Business

'An emergency for the Canadian economy': Rail disruption hurting industries, groups say

The disruption in rail service caused by anti-pipeline protesters is having a significant impact on some Canadian industries, costing millions and damaging Canada's reputation as a supplier of goods, industry leaders say.

Damage 'compounds' each day protests continue to hamper railways

CN Rail said it was forced to temporarily shut down parts of its network. Anti-pipeline protesters are not blocking the railways but are too close to the tracks for the trains to pass, rail officials say. (Ryan Remiorz/The Canadian Press)

The disruption in rail service caused by anti-pipeline protesters is having a significant impact on some Canadian industries, costing millions and damaging Canada's reputation as a supplier of goods, industry leaders say.

"Every day that it goes on, the damage compounds," said Perrin Beatty, CEO of the Canadian Chamber of Commerce.

"It is damaging our international reputation as a reliable supplier. It is affecting our supply chains around the world."

Anti-pipeline protesters who are demonstrating around the rail lines near Belleville, Ont., and New Hazelton, B.C., have prompted CN Rail to temporarily shut down parts of its network, the railway said in a statement Tuesday. There is currently no movement of any trains — freight or passenger — at both those locations, crippling the ability to move goods and facilitate trade.

Via Rail said Wednesday it has cancelled its Montreal-Toronto and Toronto-Ottawa routes until Friday. The passenger rail service said that 256 trains had been cancelled, impacting 42,100 passengers.

Since last week, the Mohawks of Tyendinaga  have been protesting in support of the Wet'suwet'en hereditary chiefs, who oppose of the Coastal GasLink pipeline in B.C. The demonstrators are not blocking the railways but are too close to the tracks for the trains to pass, rail officials say.

In an open letter to federal Transport Minister Marc Garneau and Minister of Innovation, Science and Industry Navdeep Bains, Beatty wrote that his organization is "deeply concerned about the damage to the Canadian economy" caused by the rail disruption.

"A rail disruption of this magnitude constitutes an emergency for the Canadian economy," wrote Beatty, a former Conservative MP and cabinet minister, and one-time CEO of CBC.

Foods, grain, propane stopped

Beatty implored the government to bring an end to the disturbance that he said has severely limited the movement of perishable foods and other consumer items, grain, construction materials and propane for Quebec and Atlantic Canada.

The stoppage has also affected the movement of natural resources like timber, aluminum, coal and oil, while factories and mines may soon face difficult decisions about their ability to continue operations, he said.

"And the worry for Canada is if people say, well, Canada as a result of this isn't a reliable supplier, we need to go somewhere else," Beatty told CBC News.

A member of the Mohawk community stands atop a snow blockade of the commuter rail line Wednesday in Kahnawake, Que. (Ryan Remiorz/The Canadian Press)

As well, the rail supply chain isn't like a "tap you simply turn it on and off. Once it's shut down, it takes days to get it back up again," Beatty said.

Derek Nighbor, president and CEO of the Forest Products Association of Canada, said that for his industry — which represents about 10 per cent of total tonnage on railway lines — every day that there is a disruption will take two days to bounce back.

Costing forestry industry 'millions and millions'

The rail disruptions have cost  Canada's wood, pulp and paper producers "millions and millions of dollars" through lost sales, lack of ability to deliver to customers, and increasing warehousing costs, Nighbor said. Mills are unable to get the raw materials they need to operate, and they're not getting the empty rail cars that are needed to fill orders, he said.

"So you've got the issue with the raw materials coming in. You've got the issue of getting empty cars in and then you got issues in terms of getting stuff out," Nighbor said.

The disruption in rail service caused by anti-pipeline protesters is having a significant impact on some Canadian industries, costing millions and damaging Canada's reputation as a supplier of goods, industry leaders say. (Lars Hagberg/Canadian Press)

Grain businesses as well are being significantly impacted, said  Wade Sobkowich, executive director of the Western Grain Elevator Association.

"If the blockade were to lift today, it would have cost the grain industry over $10 million just over the last few days," he said.

The effects can be long-lasting, and end up pushing sales outside peak price periods, which hurts farmers' bottom lines, he said. 

"We have farmers who are needing to deliver product. They're needing to sell it into the handling system so that they can get paid, so that they can pay bills and keep cash flow going on their farms," he said.

When Canada is unable to to reliably supply product to customers, the country looks like "a banana republic," he said. 

A First Nations protester walks over the train tracks in Tyendinaga Mohawk Territory near Belleville, Ont., in support of Wet'suwet'en hereditary chiefs who oppose the Coastal GasLink natural gas pipeline in northern B.C. (Lars Hagberg/Canadian Press)

Brendan Marshall, vice-president of the Mining Association of Canada, said his industry relies on rail services for two reasons: bringing essential products to the site so that the mine can operate, and bringing mined products to the market.

Marshall said he has spoken with companies in British Columbia, the Prairies, Ontario and Quebec.

"And the messages that I'm hearing are the same. That is, these blockades are creating a total shutdown of service for the areas and traffic that moves on those lines," he said.

Companies have curtailed production, have been running out of storage space and have lost sales. Marshall said.

"At the end of the day, you have threats to operational viability. You have significant and mounting economic losses for companies as well as the Canadian economy writ large," Marshall said. 

He said the next threshold of losses "would be catastrophic" — meaning operations are no longer viable and are forced to shut down.

"My members' priority is avoiding that situation at all costs," Marshall said. "But they have limited options at their disposal. And the biggest thing causing this distress is disrupted rail service."

About the Author

Mark Gollom

Reporter

Mark Gollom is a Toronto-based reporter with CBC News. He covers Canadian and U.S. politics and current affairs.