A Canadian rail strike is likely in late August, CPKC CEO Keith Creel says

CALGARY, Alberta — With labor negotiations at a standstill, a Canadian rail strike is likely to
occur in late August, Canadian Pacific Kansas City CEO Keith Creel said Tuesday.
CPKC and the Teamsters Canada Rail Conference are still talking but remain far apart on a new
contract, Creel said on the railway’s second quarter earnings call.
The Canadian Industrial Relations Board has said it will release a decision by Aug. 9 on what
commodities are vital to health and safety and must keep moving during a work stoppage.
Members of the TCRC, which represents engineers and conductors on CPKC and Canadian
National, have voted to authorize a strike that could begin with 72 hours notice once the CIRB
decision is issued.
A strike would shut down both CPKC and CN in Canada. It also would affect commuter
operations in Vancouver, Toronto, and Montreal because the trains operate on trackage
dispatched by CPKC rail traffic controllers, who are represented by the TCRC. 
“We’re far apart. It’s going to be a challenge,” Creel said of ongoing labor talks.
Last week CN lowered its financial outlook for the year, partly due to a traffic slowdown as
customers divert traffic in anticipation of a strike. CPKC executives said a strike wouldn’t affect
their outlook unless it dragged on for more than two weeks.
Creel said a strike will damage Canada’s reputation as a reliable trading partner, however,
particularly since it may come about a year after a dockworkers strike shut down ports in British
Columbia, which are gateways to Chicago, Toronto, and Montreal. 
“It’s not a good outcome for anyone,” Creel says, noting that some container traffic still has not
returned to Vancouver since the dockworkers strike. A rail strike may give customers “labor
unrest fatigue,” he says.
“We’re going to not give up. We’re going to remain cautiously optimistic,” Creel says of the labor
talks. “But we’re not going to do a bad deal, either.”  
Meanwhile, a potential strike by dockworkers on the U.S. East and Gulf coasts could benefit
CPKC-served ports of Lazaro Cardenas in Mexico as well as Saint John in New Brunswick.
Both could serve as alternatives to U.S. ports if dockworkers walk out.
CPKC recently ran test trains between Lazaro Cardenas, on Mexico’s Pacific coast, and its
terminal in Kendleton, Texas, on the outskirts of Houston. CPKC Chief Marketing Officer John
Brooks says the trains took 3½ days to reach the Houston area, excluding time the boxes spent
on the dock at Lazaro, and were operated with U.S. port labor disruptions in mind. 
Steamship lines, including Maersk, ONE, MSC, and CMA-CGM, have announced new service
calls at Lazaro, he notes.