REUTERS — Canada’s freight rail network could come to a grinding halt this week, likely extracting a huge economic toll across industries as the country’s two leading rail companies plan an unprecedented work stoppage.
Both Canadian National Railway and Canadian Pacific Kansas City plan to lock out workers on Thursday as talks with the Teamsters union over labour contracts remain deadlocked.
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Canada is the world’s second-largest country by area and relies heavily on trains to transport grain, beans, automobiles, potash, coal and other goods.
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Here are some sectors that could take a hit from any potential rail stoppage.
Grains, other agri products
- Canadian farmers rely on the railways to move their products to market. As much as 94 per cent of grain is shipped by rail, according to Grain Growers of Canada.
Fertilizers
- Fertilizers account for the third highest volume among commodities shipped by Canadian railways, and 75 per cent of all fertilizer produced and used in the country is moved by rail.
- The railways move an average of 69,000 tonnes of fertilizer product per day, equivalent to four to five trains.
- Fertilizer Canada, which represents producers like CF Industries and Nutrien, has warned that disruptions impacting all rail services will cost the industry an estimated $55-$63 million per day in lost sales revenue.
- Top potash producer Nutrien said the potential stoppage could impact its full-year sales volumes forecast for potash – the main ingredient in fertilizer.
Trucking
- About 85 per cent of U.S.-Canada cross-border freight in either direction is primarily handled by Canadian trucking carriers.
- U.S. freight forwarder C.H. Robinson told Reuters they have seen rates in Canada double overnight.
- Truckload shippers with spot freight, as well as rail shippers looking to convert, should expect not only higher costs but also longer lead times, C.H. Robinson added.
Coal
- Coal is one of Canada’s top bulk commodities transported by rail, with more than 30 million tonnes moved annually, according to the Coal Association of Canada.
- Shipment disruptions could impact mining giant Glencore and its majority-owned unit, Elk Valley Resources.
Crude oil
- An average of 94,400 barrels per day of crude oil has been exported via rail this year, according to the Canada Energy Regulator.
- However, the railway stoppage is unlikely to significantly reduce oil exports to the United States due to excess capacity on Trans Mountain and other pipelines.
Timber
- The forest sector is an important contributor to Canada’s economy. In 2022, exports of Canadian forest products stood at $45.5 billion, according to the Canadian government.
- According to CN’s website, it is North America’s largest rail carrier of forest products.
Autos
- The U.S. imported and exported transportation equipment worth about $73 billion in 2023 from Canada, according to the International Trade Administration.
- CN’s website said it handles more than two million finished vehicles on an annual basis, catering to more than 12 North American vehicle assembly plants.
- CPKC caters to about 90 per cent of automotive assembly plants in Mexico, it said on its website.
- The CPKC website also said it provides direct routing options to major markets including Chicago, Houston, the Twin Cities and Kansas City, as well as markets within Canada and Mexico.
