How Alberta's reliance on rail shipments prompts unease amid labour uncertainty

There's still much to be determined around how and when a labour dispute involving Canada's two main rail companies Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) will fully resolve.

On Friday morning, the Teamsters union served CNwith a 72-hour strike notice. It came one day afterfederal Labour Minister Steven MacKinnon askedtheCanada Industrial Relations Board (CIRB)to impose binding arbitration.

The path ahead is still uncertain. But the haziness has, for days, prompted government officials, agricultural associations and industry organizations to warn of the outsized impact of a prolongedrail shutdown, especially inWestern Canada.

About three quarters of all commodities moved by rail came from Western Canada in 2022, according to Statistics Canada data.

And excluding commodities loaded in Mexico and the United States but transported byCanadian rail carriers in Canada, Alberta leads the pack.

The province accounted for more than 25 per cent of the total weight ofcommoditiesshipped by rail withinCanada in 2022, according to Statistics Canada. That's the most recent data available.

Matt Jones, Alberta's minister of jobs, economy and trade has estimated that the rail shutdown will impact at least $55 million of Alberta exports per day.

Alberta Premier Danielle Smith met with federal Labour Minister Steven MacKinnonon Wednesday, writing on X, formerly Twitter, that she reiterated Alberta's "grave concerns" about the possibility of the railways shutting down.

"This stoppage will have a disastrous effect on Canada's and Alberta's economies. It will shut down the movement of essential goods right across North America and will cause food and supply shortages for all of us," Smith wrote on X.

Whether it's theprice of food or the price at the pump, here's a look at how a rail shutdown could impact the Alberta economy.

Agriculture a major focus

The timing of this dispute is weighing particularly heavily on the shoulders of Alberta's farmers, who are in the midst of harvest.

Approximately 95 per cent of Canadian grain is transported by rail.

Stephen Vandervalk farms near Fort Macleod, Alta., and is the vice-president of the Wheat Growers Association.

He said he was in "disbelief" at the way the situation had played out.

"In six to eight weeks, we bring all our income in for the year we don't get paid every two weeks, we get paid once a year," Vandervalk said.

"We have contracts, they're in place. They have certain time periods that we were about to deliver by, and companies are able to cancel these contracts because of Act of God clauses like this on one crop of mine alone, we could stand to lose $400,000 or $500,000."

Wheat production in Alberta was worth around $3 billion last year, a spokesperson with Alberta Grains said earlier this week.

Any prolonged stoppage would create long-term implications for those in the agricultural sector, said Scott Crockatt, vice-president of communications with the Business Council of Alberta.

"Harvest is food. So that means that there is perishable food coming off Canadian farmers, crops today, tomorrow and the next day that doesn't have a place to go to get to market," Crockatt said.

"That's going to decrease the value that farmers can get for their crops."

Gas prices unlikely to see much impact

Don't expect to pay much more at the pumpamid the dispute, oil and gas analysts say.

"It's probably minimal, if any," said Patrick De Haan, the head of petroleum analysis at GasBuddy.com.

"The bulk majority of oil and refined products are shipped via pipeline. The primary issue is if this becomes a prolonged strike, it could potentially pose some lower level of disruption."

Available pipeline capacity includes the Trans Mountain pipeline's expansion in May.

The Canadian oil industry is in a more resilient position today thanit would've been had a disruption taken place a few years ago, said Rory Johnston, energy researcher and founder of the Commodity Context newsletter.

"Rail was a pretty critical component of the overall egress system, now it's really kind of a marginal thing," Johnston said.

"If this happened three years ago, particularly four or five years ago, it would have resulted in catastrophic blowouts and differentials, the equivalent of a major pipeline going down for a long period of time."

Grocery stores, medicine, supply chain

According to the Railways Association of Canada, the two rail lines move approximately $1 billion worth of goods every day, meaning that disruptions would soon touch more immediate parts of Albertans' everyday lives.

Michael Graydon, chief executive officer of Food, Health & Consumer Products of Canada, which represents food manufacturers in the country, previously told CBC News that some perishable food had already seen impacts, with parts of Western Canada and Atlantic Canada likely to be most affected.

Should the worst-case play out, impacts would likelybe felt onanything that relies on transportation networks from a supply chain standpoint, said Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce.

"It's everything from, how do you receive medicines? How do you receive goods for retail? What about the produce, and how is that delivered to grocery stores? It's across the board," Yedlin said.

"We rely on the railway and trucking to bring the goods to our city everybody's going to feel it."

Impacts could also trickle down to other industries, Yedlin noted.

"Think about the construction industry. We've had record high housing starts in Alberta. Those houses need to be finished," Yedlin said.

"We have a housing shortage. We don't need any delays in terms of getting houses closed up and worked on so they can be finished. It's inflationary, so that's where we will see it. Nobody's going to be immune."