Canada calls for quick end to CP strike amid fears of worsening commodity shortages

Band Allison Lampert

March 21 (Reuters)Canada on Monday called for an early negotiated end to a work stoppage at the country’s second-largest railroad, Canadian Pacific Railway Ltd. CP.TOwhich is expected to exacerbate a shortage of basic commodities caused by Russia’s invasion of Ukraine.

Fearing a lasting strike, which began on Sunday, industry groups are calling on the Canadian government to introduce back-to-work legislation to end the dispute quickly.

Canada, the largest country by area after Russia, relies heavily on rail to move goods like grain and manufactured goods to port, in addition to 75% of all fertilizer in the country, according to an industry group.

The agricultural sector is already facing shortages and higher prices due to Western economic sanctions against Russia and Belarus, two major fertilizer producers.

“The world needs Canadian grain now more than ever,” said Wade Sobkowich, general manager of the Western Grain Elevator Association, which represents business.

He said the railroads were struggling to meet half of the grain industry’s weekly demands, despite this year’s crop being 35% below average, and warned that the CP strike could push the situation from “terrible to catastrophic”.

Federal mediators are involved in negotiations between CP and the Teamsters Canada Rail Conference, which represents unionized locomotive engineers, among others.

“We are confident in their ability to reach an agreement. Canadians expect them to do so as soon as possible,” said Canadian Labor Minister Seamus O’Regan.

The work stoppage in Canada could be felt south of the border as CP’s rail network extends as far south as Kansas City, Missouri, in the United States.

Mike Steenhoek, executive director of the Iowa-based Soy Transportation Coalition, said his concern was that the railroad could not ship fertilizer from Canada to the United States.

“The current war in Ukraine is putting additional pressure on the delivery of American agricultural production and inputs, especially fertilizers,” Steenhoek wrote in an emailed bulletin.

“A shutdown of operations at Canadian Pacific will certainly aggravate this stress.”

Corey Rosenbusch, president and CEO of the Fertilizer Institute, said the United States imports 86% of its potash from Canada, much of it by rail.

Fertilizer Canada President and CEO Karen Proud said the timing was critical as “we are 4-6 weeks away from planting in Canada and even earlier in the United States.”

Nutrien Ltd NTR.TO, the world’s largest fertilizer producer, could withstand a days’ shutdown by CP as it moved potash from its Canadian mines to U.S. stores ahead of spring planting, the chief executive told Reuters by acting Ken Seitz. But a longer shutdown would force Nutrien to consider slowing potash production, Seitz said.

The CP strike is the latest blow to Canada’s struggling supply chain, which suffered flooding in British Columbia last year that suspended access to the country’s largest port.

An eight-day strike at the Canadian National Railway Company CNR.TO in 2019 cost the fertilizer industry between C$200 million and C$300 million ($159 million to $238 million), the industry group estimates.

The Mining Association of Canada said work stoppages such as those at CP cause additional operational costs for businesses and “reduce confidence in Canada” as an investment destination for companies dependent on the supply chain. ‘supply.

($1 = 1.2601 Canadian dollars)

(Reporting by Allison Lampert in Montreal Additional reporting by Steve Scherer in Ottawa Writing by Denny Thomas Editing by Jacqueline Wong and Matthew Lewis)

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