Canadian rail stoppage set to squeeze North American industries
Recasts with lockout
Aug 22 (Reuters) -Canada's freight rail transport could come to a grinding halt after the country's two biggest railroad operators announced an unprecedented, simultaneous work stoppage following deadlocked talks over labor contracts.
Canadian National Railway CNR.TO and Canadian Pacific Kansas City CP.TO said they had locked out their workers and shut their networks in the country early on Thursday after last-minute talks with the Teamsters union failed to avert a costly stoppage.
Canada, the world's second-largest country by area, relies heavily on railways 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 the 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 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 more than 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 have warned 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 the 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 more than 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 Rod Nickel, Jamie Freed and Sherry Jacob-Phillips
Relaterade tillgångar
Senaste nytt
Ansvarsfriskrivning: XM Group-enheter tillhandahåller sin tjänst enbart för exekvering och tillgången till vår onlinehandelsplattform, som innebär att en person kan se och/eller använda tillgängligt innehåll på eller via webbplatsen, påverkar eller utökar inte detta, vilket inte heller varit avsikten. Denna tillgång och användning omfattas alltid av i) villkor, ii) riskvarningar och iii) fullständig ansvarsfriskrivning. Detta innehåll tillhandahålls därför uteslutande som allmän information. Var framför allt medveten om att innehållet på vår onlinehandelsplattform varken utgör en uppmaning eller ett erbjudande om att ingå några transaktioner på de finansiella marknaderna. Handel på alla finansiella marknader involverar en betydande risk för ditt kapital.
Allt material som publiceras på denna sida är enbart avsett för utbildnings- eller informationssyften och innehåller inte – och ska inte heller anses innehålla – rådgivning och rekommendationer om finansiella frågor, investeringsskatt eller handel, dokumentation av våra handelskurser eller ett erbjudande om, eller en uppmaning till, en transaktion i finansiella instrument eller oönskade finansiella erbjudanden som är riktade till dig.
Tredjepartsinnehåll, liksom innehåll framtaget av XM såsom synpunkter, nyheter, forskningsrön, analyser, kurser, andra uppgifter eller länkar till tredjepartssajter som återfinns på denna webbplats, tillhandahålls i befintligt skick, som allmän marknadskommentar, och utgör ingen investeringsrådgivning. I den mån som något innehåll tolkas som investeringsforskning måste det noteras och accepteras att innehållet varken har varit avsett som oberoende investeringsforskning eller har utarbetats i enlighet med de rättsliga kraven för att främja ett sådant syfte, och därför är att betrakta som marknadskommunikation enligt tillämpliga lagar och föreskrifter. Se till så att du har läst och förstått vårt meddelande om icke-oberoende investeringsforskning och riskvarning om ovannämnda information, som finns här.