Factbox-Canadian rail shutdown set to squeeze North American industries By Reuters

(Reuters) – Canada’s rail freight could come to an abrupt halt as the country’s two largest rail operators plan an unprecedented simultaneous work stoppage following stalled labor contract talks.

Both Canadian National Railway (TSX:) and Canadian Pacific (NYSE: ) Kansas City will lock out workers Thursday if last-minute talks with the Teamsters Union fail to avert a costly shutdown.

Canada, the world’s second largest country by area, relies heavily on rail to transport grain, automobiles, potash, coal and other goods. The railways transport about C$380 billion ($277 billion) worth of freight and goods annually, and the impact of the rail shutdown is expected to be felt across North America.

Ratings agency Moody’s (NYSE: ) estimates that the simultaneous shutdown could cost the Canadian economy $341 million a day.

Here are some sectors to be damaged by a possible rail shutdown:

Fertilizers

* Fertilizer is the third largest volume of cargo transported by Canadian railways, and 75% of all fertilizers produced and used in the country are transported by rail.

* Railroads transport an average of 69,000 metric tons of fertilizer product per day, the equivalent of four to five trains per day.

* Fertilizer Canada, which represents manufacturers such as CF Industries (NYSE: ) and Nutrient (NYSE: ), estimated lost sales revenue of $55 million to $63 million per day due to the disruption of all rail service.

* Top potash maker Nutrien said the possible shutdown could hamper its potash sales for the full year.

THE TRUCK

* Approximately 85% of US-Canada cross-border transportation in both directions is primarily handled by Canadian truck carriers.

* Truckers say they can absorb some of the increased demand but cannot replace long-haul rail distribution, especially for bulk cargo such as coal, potash and food grains.

* Shippers with spot cargo, as well as rail shippers looking to convert to trucks, should expect not only higher costs but longer delivery times, says freight forwarder USA CH Robinson.

COAL

* Coal is one of the most important bulk commodities transported by rail in Canada, with more than 30 million metric tons moved annually, according to the Canadian Coal Association.

* Shipping disruptions could affect mining giant Glencore ( OTC: ) and its majority-owned unit, Elk Valley Resources.

RAW OIL

* An average of 94,400 barrels per day has been exported by rail this year, according to the Canadian Energy Regulatory Authority.

* The strike is unlikely, however, to significantly reduce oil exports to the United States because of excess capacity on Trans Mountain and other pipelines.

CEREALS AND AGRICULTURAL PRODUCTS

* Canadian farmers rely on railroads to move their produce to market. According to the Grain Growers of Canada, 94% of grain is transported by rail.

* A shutdown would reduce shipments of U.S. spring wheat from Minnesota, North Dakota and South Dakota to the Pacific Northwest for export.

* Nearly three dozen North American farm groups warn that a simultaneous shutdown would be especially bad for bulk exporters from both Canada and the United States.

TIMBER

* With exports worth $45.5 billion in 2022, according to Canadian government data, the forestry sector is a major contributor to the country’s economy.

* Pulp maker Mercer International (NASDAQ: ) said it is working on contingency plans, including alternative transportation methods, in anticipation of a rail shutdown, while Conifex Timber is scaling back operating hours at its sawmill in Mackenzie, British Columbia . the largest rail transporter of forest products, according to its website.

CARS

* The U.S. imported and exported about $73 billion worth of transportation equipment in 2023 from Canada, according to the International Trade Administration.* Canadian National’s website said it handles more than 2 million finished vehicles annually , hosting more than 12 North American vehicle assemblies. plants.

* Canadian Pacific Kansas City serves about 90 percent of auto assembly plants in Mexico, according to its website.

WINE INDUSTRY* Canada exported 219.78 kiloliters of wine in 2023 and imported 407.38 kiloliters, according to government data.

* Ontario Craft Wineries, a local trade association, said a rail shutdown could put pressure on the supply chain for several inputs such as glass bottles, corks and barrels and affect its members’ ability to to export wines to other countries or could slow the rate of imported bulk wine into Canada.