Canadian Freight Railroads Shut Down, Dealing a Potential Blow to North America's Economy

Aug. 22, 2024 (CNN) - Canada's two major freight railroads have shut their operations, according to management of the two companies, locking out 9,000 members of the Teamsters union who operate the trains and dealing a potential blow to both the Canadian and US economies.

Nearly a third of the freight handled by the two railroads — Canadian National (CN) and Canadian Pacific Kansas City Southern (CPKC) — crosses the US-Canadian border, and the shutdown could disrupt operations in a number of US industries, including agriculture, autos, home building and energy, depending upon how long the shutdown lasts.

"CPKC is acting to protect Canada's supply chains, and all stakeholders, from further uncertainty and the more widespread disruption that would be created should this dispute drag out further resulting in a potential work stoppage occurring during the fall peak shipping period," the company said in a Thursday statement shortly after the start of the lockout at 12:01 am ET. "Delaying resolution to this labor dispute will only make things worse."

The shutdown would drive home how closely linked the two nations' economies are, with many industries depending on the free movement of goods across the border for their efficient operations.

For example, some US auto plants could temporarily shut down if they're unable to get engines, transmissions or stampings done at Canadian plants. US farmers might find shortages of fertilizer and US water treatment plants near the Canadian border could run of out chlorine they use to purify water.

This is the first time that both major Canadian railroads have shut down at the same time due to a labor dispute. The most recent work stoppage in the industry was a 60-hour strike at Canadian Pacific in 2022. Before that, there was a nine-day strike at Canadian National in 2019.