ANALYSIS: As a Strike Looms in Canada’s $380B Rail Sector, Here Are the Crucial Policy Decisions at Play

Canadian Pacific Railway trains sit at the main CP Rail train yard in Toronto on March 21, 2022. (The Canadian Press/Nathan Denette)

The threat of a labour shutdown of all rail services in Canada could have devastating impacts on commerce, renewing calls by some for policies to prevent such potential disruptions, while others argue maintaining labour bargaining power is crucial.

As the labour dispute drags out between the Teamsters Canada Rail Conference and both the Canadian National Railway and Canadian Pacific Kansas City, the companies say they will start locking out workers on Aug. 22 if a deal is not reached. The Teamsters are also prepared to call a strike for that date.

The dispute was put on pause in May when then-Labour Minister Seamus O’Regan asked the Canadian Industrial Relations Board (CIRB) to consider whether rail was a service essential to health and safety. On Aug. 9, the CIRB decided no commodity was so necessary as to override the right to collective bargaining.

John Corey, president of the Freight Management Association of Canada, says that was a bad decision.

“I would say shutting down Canada is probably a pretty important thing and maybe those rail workers should be subject to binding arbitration,” he said.

“At least during COVID, Transport Canada mandated both trucking and rail to continue to keep goods flowing through the supply chain. This is going to be worse than that. There’s literally going to be no rail service.”

Greg Gormick, a rail consultant based in the Toronto area, supports the CIRB decision.

“I do think it’s a correct ruling. I’m not encouraging strike activity, but taking away the right to strike takes away a lot of your bargaining power,” Gormick said in an interview.

The new labour minister, Steven MacKinnon, has been on the job less than a month after O'Regan resigned, and has encouraged both sides to work out a deal themselves rather than rely on the government to intervene.

“The parties in this dispute have a responsibility to Canadians,” MacKinnon said in a statement on Aug. 9. “A negotiated agreement is the best way forward.”

‘Bad for Our Reputation’

Canadian railways transport around $380 billion worth of goods annually, including more than $200 billion of exports. Corey said the trucking sector has very little capacity to make up for halted trains, and his member organizations are frustrated.

It takes a week for supply chains to recover from a single day of a railway strike, he said, and if the dispute is prolonged, Canadians will notice.

“I’m not saying we’re going to starve, but there certainly will be a reduction in the amount of selection in stores, and there may be some commodities that people want to buy that won’t be available,” he said.

“We are starting to look like a Third-World country when it comes to our supply chain. And that’s bad for our reputation, and certainly bad for business, and bad, ultimately, for Canadians.”

He said a prolonged strike would be devastating for consumers and would require Canada to legislate workers back on the job.

“It’s the nuclear option, and it’s an admission of complete failure, that there is not a process in place to handle these kinds of problems,” he said.

The U.S. faced a similar situation in 2022 as workers sought paid sick days and better working conditions. That July, the White House created a presidential emergency board to handle the situation and brokered a tentative agreement. Union members subsequently voted down the agreement, but legislation made it binding anyway.

‘Worker Turnover Is High’

The union says the key issues are crew scheduling, rail safety, and fatigue management, with the railways asking for concessions.

CN said it has made several offers dealing with wages, rest, and labour availability, but all have been rejected.

CPKC has said it will conditionally withdraw its proposal, which addressed concerns about work and time off scheduling while providing wage increases. Instead it will work toward a “status quo-style” offer that focuses on increasing wages.

A CN webpage giving updates on bargaining says current leave, vacation, and sick day provisions leave employees working 160 days a year. In 2023, the average railway conductor earned $121,000 and the average locomotive engineer received $150,000, apart from pensions and benefits.

Gormick said railway life often takes workers away from home, even when the shift ends, and worker turnover is high, especially at CPKC.

“They hire people, they train them, and after a couple of months, they quit because they just don’t want this kind of lifestyle,” he said.

Decades of government reports on necessary changes to the industry have failed to result in action or a well thought out rail policy like the U.S. has.

“They’re not much better, but at least national transportation policy in the States has recognized the railways need to be monitored. We need to be watching and we need to be putting money where capacity is required, where bottlenecks need to be straightened out, to partner with the private railroads,” Gormick said.

He also believes Canada’s “split jurisdiction” of government has contributed to distortions in transportation policy. While the provinces look after public highways, the federal government is responsible for railways.

‘No Railway, No Canada’

A CN lift bridge in Fort Frances, Ont., that collapsed on Aug. 14 highlights Canada’s minimalist approach to rail, said Gormick, as the loss of the Northwestern Ontario bridge severs CN’s line from Winnipeg to Thunder Bay.

“There used to [be] a second CN line from Sioux Lookout to Thunder Bay, but the asset-strippers ripped it up several years ago,” Gormick said.

CP once had a double-tracked line from Winnipeg to Thunder Bay, he said, but it was made a single track in the 1990s, leaving the railway with little capacity to handle CN shipments during bridge and track repairs.

The result is “a vital transportation system with very little redundancy or resiliency” and “another example of what comes from not having a real national transportation plan,” Gormick said.

“If there’s a country that cannot afford to lose track of its transportation system, it’s Canada. Go, right back to the roots of Canada. I mean, no railway, no Canada,” he added.