Update: Rail strike may end before disruptions.
Resin shipments throughout North America could be affected by the Canadian railway strike that began early on Aug. 22, with resin makers working on "actively managing" disruptions.
Canadian National Railway and Canadian Pacific Kansas City Ltd., Canada's two largest railroads, have locked out more than 9,000 employees represented by the Teamsters Canada Rail Conference after failing to reach terms on new contracts.
"Without an agreement or binding arbitration, CN had no choice but to finalize a safe and orderly shutdown and proceed with a lockout," officials with the Montreal-based firm said in a statement.
"Over the last 9 months, CN has negotiated in good faith," they added. The firm "consistently proposed serious offers … [but] the Teamsters have not shown any urgency or desire to reach a deal that is good for employees, the company and the economy."
Officials with CPKC in Calgary said their firm "has remained committed to doing its part to avoid this work stoppage," but added that "at this time, the responsible path forward for the union, the company, our customers … and the public interest is for TCRC and CPKC to engage in binding arbitration to resolve all outstanding disputes."
Union President Paul Boucher responded in a statement: "Throughout this process, CN and CPKC have shown themselves willing to compromise rail safety and tear families apart to earn an extra buck," he said. "The railroads don't care about farmers, small businesses, supply chains, or their own employees. Their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy."
For plastics, Nova Chemicals has large amounts of polyethylene production in the Sarnia, Ontario, region, as well as at Joffre, Alberta, in western Canada. Dow Inc. also has large PE assets in Fort Saskatchewan, Alberta.
Heartland Polymers also could be affected by the rail strike. In 2022, the firm opened a major polypropylene resin unit in Strathcona County, Alberta.
In a statement to Plastics News, officials with Dow in Midland, Mich., said the firm "is actively managing the impacts of the ongoing rail work stoppage."
"We have implemented our contingency plans to ensure minimal disruption to our operations and customers," they added. These measures include leveraging Dow's supply network and rail fleet to minimize disruption to operations and preparing both pre- and post-stoppage for rail movements.
Nova officials in Calgary told PN that the work stoppage "threatens supply chains and will have far-reaching effects on the petrochemical industry and beyond."
They added that Nova began preparations months ago to minimize disruption to customers, but the firm "has already begun to see impacts on our operations across Canada, that will only ramp up if a resolution is not met quickly."
LyondellBasell's Equistar Chemicals' PE unit already has placed force majeure supply limits on all rail shipments to Canadian locations. In an Aug. 22 letter to customers obtained by PN, officials said the labor disturbance and resulting inability to obtain transportation "are issues that prevent LYB's ability to perform and are beyond our reasonable control. … We also anticipate potential shipment delays along the U.S. rail network."
Plastics market analyst Howard Rapport said most major resin consumers depend upon bulk railcar deliveries.
"As a major trading partner with the U.S., particularly with large volume commodity resins in PE and PP, the impact of a Canadian rail strike could certainly disrupt the flow of pellets in North America," said Rappaport, who's with StoneX in New York.
He added the majority of volume flows south from Western Canadian plants that use low cost feedstocks in the region. "The longer the strike, the higher the risk of tightening up supply in the U.S. market," Rappaport said.
"There's room for U.S. Gulf producers to pick up some of the slack in a sustained outage," he added. "But if [the strike] persists for a prolonged period, the affected plants who rely on Canadian carriers to move resin production may have to trim back or shut down production once their inventory of empty cars is filled."