This morning, Canada’s two major freight railroads, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) locked out Teamsters union workers at 12:01 a.m., after failing to reach a contract deal following months of heated negotiations.
Together, CN and CPKC own 80% of the 26,800 track miles in Canada, and also operate track in the U.S.. According to the USDA's recent Grain Transportation Report, Canada is the third-largest destination for U.S. agricultural exports, with the country importing $28.2 billion worth of U.S. farm goods in 2023. The report showed that the United States imported $40.1 billion of Canadian agricultural products, making Canada the second-largest origin of U.S. agricultural imports (behind Mexico).
The USDA report noted that in 2023, the U.S. imported a total of 13 million tons of potash, with 85% originating in Canada. Just over 25% of all U.S. nitrogen imports came from Canada in 2023, representing 3.1 million tons of nitrogen-based fertilizers, including 1.2 million tons of anhydrous ammonia, 510,000 tons of urea and 420,000 tons of urea ammonium nitrate.
According to the Bureau of Transportation and the American Farm Bureau Federation, "More than 85% of fertilizer trade between the U.S. and Canada is transported by rail, with the remainder handled by trucking (12%) and waterborne vessels (3%). The vast majority of this trade — over 90% — occurs at border crossings in five states: North Dakota (90% by rail), Minnesota (100% by rail), Idaho (99% by rail), Michigan (29% by rail) and Montana (29% by rail). In 2023, over $2.1 billion in fertilizer trade occurred across the border crossing in International Falls, Minnesota; $1.3 billion occurred across the border crossing in Pembina, North Dakota; and $839 million occurred across the border crossing in Portal, North Dakota."
“In the last seven years, Canadian supply chain labour disruptions have cost the fertilizer industry nearly a billion dollars,” says Karen Proud President and CEO of Fertilizer Canada. “These stoppages are doing immense damage to our reputation as a reliable trading partner. Our customers, who rely on Canadian fertilizer products, are being forced to turn to our competitors in Russia, Belarus, and China. We can’t afford for our railways to shut down, and we can’t afford a passive approach to our supply chains any longer. We need long-term solutions.”
According to the Fertilizer Canada statement, the shut down costs the Canadian fertilizer industry up to C$63 million, or $46 million per day in lost revenue.
Prior to the lockout, a group of 35 railroads and industry groups sent a letter to Canadian Prime Minister, Justin Trudeau, to intervene in negotiations and force Teamsters to accept an agreement through binding arbitration. Trudeau declined requests for binding arbitration last week, saying the two parties should negotiate in good faith.
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