Canadian grain shippers are raising concern about the impact a strike at Canadian Pacific Railway could have on grain elevator companies, grain producers and Canadian consumers.
Earlier this month, Teamsters Canada Rail Conference (TCRC) reported that over 96 per cent of 3,062 voting members supported striking if necessary. Citing issues including wages, benefits and pensions, the union is now in position to issue a 72-hour strike notice to CP Rail. At this time a notice has not been given.
“When we have a vessel waiting for grain off the west coast, there’s a penalty the exporter pays for having that vessel wait longer than the contract window. Right now demurrage costs are $35,000 to $40,000 per vessel per day,” said Western Grain Elevator Association spokesperson Wade Sobkowich, adding that grain elevators can have multiple ships awaiting product at any given time.
“Those are astronomical costs that the exporters incur and the grain producers incur and it impacts the price to the consumer, and impacts the price the farmer can get for the grain that they deliver into the country elevator system.”
Sobkowich added that the agriculture sectors have already faced significant supply chain challenges this year amid fires, flooding and the COVID-19 pandemic. Grain companies are struggling to get product to market even though widespread drought on the prairies resulted in a significantly smaller crop size than usual.
We are still trying to meet our customers’ needs even in spite of the short crop. We have those waiting for the crop off the west coast, feed lot operators waiting for product, processing facilities across the prairies and in eastern Canada in need of canola and cereal grains in order to provide bread for the store shelves. And, we’re seeing inflation increases,” Sobkowich said.
“Everything is coming at us all at once. There are some things we can control and some things we can’t. We should be able to control a work stoppage and yet here we are facing one. This is the last thing we need right now in the grain sector and as an economy here in Canada.”
Sobkowich said roughly half of annual grain crops are exported on CP rail lines. He said average crop size ranges between 30 and 40 million metric tons.
Requests for comment from TCRC were not immediately returned.
In their most recent statement, posted March 1, CP said “we have offered a fair and balanced agreement, including wage increases, for a two-year collective agreement, and have agreed to 20 union demands on benefits and work rules in order to achieve labour certainty and stability for the next two years.”
“A work stoppage of any duration at CP will impact virtually all commodities within the Canadian supply chain, thereby crippling the performance of Canada’s trade-dependent economy.”
The Federal Mediation and Conciliation Service is assisting in the negotiation.
Saskatchewan Premier Scott Moe also voiced concern over the situation Tuesday, saying a resolution without rail service disruption is of great importance for the provincial economy and across Canada.
“We would encourage all those at the bargaining table to come to some sort of an agreement so that we can continue with services, and if not we ask the federal government to ensure that we have uninterrupted service here in Saskatchewan.”