How the Rail Stoppage May Impact Food Costs and Supply

CN rail trains are shown at the CN MacMillan Yard in Vaughan, Ont., on June 20, 2022. The Canadian Press/Nathan Denette

With Canada’s two main rail companies beginning an unprecedented work stoppage due to a failure to reach an agreement with a union, two food experts say Canadians could soon begin seeing empty grocery shelves and paying more for food.

“As soon as you go from rail to wheels, you’re likely doubling your transportation costs. And at some point, someone is going to have to pay for that, and that’s likely going to be the consumer,” Sylvain Charlebois, a professor at Dalhousie University, told The Epoch Times.

The railway companies, the Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), and the Teamsters Canada Rail Conference, which represents 9,300 employees, have failed to come to an agreement to keep the workers on the job. As a result, 6,000 CN workers and 3,300 CPKC workers were locked out by the companies, and trains across Canada came to a stop on Aug. 22.

According to an Aug. 22 press release by the Teamsters Union, throughout the negotiations of the last few days, the two companies have refused multiple offers and have shown themselves “willing to compromise rail safety and tear families apart to earn an extra buck.” Meanwhile, CN said in a press release that the union failed to respond to its final offer to “avoid a labour disruption,” while CPKC said the union continues to make “unrealistic demands” that would impair the railway’s ability to serve customers.

Canada is reliant on rail transportation to ship goods, with the Railway Association of Canada noting that more than half of the country’s exports, valued at more than $1 billion per day, are shipped by rail.

According to Charlebois, the situation is “quite problematic” for Canada’s food supply chain, and “potentially can be catastrophic” if it lasts beyond a week. The food professor predicted that for every day Canadian rail lines are shut down, it will take the entire supply chain a week to recover.

Charlebois said many grocery stores had planned ahead for the railway strike and purchased goods for five to seven days, so Canadians would likely not see large changes to food prices. “Beyond that, all bets are off, I think. We should expect some empty shelves ... I think it will likely impact retail prices,” he said.

Grain Growers of Canada has also warned that the railway stoppage is an “unprecedented crisis” for the grain industry, costing farmers and estimated $43 million per day in the first week alone.

Kyle Larkin, executive director of Grain Growers of Canada, said that with Canada’s 65,000 grain farmers unable to use the railway to get their grains to market, they will see lost sales, degraded grain quality, and a “substantial loss of market confidence.” He said this would translate into higher prices for Canadian consumers and shortages of food products that rely on grain.

Trevor Heaver, a professor emeritus at the University of British Columbia, said while some food products are shipped exclusively by trucks to grocery stores, others rely on railway to arrive at their destinations. He said switching from rail to trucking to ship food will not be easy, especially given the current shortage of drivers.

“There’s not a lot of spare capacity available as an alternative and at a reasonable price,” Heaver told The Epoch Times.

Heaver also noted that the rail strike would impact more than just the rail workers, causing mines, lumber mills, and food refrigeration plants to need to close down.