A halt to rail traffic in Canada could impact supply chains throughout the United States. Canadian National Railway and Canadian Pacific Kansas City have locked out more than 9,000 union members following failed contract negotiations between the workers and the rail companies. The workers, represented by Teamsters Canada Rail Conference, demand better conditions and wages.
According to Moody’s, the stoppage will disrupt supply chains in the U.S. and cost Canada more than $251 million daily. It could also disrupt various U.S. industries, including automotive, energy, manufacturing, and more. The U.S. Department of Transportation (DOT) states that the U.S. and Canada move billions of dollars worth of supplies by rail between the countries.
“If rail traffic grinds to a halt, businesses and families across the country will feel the impact,” says Jay Timmons, president and CEO of the U.S. National Association of Manufacturers. “Manufacturing workers, their communities and consumers of all sorts of products will be left reeling from supply chain disruptions.”
DOT data shows that $9.131 billion in trade moved between Canada and the U.S. via rail in June 2024, representing roughly 14% of total trade flows between the two countries via all modes of transport. Imports totaled $5.319 billion, while exports totaled $3.812 billion. In the first six months of 2024, total trade flows via rail were $55.657 billion.
The stoppage follows months of contract negotiations between workers and Canada’s two main rail freight operators. The workers demand better wages, benefits and working conditions. Teamsters officials say that the rail operators also refuse to soften rest periods and scheduling, increasing the risk of safety issues.