Potential Rail Strike’s Impact: What You Should Know

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

Canada is bracing for rail strikes this week as workers at the two primary railways either go on strike or are locked out by their employers. The results of a prolonged shutdown could be devastating for the industry and consumers who would be faced with product shortages and higher prices, but at least one economist is predicting major impact on the average Canadian could be avoided as the government likely won’t allow a strike to go on for long.

Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. (CPCK) both face a potential work stoppage on Aug. 22 if they fail to negotiate agreements with the thousands of employees represented by the Teamsters Canada Rail Conference (TCRC).

Canadian Federation of Independent Business (CFIB) director for British Columbia and Western Economic Policy Jairo Yunis told The Epoch Times there has already been a slowdown in the movement of certain goods as embargoes come into effect.

“Each day of a strike can result in days of backlogs,” he said.

John Corey, president of the Freight Management Association of Canada, agreed, saying it takes a week for supply chains to recover from a single day of a railway strike.

“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.

While business and agriculture groups have said a strike could be detrimental for Canada’s economy, economics expert Moshe Lander told The Epoch Times it is unlikely the federal government would allow a lengthy shutdown.

“I think that everybody needs to stay calm,” said Lander, senior lecturer at Concordia University in Montreal. “I think the likelihood of a strike might be high, but I think the likelihood of a prolonged strike is low.”

If his prediction is right, Lander said, the cost of the strike for the average consumer will be “minimal, or even zero.” However, the agriculture sector and others could be faced with relatively more harm even in the short term due to their reliance on rail transport.

Strike Length

Federal Labour Minister Steven MacKinnon has urged both sides to intensify their efforts to finalize an agreement to keep the collective workforce of 9,300 railway workers on the job.

“The parties must do the hard work necessary to reach agreements at the bargaining table and prevent a full work stoppage,” MacKinnon said in an Aug. 19 social media post. “Canadians expect the parties’ efforts to be equal to the trust conferred on them.”

While MacKinnon has the authority to mandate binding arbitration between the union and railway companies, he has yet to indicate he will take such an action.

Lander said it is likely such an order will be issued if a deal is not reached in the next few weeks.

“I think the issue right now is Parliament is not sitting, and while they could recall Parliament to debate this and put through that legislation, I think everybody just wants to enjoy their last couple of weeks this summer,” he said.

Impact on Prices

For the average Canadian, the rail shutdown is likely to be more of an inconvenience than a hardship, Lander said. The strike would need to last much longer than a few weeks for the price of groceries and household goods to rise.

“You'd need to be talking about a month before you’d start to see that there’s real issues,” he said.

Retailers typically have long-term contracts with their suppliers, requiring inventory to be available across the supply chain, Lander said. Only when stock further up the supply chain starts to disappear does it impact the stores selling the goods.

If the strike lasts for a week or two, some perishable items such as lettuce may disappear from the produce aisle, but that doesn’t mean prices will increase right away, Lander said. It could just mean some types of vegetables or fruit won’t be available.

If the government didn’t step in and the strike were allowed to continue for a month or longer, store shelves would empty and the cost of goods would rise, Lander said.

If the strike were prolonged, CFIB’s Yunis said, businesses could be forced to use more expensive alternative transportation, like private trucking, to get the products they need, pushing prices up.

“Consumers end up paying more and facing delays in getting what they need, all of which puts a strain on the economy,” he said.

Impact on Commuters

Some people relying on commuter lines like the Go train transit system in the Toronto and Hamilton regions of Ontario could be without a ride if the railways shut down, impacting residents and visitors alike.

In Toronto, for instance, the Go lines are often used by people who work in the city, but choose to live in one of the surrounding communities like Milton or Oshawa.

Metrolinx spokesperson Andrea Ernesaks said two lines would be impacted in the event of a strike.

“Only GO train services on the Milton line and at Hamilton GO would be temporarily suspended due to the interruption of rail traffic services provided by Canadian Pacific Kansas City,” she told The Epoch Times. “All other GO lines, the UP Express and Lakeshore West line stations would not be impacted.”

Railway labour disruptions would not affect any GO or UP Express services, she said.

While the impact of commuter line shut downs may be minimal, it could leave workers without a travel alternative stranded, impacting not only their finances but those of the employer, Lander said.

“There are a lot of jobs where you can’t work from home. The food and beverage industry, for example, you can’t say, ‘hey, just work from home’ and pretend to serve your customers at the restaurant,” he said. “The fact that the already existing labour could [be] stranded could become an issue for an industry that’s already been hit.”

Long-term Impact

While the average Canadian consumer is unlikely to be fazed by a short strike, the impact will be felt by the country’s farmers.

Rail is the main mode of transportation for many agricultural products and the potential shutdown comes at a time when farmers are preparing for harvest, the CFIB’s Yunis said.

“The agricultural sector, particularly in Western Canada, would be among the hardest hit,” he added.

Lander agreed, adding that the potential for damage “could be very, very substantial.”

“We’re talking about $50 million per day in Alberta alone,” he said.

Even though Lander is predicting the rail strike to be short, he said even a few weeks will be costly for farmers.

“Over the course of a week, two weeks, $50 million a day can add up to substantial loss,” he said, adding that most farmers will not be covered for such losses by their insurance providers.

Businesses will also be hard hit by a rail shutdown, according to the CFIB. The group said a strike has the potential to “paralyze the economy,” and is urging the federal government to step in to prevent the shutdown from occurring.

Lee Harding contributed to this article.