OTTAWA, ONTARIO and US. — Rail traffic in Canada came to a halt Aug. 22 when Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) were unable to reach a new labor agreement with the Teamsters Canada Rail Conference (TCRC), which represents nearly 10,000 workers.

The simultaneous lockouts by CN and CPKC could badly hurt the Canadian economy, particularly the agriculture sector, and have a significant effect on cross-border trade with the United States. The stoppage is expected to cripple shipments of grain, potash and coal while slowing the movement of petroleum products, chemicals and vehicles.

All rail traffic in Canada and all shipments crossing the US border have stopped, although CPKC and CN’s trains will continue to operate in the United States and Mexico.

In recent days, the Calgary, Alberta-based CPKC and Montreal, Quebec-based CN began winding down operations. The companies own virtually all the rail track in the country and control most of the freight shipping. The country has never experienced a labor stoppage involving both companies simultaneously.

Over 90% of agricultural products, particularly grains and oilseeds, move by rail in Canada. In 2023, 25% of all value derived from Canada’s agricultural and related product exports to the United States were by rail, averaging over $40 million per day, according to the Foreign Agricultural Service (FAS) of the US Department of Agriculture.

Grain handling and other industry groups had urged the Canadian government to prevent a stoppage, noting Canada’s railways transport about C$380 billion ($279.5 billion) worth of goods annually. The government has so far asked the railroads and the union to continue negotiating toward an agreement, choosing not to use its power to refer the dispute to binding arbitration.

The US-based National Grain and Feed Association (NGFA), in a recent letter to Canadian Prime Minister Justin Trudeau, noted that the livestock industry depends on rail for the timely delivery of feed grains and ingredients, while many facilities, such as biofuels operations, flour mills and other grain processors, require uninterrupted rail service.

Wade Sobkowich, executive director of the Western Grain Elevators Association in Canada, earlier this month said a rail work stoppage, coming just before the start of the fall harvest, would stop virtually all the country’s domestic and export grain flow.