Latest News

Why a Canadian freight rail stop would roil North American supply chains

Canada's 2 primary freight rail companies are set to lock out around 10,000 of their Canadian unionized workers on Thursday at 12:01 a.m. ET (4:01. GMT), starting an extraordinary synchronised work interruption that. would grind practically all train freight movement in the country. to a halt.

HOW INTEGRATED ARE THE RAIL NETWORKS THROUGHOUT THE United States AND CANADA?

Canadian National Train Co and Canadian Pacific. Kansas City have said their rail networks south of the. border will continue to run, but industry groups fear that a. work interruption would have significant impacts on the movement of. items and products across North America.

CN and CPKC's coast-to-coast rail networks in Canada link. south of the border and act as crucial supply chain links to. trade corridors and ports throughout North America.

The networks intersect with those of U.S. rail operators. such as BNSF Train, Union Pacific, Norfolk. Southern and CSX, facilitating the motion of. billions of dollars' worth of items and products through. ports and storage facilities across the continent.

CN's network extends 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 BLOCKAGE AFFECT THE UNITED STATES?

Around a third of the traffic moved by the 2 Canadian rail. business crosses the border with the United States.

Numerous U.S. business and manufacturers, especially those in the. Midwest, utilize Canadian ports for imports and exports, as Montreal. can be quicker for shipments to and from Europe, while Vancouver. can be quicker for ocean service to and from Asia.

Union Pacific, the No. 2 U.S. railroad operator, has actually warned. that a synchronised interruption would have devastating consequences. for the U.S. and Canadian economies.

Dozens of groups representing miners, farmers, exporters,. and fertilizer producers, to name a few, have actually alerted that their. sectors face debilitating supply-chain hold-ups, increased costs,. cash-flow constraints and prospective shutdowns in a lengthy. stoppage.

HOW WOULD THE U.S. AND CANADIAN FARM SECTORS BE AFFECTED?

A blockage would strike the movement of whatever from wheat. to ethanol, potash fertilizer and meat.

In specific, it would crimp shipments of U.S. spring wheat. from Minnesota, North Dakota and South Dakota to the Pacific. Northwest for export. A blockage would likewise hit Canadian potash. and grain exports.

The U.S. exported $28.3 billion of agricultural items to. Canada in 2023, making it the third-largest location for U.S. farming exports behind China and Mexico. The U.S. imported. $ 40.1 billion of Canadian farming items in 2015,. making Canada the second-largest pioneer of U.S. farming. imports.

Ethanol, potash, corn, cereals, food grains, cooking oils,. and meat are among the farming items traded in between the. 2 countries.

WILL TRADE WITH MEXICO BE AFFECTED TOO?

Mexico is Canada's third-largest single-country product. 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 trucks and lorry parts to Canada,. together with mangoes and avocados. Canada exports wheat, meat,. aluminum, cars and parts to Mexico.

Two-way trade between the 2 countries, much of which moves. by means of the rails, was almost C$ 55 billion ($ 40.48 billion) in 2023.

CAN THE TRUCKING MARKET STEP INTO THE BREACH?

Truckers state they are dealing with a rise in need and that roadway. freight rates are increasing for carriers in Canada. Nevertheless,. industry experts state that while the trucking sector can manage. some of the need, it can not change rail circulation. In some. cases, the market does not have the equipment, nor the. capability, to handle bulk commodity freights such as potash, food. grains, or coal.

(source: Reuters)