By Robb M. Stewart


Canadian National Railway has told customers it plans to halt intermodal traffic headed into Canada on its lines from Friday, a further step in a progressive shutdown after talks with unionized workers stalled.

The rail operator, in a customer notice viewed by The Wall Street Journal, said it will stop accepting all intermodal traffic into the country from various origins, including the ports of New York, New Jersey and Pennsylvania, Indianapolis and elsewhere.

Canadian National earlier said it will halt the movement of hazardous materials this week, and has set up a similar embargo on what it calls domestic temperature-controlled units, refrigerated containers. A Canadian Pacific Kansas City embargo on the movement of goods that are toxic or poisonous by inhalation began on Monday.

The phased shutdown of the two big rail companies is part of an effort to control traffic ahead of a possible lockout of members of Teamsters Canada Rail Conference later this month, which Canadian National and Canadian Pacific have warned will take place if there is no meaningful movement in bargaining or arbitration.

Intermodal, which includes rail and trucking services, includes domestic freight consisting largely of manufactured consumer products that are predominantly moved within North America and international freight including marine containers to and from ports and North American inland markets.

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. That 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.

Teamsters Canada is bargaining for the renewal of two collective agreements covering 3,200 so-called running trades employees and a unit of 85 rail traffic controllers at Canadian Pacific and the renewal of a collective agreement covering about 6,000 railway transportation employees at Canadian National.

The union and the rail companies have said they remain focused on reaching a settlement at the bargaining table, but with a lack of movement Canadian National and Canadian Pacific have said that to avoid the risk of a walkout they will be forced to lock out workers as of one minute past midnight Aug. 22 if progress isn't made. The union, which has declined binding arbitration in favor of continued bargaining, has said the threat of lockouts marked an unnecessary escalation by the rail operators.

Freight companies expect a schedule of embargoes from Canadian Pacific similar to what Canadian National released.

Canada's government, which estimates the two railroads transport close to 400 billion Canadian dollars, or $291 billion, in goods annually, has called on all sides to remain at the bargaining table. Business and trade organizations have warned a rail shutdown would cause widespread disruption to companies and supply chains, with delays and higher costs.

Scott Shannon, vice president for Canada at C.H. Robinson, said the logistics and transportation company has fielded inquiries from customers seeking help with spot freight. The first shippers that will be affected by a shutdown of the railroads are those that import into the ports of New York, New Jersey and Philadelphia and normally move goods north to Canada by train.

Some transporters will have the option of moving goods by truck, but that could spur a surge in demand and sudden tightening of capacity that would push prices in the spot market up dramatically, Shannon said. "Truckload shippers with spot freight as well as rail shippers looking to convert should expect not only higher costs but also longer lead times."


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


(END) Dow Jones Newswires

08-14-24 1705ET