US Supply Chain at Risk as Canadian Railroads Face Possible Shutdown Due to Labor Dispute

By Thea Felicity

Aug 18, 2024 09:05 AM EDT

Railroad cars are parked in the foreground with the international bridge, crossing of the St. John River, in the background March 2, 2017, in the border town of Edmundston, New Brunswick. Edmundston is on the left and Madawaska, Maine is on the right end of the bridge.
(Photo : DON EMMERT/AFP via Getty Images)

Two of Canada's largest railroads face possibly work disruption, possibly affecting the US supply chain as early as next week.

According to AP News, the Canadian Pacific Kansas City (CPKC) and Canadian National (CN) railroads, which collectively transport millions of tons of goods across the US-Canada border, have begun to shut down parts of their shipping networks.

Why Canada's Railroads Are Stopping

Shutting down the railroads is a result of a disagreement with the Teamsters union, which CTV is "getting worse," per CTV News. This means workers are either going to be locked out or go on strike. Either way, both will be halting the trade between the US and Canada.

Both railroads have already stopped accepting certain shipments, including hazardous materials and refrigerated products, as a precautionary measure.

Reuters reported that CPKC will already cease all shipments originating in Canada on Tuesday, August 20, as well as those from the US destined for Canada. Unless an agreement is reached, the operations will remain closed.

Similarly, Canadian National has restricted container imports from its US partner railroads, further straining the flow of goods between two countries.

Canada Railroads Disruption's Impact to US Supply Chain

Now, Yahoo Finance shared that industrial analysts are warning that the US supply chain could face several problems if the work disruption lasts more than a few days.

Jeff Windau, an analyst at Edward Jones & Co., pointed out that these railroads are very important to the economy, moving about 40,000 carloads of goods every day, worth around $1 billion.

A shutdown could affect many industries, like car manufacturing, chemicals, forestry, and farming, especially with harvest season coming soon.

At the moment, both Canadian railroads continue to negotiate with the union, which represents nearly 10,000 workers. However, ddiscussions have been slow, and important issues like crew schedules, rail safety, and worker fatigue are still not settled.

While the railroads say they want to avoid a work disruptuon, they are also getting ready for it.