Why the Canadian freight rail halt will roil North American supply chains
Recasts with lockout
By David Ljunggren
OTTAWA, Aug 22 (Reuters) -Canada's two main freight rail companies locked out around 10,000 of their Canadian unionized workers early on Thursday,starting an unprecedented simultaneous work stoppage that will grind almost all railway freight movement in the country to a halt.
HOW INTEGRATED ARE THE RAIL NETWORKS ACROSS NORTH AMERICA?
Canadian National Railway Co CNR.TO and Canadian Pacific Kansas City CP.TO have said their rail networks south of the border will continue to operate, but industry groups fear that a work stoppage would have far-reaching effects on the movement of goods and commodities across North America.
CN and CPKC's coast-to-coast rail networks in Canada connect south of the border and serve as important supply chain links to trade corridors and ports across North America.
The networks intersect with those of U.S. rail operators such as BNSF Railway BNISF.UL, Union Pacific UNP.N, Norfolk Southern NSC.N and CSX CSX.O, facilitating the movement of billions of dollars' worth of goods and commodities through ports and warehouses across the continent.
CN's network stretches south to New Orleans. CPKC's network links to the U.S. ports of Corpus Christi, New Orleans and Gulfport, and it extends further south to the ports of Tampico and Lázaro Cárdenas on the east and west coasts of Mexico.
HOW WOULD A CANADIAN RAIL STOPPAGE AFFECT THE UNITED STATES?
Around a third of the traffic moved by the two Canadian rail companies crosses the border with the United States.
Many U.S. companies and producers, especially those in the Midwest, use Canadian ports for imports and exports, as Montreal can be faster for shipments to and from Europe, while Vancouver can be faster for ocean service to and from Asia.
Union Pacific, the No. 2 U.S. railroad operator, has warned that a simultaneous stoppage would have devastating consequences for the U.S. and Canadian economies.
Ratings agency Moody's said the stoppage could cost over C$341 million ($251.14 million) per day.
Dozens of groups representing miners, farmers, exporters, and fertilizer producers, among others, have warned that their sectors face crippling supply-chain delays, increased costs, cash-flow constraints and potential shutdowns in a protracted stoppage.
HOW WOULD THE U.S. AND CANADIAN FARM SECTORS BE AFFECTED?
A stoppage would hit the movement of everything from wheat to ethanol, potash fertilizer and meat.
In particular, it would crimp shipments of U.S. spring wheat from Minnesota, North Dakota and South Dakota to the Pacific Northwest for export. A stoppage would also hit Canadian potash and grain exports.
The U.S. exported $28.3 billion of agricultural products to Canada in 2023, making it the third-largest destination for U.S. agricultural exports behind China and Mexico. The U.S. imported $40.1 billion of Canadian agricultural products last year, making Canada the second-largest source of U.S. agricultural imports.
Ethanol, potash, corn, cereals, food grains, cooking oils, and meat are among the agricultural products traded between the two nations.
WILL TRADE WITH MEXICO BE AFFECTED TOO?
Mexico is Canada's third-largest single-country merchandise trading partner behind the U.S. and China, while Canada was Mexico's fourth-largest merchandise trading partner in 2023.
Mexico exports trucks, cars and vehicle parts to Canada, along with mangoes and avocados. Canada exports wheat, meat, aluminum, cars and parts to Mexico.
Two-way trade between the two countries, much of which moves via the rails, was nearly C$55 billion in 2023.
CAN THE TRUCKING INDUSTRY STEP INTO THE BREACH?
Truckers say they are facing a surge in demand and that road freight rates are rising for shippers in Canada. However, industry insiders say that while the trucking sector can handle some of the demand, it cannot replace rail distribution. In some cases, the industry does not have the equipment, nor the capacity, to handle bulk commodity cargoes such as potash, food grains, or coal.
($1 = 1.3578 Canadian dollars)
QUOTES-Industry groups and companies fret ahead of a Canada-wide freight rail stoppage nL4N3K6190
FACTBOX-From fertilizers to coal, Canadian industries to feel the squeeze from rail stoppage nL4N3K60S6
FACTBOX-Key facts about Canada's biggest rail operators as massive work stoppage looms nL4N3K403C
EXPLAINER-Why Canada is on the verge of an unprecedented rail labor stoppage nL1N3K60NG
Canada Railroads https://reut.rs/3Ar1I8r
2023 revenue breakup of Canada's railroads https://reut.rs/3YTaCWH
Reporting by David Ljunggren; Editing by Rod Nickel and Jamie Freed
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
