Canada's Largest Freight Railroads Shut Down, Locking Out Thousands Of Workers

The labor dispute could have spillover effects in the U.S., a major Canadian trade partner.

Canada’s two largest railroads locked more than 9,000 unionized workers out of their jobs Thursday morning, shutting down the country’s rail freight lines with major implications for North American trade.

Canadian National Railway and Canadian Pacific Kansas City said they had decided to initiate the work stoppage after failing to reach a new agreement with the Teamsters Canada Rail Conference by a Thursday deadline. It’s not clear how long the shutdown might last, though there will be enormous pressure to reach a deal as quickly as possible.

The union says the railroads are seeking concessions from workers on scheduling and safety, while the railroads claim the union is making unrealistic demands. Their previous contracts expired in December 2023.

The Moody’s rating agency has estimated that the standoff could cost the Canadian economy up to $250 million a day, while a prolonged shutdown could strain supply chains in the U.S. as well. More than $9 billion in freight flowed between the two countries by rail in June, according to the U.S. Bureau of Transportation Statistics.

The railways and the union have spent months trying to negotiate a new agreement. Although the Canadian government has not yet intervened, it could still force the two sides into binding arbitration to resolve the dispute — an outcome the union says would give the railways the upper hand.