Major impacts averted in Canadian railway labor dispute

The Canada Industrial Relations Board (CIRB) implemented government requests for the country’s two major railways, CN and Canadian Pacific Kansas City (CPKC), to enter binding arbitration and avoid a prolonged labor dispute.

Months of failed contract negotiations between the railroads and their unions led to a 17-hour lockout of more than 9,000 workers on Aug. 22. But CIRB, an independent administrative tribunal, ordered the rail companies to resume operations and Teamsters Canada Rail Conference employees to resume their duties. The employees include locomotive engineers, conductors and dispatchers.

The resolution was welcome news, especially in Canada, where about 75 percent of domestic propane is shipped via rail, according to the Canadian Propane Association (CPA). About 300,000 Canadians depend on propane daily as their primary heating fuel, and many industries and businesses rely on propane for their operations.

The short-lived labor dispute still had several consequences. Propane prices moved slightly higher and resisted a steep fall with crude one day during the buzz around the impending work stoppages, and some buyers of Canadian propane delivered via rail were likely to feel some impacts, Mark Rachal of Cost Management Solutions wrote in an Aug. 26 Trader’s Corner post for LP Gas.

The amount of Canadian propane coming into the U.S. via rail has been trending downward, according to the Canada Energy Regulator, formerly the National Energy Board. The volume last year, Rachal notes, was 17 percent lower than it was in 2018. The reduced 116,598-barrels-per-day rate in 2023 averages about 54 rail cars per day of propane. Rachal says it’s also worth noting that the rail shipments in 2023 still accounted for 93 percent of total U.S. propane imports from all sources and origins.

“The potential loss of that volume may not be enough on a macro level to upset the overall propane market, but it can certainly cause issues for a propane retailer expecting one of those rail cars filled with 90,000 gallons of propane,” Rachal writes.

Propane companies in Canada expanded their storage levels in the past several months to minimize impacts to customers stemming from any transportation disruptions, according to the CPA.

The National Propane Gas Association (NPGA) says it worked closely with the CPA and the Association of American Railroads to characterize the potential impact of a long-term lockout by the rail carriers on propane. NPGA’s Supply and Logistics Committee also met and received expert analysis on the impacts of the strike.

The Canadian labor minister acted quickly and within 24 hours imposed binding arbitration and extended existing rail contracts, NPGA also acknowledges. However, compared to the same time period last summer, rail-car volumes from Canada were about 50 percent lower immediately after the lockout ended. NPGA has been told it will take weeks for CPKC and CN to resume normal service and that the railways are trying to use a balanced approach with no prioritization of goods over others.

Featured homepage photo: Brian Brown/iStock / Getty Images Plus/Getty Images