"Canadian Railway Strike Crisis: Freight Transportation Faces Suspension, North American Supply Chain Threatened Again"
Date：2024-08-22 14:51:00 View：
Recently, Canada is facing a serious threat of a railway workers' strike, which may lead to a complete shutdown of local freight transportation.
According to foreign media reports, Canada's two major freight railway companies are expected to start a strike from Thursday this week. Although employers and employees have conducted intense negotiations over the weekend, unfortunately, the two sides have not made substantial progress, the differences are still huge, and no consensus has been reached on the labor agreement.
Canadian National Railway Company (CN) officially notified the Canadian Teamsters Union on Sunday that they will start to stop union workers early Thursday. CN made it clear in a statement: "Unless the differences between labor and management can be resolved immediately and clearly, CN will have no choice but to continue to gradually shut down its operating network, eventually leading to a full shutdown."
At the same time, Canada's other major railway operator, Canadian Pacific Kansas City Railway Company (CPKC), has also notified the Teamsters Union in advance that they will start to stop union members early Thursday. The Teamsters Union also issued a 72-hour strike notice to CPKC late on Sunday, stating that unless the two sides reach an agreement within the deadline, they will stop work at 00:01 a.m. on August 22 (Thursday).
Faced with this situation, CPKC said that the company will stop all cargo transportation from Canada and all cargo transportation from the United States to Canada. At the same time, CN has also banned the receipt of imported containers from American partner railway companies.
The labor agreements of both railway companies expire at the end of 2023, and the two sides have been negotiating since then. However, no agreement has been reached so far.
Shipping giant Hapag-Lloyd posted a reminder about the Canadian railway strike on its official website. They said the closure of the rail network could severely disrupt cargo transportation and affect industries that rely on rail supply chains, potentially having a significant impact on some parts of Canada and the United States.
In addition, this strike may be just the beginning of the threats that the North American supply chain may face in the coming months. It is understood that dock workers on the East Coast and Gulf Coast of the United States may also launch strike actions on October 1, which will pose a greater threat to the supply chain.
Some shipping analysts said that potential strikes at ports on the East Coast and Gulf of Mexico in the United States could cause cargo there to be stranded for weeks or even months. As a result, many retailers and importers are rushing to ship goods into the United States before the union contract expires on September 30.
Analysts at Sea-Intelligence estimate that it may take four to six days to eliminate the cargo backlog caused by a one-day strike. Alan Murphy, the agency's CEO, said a two-week strike could mean that ports will not resume normal operations until 2025. Shipping giant Maersk has also said that a week-long shutdown may take up to six weeks to recover.
This situation has also cost shippers a high cost. "The spot market price of a 40-foot container from the Far East to the East Coast of the United States has exceeded $10,000 in early July," said Peter Sand, chief analyst at Xeneta.
According to the latest shipping report released by the Shanghai Shipping Exchange, the latest Shanghai Export Container Comprehensive Freight Index is 3281.36 points, up 0.8% from the previous period. On August 16, the market freight rates (sea freight and sea freight surcharges) from Shanghai Port to the West Coast and East Coast of the United States were $6,581/FEU and $9,297/FEU, respectively, up 8.5% and 2.4% from the previous period. Data shows that freight rates on the East Coast of the United States will continue to rise in the short term.
Source: Shanghai Shipping Exchange (deleted if infringement)
In addition, due to the attack on merchant ships by the Houthi armed forces in Yemen in the Red Sea, ships have been diverted to the Cape of Good Hope. This means that it may take 45 days or more to transport goods from Asian factories to ports on the East Coast and Gulf of Mexico in the United States. Therefore, the threat of strikes brought about by labor-management negotiations in the eastern United States is prompting manufacturers to speed up shipments in the near future to avoid delayed delivery of goods and miss sales opportunities during the year-end holidays.