One of the world’s largest exporters of softwood lumber has come to a standstill with a new rail strike (now in force), bringing the trade of Canadian timber into North American and global markets to its knees.
It comes as Wood Central reports that the Canadian National Railway and Canadian Pacific Kansas City – two of the country’s largest networks – threatened to lock out thousands of workers over a pay dispute.
At the time, it reported that such an action would seriously impact the delivery of Canadian lumber and wood products moved by rail to major shipping ports on the West Coast, including the Port of Vancouver, one of the world’s fastest-growing ports for forest products.
“Unless there is an immediate and definite resolution to the labour conflict, Canadian National Railway will have no choice but to continue the phased and progressive shutdown of its network, which would culminate in a lockout,” the Canadian National Railway said. “Despite negotiations, no meaningful progress has occurred, and the parties remain very apart.”
Now, Wood Central can reveal that the BC Council on Forest Industries, representing British Columbia’s CA $6 billion timber industry and home to some of the world’s largest forest companies, including West Fraser Timber, Canfor Corp, and Interfor Corp, is counting the cost of action.
“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 chief economist for the group, told Bloomberg, leading to “tens of millions of dollars in weekly losses for the forest products manufacturing sector.”
According to Mr Niquidet, British Columbia exported more than CA $11 billion worth of forest products last year, “with the majority of that dependent on rail (arriving at port),” adding that “there are limited opportunities to divert volumes via truck and store inventories…we expect significant curtailments within a week or two if a strike occurs.”
One of the companies most impacted by the action is West Fraser Timber, which carries more than 85% of its freight from rail to port. According to Joyce Wagenaar, company spokesperson, there isn’t enough trucking capacity to replace the volume of rail traffic: “In the event of a rail disruption, decisions pertaining to future production may be required.”
Teamsters issued a 72-hour strike notice late on Sunday.
The development comes after teamsters representing 125,000 members gave Canadian National Railway (CN Rail) and Canadian Pacific Kansas City (CPKC) a 72-hour ultimatum – that period past 2 hours ago.
“Unless parties reach last-minute agreements, a work stoppage will occur at 00:01 on Thursday, August 22,” it said in a statement.
The companies and the union accused each other of bad faith in the talks, with the teams saying that the teamsters say CN Rail and CPKC are seeking concessions that could endanger worker safety, a charge both the operators deny. Both companies have been halting shipments in preparation for potential work stoppages by 9,000 workers.
Wood Central understands that talks between the Teamsters Union and railway companies occur a year apart. In 2022, after the federal government introduced new rules on fatigue, CN Rail requested a year-long extension to its existing deal rather than negotiating a new one.
This, in turn, meant that both companies’ labour agreements expired at the end of 2023, and talks were ongoing. As a result, for the first time, the failure of negotiations would halt a vast majority of the Canadian freight rail system.
- For more information about the strike action, click on Wood Central’s special feature from earlier this week.
