Potential CP rail walkout is latest blow to freight backlog

Thousands of workers at Canada's second-largest railway could walk off the job as early as Tuesday night, adding to the transport woes that have stranded commodities across the nation's Prairies.

More than 3,000 Canadian Pacific Railway Ltd. train conductors, engineers and electrical workers represented by Teamsters Canada and the International Brotherhood of Electrical Workers could walk off the job as early as 10 p.m. Eastern Daylight Time if a negotiated settlement isn't reached, according to a Teamsters Canada statement Saturday. Teamsters members voted 98 percent to reject the company's final offer on Friday.

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"CP is offering more of the same contract language that workers just voted to reject a few hours ago," Doug Finnson, president of Teamsters Canada, said in the statement. "The company clearly isn't serious about reaching a negotiated settlement."

The railway will continue to meet with the unions in the hope of reaching an agreement, CP said Saturday in a statement. The Calgary-based company has started its contingency plan for a work stoppage and will work with customers to ensure a "smooth, efficient and safe wind down of operations," according to the statement. The vast majority of the railway's engineers and conductors in Canada are unionized and would take part in any strike, according to the Teamsters.

CP Rail fell 0.30 percent to C$240.92 at 9:31 a.m. in Toronto.

The uncertainty over a possible labor disruption comes after a lack of adequate rail capacity led to piles of commodities being stuck on Canada's Prairies this winter, including grain, oil and lumber.

A potential work stoppage that lasts even a week could cause "serious financial consequences" for grain shippers, said Wade Sobkowich, executive director of the Winnipeg, Manitoba-based Western Grain Elevator Association, which represents the nation's largest exporters, including Richardson International and Viterra Inc. Exporters are already facing reputational damage from last winter's capacity shortage and a strike could be another service failure to explain to customers, he said.

"To have zero movement on one of our two major railways in Canada is a very big deal," Sobkowich said Saturday by phone. "I can tell you the longer it goes on, the greater the impact will be."

Chief Executive Officer Keith Creel said last month that Canadian Pacific had contingency plans in place in the event of a walkout and wouldn't sacrifice long-term profitability just to get a "bad deal" in place. He didn't provide details of the plans.

Canadian Labor Minister Patty Hajdu on Sunday urged "all parties to continue their hard work to reach a fair deal that avoids any disruption in service. Our government believes in the collective bargaining process, and I remain hopeful that the parties will be able to negotiate new collective agreements."

In an earlier interview, she declined say whether the federal government would use back-to-work legislation, saying only they were focused on the bargaining process.

Mediators from the Federal Mediation and Conciliation Service have been working with Canadian Pacific and the unions and will continue to do so, Hajdu said in an e-mailed statement.‎

Companies that rely on Canadian Pacific's services include Teck Resources Ltd., Canada's biggest diversified miner, and fertilizer producer K+S AG.

Intermodal cargo was Canadian Pacific's biggest line of business in the first quarter, accounting for C$367 million ($282 million) in revenue, or 22 percent of overall sales -- just ahead of grain, which contributed C$357 million. Key intermodal customers include Ocean Network Express, a joint venture between three Asian shipping companies.

Commuter train services in cities such as Toronto, Montreal and Vancouver wouldn't be affected by a strike, Teamsters Canada said Saturday. The trains operate on tracks owned by Canadian Pacific.


--With assistance from Josh Wingrove


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