A major disruption is brewing in North American supply chains as Canadian railway workers have gone on strike, potentially impacting numerous US industries. The strike, initiated by the Teamsters Canada Rail Conference after failed contract negotiations, has shut down operations for both Canadian National Railway (CNI) and Canadian Pacific Kansas City (CP). This stoppage poses a significant threat to US companies and sectors that rely on goods and commodities transported by these two railways.
Canada utilizes its extensive railway network to export a vast array of goods, including grain, automobiles, potash, coal, and other commodities worth an estimated $277 billion annually. The strike’s impact could be felt across various sectors:
Automobile Industry:
The US imported and exported transportation equipment worth $73 billion from Canada in 2023. Both Canadian National and Canadian Pacific play crucial roles in transporting finished vehicles. Canadian National handles over 2 million vehicles annually and serves 12 North American assembly plants, while Canadian Pacific caters to about 90% of automotive assembly plants in Mexico. The strike could lead to delays and disruptions in the automotive supply chain, potentially affecting production and vehicle prices.
Timber Industry:
Canada is a major timber exporter, with exports reaching $3.5 billion in 2022. Pulp producer Mercer International is already exploring contingency plans for alternative transport methods due to the strike. This disruption could impact the supply of lumber and wood products in the US, potentially pushing up prices for building materials.
Grains and Agricultural Products:
A combined strike by both Canadian National and Canadian Pacific would significantly impact bulk commodity exporters in both Canada and the US, according to warnings from nearly three dozen North American agricultural groups. The strike could disrupt the flow of grain and agricultural products, leading to shortages and price hikes.The strike’s impact is already being felt in the stock market. Major automobile manufacturers, timber retailers and producers, and grain and agricultural product companies have experienced mixed performances, with some showing losses due to concerns about the potential economic fallout. While the strike’s duration remains uncertain, it’s clear that the disruption to these key Canadian railways will have a ripple effect across the North American supply chain, potentially affecting US consumers and businesses in various sectors.
