2 Railway Strikes, 3 US Sectors In Trouble: $277B In Goods At Stake As Canadian Unions Call For New Contracts

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Zinger Key Points
  • Canada uses railways extensively to export $277 billion a year ingrain, automobiles, potash, coal and other goods.
  • Pulp producer Mercer International said it was working on contingency plans for alternative transport methods in response to the strike.
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Canada’s railway strike could have major impacts on various sectors and companies in the U.S. that rely on goods and commodities from the second-largest company in the world.

Canadian National Railway Company CNI and Canadian Pacific Kansas City Ltd. CP said they locked out their workers and shut their networks in Canada early on Thursday after labor negotiations with the Teamsters Canada Rail Conference failed to result in a new union contract, Reuters reported.

Canada uses railways extensively to export grain, automobiles, potash, coal and other goods that are sold by companies — about $277 billion worth annually.

Thursday’s stoppage by these two Canadian railways could prove to be a major shock to U.S. companies and sectors because of the amount of goods and commodities they carry in North America.

Canadian National Railway Company operates 20,000 miles of railroad that spans the entire width of Canada and follows the Mississippi River all the way to the Gulf of Mexico.

The Canadian Pacific Kansas City also runs a 20,000-mile network that covers Canada from east to west but also travels down through the U.S. and into Mexico.

Read Also: Transatlantic Container Shipping Volumes Rise As Possible Strike At U.S. Ports Hovers

Here are some sectors that stand to be hurt by the rail stoppage:

Automobile

The U.S. imported and exported transportation equipment worth about $73 billion respectively in 2023 from Canada, according to the International Trade Administration. Canadian National’s website said it carries over 2 million finished vehicles a yearon an annual basis and services 12 North American vehicle assembly plants.

Canadian Pacific Kansas City caters to about 90% of automotive assembly plants in Mexico, it said on its website.

Price Action: Major automobile manufacturers had mixed performances into Thursday’s mid-afternoon trading.

  • Ford Motor Company F rose 0.69% to $10.93
  • General Motors GM ticked up 0.05% to $46.58
  • Stellantis N.V. STLA slipped 1.30% to $16.34
  • Tesla, Inc. TSLA fell 3.84% to $214.70

Timber

Canada’s timber exports totaled $3.5 billion in 2022, according to Canadian government data.

Pulp producer Mercer International MERC said it was working on contingency plans for alternative transport methods in response to the strike.

Price Action: Major lumber retailers and producers trended downward on Thursday.

  • The Home Depot, Inc. HD fell 1.17% to $366.12
  • Lowe’s Companies, Inc. LOW declined 0.68% to $240.72
  • Weyerhaeuser Company WY dropped 0.53% to $30.25
  • West Fraser Timber Co. Ltd. WFG slipped 0.61% to $80.52

Grains And Agricultural Products

Nearly three dozen North American agricultural groups have warned that a simultaneous stoppage would be very severe on bulk commodity exporters in both Canada and the United States.

Price Action: Major manufacturers of grains and agricultural products saw losses on Thursday.

  • Tyson Foods TSN declined 0.60% to $62.93
  • The Mosaic Company MOS dipped 0.29% to $27.84
  • AGCO AGCO slid 0.32% to $89.19

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