CP Rail set to halt operations if labour talks fail

Canadian Pacific Railway Ltd. train Source: CP Rail

One of Canada’s largest railways is gearing up to halt operations after failing to reach a labour deal with unionized workers.

Canadian Pacific Railway Ltd. has issued a 72-hour notice to the Teamsters Canada Rail Conference of plans to lock out employees early Sunday if the union’s leadership and the company fail to negotiate a settlement or agree to binding arbitration, CP said on its website. The parties have been in daily discussions but “remain far apart.” Canadian Pacific will continue to bargain with the union to achieve a settlement.

CP “has commenced its work stoppage contingency plan and will work closely with customers to achieve a smooth, efficient and safe wind-down of Canadian operations,” the company said. 

A work stoppage means CP can’t operate the railway and will create a “freight capacity crisis,” the railway said earlier this month in a note to its customers. The Teamsters represents about 3,000 of CP’s locomotive engineers and conductors.

The disruption is poised to create more uncertainty in fertilizer markets just as farmers need key nutrients to plant spring crops. Canada, along with Russia and Belarus, is one of the main sources for the world’s potash, a mined mineral used in crop nutrients. Sanctions on Belarus and Russia following the invasion of Ukraine have already created a global shortfall and skyrocketing prices.

CP is the primary rail transportation provider for the delivery of Saskatchewan potash to overseas markets, according to the provincial government.

Lumber prices soared five per cent after the news Thursday, with futures trading by the exchange limit of $57, to $1,207 per $1,000 board feet in Chicago. In addition to Canada’s potash, disruptions to CP’s railway could strand large volumes of lumber and other goods.

Nutrien Ltd., one of the top crop-nutrient suppliers, and Saskatchewan’s government have asked Canada’s federal government to act swiftly to stop a strike. Nutrien is “frustrated” with the situation, interim chief executive officer Ken Seitz said in an interview. The company is hopeful that the situation will be resolved quickly so it doesn’t cause further price hikes in fertilizer.

“This is now more than ever an essential service,” Seitz said. “We certainly deem it to be such. The world really doesn’t need any more supply-side events, and certainly in the crop nutrient space.”

The federal labor and transportation departments are monitoring the situation closely, according to a statement issued late Wednesday.  

“The government strongly encourages both parties to consider making the compromises necessary to reach a deal that is fair for workers and the employer,” Labour Minister Seamus O’Regan said.

© 2022 Bloomberg L.P.

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