The strike at CN Rail is not a boon for the trucking industry, says a senior executive of a large prairie-based firm.
Instead, it is causing a logistical nightmare.
“The sooner CN gets back on track the better we’ll all be,” said Scott Johnston, president and chief executive officer of Saskatoon’s Yanke Group of Companies.
A strike by nearly one-quarter of CN’s staff has led to a sharp drop in the railway’s container traffic and pleas by commodity shippers for trucking companies to come to their rescue.
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Johnston said the trucking industry is doing what it can to accommodate the new demand, but diverting traffic flows is not like flicking a light switch.
“We don’t have truck drivers hanging on coat hangers and trucks sitting in the shed to put into place.”
Truck carriers have spent the last decade “voiding” themselves of domestic intermodel or container traffic because they can’t compete with railway rates.
Instead of vying for east-west business, they have focused on the container traffic flowing back and forth from the United States.
“You’ve got this dichotomy of Canadian domestic shippers expecting the trucking industry to respond in one week to quite frankly what we’ve migrated from over the last 10 years,” said Johnston.
While his company has picked up some of CN’s spillover business, Johnston has to be careful about how much extra cargo he commits to because it affects his U.S. clientele.
The newfound domestic business is delaying pickup and delivery times and causing labour shortages that have irritated American pesticide and fertilizer manufacturers that have product to move to Canada.
“Their comment is ‘why would you void yourself of a seven-year business relationship for one week?'” said Johnston.
“Meanwhile I’ve got shippers in Toronto screaming at us that, ‘we need capacity to move our loads to the West.’ “
During the first week of the strike, there was a 26 percent decline in the number of containers moved on CN’s lines, but that traffic has recovered to more normal levels as the strike has worn on, said CN spokesperson Jim Feeny.
Johnston is frustrated by the attitude of Canadian container shippers, who expect to truck their shipments for the same rates they received from CN.
He said railways move containers at 60 percent of the cost of trucking companies. That’s why they have a virtual monopoly on east-west traffic.
“Everybody expects me to move it by truck based on last week’s rail economics.”
Johnston realizes that while rail customers are giving him “a big hug” the past few weeks, as soon as CN has fully restored container service, the economics will drive them back to the railway.
In the meantime, the strike is disrupting his relationship with long-term customers.
“It quite frankly doesn’t do anybody any good,” said Johnston. “It will not strengthen anybody’s bottom line, rest assured.”
