The company says it has an embargo application in place on shipments going to or from CP’s Canadian locations that will take effect just after midnight on April 21, according to CTV News.
The serving of a strike notice is part of the bargaining process that unions must follow if they want to be able to strike. The embargo applies to all shipments originating in Canada which are billed to any Canadian or United States destinations, and, conversely, shipments originating in the U.S. which are billed to any Canadian destinations.
“CP has commenced and will continue to execute a safe and structured shut down of its train operations in Canada,” the company said in a statement to customers on its website. “An embargo application for shipments routing to and from CP Canadian locations is now in place to be effective 0001, Saturday, April 21, 2018.”
In the meantime, CP is continuing to bargain with both unions, the Teamsters Canada Rail Conference and the International Brotherhood of Electrical Workers. However, a spokesperson for the Teamsters Canada Rail Conference, which represents about 3,000 CP Rail engineers and conductors, said on Thursday no progress had been made.
What services get impacted?
According to Canadian Pacific, a strike would severely hamper their ability to provide freight service, impacting all commodities, even as demands for shipping soar. As for passenger service, commuters in three of Canada’s largest cities, Toronto, Montreal, and Vancouver – will suffer because the trains they ride on use Canadian Pacific tracks, reports The Star.
On Wednesday, in a conference call with analysts, Canadian Pacific Railway’s chief executive officer Keith Creel said, “CP cannot be put in a position where we are held hostage. We can’t take a position that’s going to destroy our long-term ability to be on a solid financial footing. If it means that we have to experience short-term pain to avoid that long-term damage, then that’s my fiduciary responsibility to all stakeholders and we’re going to uphold that.”
“A strike would be highly disruptive to Canadian economic activity when the railroads are already facing some operational challenges,” Cam Doerksen, a National Bank Financial analyst in Montreal, said Thursday in a note to clients. He added that while the federal government could potentially halt a work-stoppage, “the stock could be under some pressure until there is a resolution on the labor front.”
Impact on the oil industry
The potential strike comes as Canada’s two oil-producing provinces, Alberta and Saskatchewan introduce legislation that would allow them to cut oil and other fuel shipments to British Columbia in retaliation for the west coast province’s efforts to derail the Trans Mountain Pipeline extension.
However, things have not been looking good for the oil industry. The Financial Post is reporting that heavy crude is selling for US$16.60 a barrel below the U.S. benchmark, from a discount of more than US$30 in February. And while pipeline bottlenecks have eased a bit, allowing for a flow of oil into the U.S., a strike would create a huge disruption.
“Any reduction in rail capacity would not be good,” Kevin Birn, a director at IHS Energy in Calgary, said by phone. “A rail strike would stretch or constrain CP, one of the major rail lines, at a time when it’s most needed.”
“The oil industry is concerned about any further impact on the availability of rail capacity given the tight pipeline situation and is monitoring these new market developments as they unfold,” Chelsie Klassen, spokeswoman for the Canadian Association of Petroleum Producers, said in an email.
