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Canadian Railway Dispute With Workers May Disrupt Grain Exports

Oct. 17 (Bloomberg) -- A possible strike or lockout by Canadian National Railway Co. workers may disrupt grain shipments and lead to contract penalties and defaults, according to the Western Grain Elevator Association.

About 95 percent of Canada’s export grain is shipped by rail, and half of that is moved by Canadian National Railway, said Wade Sobkowich, executive director of the Winnipeg-based association, which represents grain-handlers including Viterra Inc., Cargill Inc. and Richardson International. A labor dispute causing delays would interrupt deliveries at a time when farmers are harvesting record wheat and canola crops.

“The issue is not only the immediate stoppage in the movement of grain from country elevators to export terminal facilities, but the inability for the railways to recover from these lost shipments,” Sobkowich said in an e-mail statement. “The railways do not invest in surge capacity to make up shipping. Once it’s lost, it’s lost.”

Canadian National is optimistic it will settle a dispute with 2,800 rail workers before Oct. 29, the earliest date for a strike or lockout, Mark Hallman, a company spokesman, said by telephone from Concord, Ontario. Negotiations between the railway and Teamsters Canada Rail Conference, the union that represents the company’s conductors, railmen and yardmen, will resume Oct. 21 with mediators appointed by the federal minister of labor, he said.

Expired Contract

The labor contract expired in July and the railway has been bargaining with the union since then, Hallman said. The railway declined to disclose how much of its fleet is devoted to shipping grain to terminals in Vancouver, Prince Rupert and Thunder Bay.

Wheat production will probably expand to 33 million metric tons, up 22 percent from 27.1 million in 2012 and exceeding the record harvest of 32.1 million tons in 1990, Statistics Canada said in an Oct. 4 forecast. The canola harvest in Canada, the world’s largest grower, may climb to 16.0 million tons, surpassing the record of 14.6 million tons in 2011, the government agency said.

The Teamsters union is gearing up for a fight with the railway company and on concessions that would require workers to work longer hours with less rest time between trips, according to an Oct. 14 statement on the union’s website.

None of the railway’s bargaining proposals would compromise the health and safety of workers, Hallman said in an e-mailed statement.

To contact the reporter on this story: Jen Skerritt in Winnipeg at jskerritt1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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