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Canadian National (CNI) Ends Lockout Post Minister Intervention
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Canadian National Railway Company (CNI - Free Report) is preparing to resume operations after Canada’s Labour Minister, Steven MacKinnon, referred the labor dispute for binding arbitration. Canadian National is waiting for formal orders from the Canada Industrial Relations Board (“CIRB”) to resume operations in the country.
The railroad operator from Canada remains disappointed that the labor dispute with the Teamsters Canada Railway Conference (“TCRC”) could not be resolved even after nine months of negotiations and required ministerial intervention instead. CNI’s unionized employees resorted to lockout on Thursday after an agreement with the union could not be reached and the deadline passed. The dispute is regarding multiple topics including higher pay, scheduling and worker fatigue.
The labor dispute is between Canada’s two largest freight railways, Canadian National and Canadian Pacific Kansas City (CP - Free Report) , and TCRC. Like CNI, unionized Canadian workers at CP resorted to a work stoppage on Aug 22, bringing the total number of locked-out workers to nearly 10,000. MacKinnon exercised his authority under Section 107 of the Canada Labour Code to direct the Canada Industrial Relations Board (“CIRB”) to impose final binding arbitration. He also said that the existing contracts between the TCRC and both the Canadian railroads will be extended until new agreements are inked.
Following the reference for binding arbitration, CIRB is authorized to oversee the remaining negotiations as a third party and find a solution. After MacKinnon’s announcement, Canadian Pacific Kansas City is also preparing to restart railway operations.
Mainly due to the labor strife, shares of CP and CNI have underperformed the industry over the past month.
One-Month Price Performance
Image Source: Zacks Investment Research
Strike Would Have Resulted in Substantial Loss
The continuation of a strike by the two railroad operators of Canada would have had a devastating impact on the country’s economy and trade. CNI and CP control about 80% of Canada’s rail network, transporting goods worth C$1 billion per day. The work stoppage by railroad workers was estimated to have cost the economy of Canada C$341 million per day.
A prolonged work stoppage by CP and CNI and the resultant shutdown of services would have hurt not only the U.S. cross-border trade, but global supply chains significantly since two-thirds of Canada’s GDP is accounted by international trade.
With the damaging strike being averted in Canada, following ministerial intervention, not only the country’s economy but the global economy at large is likely to have heaved a sigh of relief.
Zacks Rank & a Key Pick
Canadian National currently carries a Zacks Rank #4 (Sell), while Canadian Pacific Kansas City carries a Zacks Rank #3 (Hold) presently.
CHRW, which is being well-served by its cost-reduction efforts, has an expected earnings growth rate of 25.5% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark once, delivering an average surprise of 7.3%. Shares of CHRW have gained 22.7% in the last three months.
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Canadian National (CNI) Ends Lockout Post Minister Intervention
Canadian National Railway Company (CNI - Free Report) is preparing to resume operations after Canada’s Labour Minister, Steven MacKinnon, referred the labor dispute for binding arbitration. Canadian National is waiting for formal orders from the Canada Industrial Relations Board (“CIRB”) to resume operations in the country.
The railroad operator from Canada remains disappointed that the labor dispute with the Teamsters Canada Railway Conference (“TCRC”) could not be resolved even after nine months of negotiations and required ministerial intervention instead. CNI’s unionized employees resorted to lockout on Thursday after an agreement with the union could not be reached and the deadline passed. The dispute is regarding multiple topics including higher pay, scheduling and worker fatigue.
The labor dispute is between Canada’s two largest freight railways, Canadian National and Canadian Pacific Kansas City (CP - Free Report) , and TCRC. Like CNI, unionized Canadian workers at CP resorted to a work stoppage on Aug 22, bringing the total number of locked-out workers to nearly 10,000. MacKinnon exercised his authority under Section 107 of the Canada Labour Code to direct the Canada Industrial Relations Board (“CIRB”) to impose final binding arbitration. He also said that the existing contracts between the TCRC and both the Canadian railroads will be extended until new agreements are inked.
Following the reference for binding arbitration, CIRB is authorized to oversee the remaining negotiations as a third party and find a solution. After MacKinnon’s announcement, Canadian Pacific Kansas City is also preparing to restart railway operations.
Mainly due to the labor strife, shares of CP and CNI have underperformed the industry over the past month.
One-Month Price Performance
Strike Would Have Resulted in Substantial Loss
The continuation of a strike by the two railroad operators of Canada would have had a devastating impact on the country’s economy and trade. CNI and CP control about 80% of Canada’s rail network, transporting goods worth C$1 billion per day. The work stoppage by railroad workers was estimated to have cost the economy of Canada C$341 million per day.
A prolonged work stoppage by CP and CNI and the resultant shutdown of services would have hurt not only the U.S. cross-border trade, but global supply chains significantly since two-thirds of Canada’s GDP is accounted by international trade.
With the damaging strike being averted in Canada, following ministerial intervention, not only the country’s economy but the global economy at large is likely to have heaved a sigh of relief.
Zacks Rank & a Key Pick
Canadian National currently carries a Zacks Rank #4 (Sell), while Canadian Pacific Kansas City carries a Zacks Rank #3 (Hold) presently.
A better-ranked stock in the Zacks Transportation sector is C.H. Robinson Worldwide (CHRW - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CHRW, which is being well-served by its cost-reduction efforts, has an expected earnings growth rate of 25.5% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark once, delivering an average surprise of 7.3%. Shares of CHRW have gained 22.7% in the last three months.