Freight rail traffic across Canada expected to be disrupted this week as two companies issue closure notices By Reuters

Written by Promit Mukherjee

OTTAWA (Reuters) – Canada's freight rail network could grind to a halt this week, potentially causing huge economic losses, after the country's two largest rail operators on Sunday issued shutdown notices to the truckers' union representing about 10,000 workers.

As last-minute deals fell through, Canadian National Railway (TSX:) (CN) and Canadian Pacific Kansas City (CPKC) plans to close its doors to workers starting in the early hours of Thursday morning.

This is the first time the country has faced a simultaneous labour stoppage at railway companies, as companies typically negotiate their labour agreements in alternate years.

The stoppages could cripple shipments of food grains, beans, potash, coal and timber, which make up a large portion of Canada's exports, and also affect shipments ranging from petroleum products to chemicals and automobiles.

In addition to billions of dollars in economic damage, the shutdown could disrupt rail commerce across North America.

“Unless an immediate and decisive solution to the labour conflict is found, the national railway company will have no choice but to continue the gradual closure of its network, which could culminate in a shutdown,” the national railway company said in a statement.

“Despite the negotiations that took place over the weekend, there has been no tangible progress, and the parties remain very far apart,” she said.

The truckers' union says the Canadian government wants to implement a forced relocation provision that would order workers to move across Canada for months at a time to fill labour shortages.

CN says it has made four offers this year on pay, rest and availability while remaining fully compliant with government-imposed rules overseeing work and rest periods.

The dispute with CPKC focuses on safety issues, with the union claiming the company wants to “abolish the collective agreement for all safety-critical fatigue provisions”, meaning crews will have to stay awake longer, increasing the risk of accidents.

CPKC says its offer maintains the status quo of all work rules, “fully complies with new regulatory requirements for comfort and does not compromise safety in any way.”

The truck drivers, who represent yard workers, rail traffic controllers, locomotive engineers and conductors, earlier on Sunday issued a 72-hour strike notice to CPKC ahead of the company's shutdown notice.

She also said in a separate statement to members that CN's shutdown notice should be treated “as if we were on strike”.

“We are filing the strike notice to defend the rights and safety of our members,” Paul Bouchet, president of the Canadian Train Drivers Association, said in a statement.

Both CN and CPKC said their networks outside Canada would continue to operate but that the outages could have ripple effects. The two Canadian rail companies’ networks connect to several major U.S. rail and freight hubs such as Chicago, New Orleans, Minneapolis and Memphis. CPKC’s network also extends south to ports on both the east and west coasts of Mexico.

The federal Liberal government has so far rejected business groups' requests to intervene, saying it wants companies and unions to resolve their differences through negotiations.