Canadian Pacific Railway Shutdown Will Affect U.S.

A Canadian Pacific Railway crew works the CP Rail yards in Calgary, Alberta, in 2014. (Todd Korol/Reuters)

Over the weekend, Canadian Pacific Railway (CP) began to shut down its operations because of a labor dispute. Headquartered in Calgary, CP is one of the largest freight railroads in North America, with over 12,000 miles of track.

Around 3,000 engineers, conductors, and yard workers stopped working on Sunday, according to FreightWaves. They’re represented by the Teamsters Canada Rail Conference (TCRC), and the union said the main points of disagreement were wages, benefits, working conditions, and pensions — in other words, just about everything.

Each side is blaming the other for the shutdown. The TCRC emphasized that this shutdown is a lockout, not a strike, because it was initiated by Canadian Pacific, not by the union. CP contradicted TCRC’s claim, saying that the union was the one that walked away from negotiations.

Whoever started it, the result is the same: Canadian Pacific’s normal rail operations will not be resuming until a deal is worked out. That has consequences for the United States.

Despite its name, CP has significant U.S. operations. In addition to its denser network in western Canada, CP serves North Dakota, Minnesota, Iowa, Missouri, Wisconsin, Illinois, Indiana, Michigan, New York, and Pennsylvania.

Sensitive to those connections, Senators Kevin Cramer (R., N.D.), Steve Daines (R., Mont.), Mike Braun (R., Ind.), and John Hoeven (R., N.D.) sent a letter to Justin Trudeau last week urging the Canadian prime minister to do everything possible to prevent the strike. The senators were careful to note two particular commodities that would suffer from a work stoppage: crude oil and fertilizer.

Because of the Keystone XL pipeline cancellation, Canada and the US rely on CP to carry heavy Alberta crude oil to US refineries. Without the ability to move heavy Canadian crude, fuel supply shortages will be exacerbated and agricultural producers who rely on diesel to power their equipment will be forced to pay even higher fuel costs.

Up to fifteen percent of CP’s business is fertilizer shipping, and the US relies on Canada to help provide our producers with essential inputs like potash and nitrogen fertilizers. At a time when agricultural input costs are already skyrocketing, major agriculture producing nations are at war, and global food prices are at an all-time high, all steps necessary must be taken to ensure producers have access to the inputs they need.

Crude oil and fertilizer are also two of the products most affected by the war between Russia and Ukraine, which are the “major agriculture producing nations” the senators were referencing in the letter. Oil has been at the center of media attention, but as Andrew Stuttaford has written about before, fertilizer shortages could end up being much more damaging. Food is truly a universal input.

Given the war, U.S. and Canadian grain producers are under pressure to produce more than normal this season to at least partially compensate for the lost production in Russia and Ukraine. That means they’ll need a lot of fertilizer. Saskatoon, Saskatchewan, is home to Nutrien, the world’s largest fertilizer company, and is served by one of the densest parts of CP’s rail network. Without CP operating as normal, many farmers on both sides of the border will have a hard time getting fertilizer.

This work stoppage might only be a foreshadowing of what is to come, however. The International Longshore and Warehouse Union (ILWU), which represents West Coast dockworkers in the U.S. and Canada, has been gearing up for labor negotiations when its current contract expires on July 1.

In what is not exactly a sign of great confidence, 49 industry groups sent a letter to President Biden and Vice President Harris on March 1, asking the federal government to aid negotiations between the ILWU and the Pacific Maritime Association, which represents employers. The letter notes that previous disruptions at West Coast ports cost the U.S. over $1 billion per day. Negotiations have not even started yet.

It also notes that U.S. ports are some of the least efficient in the world. One of the primary reasons for that is the ILWU, which has opposed technological advances that would make them more efficient, but also reduce the number of union jobs. The Biden administration prides itself on its pro-union stance and is unlikely to demand any meaningful concessions on port automation that would actually improve efficiency.

That’s especially true now, when the ILWU has a lot of leverage. Given the current state of supply chains, the last thing politicians want is a work stoppage, and the left-wing governments in both the U.S. and Canada are ideologically predisposed to side with labor over management. The unions know that, so expect them to press hard for conditions that employers will not want to grant. The ILWU’s president was already telling his members back in August 2020 that “there may be a battle in 2022,” so “be prepared.”

Just as the TCRC was willing to play hardball with CP, the ILWU may be willing to do the same at our West Coast ports. The CP shutdown doesn’t look like it will be over quickly, either, with CP saying today it is still “at an impasse” with negotiators. If the TCRC ends up getting what it wants, it will only further embolden the ILWU to shut down work if its demands aren’t met.

The last thing we need right now is a dockworkers’ strike, but it could be where we’re headed, with this CP shutdown as the undercard match before the main event.

Dominic Pino is a William F. Buckley Fellow in Political Journalism at National Review Institute.