Canadian Pacific Railway shutdown threatens new supply chain

Canadian Pacific Railway Ltd.

CP 0.08%

Trains came to a halt Sunday morning, halting global shipments of key goods and manufactured goods such as fertilizer, after a stalemate in contract negotiations between the company and its employees and engineers.

The Teamsters Canada Rail Conference, which represents more than 3,000 Canadian Pacific conductors, engineers and yard workers, issued a statement near midnight Sunday ET stating that the railroad began shutting down after the union failed to meet the company’s deadline to approve a new contract.

Patrick Waldron, a spokesperson for Canada Pacific, said the union misinterpreted why the business was halted. Railroad representatives were still at the negotiating table with a federally appointed broker in Calgary, Alberta, awaiting a response to an offer of a new contract when the union released its statement that the railroad had begun to close.

“The actions of the leadership of the team members last night were dishonest and irresponsible. The union falsely claimed that Canadian Pacific had begun a shutdown process. In fact, it was the union that started the shutdown,” Mr. Waldron said.

He said Canadian Pacific was still willing to bargain in good faith with the union. “The union’s actions show a complete disregard for the unnecessary harm that will be done to the supply chain,” said Mr. Waldron.

The union did not immediately respond to a request for comment.

The railways have been in negotiations and mediation since September with the union, which is seeking increased wage and pension benefits and more breaks. This represents the fourth time since 2011 that contract negotiations with the Teamsters have brought Canadian Pacific to a standstill.

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The prospect of a strike has prompted a number of businesses, customers, and politicians to publicly urge the Canadian government to introduce return to work legislation that would force striking workers to return to their jobs. Such a law would require a vote by the Canadian Parliament, scheduled for Monday after a recess.

Canada’s Labor Minister, Seamus O’Regan, has traveled to Calgary, Alberta, where contract negotiations are taking place. He urged both sides to avoid business interruptions that would exacerbate existing bottlenecks in the supply chain and soar in commodity prices. In a video statement posted on Twitter, he said the suspension of Canadian Pacific trains “could not come at a worse time.”

The Canadian Pacific is the sixth largest freight railroad in North America, shipping goods through Canada and south to the central states of the United States. It is the primary shipper of fertilizers such as Canadian potash that is mined in the province of Saskatchewan.

Nutrien Ltd.

NT 1.44%

It is the largest potash producer in the world and most production from its mines in Saskatchewan is transported by the Canadian Pacific to ships bound for foreign countries. Nutrien said this week that it plans to increase its annual production of potash this year by about 7%, or nearly one million metric tons, after shipments of potash from Russia and Belarus, major producers, Virtually discontinued in the aftermath of the Ukraine war.

Nutrien CEO Ken Seitz said that if the rail strike extends beyond a few weeks, the company will start cutting production at its potash mines because its warehouses are currently full of fertilizer for the planting season.

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“It’s a frustrating situation given what’s going on in the world, and we’re expecting some legislation,” he said.

write to Jackie McNish at [email protected]

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