Starting Aug. 22, 10,000 Canadian rail workers went on a labor strike. Brought on after negotiations failed with two major railroads–Canadian National and Canadian Pacific Kansas City—the strike only directly effects Canadian employees, however with Canadian rail being a major part of the North American supply chain, especially in agriculture, concerns are being elevated.
Reporting from Canada, Shaun Haney said, “The problem is that for weeks leading up to August 22, the railways have cut shipping flow on some products to not strand crews or products in the geographically-challenging expanse that is Canada. A strike is not just about the loss of the strike days; you must account for the economic impacts of the weeks leading into decision day and then the time required to get back to full capacity after the strike is over.”
And he highlights how even with full capacity restored, even one week of such a strike could add up to 14 weeks until the system is completely back to being optimized.
Canadian Government Steps In
By Thursday afternoon, Canadian Labour Minister Steven MacKinnon announced the railroads must enter contract arbitration with the labor union. This is positive movement as trains could start moving as soon as the dispute enters arbitration. As reported by the Toronto Star, MacKinnon is using federal code that can have the Canada Industrial Relations Board impose final, binding arbitration.
In reaction to the governmental action, The Fertilizer Institute provided the following state: “TFI applauds the Canadian government’s efforts to take action to get the rail system moving again as quickly as possible. The economies of Canada and the United States are closely intertwined, and a dependable and reliable rail network is necessary to support the cross-border fertilizer supply chain and facilitate the movement of critical agricultural inputs on both sides of the border. We also thank US government officials for their engagement with both the industry and their counterparts in Canada. TFI looks forward to continuing to work with policymakers on strengthening supply chains and domestic fertilizer supply and production.”
Fertilizer In Focus
Notably, the U.S. imports more than 80% of its potash tonnage from Canada.
“We are disappointed that the parties involved in this dispute have failed to prevent what has become another significant disruption to vital supply chains serving the agricultural industry,” says Mark Thompson, chief commercial officer for Nutrien. “Nutrien depends on Canadian rail to provide the crop inputs that growers around the world need to support global food security. We are already feeling the impacts of work stoppages on our industry and urge all parties involved to come to a resolution and prevent further damage.”
Echoing the dependence of the ag supply chain on Canadian rail, TFI president and CEO Corey Rosenbusch said, “Rail transport is the backbone of North America’s supply chain, and fertilizer and agriculture are among the most dependent on rail service. The interconnected and time-specific nature of agriculture means that even short-term disruptions to one segment have wide-ranging implications, affecting everything from grocery store prices to international trade.”
The strike adds another layer of concern for ag retailers. With farmers assessing their fertilizer costs and needs this fall, this supply chain concern could add stress to an already elevated issue.
“My fear is that with higher interest rates, fall fertilizer prices and application won’t be as popular with farmers,” says Mark Stutsman, COO of Stutsman, a three-location Iowa-based ag retailer. “If this comes true on a large scale, all it will do is push the workload to the spring, which creates logistical and workload chaos.”
The Agricultural Retailers Association launched a grassroots letter writing campaign hours after the rail stoppage. Anyone can take action with ARA at www.aradc.org/take-action.
“The agricultural community will feel an immediate hit to supply chains due to the rail strike because the fertilizer, livestock and other ag input companies rely on these railroad operators for timely deliveries,” says ARA Senior Vice President of Public Policy & Counsel Richard Gupton. “In fact, many ARA member facilities have no other transportation options to continue to move products through the supply chain, which could limit crop yields during the harvest.”
