A coalition of 35 US agriculture and industry trade groups on Aug. 19 sent a letter to Canadian Prime Minister Justin Trudeau and various government ministers urging the Canadian government to maintain rail operations to “prevent serious damage to the Canadian and US economies.”
The letter from the Agricultural Transportation Working Group was sent just days before more than 9,000 members of the Teamsters Canada Rail Conference (TCRC) were locked out at Canadian National Railway Co. (CN) and Canadian Pacific Kansas City Ltd. (CPKC), halting operations at Canada’s two largest railroads.
“A lockout or strike would lead to shutdowns or slowdowns of rail-dependent facilities resulting in harmful consequences for Canadian and American agricultural producers, the agricultural industry, and both domestic and global food security,” the letter said. The coalition includes The Fertilizer Institute (TFI) and the Agricultural Retailers Association (ARA).
“The ability to soften the blow of a strike varies by industry. Importing industries are arguably able to better prepare for a rail stoppage by diverting vessels to US ports,” the group said. “However, the impact of a strike would be particularly severe on bulk commodity exporters in both Canada and the US as trucking is not a viable option for many agricultural shippers due to their high-volume needs and the long distances for many of the movements.”
The group warned that agriculture ships more than 25,000 cars per week, and this figure will go to zero during a strike or lockout, with even higher volumes potentially lost during harvest.
“Agricultural facilities have no viable alternative transportation options to supply Canada’s international customers and the inability to cycle products through the supply chain could limit producers’ ability to deliver harvested crops,” the letter warned. “Costs from delayed shipments and lost sales will be amplified and carried by all system participants, as well as Canadian consumers in the way of higher grocery store prices. A work stoppage of any length of time means lost shipping opportunities that will never be recovered.”
The trade groups stressed that agriculture is “particularly exposed to rail stoppages” due to the heavy reliance on rail for industries such as fertilizer, grain, livestock, feed grains, biofuels, and flour mills.
“In the event of an interruption, they quickly run out of storage capacity and incur shortages of incoming raw materials,” the letter said. “In addition, shutting down and restarting these facilities are complex operations, meaning that even a short-term disruption could stop production for several weeks.”
“Operational railroads are essential on both sides of the border for the integrated North American supply chain,” the letter concluded. “While we believe a negotiated solution is always the preferred outcome, your government should be prepared to move quickly if negotiations fail.”
The letter was also circulated to the White House, the US Department of Transportation, USDA, and the Surface Transportation Board. TFI issued its own statement on Aug. 22, the day the work stoppage began, saying it continues to be engaged with US policymakers to amplify the impact of the work stoppage on the fertilizer and ag industries.
“Our outreach to Capitol Hill is catalyzing activity, as multiple Congressional offices have messaged to the White House, USDOT, USDA, the STB, and others about the impact of this work stoppage to the fertilizer supply chain, to farmers, to consumers, and to foreign and trade relations, emphasizing the importance of US engagement with Canadian officials,” TFI said.
ARA also sent an alert on Aug. 22 asking members to reach out to members of congress to urge them to contact the White House and key federal agencies “to take immediate action by working with the Canadian government on immediately ending this railroad strike/lockout.”
“Costs from delayed shipments and lost sales will be amplified and felt by all segments of America’s agricultural industry and consumers,” said Richard Gupton, ARA’s Senior VP, Public Policy and Counsel. “Rail stoppages will have a significant impact on fertilizer as Canada is the largest producer of potash and an important trading partner with the US.” US Transportation Secretary Pete Buttigieg said earlier this week that his department had been monitoring the situation closely and tracking the flow of vital goods to the US. The US Chamber of Commerce also called on the Canadian government to intervene.