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CN Moves To Shut Down Eastern Canada Rail Network Amid Blockades

FreightWaves

Canadian National (NYSE: CNI) began shutting down its Eastern Canada rail network Thursday and plans to halt all transcontinental service in response to ongoing disruptions by anti-pipeline protesters that have increasingly strained the country's supply chains.

CN said it is initiating a "disciplined and progressive shutdown" of the eastern rail network after canceling more than 400 trains during the past week amid blockades in Ontario, Manitoba and British Columbia in support of a First Nations group's opposition to a proposed pipeline route. 

The company said it will stop and secure all transcontinental trains and warned of imminent temporary layoffs for its Eastern Canadian operations staff.

"This situation is regrettable for its impact on the economy and on our railroaders as these protests are unrelated to CN's activities, and beyond our control. Our shutdown will be progressive and methodical to ensure that we are well set up for recovery, which will come when the illegal blockades end completely," CEO JJ Ruest said in a statement. 

Blockades remain in Ontario and British Columbia despite court orders and pressure from government officials. The protests are in support of hereditary chiefs of the Wet'suwet'en nation who say the Coastal GasLink pipeline will bring environmental and cultural harm to their territory in British Columbia.

Intermodal Carriers Take Hit

The shutdown further hit an already strained supply chain, including intermodal trucking carriers. 

"It's a complete standstill," Corey Darbyson, director of the Quebec-based intermodal carrier Transport Dsquare, told FreightWaves, ahead of CN's shutdown.

Dsquare primarily services the Toronto-Montreal corridor — with about 30% of its businesses tied to the rails. The company had already started receiving requests from shippers to have its trucks handle the full haul between Toronto and Montreal.

Darbyson said the disruption had already had a worse impact on Dsquare's operations than November's CN strike

"This has to stop," Darbyson said. "The people have had their voices heard. Now it's impacting across the nation"

The CEO of one of Canada's largest transportation companies, Mullen Group, derided the ongoing anti-pipeline protests  as "a new form of "eco-terrorism" but said the blockades could bring more freight to trucking.

"The trucking industry might benefit by rails not being able to move goods," Murray Mullen told analysts while discussing his company's fourth-quarter financial results.

Despite his view of a potential upside, Mullen raised alarm about the impacts to Canada's supply chain and called on authorities to end the protests as soon as possible.

"They better do something or a lot of Canadians are going to be hurt by the distortion to the supply chain," Mullen said.

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