Canada's Looming Rail Strike: A Critical Threat to Canada’s Food, Health, and Consumer Product Supply Chains

As the deadline of August 22nd approaches, the potential rail strike involving Canada’s two largest railways, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), presents a dire threat to Canada’s food, health, and consumer product industries. The stakes are high, and the consequences of a rail disruption could severely impact the availability of essential goods and the stability of our supply chains.

Railways are a crucial component of Canada's logistics infrastructure, responsible for transporting a significant volume of goods across the country. A work stoppage by CN and CPKC would disrupt this critical network, with far-reaching effects on product availability on grocery and drug store shelves nationwide. Given that rail is utilized for most long-haul shipments to British Columbia, Alberta, Manitoba, and the Atlantic provinces, these regions will experience the most severe disruptions. Specifically, an estimated 40% of shipment volume, or approximately 6,500 containers per month, would be impacted.

The anticipated fallout of a rail strike is staggering. A one-week rail disruption is expected to require six to eight weeks of recovery time before normal service levels are restored. With rail carrying the equivalent of approximately 20,000 truckloads of consumer-packaged goods per month, the alternative—trucking—cannot adequately compensate for this volume. The limited truck capacity available would be costly, potentially three to four times the regular rates, and could be difficult to secure if the strike extends beyond a week. This shortage will create significant delays and increase costs for manufacturers and retailers alike.

The financial impact on the food, health, and consumer products sectors would be profound. After just 10 days of labor disruption, the estimated lost sales in Western and Atlantic Canada could reach approximately $40 million per week. Retailers in these regions will face delivery delays, product shortages, and out-of-stock situations that will inevitably affect consumers. This disruption will not only strain supply chains but also inflate costs and limit the availability of essential goods.

In response to the looming threat, some larger companies within the FHCP network have taken proactive measures. They have worked with major retailers to increase stock levels in anticipation of potential shortages and have pre-booked truck capacity to mitigate the impact. However, these strategies offer only temporary relief. Smaller and medium-sized businesses, which may lack the resources to make similar arrangements, are particularly vulnerable. As the strike progresses, on-shelf availability will likely decline, and consumer “panic buying” could exacerbate the situation, especially in the affected regions.

Another critical issue will be the impact on border crossings. As rail disruptions force a shift from rail to truck transport, there will be increased pressure on border logistics. Ports, which handle a significant portion of imports and exports, will face heightened congestion and delays, further complicating the supply chain.

The federal government must act swiftly to avert this crisis. Ensuring uninterrupted rail service is crucial for maintaining the stability of our food, health, and consumer product industries. The government must facilitate a resolution between CN, CPKC, and the union, and take decisive action to prevent a complete shutdown of our transportation infrastructure.

The impact on Canadian consumers, businesses, and the broader supply chain cannot be overstated. It's imperative that all stakeholders come together to resolve this issue before it escalates. The well-being of countless Canadians and the stability of our economy depend on it.