Canada’s two major freight railroads have completely halted operations due to a contract dispute with their workers in a standoff that could cause considerable economic damage to businesses and consumers in both Canada and the United States.

Canadian National (CN) and CPKC railroads both locked out their employees after the Thursday deadline passed without new agreements with the Teamsters Canada Rail Conference which represents some 10,000 engineers, conductors and dispatchers.

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This is the first time the country has faced simultaneous work stoppages at the two companies, which in the past have negotiated labour deals in alternate years.

All rail traffic in Canada and all shipments crossing the US border have stopped, although CPKC and CN’s trains will continue to operate in the US and Mexico.

Labour talks started early this year, but progress has been slow with both the union and the companies accusing each other of bad faith.

The negotiations are stuck on issues related to the way rail workers are scheduled and concerns about rules designed to prevent fatigue and provide adequate rest to train crews. Both railroads had proposed shifting away from the existing system, which pays workers based on the miles in a trip, to an hourly system they said would make it easier to provide predictable time off.

Business groups had urged the government to intervene, but Prime Minister Justin Trudeau has declined to force both sides into arbitration yet, but he urged them to reach a deal on Wednesday because of the economic damage that would follow a full shutdown.

“It is in the best interest of both sides to continue doing the hard work at the table,” Trudeau told reporters in Gatineau, Quebec. “Millions of Canadians, workers, farmers, businesses, right across the country, are counting on both sides to do the work and get to a resolution.”

Numerous business groups have been urging Trudeau to act.

“Despite the lockout, the Teamsters remain at the bargaining table with both companies,” the union said in a statement.

Rail traffic in Canada and all shipments crossing the US border have stopped over the labour dispute [File: Nick Ingram/AP Photo]

Effect on trade

Canada – the world’s second-largest country by territory – relies heavily on rail to ship grain, fertiliser and commodities, and the country’s main business lobby group estimates losses would hit $1 billion Canadian dollars ($733m) a day during a stoppage.

If the dispute drags on for a couple of weeks, water treatment plants across the country might have to scramble without new shipments of chlorine.

Billions of dollars of goods each month move between Canada and the US via rail, according to the US Department of Transportation.

“If rail traffic grinds to a halt, businesses and families across the country will feel the impact,” Jay Timmons, president and CEO of the National Association of Manufacturers, said in a statement. “Manufacturing workers, their communities and consumers of all sorts of products will be left reeling from supply chain disruptions.”