Canadians Need Reliable Rail Service

  |  
November 26, 2019

The CN Rail strike is only a week old, but its impacts are already being felt in communities across Canada.

TD Economics estimates that this dispute could cost the Canadian economy more than 2.2 billion if it continues to November 30th.   While CN rail service is suspended, Canadian farmers, foresters, miners, and manufacturers have been cut off from the rail network and are not able to get to customers in Canada and around the world.

Today’s economy is a global one.  For Canadian businesses to be competitive on the world stage we rely on having access to an efficient and reliable transportation system.  We have some unique challenges in Canada.  Not only are we a large geography but, unlike our neighbours to the south, Canada’s rail service sector essentially operates as a duopoly—Canadian National (CN) and Canadian Pacific (CP) share the vast majority of Canada’s freight rail market, leaving shippers with very few—if any—alternatives during a service disruption. While some of these businesses may be able to use trucking services to some extent, an ongoing truck driver shortage across Canada limits the scale on which this solution can be implemented.

Over 600 communities across Canada are dependent on the forest sector, and many, (particularly in British Columbia), are already facing market headwinds and impacts of devastating pest outbreaks, fires, and the ongoing softwood lumber dispute with the United States.  For forestry workers, families, and forestry-dependent communities, life can change in the space of a few days if mills have to be curtailed or closed.

Mineral and metal products account for roughly half of total rail freight revenue generated on an annual basis, and roughly 20% of the value of Canada’s exports (estimated at $105 billion in 2018). Companies, running out of storage space, have already curtailed production, and lost sales and customers. While mining companies are doing everything possible to avoid closures and lay-offs – and the resulting direct and indirect economic impacts – they are rapidly running out of time and options.

The strike is also hurting the agriculture industry – from the manufacturer to the farmer, it is directly, and negatively, impacting the entire supply chain. An estimated $200 million to $300 million worth of fertilizer shipments will be impacted should the CN Rail strike continue through to December 5, when Parliament resumes. Grain farmers are in the midst of an extremely difficult harvest.  Some of the crop remains in the field, and quality issues are resulting in a lesser return than farmers had hoped for. In addition to their inability to bring crops to market, many farmers are also heavily reliant on propane, which is necessary to heat their barns as winter approaches, and dry their crops to avoid spoilage. Likewise, Canadian feed mills rely on a steady and predictable source of inputs, which is often delivered by rail, in order to provide livestock producers with a continuous source of feed for their animals. As a result, the combination of these factors carries potentially devastating consequences for farmers’ livelihoods and for animal welfare.

Numerous other essential goods flow from province to province via the rail network—in many instances, municipalities and hospitals rely on these products to ensure the well being of Canadians. These include products used by municipalities to ensure clean drinking water. Roughly $38 million worth of industrial chemical products rely on CN’s network to get to their destinations every single day, with an average loss of $1 million per day per facility that is shutdown. Approximately 80 per cent of this sector’s production is shipped via rail.

Though the gravity of this situation is not always obvious to those who are not directly affected by the strike, it should not be underestimated. While the undersigned respect the collective bargaining process and believe that a negotiated settlement is the preferred route of action, our workers and their families cannot afford a drawn out dispute.

Based on the economic and community consequences of this strike across Canada, it is imperative that Prime Minister Trudeau and his government make its resolution their top priority.  We cannot wait until December 5th for Parliament to return to address this. By that time, industry closures will have mounted to a point of economic crisis, the damages from which many Canadian businesses may never fully recover. We need the government to act immediately and in an expedient fashion to get the trains and our products moving again.

Sincerely,

Derek Nighbor, President and Chief Executive Officer, Forest Products Association of Canada (FPAC)

Cathy Campbell, President, Responsible Distribution Canada (RDC)

Bob Masterson, President and Chief Executive Officer, Chemistry Industry Association of Canada (CIAC)

Mary Robinson, President, Canadian Federation of Agriculture (CFA).

Melissa Dumont, agr., Executive Director, Animal Nutrition Association of Canada (ANAC)

Garth Whyte, President and Chief Executive Officer, Fertilizer Canada

Wade Sobkowich, Executive Director, Western Grain Elevator Association (WGEA)

Chris Vervaet, Executive Director, Canadian Oilseed Processors Association (COPA)

Jim Everson, President, Canola Council of Canada (CCC)

Bernie McClean, President, Canadian Canola Growers Association (CCGA)

Gordon Bacon, Chief Executive Officer, Pulse Canada

Pierre Gratton, President and Chief Executive Officer, Mining Association of Canada (MAC)

For more information contact:
Kerry Patterson-Baker
Vice President, Communications and Public Affairs
Follow FPAC on Twitter: @FPAC_APFC
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