Manufacturers are scrambling to deliver products, industry associations are warning of potential shortages of food items, propane, and chlorine for water treatment, and mining companies are curtailing production as rail blockades by Indigenous groups and environmental activists continue to paralyze Canada’s transportation infrastructure.
Canadian National Railway began shutting down all operations in Eastern Canada and Via Rail cancelled most passenger service nationwide Friday as protests in support of Wet’suwet’en Nation opposition to the Coastal GasLink pipeline in northern British Columbia moved into a second week.
Demonstrators have blocked railways in B.C. and Ontario, crippling crucial arteries for industrial supply chains that operate on a just-in time basis. And as trains ground to a halt, unions were notified by CN, Canada’s biggest cargo railway, to be prepared for potential layoffs.
“Rail is the backbone of infrastructure in this country, critical for industry but also for inter-city movement of goods,” said Brian Kingston, vice president of policy, international and fiscal Issues at the business council of Canada. “This is not the kind of thing you can take a wait and see approach on for too long because this is potentially a catastrophe for the Canadian economy.”
The crisis in the nation’s rail system is hitting at a particularly difficult time for the economy, already wounded by the coronavirus and still recovering from an eight-day strike that shut down CN’s operations in November. Half of Canadian exports move via rail to ports and then on to global markets, with CN alone moving $250 billion in goods annually, Kingston said.
The Parliamentary Budget Officer recently downgraded fourth quarter growth to 0.3 per cent from 1.6 per cent, citing the strikes at CN strike and General Motors. Projected first quarter growth was subsequently reduced too, to 1.5 per cent from 1.8 per cent — largely due to concerns about the impact of the ongoing coronavirus outbreak.
This is not the kind of thing you can take a wait and see approach on for too long because this is potentially a catastrophe for the Canadian economy
Brian Kingston
Those dampened figures cast doubt over the prospects for an already slowing economy, expected to grow at just 1.6 per cent in 2020, according to the federal government’s forecast, Kingston said.
“That’s half the speed of the average growth of the G20 so it’s not like were at the top of the table to begin with,” he said. “Then factor in the downgrade for coronavirus, plus this rail situation and it becomes very difficult to see how we achieve even that very modest growth forecast.”
Retailers and food producers warned that an extended strike could lead to shortages of groceries and household products on shelves, and the “spoilage of fresh foods.” While urban centres would not escape the impact, smaller communities would be particularly affected.
“This is not solely a food supply issue,” the Retail Council of Canada and Food and Consumer Products Canada said in a joint statement. “Among the type of goods impacted are items like personal hygiene products, infant formula, fire alarms and the type of cleaning and sanitary products that help deal with concerns about the spread of influenza and other infectious diseases.”
As in other sectors, firms were switching to alternate transportation already in short supply, including trucking, the statement said. But for some goods including bulk agricultural commodities, mining products and hazardous chemicals, trains are the only way to move products.
Chlorine to treat drinking water, jet fuel and chemicals used in de-icing fluid are all particularly dependent on rail.
“When you get into hazardous products like chlorine, you can’t put it on a truck and send it down the 401 (Highway) at 100 km an hour,” said Bob Masterson, chief executive of the Chemistry Industry Association of Canada. “These things are very important to public safety and they’re not getting through. So how long can this go on before we are in a crisis? We are dangerously close to finding out the answer to that question.”
Meantime, some mining companies — which rely heavily on rail to ship raw materials into their operations and carry products out to market — are experiencing serious disruptions while others have had their service severed altogether.
In 2018, the industry was responsible for 20 per cent of Canada’s exports, valued $104.5 billion.
“Not all of that moves by rail but most does,” said Brendan Marshall, vice president of economic and northern affairs at the Mining Association of Canada.
“I’ve been talking to companies across the country and some have already begun operational curtailments knowing they only have so much storage space before they shut down.”
Worn down by a string of rail disruptions, some customers, he says, are considering shifting their supply source away from Canada, he added.
“This is indicative of the level of concern out there.”
Halted freight trains in in Tyendinaga, Ont.
Chris Helgren/Reuters
It’s too soon to say how much the blockade, now on its eighth day, will cost CN. But the impact on its operations is comparable to the recent labour strike, when 3,200 conductors and rail workers walked off the job during collective bargaining, forcing the railway to scale back operations to 10 per cent of capacity.
At the time, CN warned the labour action would cut earnings by an estimated 15 cent per share. In January, it reported revenue fell $224 million to $3.58 billion in the last three months of 2019, down 6 per cent from the same quarter in 2018. Operating profit fell 16 per cent to $1.21 billion.
The railway blamed both the strike and weaker economic conditions for the revenue drop, although it did not allocate a dollar figure to the strike. Once a tentative deal was struck, it took about three weeks for normal operations to resume. But new government rules that’s expected to slow down train traffic means it could take longer for CN to recover from the blockades.
Last week, Transport Minister Marc Garneau issued a ministerial order forcing trains carrying dangerous goods to slow down in response to three derailments of trains carrying crude oil over the last year. The 30-day order cuts the speed limit in half to 25 miles per hour from 50 mph across the country and down to 20 mph from 40 mph in metropolitan areas with populations over 10,000 people.
Passenger train carrier Via Rail also shut down the vast majority of its operations given its trains run on CN tracks. Tens of thousands of customers have been affected, with Via offering refunds for passengers whose travel plans were cancelled.
Via Rail did not reply to questions about how much the disruption is expected to cost.
With files from Emily Jackson and Julia Mastroianni
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
