The effects of a nationwide railway dispute are already hitting western Canada hard.
‘We’re facing a pretty serious animal health crisis’: For ranchers, producers and industries in much of the southern prairies, Canadian Pacific is their only railway option
The effects of a nationwide railway dispute are already hitting western Canada hard.
Even before Canadian Pacific announced it would lock out nearly 3,000 Teamsters Canada Rail Conference (TCRC) engineers, conductors and yard workers at midnight Saturday, American feed shippers began halting shipments north, fearing a work stoppage would strand their cargo once the network stopped operating.
“With the drought we had last year we already had a critical feed shortage, so right now they’re relying on somewhere between eight and 10 trains per week bringing up corn and dried distillers’ grain from the states to feed the more than million head of cattle in Western Canada,” said Foothills MP and Shadow Agriculture Minister John Barlow, whose riding south of Calgary includes some of Canada’s oldest and most established cattle ranches.
“And if we don’t have that, we’re facing a pretty serious animal health crisis.”
For ranchers, producers and industries in much of the southern prairies, Canadian Pacific is their only railway option.
CN, Canada’s largest railway in both revenue and network, built their transcontinental line along a more northerly route, with the bulk of branch lines and secondary routes servicing areas south of Saskatoon and Edmonton largely abandoned over the decades.
A strike vote held earlier in March saw 96 per cent of TCRC members voting in favour of a strike, reflecting the frustrating impasse taking root at the bargaining table.
The stalemate continued until Wednesday evening when Canadian Pacific issued a 72-hour lockout notice.
“For the sake of our employees, our customers, the supply chain we serve and the Canadian economy that is trying to recover from multiple disruptions, we simply cannot prolong for weeks or months the uncertainty associated with a potential labour disruption,” Canadian Pacific President and CEO Keith Creel said in a company statement.
“The world has never needed Canada’s resources and an efficient transportation system to deliver them more than it does today. Delaying resolution would only make things worse. We take this action with a view to bringing this uncertainty to an end.”
Teamsters Canada Rail Conference spokesperson Stéphane Lacroix said negotiations resumed Thursday, but concurred with observations from Canadian Pacific that the two sides remained far apart.
Yesterday’s announcement of a lock-out is upsetting, and our members are not very pleased with that
Stéphane Lacroix, Teamsters spokesperson
“We’re really, really disappointed,” he said of the impending lock-out.
“Yesterday’s announcement of a lock-out is upsetting, and our members are not very pleased with that.”
The overwhelming strike vote notwithstanding, Lacroix said work stoppages are the last thing their members want.
“They wanted to keep negotiating, they wanted to fix the issues and reach an agreement,” he said.
While wages, pensions and benefits remain at the centre of the impasse, Lacroix said the union also wanted the railway to address concerns over rest and work rules.
“Yard employees at Canadian Pacific are only allowed ten hours rest,” he said.
“In some locations it isn’t sufficient time to go home, to rest and return for their next tour of duty.”
A statement released Thursday by the Canadian Federation of Independent Business (CFIB) said the dispute could not come at a worse time for their members.
“As many businesses rely heavily on rail services to send and receive their goods from Canadian and international suppliers, the work stoppage will further disrupt their operations and create more uncertainty at a time that is already challenging for many businesses,” the statement read.
“Only 35% of businesses have returned to normal sales, while debt levels and share of businesses considering bankruptcy remain high.”
In light of the ongoing worldwide supply chain crisis — and Ottawa’s invocation of the Emergencies Act last month to ostensibly clear trade-crippling freedom convoy blockades at land border crossings — many are predicting the Trudeau Liberals are preparing to table back-to-work legislation or declare the railroads an essential service.
Spokespersons for both the Transport and Labour ministers declined to answer direct questions about legislating trains back onto the rails, directing the National Post instead to a statement from Labour Minister Seamus O’Regan.
In the statement, O’Regan said he respected the collective bargaining process, adding that both he and Transport Minister Omar Alghabra would monitor the impact of any work stoppages — strongly suggesting the federal government was not intending to step in before any deadline expired.
In a tweet later Thursday, O’Regan said, “Update: CP Rail and TCRC remain at the table with the support of federal mediators. I’ve been in regular contact with them and continue to monitor the situation closely. It’s not lost on us that this news is already starting to have real impacts.”
Barlow said the dispute ending in either a strike or lockout shouldn’t have come as a surprise to anybody.
“We’ve been in contact with Minister O’Regan asking them to make sure that they have a contingency plan in place that will prevent a strike,” he said.
“That’s up to them whether that’s binding arbitration or back-to-work legislation.”
All this, Barlow said, as ranchers scramble to feed their herds and farmers wait to ship grain harvested two seasons ago.
“All of these things take time, and that’s something we do not have right now,” he said.
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U.S. and Canadian stocks closed higher on Friday after a labour market report showing moderating wage growth in May indicated the Federal Reserve may skip a rate hike in two weeks, while investors welcomed a Washington deal that avoided a catastrophic debt default. It was the biggest gain in seven months for the TSX, with energy and financial shares among the biggest winners in a broad-based rally.
Bond yields spiked as a risk-on tone to markets had investors shunning the bond market.
The tech-heavy Nasdaq index surged to a 13-month intraday high and posted its sixth-straight week of gains that mark its best winning streak since January 2020.
U.S. job growth accelerated in May but a surge in the unemployment rate to a seven-month high of 3.7% as more people looked for employment indicated labour market conditions were easing.
