Deadline to reach agreement between two major Canadian Railroads & the worker's union is 12:01 AM Eastern, Thursday August 22.
Work stoppage is expected, and will have widespread impacts across Canada, US, and Mexico. Rail traffic has been slowed down ahead of the work stoppage, but is still running as of August 21 on low capacity.
Impacts to hospitality include lower availability and higher costs for full truckloads and volume shipments in US/Canada, increased costs due to low availability of raw materials from vendors, and diverted ocean traffic to northern US West Coast Ports resulting in long wait times, lower capacity, and higher rates to pull from those ports.
Over the last week there have been reports of freight rail transports in Canada beginning to be slowed or stopped entirely. Rail represents approximately 15% of all cross-border freight in Canada and is heavily relied upon to transport goods across Canada, which is the world's second largest country by area. This stoppage, should it occur, will not only impact freight lanes but also commuter rail as well.
These reports of slowing or stopping of rail transport in Canada stem from a dispute between Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), two of Canada's major freight railroad companies, and the Teamsters Union, who represents over 10,000 engineers, conductors, and dispatchers across Canada.
The contract deadline is 12:01 AM Eastern, August 22, and work stoppage is expected should a deal not be brokered by that time. Ahead of the deadline, both CN and CPKC have both stopped perishable and hazardous shipments in the previous days so they are not "stranded somewhere on the tracks". "Each day of a work stoppage would require three to five days for the railroads to recover." said Jonathan Abecassis, a Canadian National spokesperson.
While the Canadian rail mostly transports perishable items, coal, & cars, the impact to the hospitality industry could be seen in a few different areas.
If these goods are not able to be transported via rail - they still need to be moved overland. Trucking already represents 85% of the cross-border freight in Canada, and multiple companies report seeing jumping costs & lower availability of trucks in Canada. This could impact availability of U.S. based companies if they send truckers north, which could result in higher costs for truckload and volume transportation.
Canadian rail is interconnected to many things in the U.S. (and Mexico), from food to lumber to cars, lower availability would mean rising costs that could be passed on to not only the consumer but also business accounts as well.
Impact to U.S. West Coast ports due to congestion from diverted freight. Vancouver Port is responsible for approx. 66% of the railed cargo in Canada, and 90% of international exports. If those containers or vessels were diverted to Seattle, or even Long Beach Port, this would result in more congestion, higher rates, and longer wait times at West Coast Ports.
We are also keeping an eye on the East Coast Negotiation process between the ILA (International Longshoreman's Association) and USMX (U.S. Maritime Alliance), as the October 1 deadline is fast-approaching & another review of ILA contracts is scheduled first week of September with no negotiation reached as of August 21, 2024.
We will monitor both of these stories closely, please reach out to your freight manager if you have any questions about how this will impact your project.