Canadian Pacific Strike Leaves Containers Piled at Port
A Teamsters strike that shut down Canadian Pacific Railway Ltd. freight lines in the country has left incoming container shipments piling up at the Port of Montreal, where the railroad handles more than half of all traffic.
Containers began amassing yesterday at the port, Canada’s second-busiest, as Canadian Pacific halted freight operations, said Yves Gilson, a spokesman for the Montreal Port Authority. The site accounts for about 28 percent of Canada’s international container traffic.
The Teamsters, Canadian Pacific’s biggest union, walked off jobs after contract talks stalled over proposed pension-plan cuts and work-fatigue rules. The work stoppage constricted the flow of supplies to mines as well as deliveries of wheat and oilseed, prompting the government to consider introducing a bill to end the labor action.
“We currently believe that the strike will be short-lived, owing to either a favorable resolution with the union or back- to-work legislation,” Madhav Hari, a Toronto-based credit analyst with Standard & Poor’s Ratings Services, said in a report.
Canadian Pacific climbed 3 percent to C$77.25 at the close in Toronto. The shares have gained 12 percent this year.
Chrysler Group LLC, which uses Canadian Pacific for shipments of parts and finished vehicles, is “actively working to mitigate any impact” from the strike on operations, Lou Ann Gosselin, a spokeswoman, said in an e-mail.
“We encourage a quick resolution to this issue,” she said.
If the labor action, which began yesterday, is prolonged, it “could materially hurt CP’s profitability and lead to share erosion to rivals in certain segments,” Hari wrote. In that case, S&P “could consider taking a negative rating action.”
The railroad’s long-term debt is rated BBB-, the lowest investment-grade score, by S&P.
Contract talks between the Teamsters, which represents more than 4,000 of the Calgary-based railroad’s workers, and the company started in October, and the union first threatened to strike in April.
The Teamster Canada Rail Conference resisted what it described as a 40 percent cut in post-retirement benefits, while Canadian Pacific said the pensions helped push its expense margins higher than those of its peers. The disparity was criticized by Ackman during the proxy campaign.
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