By Robb M. Stewart


Canadian National Railway has taken the first step in a phased shutdown of its rail network in Canada with a halt to the movement of hazardous cargo, based on what it says is a lack of movement in talks with unionized workers.

The rail operator said it would have no choice but to push ahead with a lockout of employees as of one minute past midnight Aug. 22 if there were no meaningful progress in negotiations with Teamsters Canada Rail Conference or arbitration.

Canadian National said it started an embargo of certain hazardous goods, including chlorine used in household cleaners and to purify drinking water, and ammonia used as fertilizer. Such goods are carried daily but can't be left unsupervised out on the railroad in the event of a work stoppage.

Canada's labor-relations board late last week opened the door to a strike or lockout after it determined work stoppages at Canadian National and Canadian Pacific Kansas City wouldn't pose an immediate or serious danger to safety or public health. This effectively put the rail companies and the union back to where they were in early May, when the federal government averted disruption by calling on the board to rule on whether certain goods must be transported during a strike or lockout.

Canadian Pacific has said it planned to lock out employees Aug. 22 if Teamsters leadership and the company couldn't reach a negotiated settlement or agree to binding arbitration. Last week it said it would issue an embargo on the movement of all "toxic by inhalation" dangerous goods and follow up with a halt on other cargoes during a 13-day cooling off period order by the Canada Industrial Relations Board in its ruling Friday.

A work stoppage at both railroads would idle around 10,000 workers and shut down both networks, slowing the movement of cargo across the country and cross-border trade. The government estimates that close to 400 billion Canadian dollars, or $291 billion, in goods is transported by railroads in Canada annually.

Canadian National warned that a prolonged shutdown of rail operations would have a serious impact on supply chains, creating delays and possible shortages, and increasing costs for businesses including mines, grain elevators, factories and mills.


Write to Robb M. Stewart at robb.stewart@wsj.com


(END) Dow Jones Newswires

08-13-24 1312ET