Yesterday, I wrote about the work stoppage at Canadian Pacific (CP) and how it could affect the U.S. About 3,000 CP employees represented by the Teamsters Canada Rail Conference (TCRC) stopped working on Sunday and rail operations were shut down through Monday.
This morning, CP and the TCRC reached an agreement to move to binding arbitration. That means both sides will argue their case before an independent third-party arbitrator, and the arbitrator’s decision will be final. While that process plays out, work resumes today at noon Mountain Time (CP is headquartered in Calgary). According to the Wall Street Journal, the details of the agreement are not public. The story says:
Binding arbitration typically allows an employer and union representatives to present their contract demands to an independent arbitrator, who then can decide on such terms as wage increases and benefits. In some cases, certain contract terms can be subject to a vote by union members.
In other words, we don’t know who is coming out on top in this dispute, and we probably won’t know for a while. Both sides blamed each other for starting the shutdown, so it’s not as though one side is clearly backing down by allowing work to resume.
The TCRC’s statement said that “arbitration is not the preferred method” but that the union was “able to negotiate terms and conditions that were in the best interest of our members.” It said that the union will not be speaking to the media until arbitration is complete. CP’s statement was more uniformly positive, saying that it was happy work would be resuming.
Senator Kevin Cramer (R., N.D.), one of the four senators who signed a letter last week urging the Canadian government to prevent the shutdown, said today in a statement to National Review:
This issue should have been dealt with proactively, but thankfully the Canadian Pacific railway strike has come to an end. I urge all sides to stay at the table to come to a final resolution. This railroad plays a major role in our nation’s agriculture and energy industries while producers, businesses, and all Americans are facing record inflation and a broader supply chain crisis from the Biden Administration.
Yesterday, I said the shutdown didn’t look like it would be over quickly because the sides were still very far apart. I was wrong about the first part of that — and happy to be so, for the reasons Cramer says — but the second part remains true. Contract negotiations have been ongoing for six months, and there are still basic disagreements about wages, benefits, and working conditions. Going to arbitration resolves the work stoppage for now, but the underlying questions remain unsettled.
The reason this matters is as a possible prelude to contract negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) at U.S. West Coast ports. The current labor agreement expires on July 1, and the sides have not even begun negotiations yet. If those negotiations were to take six months, like the CP negotiations have, they would have needed to start in January.
It’s also useful to see the union’s attitude in the constrained supply-chain environment we are currently experiencing. The TCRC was willing to stop work and actually did so, even if only for a few days. The consequences of a prolonged CP shutdown would have been severe, especially for crude oil and fertilizer, two of the commodities already roiling global markets because of Russia’s invasion of Ukraine. Neither side was afraid enough of the consequences to back down.
The ILWU has never been afraid of consequences from work stoppages in the past and has been willing to use hardball tactics to get what it wants. With a pro-union Biden administration in power that has demonstrated a lack of willingness to stand up to the ILWU at any point during the supply-chain crisis, the union has to be feeling pretty confident that it can do whatever it takes to see its demands are met. That will be especially true if the TCRC winds up getting what it wants from CP. The ILWU is watching closely.