Canada’s two largest railroads are facing a potential shutdown as a labor dispute with the Teamsters union looms large, threatening to disrupt cross-border trade with the U.S.

Both the Canadian Pacific Kansas City and Canadian National railroads, essential for transporting freight across the border, have started to restrict certain shipments like hazardous materials and refrigerated products.

If agreements are not reached, both railroads are prepared to lock out Teamsters Canada workers starting Thursday.

As of Tuesday, CPKC will cease all shipments originating in Canada and those headed to Canada from the U.S. Meanwhile, Canadian National has halted container imports from U.S. partner railroads.

Industry analysts predict that work stoppages may last only a few days. However, if prolonged, there could be significant disruptions in the supply chain, affecting various sectors, including fully built automobiles, auto parts, chemicals, forestry products, and agricultural goods.

The railroads collectively handle about 40,000 carloads of freight per day, valued at roughly $1 billion. With the upcoming harvest season, any disruptions could have severe consequences for the economy.

Although both railroads have a substantial presence in the U.S., and CPKC also serves Mexico, their operations are expected to continue even in the event of a work stoppage.

CPKC emphasized its commitment to avoiding any actions that could harm Canada’s economy, stating that shutting down the network would allow them to safely remove dangerous goods before any potential stoppage.

Union negotiations are ongoing, but the railroads seem to be moving towards a lockout scenario rather than a strike. It is essential for both parties to engage meaningfully to resolve the issues at hand.

These negotiations have been ongoing since last November, with crew scheduling, rail safety, and worker fatigue being among the main sticking points.

In conclusion, while the trucking industry may be able to compensate for some of the railroads’ shipping volumes, a complete replacement with trucking is not feasible. It is crucial for all parties involved to work towards a resolution to ensure the smooth flow of goods and the stability of the economy.