Canadian rail stoppage set to squeeze North American industries
Adds comment from ratings agency Moody's in paragraph 4; farm impact details in paragraphs 18-19
Aug 21 (Reuters) -Canada's freight rail transport could come to a grinding halt as the country's two biggest railroad operators plan an unprecedented, simultaneous work stoppage following deadlocked talks over labor contracts.
Both Canadian National Railway CNR.TO and Canadian Pacific Kansas City CP.TO will lock out workers on Thursday if last-minute talks with the Teamsters Union fail to avert a costly stoppage.
Canada, the world's second-largest country by area, relies heavily on rails to transport grain, automobiles, potash, coal and other goods. The railways transport about C$380 billion ($277 billion) worth of goods and commodities annually, and the impact of the rail stoppage is expected to be felt across North America.
Rating agency Moody's estimates the simultaneous stoppage could cost the Canadian economy C$341 million per day.
Here are some sectors set to be damaged by a potential rail stoppage:
FERTILIZERS
* Fertilizers account for the third-highest volume among commodities shipped by Canadian railways, and 75% of all fertilizer produced and used in the country is moved by rail.
* The railways move an average of 69,000 metric tons of fertilizer product per day, equivalent to four to five trains daily.
* Fertilizer Canada, which represents producers such as CF Industries CF.N and Nutrien NTR.TO, has estimated C$55 million to C$63 million per day in lost sales revenue from disruptions of all rail services.
* Top potash producer Nutrien said the potential stoppage could hamper its full-year potash sales.
TRUCKING
* About 85% of U.S.-Canada cross-border freight in either direction is primarily handled by Canadian trucking carriers.
* Truckers say they can absorb some of the increased demand, but cannot replace long-haul rail distribution, especially for bulk commodities such as coal, potash and food grains.
* Truckload shippers with spot freight, as well as rail shippers looking to convert to truck, should expect not only higher costs but also longer lead times, says U.S. freight forwarder C.H. Robinson CHRW.O.
COAL
* Coal is one of Canada's top bulk commodities transported by rail, with over 30 million metric tons moved annually, according to the Coal Association of Canada.
* Shipment disruptions could affect mining giant Glencore GLEN.L and its majority-owned unit, Elk Valley Resources.
CRUDE OIL
* An average of 94,400 barrels per day of crude oil has been exported via rails this year, according to the Canada Energy Regulator.
* The strike is, however, unlikely to significantly reduce oil exports to the United States, due to excess capacity on Trans Mountain and other pipelines.
GRAINS AND AGRI PRODUCTS
* Canadian farmers rely on the railways to move their products to the market. As much as 94% of grain is shipped by rail, according to Grain Growers of Canada.
* A stoppage would crimp shipments of U.S. spring wheat from Minnesota, North Dakota and South Dakota to the Pacific Northwest for export.
* Nearly three dozen North American agriculture groups warn a simultaneous stoppage would be particularly severe on bulk commodity exporters in both Canada and the United States.
TIMBER
* With exports worth C$45.5 billion in 2022, as per Canadian government data, the forest sector is an important contributor to the country's economy.
* Pulp producer Mercer International MERC.O said it was working on contingency plans including alternative transport methods in anticipation of a rail stoppage, while Conifex Timber CFF.TO is reducing its sawmill operating schedule at its Mackenzie, British Columbia site
* Canadian National Railway is North America's largest rail carrier of forest products, according to its website.
AUTOS
* The U.S. imported and exported transportation equipment worth about $73 billion respectively in 2023 from Canada, according to the International Trade Administration.
* Canadian National's website said it handles over 2 million finished vehicles on an annual basis, catering to over 12 North American vehicle assembly plants.
* Canadian Pacific Kansas City caters to about 90% of automotive assembly plants in Mexico, it said on its website.
WINE INDUSTRY
* Canada exported 219.78 kilolitres of wine in 2023 and imported 407.38 kilolitres, per government data.
* Ontario Craft Wineries, a local trade association, said a rail stoppage could apply supply-chain pressure on several inputs such as glass bottles, corks, and barrels and affect its members' ability to export wines to other countries or slow down the rate of imported bulk wine into Canada.
Exports of Canadian forest products https://reut.rs/3yAvpUh
EXPLAINER-Why a Canadian freight rail halt would roil North American supply chains nL1N3K80V9
FACTBOX-Key facts about Canada's biggest rail operators as massive work stoppage looms nL4N3K403C
Reporting by Mrinalika Roy and Nathan Gomes in Bengaluru; Editing by Sriraj Kalluvila and Rod Nickel
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.
