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Rail strike could devastate B.C.'s economy, business leaders say

Work stoppage would harm small businesses and major resource exporters alike, B.C. economist warns
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A Canadian Pacific Railway locomotive is shown at the main CP Rail trainyard in Toronto on Monday, March 21, 2022. Rail strike possible as of Aug. 22 after labour board rules services non-essential. The country’s labour tribunal says services by rail employees do not amount to essential work. THE CANADIAN PRESS/Nathan Denette

With a potential Canada-wide railway worker strike less than two days away, B.C. business leaders are warning that such an action would raise prices for consumers and have devastating impacts on the province's economy. 

“It’s big. It’s massive, potentially very, very disruptive," said Ken Peacock, chief economist with the Business Council of British Columbia.

On the consumer side, prices of food and products are likely to jump if grocery stores and businesses are unable to replenish their stock. It could also mean people simply aren't able to order or access certain items as quickly as they are used to. 

“Pretty much everything in a person’s house is a consumer product that was imported from somewhere else," Peacock said. 

One step up the supply chain, at the small business level, Peacock said the impacts would be even worse. Restaurants often rely on rail services to import fresh food and beverages and non-food related businesses rely on the transportation method to send and receive products, parts and essential materials. 

For businesses that just made it through the COVID-19 pandemic, Peacock said there likely isn't financial wiggle room to weather more turbulence. 

Bridgitte Anderson, president and CEO of Greater Vancouver Board of Trade, echoed Peacock's concerns in a statement, saying "every facet of daily life would be impacted."

“A work stoppage would be devastating for businesses across British Columbia, especially small businesses, as they are most vulnerable to delays and shortages.”

Restaurants Canada also issued a statement, noting that 47 per cent of restaurants are currently operating at a loss or breaking even. 

“Stability is crucial for restaurants to continue serving their communities and supporting the livelihoods of those who depend on them.”

READ ALSO: Business on edge as Canada’s railways on track for Thursday work stoppage

The greatest concern for Peacock, however, is at an even broader level. Many of the industries that form the backbone of B.C.'s export economy, such as forestry, mining and smelting, depend almost exclusively on railways to get their products to market. 

"Truck and road is not a substitute for the vast majority of things," Peacock said, noting a figure from RSI Logistics that estimates it takes 300 trucks to transport the same load as a single freight train.

Peacock said most big companies in resource industries don't have the capacity to store their products for long and will be forced to shut down operations if they can no longer export goods.

Depending on how long a potential railway strike lasts, Peacock said the impacts would be disastrous for B.C.'s economy. It could also harm Canada's reputation as a major transporter on a global scale – something Peacock said the country has worked hard to build over the last two decades. 

In B.C., that reputation was already damaged last summer when port workers decided to strike, halting many container shipments into the province. 

READ ALSO: Railway shipments plummet amid B.C. port strike, hurting small businesses

If other countries can no longer reliably transport their goods and products through Canada, they will find other methods, Peacock said.

According to the Railway Association of Canada, rail lines carry more than $1 billion worth of goods each day and more than half of the country’s exports travel by rail.

Canadian Pacific Kansas City Ltd., Canadian National Railway Co. and their combined 9,300 workers have until Wednesday night to reach a deal before the companies have promised to lock out workers and the union has said its workers will walk off the job. 

CN made a request to federal Labour Minister Steven MacKinnon asking him to use binding arbitration to force a deal, but MacKinnon rejected the request last Thursday (Aug. 15), saying he wanted the company to bargain in good faith. 

Since then, CN and CPKC said they have begun limiting the shipment of certain perishable or dangerous goods to ensure they aren't stuck in transit should a work stoppage occur. This includes meat, some medicines, fertilizers, and poisonous and toxic inhalation substances, among other things. 

READ ALSO: Canada’s railways halt shipments as lockout threat looms large

One such halted substance that has raised concern is chlorine, which is used by municipalities to treat drinking water. 

Alan Robinson, commercial vice-president at Chemtrade Logistics Inc. said the chemical cannot move by truck or ship and safety regulations limit the amount that can be stockpiled. 

Bob Masterson, CEO at the Chemistry Industry Association of Canada, estimated municipalities will have around seven to 10 days of chlorine supply before they need a fresh shipment. 

However, Metro Vancouver's water services director of engineering and construction, Goran Oljaca, said they don't foresee any disruptions to their water treatment process. He said the regional district has topped up its storage tanks to their maximum levels and has been assured by its chlorine supplier that it will be able to transport the substance to them by truck if needed. 

Oljaca said they're also working with an alternative supplier who could get them smaller shipments of chlorine.

Asked about potential interruptions to medicine entering B.C., the Ministry of Health said the information it has received so far is that most medications aren't transported by rail. 

Anderson, with the Greater Vancouver Board of Trade, added that one further impact of a work stoppage would be on some Lower Mainland commuters. If a strike does occur Thursday, the West Coast Express would be shut down. It transports around 6,000 people between Vancouver and Mission each day.  

READ ALSO: 32,000 commuters bracing for rail strike in Canada’s 3 biggest cities

Anderson said her board is calling on the federal government to intervene and do anything in its power to stop a strike. 

Premier David Eby told reporters on Monday (Aug. 19) that he believes the companies and workers need to get back to the bargaining table.

"I think the more the company and workers can be sitting down and hammering out something together, the better the arrangement is going to be and the longer it’s going to last and the more stable it’s going to be for everyone.”

He added that Ottawa should be doing everything in its power to help the process along. 

-With files from The Canadian Press


 

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