Less than 17 hours after almost all rail freight traffic in Canada came to a standstill Thursday following a lockout by the country’s two main rail companies of 10,000 employees, the federal government told a labor board to end the shutdown and ordered arbitration.
The lockout had threatened to cause supply-chain disruptions in the United States and serious economic consequences within Canada. The moves followed months of contract talks that had failed to reach an agreement.
Steve MacKinnon, Canada’s labor minister, said at a news conference in Ottawa on Thursday that he had told the Canada Industrial Relations Board to formally order the railways to restart service. He said that process would most likely take “a few days.”
He also told the labor board to extend the contracts between the Teamsters Canada Rail Conference — the union that represents the workers locked out of their jobs — and the railway companies: Canadian National and Canadian Pacific Kansas City. The contracts expired at the end of the last year.
Last week, the two railway companies had asked Mr. MacKinnon to impose arbitration to in advance of a Thursday’s deadline for a strike or lockout. Mr. MacKinnon turned them down then but said on Thursday that the situation had changed.
“We gave negotiations every possible opportunity to succeed,” Mr. MacKinnon said. “But we have an impasse here.”
The short lockout did not affect Canadian National’s extensive operations in the United States or Canadian Pacific Kansas City’s lines in the United States and Mexico.
About 6,500 containers enter the United States by rail from Canada every day, according to the Railway Association of Canada, an industry lobbying group. That includes cargo from Asia and Europe that lands in Canadian ports.
For Canada’s export-dependent economy, a prolonged shutdown could have brought severe economic repercussions. The railway association estimates that half of all Canadian exports are moved on trains and that railroads carried 380 billion Canadian dollars, about $279 billion, worth of goods during 2022.
The effect on intercity passenger trains, which mostly use Canadian National’s tracks, and on commuter lines was less pronounced on Thursday. And while the railways move grains and other farm products for global export, they transport relatively few of the food products found in Canadian grocery stores.
The two companies’ labor contracts previously expired on alternating years, which avoided a near-total rail shutdown. But to accommodate changing federal regulations, Canadian National secured a one-year extension of its last agreement. The contracts with both companies expired at the end of last year. Negotiations began last September.
The main points of contention for the railway workers appear to be scheduling, work hours and fatigue management. Hunter Harrison, a longtime American railway executive who ran both railways at separate times, introduced a system known as precision-scheduled railroading. To boost efficiency, he put trains on rigid, consistent schedules and cut back on equipment and employees through steps like running extremely long trains.
His approach bolstered profits, and the legacy of Mr. Harrison, who died in 2017, remains significantly intact at both railways.
In June, the Teamsters Canada Rail Conference said the two railways were “trying to squeeze even more availability” out of workers. It said that would mean “train crews would be forced to stay awake even longer, increasing the risk of derailments and other accidents.”
“The railroads don’t care about farmers, small businesses, supply chains or their own employees,” Paul Boucher, the union’s president, said in a statement on Thursday. “Their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy.”
Canadian National said in a recent statement that it had proposed “a modernized agreement that improved safety, wages and work/life balance.” Canadian Pacific Kansas City said its offer “maintains the status quo for all work rules,” adding that it “fully complies with new regulatory requirements for rest and does not in any way compromise safety.”
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