CP Rail has provided 72-hour notice to lock-out the Teamsters Canada Rail Conference (TCRC)-Train & Engine employees. This will result in a full shut-down of the CP Rail network if the union leadership and the company are unable to come to a negotiated settlement or agree to binding arbitration. The soonest that a lock-out would occur is 00:01 ET (midnight) on March 20, 2022.

At this point, it is likely that we are facing a complete shut-down of the CP Rail line as of Sunday. As a customer-focused carrier, we want to provide you with an update on the current situation and some insight into how things will likely progress from here. Our intent is to provide you with information you can use to help manage your business, customer expectations, and your supply chain during these unprecedented challenges.

When a major Canadian railway is pending a possible shut-down, carriers and shippers will transition volume to the remaining railway (if they have the option to do so). Clarke for example maintains an ongoing ‘dual-rail’ partnership, so when one railway ceases operations for any reason, we can pivot and re-assign freight to the remaining operational railway.

In a ‘typical’ supply chain environment, this is a very effective way of maintaining service levels for our customers. Given that the Canadian supply chain is already experiencing tremendous ongoing pressure, we believe that there are going to be many possible challenges ahead if a CP stoppage occurs.

A shutdown of one of the major Canadian railways will have dramatic impact on an already stressed Canadian supply chain. In the event this occurs, please expect and plan for the following:
• Carriers and shippers will move freight to the remaining railway that is operational.
o The remaining railway will quickly become congested and backlogged (note: this is occurring already, ahead of the lockout)
o The remaining railway will likely implement surcharges, given limited capacity
o Carriers will be forced to pass-on these surcharges to their customers, in order to maintain minimum service levels


• Rail backlogs and delays will force shippers to transition to over the road service
o Road capacity and pricing have already been dramatically impacted over the past few months; this situation will become even more severe
o Capacity over the road will be constrained, and available only at a significant premium
o Carriers will have to implement additional over the road surcharges in order to maintain minimum service levels
o Backlogs and delays will be common even on over the road shipments, given the lack of suitable capacity to cover the surge as rail shippers transition to road


• As congestion builds both on road and rail, carriers will be unable to move freight effectively
o Carriers will likely need to implement selective embargos in order to maintain integrity of their operations
o These embargos could affect selective markets, depending on where congestion is a factor. It could also become more widespread and universal

These factors and potential outcomes above are of course concerning to both shippers and carriers alike.

Clarke is well positioned to maintain service to our customers, however we want to ensure our customers are aware of the potential risks ahead as the lock-out deadline approaches. Clarke continues to secure additional road power to manage the expected surge in over the road service; as indicated above this will likely come with a significant premium for shippers.

We hope that this honest and up-front approach will help our customers plan for the challenging road ahead.

For more details and information on the pending lock-out, please visit the CP website link below:
https://www.cpr.ca/en/cp-issues-72-hour-notice-to-lock-out-tcrc-train-engine-employees