Up to 85% of West Fraser freight transported by rail into the United States and shipped (via the Port of Vancouver) into the Far East and Asia could now be stranded. It comes as the Canadian forest products industry is now counting the cost of new strike action, which threatens British Columbia’s multi-billion dollar export trade.
According to Joyce Wagenaar, West Fraser Timber’s spokesperson, there simply is not enough trucking capacity to replace rail traffic volume, warning that the timber giant may need to slow down production until a resolution can be reached: “In the event of a rail disruption, decisions around future production may be required.”
Yesterday, Wood Central reported that the BC Council on Forest Industries, which represents British Columbia’s CA $6 billion industry, including some of the world’s largest forest companies, was counting the cost after the Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), locked out 9,300 workers after failing to clinch a deal with the Teamsters union.
“Within the first week of the strike, we could face widespread mill curtailments, further threatening jobs and economic activity in our communities,” Kurt Niquidet, the industry’s chief economist, said yesterday, leading to “tens of millions of dollars in weekly losses for the forest products manufacturing sector.”
Hours after the strike began, Justin Trudeau, Canada’s Prime Minister, said the federal government would announce steps to resolve the work stoppage. “We are not taking this lightly,” he told reporters in Sherbrooke, Quebec, before adding, “We are on this.”
The urgency stems from Canada’s overdependence on rail to meet demand. The world’s ninth-largest economy exports 75% of its goods into the United States (including more than 80% of forest products) via rail. Wood Central understands that a prolonged dispute could disrupt shipments of a wide range of goods, from grains and beans to potash, coal, and, of course, timber.
After months of talks, the bitter negotiations ground to a halt late, with Canada’s media reporting that both sides have accused the other of refusing to negotiate seriously. In separate statements, CN and CPKC said they took the steps months after “good faith” negotiations, which stalled over working conditions like shift scheduling and fatigue provisions.
“Without an agreement or binding arbitration, CN had no choice but to finalise a safe and orderly shutdown and proceed with a lockout,” CN said in a statement. The CPKC said it was “acting to protect Canada’s supply chains, and all stakeholders, from further uncertainty and the more widespread disruption,” adding that binding arbitration was the only “responsible” way to move forward.
Speaking to the BBC, the National President of Teamsters Canada, François Laporte, said he wanted to resume negotiations “as soon as possible.” However, Mr Laporte said his union’s sticking point was safety.
“Across Canada, we have trains carrying goods, energy, and chemicals,” he said. “And we want to make sure that those trains are operated by people who get the proper rest, who are safe, get who are not fatigued.”
As it stands, more than 9.74 million cubic metres of lumber (or 83.4% of total lumber) was traded from Canada to the United States for the first four months of 2024 alone. In addition, huge volumes of OSB (oriented strand board), plywood, and engineered wood products are exported from manufacturers like West Fraser Timber into the United States.
Given this importance, the Biden-Harris White House has been in touch with Trudeau, encouraging all parties to remain at the bargaining table.
Ahead of the full shutdown, both CPKC and CN had already begun pausing select shipments. Shipping firm Maersk on Monday stopped accepting shipments destined for Canada that were meant to move by rail and could not be transported on heavy trucks instead.
Professor Barry Prentice, director at the University of Manitoba Transport Institute, said the government would likely pass back-to-work legislation in the coming days if the sides couldn’t agree, as has been done in similar past disputes: “This isn’t the best way to run the show,” he told the BBC on Wednesday. “But it seems to be the playbook, and we’re back on this merry-go-round again.”
- For more information about the strike action, click on Wood Central’s special feature from earlier this week.
