Canadian Railroad Impasse, Shipping Issues for Q3
On August 22, Canada’s two biggest railroads, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), locked out their workers after failed labor talks with the Teamsters Canada Rail Conference on a new collective bargaining agreement for some 9,000 conductors and engineers. Sticking points are rest rules, labor availability and the railroads’ desire to shift salaries from a per-mile to a per-hour wage model.
Concerns about a work stoppage caused Danish shipping line A.P. Moller-Maersk to announce on August 19 that it would stop accepting Canada-bound cargo that needs to be moved by rail. The U.S. would be affected by a shutdown of Canada’s largest railroads, too, as they account for the movement of 2,500 rail cars across the border annually.
Negotiators struggled for months to reach an agreement and industry groups urged the Prime Minister to prevent a lockout. Thus, on August 24, the Canadian Industrial Relations Board moved to affirm the Labor Minister’s decision to resume rail operations and impose binding arbitration between the two rail companies and Teamsters Canada.
In the U.S., labor negotiations impacting shipping are ongoing between maritime employers and dockworkers on the East and Gulf coasts. The United States Maritime Alliance (USMX) has offered the International Longshoremen’s Association (ILA) what it says are “industry-leading wage increases” and benefits for a new master contract. But the ILA says talks on a new six-year deal are at an “impasse” over wages and APM Terminals using automated gate technology at the Port of Mobile.
The USMX has made offers to the ILA since 2022 for a new contract covering ports from Maine to Texas, but dockworkers are planning to strike on October 1 if the ILA doesn’t agree to a deal. A strike by the ILA’s 85,000 members would be the first in nearly 50 years and would close major ports just one month before the general election.
Another shipping development occurred on July 22 when the Federal Maritime Commission (FMC) published its final rule concerning the “Definition of Unreasonable Refusal to Deal or Negotiate with Respect to Vessel Space Accommodations.” This follows an earlier FMC rule on “Demurrage and Detention Billing Practices” as the agency implements the Ocean Shipping Reform Act of 2022 which was strongly supported by IHA.
This latest rule also applies to vessel-operating common carriers (VOCC) and containerized cargo, and gives the FMC greater enforcement authority over alleged refusals of available cargo and vessel space. Claims brought before the Commission will be reviewed and decided on a case-by-case basis and if an ocean carrier can prove there was a reasonable basis for refusing to negotiate or carry cargo, their conduct will not be found in violation of the law.
It should also be noted that Congress wants to further expand the FMC’s rulemaking authority and on March 31, 2024, the House passed the Ocean Shipping Reform Implementation Act (H.R. 1836) by a vote of 393-24. The bill is now in the Senate and would strengthen the FMC’s ability to regulate technology and anticompetitive practices within the international ocean transportation system.
