Canadian Railway Workers’ Strike and the Waterway Option

Train conductors for one of Canada’s largest railway companies, CN Rail have initiated strike action demanding improved working conditions. The strike has halted movement of propane from an oil refinery located between Lakes Huron and Erie to customers located along the Saint Lawrence Seaway, between Lake Ontario and the Gulf of Saint Lawrence. While road going tanker trucks are moving some propane, the maritime option appears attractive.

Introduction

Railway workers at Canada’s coast-to-coast railway company are demanding improved working conditions that involve reducing the number of consecutive hours each worker spends on duty, in charge of a train. To emphasize their demand, they have initiated strike action. As a result, the retail sector has sounded the alarm over delayed shipments during their busiest season. The farming sector, along with hospitals and schools located to the north and east of Lake Ontario, has sounded the alarm over their small reserves of soon-to-be depleted propane they require to provide interior heating to buildings.

An oil refinery located in southwestern Ontario at the City of Sarnia, on the waterway between Lakes Huron and Erie processes propane from oil pumped across Canada through a pipeline. The pipeline ends at Sarnia, the result of both political and environmental opposition to extending the pipeline to eastern Canada, across the Province of Quebec where the need for propane is urgent. While trucks could carry propane along the often congested main roadway between Detroit and Montreal, the inland waterway maritime sector may be able to carry far greater volumes of propane at much lower cost.

Convenient Terminals

The oil refinery at Sarnia is located next to the Detroit River, allowing for a short-distance high-pressure pipeline to connect the propane processing section to provide propane to ships moored near to Sarnia. There are numerous waterway terminals located between Sarnia and the Gulf of Saint Lawrence where Seaway-max tanker ships and barges may be secured to transfer propane to tug-propelled tanker barges and to tanker trucks that will deliver propane to the final destinations. The list of ports includes Toronto, Oshawa, Johnstown, Valleyfield, Montreal, Three Rivers and Quebec City.

At several of the ports, there may be scope to directly transfer compressed propane from Seaway-max ship to tanker tug-barges that would sail to smaller terminals located along the Saint Lawrence Seaway, Ottawa River, northern area of the Richelieu River and Saguenay River. Depending on sailing conditions on Lake Erie, some tug-propelled coupled trains of tanker barges carrying propane could sail to Lake Ontario, with narrower barge tows then sailing through the calm conditions along the Murray Canal to deliver propane to small terminals located between Ports of Oshawa and Johnstown.  

Safety and Storage

The railways and road going tanker trucks regularly carry compressed propane along main railway lines and main highways that pass within close proximity to large populations. With waterway transportation, tanker ships and tanker barges that carry compressed propane would sail at greater distance from the large population areas located between Sarnia and Montreal. While maritime transportation is able to carry much greater volumes of propane than road or railway transportation, large tanker barges moored offshore could also store massive volumes of propane. Overseas, such barges store LNG and compressed natural gas.

Between Montreal and Quebec City, older Panamax size vessels could be converted to floating storage of propane, perhaps with over three months of storage capacity. At Quebec City and courtesy of not having to sail under any bridges, much large vessels could be converted to storing propane. The government of Quebec remaining firm in their opposition to pipelines provides a basis to consider the combination of Seaway-max tanker ships carrying propane from Sarnia to large-scale floating storage located along the Lower Saint Lawrence River, with smaller-scale storage implemented along the Saint Lawrence Seaway.

Alternative Strategies

The union representing the striking railway workers has presented the railway company with a powerful bargaining strategy. A prolong strike would prompt both the retail and propane sectors to develop their own strategies to respond to the possibility of a prolonged strike. Containers destined for eastern Canada that arrive at Western Canadian ports can be diverted to American Pacific ports and sent on alternative trains to the eastern U.S. where trucks would carry the containers into Canada. Port of Montreal could transfer Toronto bound containers to tug barges that sail via calm water in the Murray Canal.

Mega-size ships sailing via the Suez Canal and carrying containers destined for Eastern Canada may transfer the containers at Western Mediterranean transshipment ports to crane equipped Seaway-max container ships that may sail directly to Ports of Toronto, Oshawa or Hamilton, for transfer to trucks. Traffic congestion along main roads that connect to Port of Toronto could prompt unloading some container ships at either Oshawa or Hamilton that would need to secure additional cranes to assist in offloading the ships. A prolonged railway workers’ strike could prompt a long-term transfer of a major portion of peak propane transportation to waterway.

Workers’ Grievances

The main grievances of the Canadian railway workers involve multiple issues that revolve around the often extended duration of on-duty work shifts and duration of off-duty rest time between shifts. Many of the workers complain of being insufficiently rested to return to duty after a rest break, identifying worker fatigue as endangering worker safety. Following investigations into a train collision that occurred over 30 years ago at Hinton, Alberta, extended on-duty duration, worker fatigue and worker use of stimulants were identified as being among the contributing factors. It is ironic that today’s railway workers strike over work shift and off-duty duration.

The Railway

While CN Rail negotiates toward a possible settlement with their employees, the railway is both competitive and efficient in its movement of goods. Mega-size trans-Pacific container ships interline with CN Rail at west coast Canadian ports and carry containers in double-stacked formation aboard extended-length trains that include mid-train locomotives, to major eastern Canadian intermodal terminals at Montreal and Toronto. CN Rail also excels in the efficiency of bulk freight transportation of agricultural produce, mining ores energy products. The strike has revealed potential market vulnerability in propane transportation and will prompt customers to seek alternative container transportation.

Conclusions

While railway worker grievances involving duration of time on-duty and rest time appear legitimate, their union leadership has shown strategy by calling a strike during peak container transportation season and when demand for propane was high. A prolonged strike would prompt the energy sector and their customers to seek an alternative form of bulk transportation to at least carry some of the winter season peak market demand along with developing large-scale propane storage. Following resolution of the worker dispute, the railway would likely recover all or majority of its trans-Canada container transportation business.