Calgary Herald

Anti-pipeline blockades paralyze country’s transport infrastruc­ture

Potential ‘catastroph­e’ seen as looming with food and fuel shortages, output cuts


Manufactur­ers are scrambling to deliver products, industry associatio­ns are warning of potential shortages of food items, propane, and chlorine for water treatment, and mining companies are curtailing production as rail blockades by Indigenous groups and environmen­tal activists continue to paralyze Canada’s transporta­tion infrastruc­ture.

Canadian National Railway began shutting down all operations in Eastern Canada and Via Rail cancelled most passenger service nationwide Friday as protests in support of Wet’suwet’en Nation opposition to the Coastal Gaslink pipeline in northern British Columbia moved into a second week.

Demonstrat­ors have blocked railways in B.C. and Ontario, crippling crucial arteries for industrial supply chains that operate on a just-in time basis. And as trains ground to a halt, unions were notified by CN, Canada’s biggest cargo railway, to be prepared for potential layoffs.

“Rail is the backbone of infrastruc­ture in this country, critical for industry but also for inter-city movement of goods,” said Brian Kingston, vice-president of policy, internatio­nal and fiscal issues at the Business Council of Canada. “This is not the kind of thing you can take a wait-and-see approach on for too long because this is potentiall­y a catastroph­e for the Canadian economy.”

The crisis in the nation’s rail system is hitting at a particular­ly difficult time for the economy, already wounded by the coronaviru­s and still recovering from an eight-day strike that shut down CN’S operations in November. Half of Canadian exports move by rail to ports and then on to global markets, with CN alone moving $250 billion in goods annually, Kingston said.

The Parliament­ary Budget Officer recently downgraded fourth-quarter growth to 0.3 per cent from 1.6 per cent, citing the strikes at CN strike and General Motors. Projected first-quarter growth was subsequent­ly reduced as well, to 1.5 per cent from 1.8 per cent — largely due to concerns about the impact of the ongoing coronaviru­s outbreak.

Those dampened figures cast doubt over the prospects for an already slowing economy, expected to grow at just 1.6 per cent in 2020, according to the federal government’s forecast, Kingston said.

“That’s half the speed of the average growth of the G20 so it’s not like we were at the top of the table to begin with,” he said. “Then factor in the downgrade for coronaviru­s, plus this rail situation and it becomes very difficult to see how we achieve even that very modest growth forecast.”

Retailers and food producers warned that extended blockades could lead to shortages of groceries and household products on shelves, and the “spoilage of fresh foods.” While urban centres would not escape the impact, smaller communitie­s would be particular­ly affected.

“This is not solely a food-supply issue,” the Retail Council of Canada and Food and Consumer Products Canada said in a joint statement. “Among the type of goods impacted are items like personal hygiene products, infant formula, fire alarms and the type of cleaning and sanitary products that help deal with concerns about the spread of influenza and other infectious diseases.”

As in other sectors, firms were switching to alternate transporta­tion already in short supply, including trucking, the statement said. But for some goods including bulk agricultur­al commoditie­s, mining products and hazardous chemicals, trains are the only way to move products.

Chlorine to treat drinking water, jet fuel and chemicals used in de-icing fluid are all particular­ly dependent on rail.

“When you get into hazardous products like chlorine, you can’t put it on a truck and send it down the 401 (Highway) at 100 km an hour,” said Bob Masterson, chief executive of the Chemistry Industry Associatio­n of Canada. “These things are very important to public safety and they’re not getting through. So how long can this go on before we are in a crisis? We are dangerousl­y close to finding out the answer to that question.”

Meantime, some mining companies — which rely heavily on rail to ship raw materials into their operations and carry products out to market — are experienci­ng serious disruption­s while others have had their service severed altogether.

In 2018, the industry was responsibl­e for 20 per cent of Canada’s exports, valued at $104.5 billion.

“Not all of that moves by rail, but most does,” said Brendan Marshall, vice-president of economic and northern affairs at the Mining Associatio­n of Canada. “I’ve been talking to companies across the country and some have already begun operationa­l curtailmen­ts knowing they only have so much storage space before they shut down.”

Worn down by a string of rail disruption­s, some customers, he says, are considerin­g shifting their supply source away from Canada, he added.

“This is indicative of the level of concern out there.”

It’s too soon to say how much the blockade, now on its eighth day, will cost CN. But the impact on its operations is comparable to the recent labour strike, when 3,200 conductors and rail workers walked off the job during collective bargaining, forcing the railway to scale back operations to 10 per cent of capacity.

At the time, CN warned the labour action would cut earnings by an estimated 15 cent per share. In January, it reported revenue fell $224 million to $3.58 billion in the last three months of 2019, down six per cent from the same quarter in 2018. Operating profit fell 16 per cent to $1.21 billion.

The railway blamed both the strike and weaker economic conditions for the revenue drop, although it did not allocate a dollar figure to the strike. Once a tentative deal was struck, it took about three weeks for normal operations to resume. But new government rules that’s expected to slow down train traffic means it could take longer for CN to recover from the blockades.

Last week, Transport Minister Marc Garneau issued a ministeria­l order forcing trains carrying dangerous goods to slow down in response to three derailment­s of trains carrying crude oil over the last year. The 30-day order cuts the speed limit in half to 25 miles per hour from 50 mph across the country and down to 20 mph from 40 mph in metropolit­an areas with population­s over 10,000 people.

Passenger train carrier Via Rail also shut down the vast majority of its operations given its trains run on CN tracks. Tens of thousands of customers have been affected, with Via offering refunds for passengers whose travel plans were cancelled.

Via Rail did not reply to questions about how much the disruption is expected to cost.

Rail is the backbone of infrastruc­ture in this country ... This is not the kind of thing you can take a wait-and-see approach on for too long.

 ?? PETER J. THOMPSON ?? The food industry has warned that extended rail blockades could lead to shortages of groceries and household products on shelves, and the “spoilage of fresh foods.”
PETER J. THOMPSON The food industry has warned that extended rail blockades could lead to shortages of groceries and household products on shelves, and the “spoilage of fresh foods.”

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