A looming labour dispute between Canada’s two largest railroads, Canadian Pacific Kansas City (CPKC) and Canadian National, and the Teamsters Union threatened to disrupt supply chains across North America. Both railroads had begun curtailing shipments of hazardous materials and refrigerated products, signaling the possibility of a full work stoppage by the end of August 2024. The impact on cross-border trade and various industries could have been significant if negotiations failed to yield a resolution.

Although, per the latest updates, the labour has been averted for now, the railroads and the union are yet to work towards new deals under a government-imposed binding arbitration process.

These two railroads handle about 40,000 carloads of freight daily, including automotive parts, chemicals, and Resins, among other goods. The automotive sector, already grappling with supply chain bottlenecks, could face disruptions in the delivery of crucial components like batteries, cables, and displays, if anything goes south. Similarly, the chemical industry, vital for manufacturing processes in various sectors, could experience delays in receiving essential materials, potentially causing production slowdowns and price increases. Resin manufacturers in Canada heavily rely on rail transport to move raw materials (like natural gas liquids) and finished products.

Here’s the long-term impact that each industry might encounter in the US as well as in Canada if the situation worsens in the future (under unlikely circumstances):

In the short term, the trucking industry may have provided some relief by absorbing a portion of the displaced rail freight. Yet, it cannot fully compensate for the massive volume handled by the railroads. However, with the recent government intervention and the implementation of binding arbitration, the looming threat of a prolonged work stoppage has been mitigated. This positive development is expected to minimize disruptions to the supply chain and ensure the continued flow of goods across North America.