Striking CN engineers picket outside the company's operations in Saskatoon on Saturday. (Dan Zakreski/CBC)

Canada's labour minister is urging the union representing striking Canadian National Railway locomotive engineers to accept binding arbitration.

About 1,700 engineers represented by the Teamsters union walked off the job early Saturday after mediated talks in Montreal collapsed just before a midnight Friday strike deadline.

In a statement issued Saturday, Rona Ambrose said she's "disappointed" the union and CN could not reach an agreement before the strike began.

The minister said CN has already agreed to binding arbitration and that the government is ready to appoint an arbitrator once the union gives its approval.

"I am committed to protecting Canadians and the Canadian economy and will make every effort to shield them from the damaging effects of a strike," she said. "At a time when our economy is still recovering, our government will not support a disruption to such a vital component of Canada's economy."

Union balks at higher distance caps

The engineers have been working without a contract for close to 11 months. Their union says a strike could have been postponed had the railway agreed to negotiate and not impose a 1.5 per cent wage increase, along with higher mileage caps.

"Well, it’s truly unfortunate, but the situation started on Monday when Canadian National arbitrarily imposed changes to our collective agreement that imposed more hours on our members," Teamsters Canada Rail Conference president Daniel Shewchuk said Saturday.

"And then reluctantly we had to serve strike notice after that to protect our members from further changes to the collective agreement," he said.

"The company could not accept the excessive wage demands of the Teamsters Canada Rail Conference," CN communications director Mark Hallman said.

'We feel this is a hugely missed opportunity that the union did not agree to CN's repeated requests to submit the issues in this dispute to binding arbitration," he said.

Customers shipping goods by rail cross-country will be most affected by the work stoppage. On Saturday, both Shewchuk and Hallman said the strike is not affecting passenger train travel.

With files from The Canadian Press