In a development that could significantly impact cross-border trade with the United States, Canada's two largest railroads, Canadian Pacific Kansas City (CPKC) and Canadian National, are starting to shut down their shipping networks due to an ongoing labor dispute with the Teamsters union. The dispute, which involves threats of lockouts or strikes, has already led to disruptions in the transportation of hazardous materials and refrigerated products.

To escalate the situation, both railroads have halted the acceptance of specific shipments, further exacerbating concerns about supply chain disruptions. Unless agreements are reached, CPKC is planning to lock out Teamsters Canada workers on Thursday, while Canadian National has banned container imports from its U.S. rail partners, as reported by The Canadian Press.

Industrial analyst, Jeff Windau of Edward Jones & Co., expects the work stoppages to be short-term, lasting only a few days. However, if the impasse stretches out, significant disruptions in the supply chain could occur. With the railroads playing a crucial role in handling approximately 40,000 carloads of freight on a daily basis, valued at around $1 billion, industries such as fully built automobiles and auto parts, chemicals, forestry products, and agricultural goods would bear the brunt of the consequences, particularly with the upcoming harvest season.

Despite the potential fallout, both Canadian Pacific Kansas City and Canadian National assure that their operations in the United States, including CPKC's operations in Mexico, will continue even if there is a work stoppage. Spokesperson Patrick Waldron of CPKC emphasizes the company's commitment to avoiding any negative impact on Canada's economy and international standing, stating that they are taking responsible steps to prepare for the potential rail service interruption by shutting down the network and safely removing dangerous goods.

Negotiations between the railroads and the Teamsters union are still ongoing, but union spokesman Christopher Monette revealed that the situation has shifted from a possible strike to an almost certain lockout by the railroads. The union represents nearly 10,000 workers at both railroads. While Canadian Pacific Kansas City plans to continue bargaining on Sunday, Canadian National expressed disappointment in the lack of meaningful progress, expressing hopes for productive engagement during a scheduled meeting on Saturday.

The labor dispute, which began last November, revolves around key issues such as crew scheduling, rail safety, and worker fatigue, according to the union. In the past, concerns about the quality of life for rail workers, including demanding schedules and the absence of paid sick time, nearly led to a rail strike in the United States two years ago. The situation was eventually resolved through congressional intervention, leading to improvements in paid sick time and schedules for most rail workers.

As the railroads brace for potential work stoppages, experts believe that while the trucking industry may be able to absorb some of the shipping volumes, it cannot fully replace the capabilities of the railroads. The outcome of the ongoing negotiations remains uncertain, and the impact on the supply chain and various industries dependent on rail transportation hangs in the balance.