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CANADA: /US: Major Rail Strike Goes Ahead, Risk Of Longer Lasting Frictions

CANADA
  • Canada’s rail strike has indeed gone ahead with more than 9,000 employees at CN and CPKC locked out, the first time in decades that workers at both companies have simultaneously walked out. 
  • Rail cargo is most pertinent for wheat, fertilizer, chemicals and lumber but automakers have also raised concerns. 
  • It sees a shutdown of lines carrying about C$1bn/day in trade between the US and Canada, whilst latest estimates of costs came from Moody’s yesterday at circa C$340m/day.
  • Potential costs should be non-linear though, with analysts seeing limited macro impact if strikes are kept to a week as inventories can be drawn upon but of increasing significance if longer lasting. 
  • This could be understating the impact though as shipments of some perishable items to Canada had already been diverted to the US from Monday (and some did so as early as May when rail workers initially voted in favor of a strike), exacerbated by a union of 730 dock foremen in BC – home to the busiest port in Vancouver – also threatening to strike. 
  • It builds on the damage caused by a 13-day strike of more than 7,000 workers across Canadian western ports in July 2023 (seen at the time taking a tenth off monthly GDP). 
  • What’s more, these rail strikes coincide with talks covering about 45,000 dockworkers at ports through Houston to Boston being called off earlier this year and potential for a strike if no deal is reached before Sep 30. 
  • The combination of large strikes in a relatively short window along the west coast and threats of strikes on the east coast carries a real threat of driving longer-lasting frictions in US and Canadian supply chains.  
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