CN Rail CEO says U.S. must avoid national rail strike

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The head of Canada’s largest railroad said the North American supply system is facing unprecedented demand in the weeks ahead as a bumper grain harvest nears its peak, so the United States must avoid a looming national rail strike later this week.

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Tracy Robinson, chief executive of Canadian National Railway Co., said her company has contingency plans in the event that negotiations between the major American railroads and unions break down, resulting in a strike as early as Friday.

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“We’re doing everything we can to make sure that doesn’t happen,” Robinson said at a conference held by Morgan Stanley on Sept. 14. “Nobody wants a labour shutdown, at all.”

CN operates a network that spans across Canada, through the U.S. mid-west, and down to the Gulf of Mexico. It’s one of six major freight railroads currently in bargaining with unions representing American rail workers. Those talks inching closer and closer to a strike deadline on Friday, as pressure builds for U.S. President Joe Biden to step in and avert a supply chain crisis.

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Robinson said the strike looms just as her railroad braces for a surge in demand for railcars to move strong grain harvests both in Canada and the U.S., on top of renewed demand for cars to move more coal.

“We’re going to have record demand, I think, for the rest of the year — particularly in the western part of the network. So we’re ready for it,” Robinson said. “But the one thing, of course, that we need to make sure we get done is we need to fix this labour situation down here in the United States. It’s a critical one for all of us. We are hard at it. We’re very intent.”

CN expects it will need rail cars to move up to 27 million metric tonnes worth of grain in the coming year in Canada alone — well above the paltry 18 million metric tonnes it moved following last year’s drought in the Prairies, according to the company’s annual grain plan.

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But Richard Grey, an agricultural economist at the University of Saskatchewan, suggested a U.S. rail strike wouldn’t cause that much trouble for the Canadian grain industry, since most shippers just use domestic rail lines to get their grain to ports on the Canadian Pacific coast or in Thunder Bay.

“I’m guessing that there isn’t a big impact,” he said. “Unless it’s certain things, like if you’re trying to ship oats to Minneapolis, that might give you a big problem, for example.”

Still, big Canadian grain companies are concerned that shutdowns or delays in the U.S. could have knock-on effects on the domestic rail system. Wade Sobkowich, executive director of the Western Grain Elevator Association, said he’s afraid backups with U.S.-bound freight could impact scheduling on the Canadian networks, or some of the Canadian railroads could end up with trains or crews stuck in the U.S., causing further delays.

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“It’s true, most of Canadian grain moves east-west with Canadian crews. But when you get into it a little more deeply, there could be some implications,” Sobkowich said. “Grain companies are already talking to their customers and saying, ‘You know, if this thing happens, we’re not going to be able to get you product.’”

This week, CN stopped sending hazardous materials across its U.S. rail lines to make sure the cargo didn’t end up stuck on “an unattended or unsecured train in the event of a work stoppage,” according to a note to customers on Sept. 12.

“Other freight customers may also start to experience delayed or suspended service over the course of this week, as the railroads prepare for the possibility that current labor negotiations do not result in a resolution and are forced to substantially reduce operations,” CN told customers.

Canadian Pacific Railway Ltd., CN’s main rival, isn’t part one of the six railroads negotiating with unions in the U.S. In a note to customers, CP said it “will continue to fully operate in Canada as well as in the US, subject only to any applicable embargo imposed by any of the U.S. railroads.”

• Email: jedmiston@nationalpost.com | Twitter: jakeedmiston