How Canada reached the brink of an unprecedented railway stoppage

For the first time, Canada's two main railway companies — Canadian National Railway and Canadian Pacific Kansas City — are on the verge of a simultaneous labour stoppage that could inflict billions of dollars' worth of economic damage.

Why are both companies poised to stop?

Contract talks between the Teamsters union and the companies usually take place a year apart, but in 2022, after the federal government introduced new rules on fatigue, CN requested a year-long extension to its existing deal rather than negotiate a new one.

This meant both companies' labour agreements expired at the end of 2023 and talks have been ongoing since. As a result, for the first time, the failure of negotiations would halt the vast majority of the Canadian freight rail system.

The Teamsters represent around 10,000 members who work as locomotive engineers, conductors, train and yard workers and rail traffic controllers at the two companies in Canada.

What is likely to happen next?

The companies say they will start locking out workers in the early hours of Thursday if they cannot reach a deal, while the union says it is ready to call a strike for that day. CPKC has already given formal notice of a lock-out.

CPKC, created in 2023 through a merger of Canadian Pacific and Kansas City Southern, has a U.S. and Mexican network which it says will operate normally. CN also says trains on its U.S. network will run.

That said, a strike will still lead to shipment disruptions south of the border. Both rail operators and some of their U.S. competitors have begun to refuse certain cross-border cargoes that would rely on the CN and CPKC networks.

CPKC has said it would halt new rail shipments originating in Canada, and new U.S. shipments destined for Canada starting