CN Strike Harms Global Trade

As the result of a ten-day old strike at Canadian National (CN) Railways, rail transportation has slowed to as little as 25% of normal capacity. The strike started on February 10 when 2800 conductors and switching crew employees walked off the job over wages and working conditions.

CN operates Canada's largest railway. CN's 19,200 miles of track stretch from the Pacific to the Atlantic oceans, and south to the Gulf of Mexico. CN trains deliver a significant share of Canada's merchandise exports including auto products, chemicals, coal, fertilizers, forest products, grain, minerals and petroleum.

Global Trade Depends On CN's Fast, Reliable Delivery Service

CN services six major North American ports, thus export shipments are major drivers for CN's revenues. For example, Canadian farmers are shipping more harvested grain on CN trains to satisfy demand from China. CN also owns railways in Pennsylvania that carry products from the steel industry to meet rising global demand for iron.

CN has established a reputation for on-time delivery by running shorter, more frequent trains on a stricter time schedule than competitors who hold their trains until a pre-determined number of cars are full.

Canadian Railways Strike Causes Global Trade Shortages

Not just CN's reputation was put in jeopardy by the strike; domestic and international customers are suffering. West Fraser Timber may shut down operations after stockpiling as much lumber products as it can.

Ford Motor Co. of Canada has closed an assembly plant in St. Thomas, Ontario because of materials shortages due to the railways strike. Unlike West Fraser, Ford is looking at trucking alternatives to CN.

The strike has angered other manufacturers, chemical producers, forestry firms and farming groups. Nova Chemicals is complaining that its plastic pellets aren't reaching toy makers, consumer packaging firms, industrial drum manufacturers and other key customers that depend on Nova's raw materials.

In the United States, Maine Governor John Baldacci comments that the rail strike has contributed to a shortage of propane in his state.

Strike Threatens Canadian Exports

Exports from Canada to the rest of the world will face a major problem if the strike is prolonged. Eventually bottlenecks will congest the six ports to which CN Railways delivers as backlogged rail exports pile up, turning a short-term railways strike into a long-term global trade issue among Canada and its trade partners.

Then, CN's strike may force Canada's global trade partners to look elsewhere for permanent alternatives to Canada's products.

Sources: CN Strike (reported in Toronto Star - February 19 & 20, 2007); CN strike takes mounting toll (reported in Globe and Mail - February 19, 2007)

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