different labor law in the U.S. than other workers. The Railway Labor Act gives Congress the ability to intervene in labor disputes specifically as a way to avoid “any interruption of interstate commerce.”
U.S. rail workers were asking for paid sick leave, changes to scheduling, and general work-life-balance requests that would also improve safety. Workers said they weren’t able to schedule doctors appointments and even had to miss funerals because they couldn’t take off work. That labor dispute ended because Congress passed a tentative contract agreement into law, which Biden then signed. It didn’t quite give rail workers what they wanted, though, and Biden faced criticisms for being anti-union. The agreement that was passed gave them just one additional day off (though many U.S. rail workers now have four paid sick days after public pressure following that dispute).
Canadian rail workers are facing many of the same issues, and making the same demands. “Neither CN nor CPKC has relented on their push to weaken protections around rest periods and scheduling, increasing the risk of fatigue-related safety issues,” the Teamsters said in a statement.
In Canada, both the railways and the union could be forced into binding arbitration to resolve their labor dispute. Industry groups are calling on the government to step in, but so far the Canadian government is opting not to, and is instead asking the railroads and the union to work together to reach an agreement. Prime Minister Justin Trudeau said his government is “not taking the situation lightly.”
Canada is more labor-friendly than the U.S., with the overall union rate about three times higher. When it comes to private sector workers specifically, just 6% are unionized in the United States, versus 15% in Canada. Wheaton notes that most people in labor think the best way to solve a dispute is through the two parties negotiating, not through an outside arbitrator coming in.
If the government lets the labor dispute play out, that will have significant economic implications. “But it’s those implications and economic hardship that puts more pressure on them to solve the problem faster,” Wheaton says. Both the union and management don’t want to go months without rail, he added. And neither does the government. “The bigger the pain, the more pressure the Canadian government will force on the players to get back to the table and get this resolved.”