A stalemate over a new collective bargaining agreement for Canadian rail conductors and engineers has set the stage for vote by union members that could result in a strike notice being issued next month.

The workers, represented by the Teamsters Canadian Rail Conference (TCRC), will vote from April 8 to May 1 on whether to authorize a strike against Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) as soon as May 22.

A strike could halt intermodal service to and from all containerized marine terminals in Canada, affecting about 50,000 TEUs per week in imports, according to a Journal of Commerce analysis of data submitted to the Association of American Railroads and Intermodal Association of North America.

Negotiations between the railroads and the TCRC have hit a stumbling block over salary and mandatory rest periods. The Teamsters represent more than 9,000 conductors and engineers — 6,000 at CN and 3,200 at CPKC.

"With the prior collective bargaining agreement, we took one step forward," a TCRC spokesperson told the Journal of Commerce. "Now our sense of the negotiations is that both rail companies are trying to take us three steps backwards."

Talks between the sides are continuing with a federal conciliator who can broker a deal up until May 1, when a 21-day cooling off period begins before any strike could occur. The union would then have to issue a 72-hour strike notice to the two Canadian railroads.

CN and CPKC say they have made proposals varying in length that will ensure conductors and engineers receive competitive wages, are well rested and have a proper work-life balance.

"[Our offer will provide for] higher income and more predictable work-life balance by shifting to a predictable scheduling model with assigned days off," a CPKC spokesperson told the Journal of Commerce. "The time-based model would modernize the collective agreement with 21st century practices … The existing collective agreement is more than 440 pages; it could be reduced to approximately 100 pages."

CPKC has two offers on the table: one that would simplify the prior collective bargaining agreement and a second offer that would "maintain the status of the quo" within rules established last year by Transport Canada.

CN also offered a deal to switch salary from a per-mile basis to an hourly wage.

"If our trains run on a schedule and our interactions with our customers run on a schedule, why shouldn't employees benefit from running on a schedule as well?" a spokesperson for CN said. "We believe that by offering stable and predictable schedules with wage increases that would be paid hourly, we would be improving the quality of life of our railroaders and improve safety.

"Furthermore, by moving to scheduled work, employees would know well in advance when they work and when they take time off," the spokesperson added.

New rules for workers went into effect last year

The TCRC last went on strike in 2019 when CN conductors and yard workers walked off the job for eight days. Lawmakers in Ottawa passed the Transport Canada Duty and Rest Period Rules covering hours of service and mandatory rest periods, which went into effect last year.

"The situation has improved marginally as the government updated duty and rest rules," the TCRC spokesperson said. "The rules are designed to work in conjunction with the protections that we have built into our existing collective bargaining agreements, not replace them. We also believe the railroads are not implementing them correctly and exploiting loopholes."

The union noted that a Canadian judge last June ruled CPKC was in contempt of court for requiring train crews to work excessive hours.

Separately, the TCRC is also negotiating a contract with CPKC to cover rail traffic controllers. A source with knowledge of the situation told the Journal of Commerce that a strike by controllers would have much less of an impact than conductors and engineers walking off the job because senior managers are generally cross trained to act as traffic controllers if necessary.

An anti-scab law now being debated in the Canadian parliament to prevent non-union employees from taking over union jobs during a strike would not go into effect until at least 2025, if not later, if approved.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.