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January 24, 2011 2:00 AM, EST

Strike Threat by Canadian Rail Workers Could Affect Intermodal Shipments

Update: Canadian National Railway Co. reached a contract deal with the Canadian Auto Workers union Monday and the union dropped its threat to strike Tuesday, Reuters reported.

By Rip Watson, Senior Reporter

This story appears in the Jan. 24 print edition of Transport Topics.

Canadian Auto Workers union members have voted to strike soon at Canadian National Railway Co. and Canadian Pacific Railway Ltd. in a move that could affect both carriers’ intermodal shipments in that nation.

The union, which announced the vote on Jan. 13, plans a walkout at CN as soon as Jan. 25, and Feb. 8 at Canadian Pacific.

The CAW’s potential action affects intermodal because union members at CN include truck drivers delivering freight at intermodal terminals and workers who perform clerical services there as well as in offices. At Canadian Pacific, the CAW workers inspect and repair rail cars used to carry intermodal shipments.

On a combined basis, intermodal freight shipments rose 16% last year at the two railroads to a total of 2.5 million. Intermodal accounts for 27% of Canadian Pacific’s revenue and 20% at Canadian National.

Union President Ken Lewenza said in a statement, “Negotiations with both companies have been challenging so far, with each demanding concessions of the workers. Our members are absolutely serious in addressing these concerns.”

The CAW staged a 29-day strike against Canadian National in 2004 that reduced the railroad’s intermodal freight volume, revenue and shipments.

Both railways have operations in the United States that will not be affected by a walkout because there are separate labor contracts with union workers there.

The auto workers’ four-year contract with both carriers expired on Dec. 31, two months after negotiations began. 

Both railways have vowed to continue service if there is a walkout. The union said it represents 4,300 workers at Montreal-based CN and 2,100 at CP, which is based in Calgary.

“In the event of a strike or lockout, CN has developed a contingency plan to operate the railway safely and as efficiently as possible, with the objective of providing its customers the best possible service,” Canadian National spokesman Mark Hallman told Transport Topics on Jan. 18.

Canadian Pacific in a statement said it “has a comprehensive contingency plan in place to fully operate the railway should a labour dispute occur.”

Analyst Edward Wolfe of Wolfe Trahan said in an investor note that Canada’s government likely will avoid steps to stop a walkout because no workers who actually operate trains are involved in the disputes.

He also noted that “there could be some disruptions during the first quarter which impact first-quarter earnings per share if either of the strikes occur. Historically, strikes against the Canadian rails have been short-lived and have not had a material stock impact.”

Hallman said the company “remains optimistic that it can reach a contract agreement with the CAW without labor disruption.”

Canadian Pacific, which also expressed optimism that a settlement could be reached, said “the company has a long history of cooperative labor relations and working through key issues with the unions representing our employees.”

In a statement, the union said there was overwhelming support for a strike in a membership vote, with about 90% voting in favor of a walkout.