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article imageCanadian economy affected by continuing CN rail strike

By Karen Graham     Nov 23, 2019 in Business
Earlier this week, 3,200 workers at Canadian National Railway Co. went on strike, threatening to crimp shipments of oil, potash, and grain across the country. A prolonged strike will impact Canada's $1.7 trillion economy.
On Tuesday at midnight, conductors and yard operators at Canada’s largest railway walked off the job after they failed to reach an agreement with the company over issues including working conditions and drug benefits, the Teamsters Canada Rail Conference union said.
“Unfortunately, we were unable to reach a deal with CN,” the union said in a statement. Workers have been without a contract since July and served a strike notice on last Saturday.
The country-wide strike is the largest in Canada's recent memory and it needs to be noted that in recent years, rail strikes have usually lasted only a few days before the federal government stepped in to implement back-to-work legislation. However, there is not a lot the Trudeau minority government can do until Parliament convenes on December 5.
As the Financial Post points out, Canada's railroads and its economy are closely tied to the ebb and flow of global trade. We have seen the impacts on the petroleum industry and the export of grains during the U.S.-China trade war.
Canada's dependence on railroads
CN Rail is one of two main railroads used to ship consumer goods and exports of canola, wheat, potash and other resources from the prairie provinces to seaports. CN carries C$250 billion ($189 billion) worth of goods annually.
The rail company has also increasingly gotten into the shipment of oil due to the bottleneck caused by a lack of pipelines from Alberta's oilsands. CN reported the company shipped 180,000 barrels a day of oil in September, according to its earnings call.
Petroleum and chemicals account for 20 percent of CN Rail’s revenue, followed by grain and fertilizer with 16 percent. Additionally, nearly half of Canada's grain elevators are situated along CN rail lines, according to the Western Grain Elevator Association.
Canadian Canola field: In just a few decades  canola has become one of the world s most important oi...
Canadian Canola field: In just a few decades, canola has become one of the world's most important oilseed crops and the most profitable commodity for Canadian farmers.
© Canola Council of Canada
The Autumn Harvest
Commenting on the Autumn harvest, Bruce McFadden, director of research and analysis at grain monitor Quorum Corp., said in a phone interview “There have been fairly heavy orders of late."
“It was a slow start to the season as the harvest was much delayed by weather. But even though it continued to be a difficult harvest there has been a substantial portion of the grain is available now.”
According to CN’s operating plan, the company is expected to supply 5,650 hopper cars per week for shipping of crops like canola and wheat to Canada’s ports on the west coast through November.
“We’re going to take a further hit here,” said Pedro Antunes, the chief economist at the Conference Board of Canada. The strike exacerbates a “fundamental, underlying problem that is essentially the competitiveness, attractiveness of investment in Canada.”
More about CN rail strike, Canada economy, oil and wheat, oil exports, economic fallout
 
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