There Will Always be a Settlement—at Some Point

Photographs Courtesy of CN, left, and CPKC, right.

FINANCIAL EDGE, RAILWAY AGE SEPTEMBER 2024 ISSUE: Nothing warms a jaded rail equipment columnist more than having an article planned out only to see the headlines grabbed by something so tantalizing that the entire idea has to be scrapped in favor of the more topical event. It happens more often than you may think. It’s a Yogi Berra moment—deja vu all over again.   

When watching the tussle between CN and Canadian Pacific Kansas City (CPKC) and the Teamsters Canada Rail Conference (TCRC), it was impossible not to harken back to the latter part of 2022 when the U.S. Class I’s and the unions representing their employees went to the mattresses and prepared for a strike in the same way the Canadian Class I’s did the week of Aug. 19. 

The negotiations between the Canadian railroads and the Canadian unions began in 2023, and—stop if you’ve heard this before—they were unable to reach resolution prior to the contract end date. 

So, the Canadian Class I’s began strike preparations and the Canadian government announced that it was not going to interfere in the labor dispute. As a result, in anticipation of an employee  lockout, hazmat commodities were secured and shutdown preparations were made ready.

This is where things got interesting. As reported in Railway Age, Union Pacific CEO Jim Vena weighed in on the continentally significant impact of the Canadian strike. Five days later, as directed by Labour Minister Steven MacKinnon, the Canada Industrial Relations Board (CIRB), perhaps recalling the acrobatics of the athletes competing in the skateboarding and break-dancing events at the Paris Olympics, pulled a 180-degree turn and ordered the unions not to strike and the railroads not to lock out. The CIRB instead ordered the parties to the negotiation table for binding arbitration negotiations until a resolution could be achieved. 

Crisis averted!

Railway Age referenced a statistic published by Reuters (and also highlighted by Vena) that, annually, 30% of all Canadian rail traffic crosses the U.S. border. Heading into the grain season that statistic would suggest a rail service shutdown in the late summer would be, to say the least, impactful.

And this is the point of a deja vu moment and the real question for everyone involved in this redo drama: Why weren’t any lessons learned from the mishandling of the U.S. rail labor crisis in late 2022? One cannot, without imagining an incredible level of negligence, believe that the Canadian government was unaware of the impact that the strike would have on Canadian commerce and the North American rail system.

These are matters of economics, of policy and of procedure. Why allow the railroads across the North American system to waste time, money, resources and employee hours making preparations for a lockout only to reverse the process one week later? Did the government actually believe that dragging CN, CPKC and TCRC to the negotiation table would actually bring resolution and therefore the money spent preparing for the potential lockout would in fact be money well spent? (Prior to mandating arbitration, MacKinnon suggested all parties meet to achieve resolution.)

The instrument has yet to be invented to measure the skepticism that the government, as this drama was unfolding, thought that pushing to negotiation would be a successful strategy. A lockout is a stalemate: Railroad workers cannot just be replaced by people off the street looking to cross a picket line. At some point there will always be a settlement. What’s the answer?

One party who thinks they have it is Joe Hinrichs and CSX. While the situation in Canada was unfolding and grabbing headlines, CSX made news of its own by signing a tentative five-year contract with first three and then 12 labor unions four months prior to the contracts becoming amendable under the Railway Labor Act deadline. Four months! Imagine! 

This is a landmark handling of a material percentage (more 50% to be precise) of CSX’s contractual relationships with its employees. Hinrichs was in position to display pride and enthusiasm about CSX’s preemptive success. However, Railway Age Capitol Hill Contributing Editor Frank N. Wilner suggests that CSX’s breakthrough here might not support future successes. Wilner’s prognostications are incomparable, and CSX should heed his concerns regarding the BLET and their perception of these successes. 

Perhaps CSX ran the numbers and decided that after the protracted 2022 negotiations, the juice just wasn’t worth the squeeze for fighting it out again. What the industry can hope for is that after seeing the divergent paths between protracted arbitration and negotiated success the future of these negotiations might start to take a turn. From the lips of the jaded to your ears.

Got questions? Set them free at dnahass@railfin.com.