Two of Canada’s largest freight railroad companies are shutting their doors on more than 9,000 members of the Teamsters union who operate the trains, according to management from the two companies.
The companies at the head of the shutdown are Canadian National and Canadian Pacific Kansas City Southern.
The move could potentially deal a blow to the Canadian and US economies as nearly a third of the freight handled by the two railroads crosses the US-Canadian border, The Associated Press shared.
The industries that could see disruptions in the US include agriculture, autos, home building, and energy, depending on how long the shutdown goes.
“CPKC is acting to protect Canada’s supply chains, and all stakeholders, from further uncertainty and the more widespread disruption that would be created should this dispute drag out further resulting in a potential work stoppage occurring during the fall peak shipping period,” the company said in a statement after the lockout began on Thursday at 12:01 a.m. EST. “Delaying resolution to this labor dispute will only make things worse.”
The shutdown is different from a strike, in which union members walk off the job, as management are the ones telling the 9,000 Teamsters they can’t work.
This now marks the first time that both of Canada’s major railroads have shut down at the same time because of a labor dispute. The last work stoppage lasted 60 hours at Canadian Pacific in 2022.
When it comes to what’s behind the stoppage, the Teamsters union has been seeking a contract between workers and the two companies. However, it says that the railroad’s proposals would increase safety risks by reducing the amount of rest workers have.
“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. Their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy,” Paul Boucher, president of the Teamsters Canada Rail Conference, said in a statement early Thursday.
The railroads have denied that the changes they are seeking would increase safety risks, instead saying they would provide greater safety protections.
Rather than see negotiations fall through when the contract runs out, CPKC spokesperson Patrick Waldron told CNN his company felt it was better to stop operations now.
“We’re right up against the fall peak shipping season. You have a new Canadian grain crop coming in, the first not impacted by drought in two years,” Waldron told CNN ahead of the lockout. “You have Christmas presents in containers arriving at ports. If this pushes further into fall shipping period, the consequences are going to be worse.”
When it comes to the economic impact the shutdown might have, a report from the Michigan-based research firm Anderson Economic Group estimated that a three-day work stoppage could cause $300 million worth of economic damage. A seven-day stoppage would see that number rise to $1 billion.