Canadian businesses and retailers are breathing a huge sigh of relief today with the resumption of operations for Canada’s two largest railways.
Canadian Pacific Kansas City (CPKC) and Canadian National Railway (CN) were ordered by the federal government to end their recent network shutdowns, which was upheld by the federal labour board.
In a tweet, Dan Kelly, President and CEO of the Canadian Federation of Independent Business, said he was relieved to hear the Labour Board has upheld government’s binding arbitration order.
“And it is good news that @TeamstersCanada will comply, even as it challenges the decision. Hoping for a quick end to the uncertainty with Canada’s critical rail service,” he tweeted.
The Canadian Manufacturers & Exporters (CME) welcomed the Canada Industrial Relations Board (CIRB) order for the resumption of rail services following the Minister of Labour’s direction under Section 107 of the Canada Labour Code.
“The CIRB decision mandates that the railways and their employees resume their duties by 00:01 EDT on August 26 and continue operations until the final binding arbitration is completed,” it said in a statement.
“Months of uncertainty culminating in a wind-down of services and a full rail stoppage has created significant operational and reputational challenges for Canada’s industrial economy. Manufacturers across Canada are relieved that critical rail services are being restored, providing much-needed stability and certainty heading into the fall.
“This stoppage, along with other recent supply chain disputes and disruptions has underscored the need for systemic change. CME is encouraged by the Minister’s recognition of these problems, and we look forward to working with the government to strengthen Canada’s supply chains and ensure the long-term, reliable flow of goods vital to our economy.”
Sylvain Charlebois, Senior Director, Agri-Food Analytics Lab at Dalhousie University, said Ottawa made the move two months too late.
“That uncertainty really disrupted supply chains for well over two weeks. The whole chain was compromised and we’ve seen delays. I think the industry will recover. Farmers will likely be able to have access to markets but this situation really brought a lot of really damning uncertainty both sides of the border,” he said.
“We have two highly integrated economies so the disruption and the dispute really didn’t help. I think a lot of businesses, grocers, are relieved by the fact that Ottawa at the last minute showed some leadership forcing people to come to a deal.”
A lengthier disruption would have been devastating for the Canadian economy.
In a statement, Michelle Wasylyshen, National Spokeswoman for the Retail Council of Canada, said: “After weeks of engagement, RCC is supportive of the federal government’s move to impose arbitration to end the railway stoppage. Every single day that railways don’t operate, Canada’s retail supply chains suffer immensely. In fact, it takes at least a week to 10 days to recover from only one missed day of operations. At the same time, costs for food and consumer goods would have risen and shelves would quickly become empty for an endless number of products that Canadians depend on each and every day.”
Gary Newbury, a retail supply chain expert, strategic advisor and delivery executive with RetailAID, said retailers, brands/CPGs and, to a lesser degree, consumers, have been on tender-hooks for this situation to be resolved amicably and with some haste before the lockout occurred.
“The lockout did indeed happen, however within a day or so, the federal government intervened with imposing binding arbitration and a return-to-work order pending agreeing to the terms of a new collective agreement. The lockdown sent a shudder through many industries,” he said.
Whereas this suited CN/CPKC, it did not favour the heads of Teamster’s union. At government level, their co-operation party did not support government intervention as their leader felt this gave all employers a “hand up” in future disputes (e.g. Air Canada).
“The retailers and distributors I have talked with are on high alert, especially when the unions suggested they would withdraw labor with the government’s heavy-handed approach to negotiations. Many are expecting the government to keep pressure up to ensure supply chain integrity is maintained. And it’s not just Canada that will feel any pinch when it comes to strike action. CN/CPKC run an extensive network across the North American continent. The impact on Canada’s reputation for a longer strike will be catastrophic.
“Preliminary actions by retailers had included buying forward for peak and trying to get product safely into their networks prior to August 22. Now with threatened strike action, they are trying to figure out what their options are, especially with road transportation hitting capacity levels over the last couple of weeks with the extra moves being covered.
“Why is the government imposing its will on a commercial negotiation between union(s) and two commercial railroad operators, the latter accountable to its Board of Directors and shareholders?
“Whilst the negotiations are being managed (the two parties are considerably adrift from alignment), retailers and other industries relying on the rail transportation network should be exploring and securing capacity to continue operations. The only saving grace, and it’s not a good one for brand and retailers, this peak may be somewhat lower than last year due to current higher interest rates negatively impacting on “shelter costs”., however, retailers cannot afford to let their consumers down.”
A report by the Conference Board of Canada suggested a two-week rail disruption would result in a $3 billion loss in nominal GDP this year in Canada.
The loss would be felt by both households, with a $1.3 billion loss in labour income, and businesses, with a $1.25 billion loss in corporate profits, said the Conference Board.
Two same kinds of companies, the only two that size, that’s quite the punch and that knocked other companies on rails plus all else in their grasp.