Companies across Canada—from manufacturers to big box stores and mining firms—are bracing for an unprecedented railway shutdown that would slam the brakes on their ability to ship goods, and throw the economy into disarray. 

Canadian National Railway and Canadian Pacific Kansas City, the country’s two major railways, have been simultaneously locked in labour negotiations with the Teamsters workers’ union for months. On Thursday strikes and lockouts at both companies will begin if no resolution is found.

A chorus of voices from industry representatives to politicians, including Prime Minister Justin Trudeau, are calling for the parties to reach a compromise, warning the economic fallout could be catastrophic. As of Wednesday afternoon and facing a midnight deadline, both CN and CPKC had not reached a deal with the union. 

Prairie blues: In the agricultural sector the annual harvest is just getting underway, and farmers have no alternatives to get their shipments of grains and other commodities to market. 

“This work stoppage could not come at a worse time for the grain sector,” Chris Davison, CEO of the Canola Council of Canada, said in an interview. 

Currently, grain elevator operators, including large firms like Cargill, G3 and Parrish & Heimbecker, are reducing capacity, while food processors like Louis Dreyfus in the canola sector are curbing production, Davison said. A rail shutdown would crimp production and supply across the entire $30-billion canola industry, he said. 

Taking stock: Canada’s rail lines are the “backbone” of the economy, said Vineet Khattar of Morningstar DBRS, and a lockout would cause major complications for everyone from food processors to fertilizer makers. 

According to the Canadian Chamber of Commerce, labour strikes would strand about $550 million worth of exported manufactured goods daily. Some food processors expect to lose up to $3 million per week if a shutdown persists, the Canadian Meat Council has warned, while fertilizer producers could forgo $63 million per day. Auto manufacturers would likely shutter operations within days, said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.

About $3.6 billion worth of goods and services crosses the U.S.-Canada border, the Chamber’s Pascal Chan told The Logic in an interview. “It’s really difficult to get the full grasp of all the things that would be impacted by this work stoppage,” he said.

Big retailers with warehousing space, like Home Depot and Canadian Tire, have likely been stocking up on goods for months in anticipation of a potential strike, according to John Corey, head of the Freight Management Association of Canada (FMAC). 

But industries like mining that work in more remote regions are deeply dependent on rail, according to a Mining Association of Canada representative Geoff Smith, who told The Logic the group is working “around the clock” to raise members’ concerns to the government. 

Captive markets: Many firms will have little to no options should the rail system close. Around 80 per cent of railway customers are so-called “captive shippers,” meaning they don’t have any alternatives when moving goods, FMAC’s Corey said. 

“There’s nothing, and that’s the problem. It’s literally going to shut down the supply chain.”