More than 9,000 Teamster Canada union workers were locked out by Canadian National Railway and Canadian Pacific Kansas City Thursday after failed negotiations, according to multiple media reports. 

“Rail cross-border trade with the U.S. is at a standstill, which according to the U.S. Department of Transportation, accounted for 14% of total bilateral trade of $382.4 billion between the countries for the first half of the year,” according to CNBC. “Approximately $572 million in container trade arrives daily in the U.S. from Canada, according to U.S. Census data.” 

According to the Detroit Free Press, vehicle and auto parts are the top commodity transported between the U.S. and Canada by rail. 

“If it goes on for more than three to four weeks, it’ll be a major, major problem. Parts will have run out and production lines will be stopped and workers will be laid off,” said Nick Little, director of Railway Education at the Eli Broad College of Business at Michigan State University, to the newspaper. 

The article also reported the American Automotive Policy Council had reached out to the White House with concerns Thursday. 

“John Bozzella, CEO of Alliance for Automotive Innovation, the auto industry’s lobbying group, said Thursday that the rail stoppage is ‘a concern,’ given that freight rail moves three-fourths of all new vehicles purchased in the U.S. and carries 1.8 million carloads of vehicles and parts,” the article says. “The group is ‘closely monitoring’ the rail situation in Canada and will have more to say as the situation develops, he said.” 

General Motors Co. told The Detroit News that it had contingency plans in place for the short term. Stellantis NV said it hadn’t seen an impact as of Thursday afternoon but the company was taking necessary action as a precaution. 

Steve Hughes, HCS International president and CEO, said via email to Repairer Driven News that importers bringing cargo into the country through Prince Rupert or Vancouver parts will have their containers either stuck there or need to dray or transload to a truck. 

“There will be a huge push by all importers to move to truck, which will no doubt make the trucking rates skyrocket as the demand will far outstrip the supply,” Hughes said. “Overall, this lockout will affect all imports coming through the western ports and from Canadian companies that rail goods to companies in the US. This is a major problem!” 

The shipping industry is already seeing other disruptions, Hughes said in a recent newsletter. He said container space was scarce in June and July and the trend appears to continue this month. 

Companies impacted by President Joe Biden’s tariffs on China that were set to go into effect Aug. 1 but were delayed have been front-loading their imports, he said. 

The ILA/USMX Longshoreman are also looking at a possible strike with a contract set to expire Sept. 30. 

“Given this substantial threat to imports on both the East and Gulf state ports, virtually every company and industry that imports through these gateways have been front-loading their imports to avoid the possible impacts of a strike,” Hughes said. 

Hughes also said disturbances in the Red Sea/Suez Canal continue and are causing scenarios seen during the pandemic.

IMAGES

Photo courtesy of den-belitsky/iStock