The jump in the unemployment rate from a 53-year low of 3.4% in April reflected a drop in household employment and a rise in the overall workforce. A bigger labour pool is easing pressure on businesses to raise wages and helping decelerate inflation.
Average hourly earnings climbed 0.3% after rising 0.4% in April. That lowered the year-on-year increase in wages to 4.3% after an advance of 4.4% in April. Annual wage growth averaged about 2.8% prior to the pandemic.
“While it appears to be a hot number on the actual number of people employed, the wage rate is not increasing as fast,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh. “That is a softening effect and is this the mythical soft landing? Looks like that.”
The data brought relief to investors who mostly expect the Fed to pause hiking rates at its policy meeting on June 13-14. It would be the first halt since the Fed started its aggressive anti-inflation policy tightening more than a year ago.
But some pointed to the much hotter-than-expected jobs data as a sign the Fed still has not yet tamed inflation.
“Our view is and has been that the market is completely wrong on assessing what the Federal Reserve is doing,” said Phil Orlando, chief equity strategist at Federated Hermes in New York.
“The market’s perception is that this economy was going to cool, inflation was going to collapse and the Fed was going to turn around and start cutting interest rates. That’s wrong.”
Fed funds futures showed a 66.6% probability that the Fed will hold rates steady in two weeks, down from 79.6% on Thursday, according to CME Group’s FedWatch Tool.
The yield on the 10-year U.S. Treasury climbed to 3.70% from 3.60% late Thursday. The two-year Treasury yield, which moves more on expectations for Fed action, jumped to 4.52% from 4.34%. Canadian bonds saw a similar jump in yields.
Markets now await data on key consumer prices a day before the Fed’s rate decision.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 352.38 points, or 1.8%, at 20,024.63, its biggest advance since November 2022. For the week, it was up 0.5%.
“It is all these little factors that the market is holding on to, looking for any reason to be bullish and they’re finding it,” said Philip Petursson, chief investment strategist at IG Wealth Management. “It’s definitely risk-on today.”
The TSX energy sector rallied 2.8% as oil settled 2.3% higher at US$71.74 a barrel ahead of a meeting of OPEC and its allies this weekend.
Suncor Energy Inc was up 3.2% after the company told employees it plans to cut 1,500 jobs this year.
“It appears that some activist investors are trying to make Suncor more efficient over the long term by getting them to cut costs and that’s good to see for investors,” said Greg Taylor, chief investment officer at Purpose Investments.
Heavily-weighted financials rose 2.1% and industrials were up 2.2%.
The real estate sector also advanced 2.2% as data showed home prices in the Greater Toronto Area increased in May from April and sales rose sharply.
In contrast, shares of Canaccord Genuity Group Inc fell 6.8% after a management-led consortium said its C$1.13 billion take-private offer may not result in a deal.
In the U.S., the Senate passing a bill late on Thursday to lift the government’s US$31.4 trillion debt ceiling avoided what would have been a catastrophic, first-ever default.
Passage of the vote eased investor concerns as Wall Street’s fear gauge, the CBOE volatility index, fell to its lowest since November 2021, down 1.1 points at 14.6 points.
The Dow Jones Industrial Average rose 701.19 points, or 2.12%, to 33,762.76, the S&P 500 gained 61.35 points, or 1.45%, to 4,282.37 and the Nasdaq Composite added 139.78 points, or 1.07%, to 13,240.77.
Shares of Verizon Communications Inc, AT&T Inc and T-Mobile US Inc declined after a report said Amazon.com Inc was in talks with the U.S. telecoms to offer low-cost wireless services to its Prime members.
Verizon slid 3.2%, while AT&T and T-Mobile declined 3.8% and 5.6%, respectively; Amazon gained 1.2%.
All 11 S&P 500 sectors advanced, with the materials index leading, up 3.4%, and the consumer discretionary sector, housing Amazon, close behind, rising 2.2%.
Nvidia Corp slid 1.1% for a second day of declines after briefly entering on Wednesday the elite club of megacap stocks valued at $1 trillion or more on hopes artificial intelligence will deliver significant future returns.
But Nvidia’s almost 170% rise year to date highlights investors face of a market dominated by the out-performance of megacaps while most other companies tread water.
“Nobody’s really explained to me how they’re going to make any money from it,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management in Punta Gorda, Florida. “A company like Nvidia going up so much in such a short period of time, that doesn’t make any rational sense.”
Advancing issues outnumbered declining ones on the NYSE by a 4.75-to-1 ratio; on Nasdaq, a 2.73-to-1 ratio favored advancers. The S&P 500 posted 15 new 52-week highs and two new lows; the Nasdaq Composite recorded 74 new highs and 40 new lows. Volume on U.S. exchanges was 11.05 billion shares, compared with about 10.58 billion average for the full session over the last 20 trading days.
Reuters, Globe staff
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(Kitco News) – The gold market is trying to hold its ground within striking distance of $2,000 but could face an uphill battle as the U.S. labor market remains healthy and robust.
U.S. nonfarm payrolls rose by 339,000 last month, according to the Bureau of Labor Statistics. The monthly figure was significantly above the market consensus estimate of 193,000. April’s employment data was revised up to 294,000 jobs.
However, looking past the headline number, the report said the unemployment rate rose sharply to 3.7% missing market consensus calls of 3.5% for May. The unemployment rate it at its highest level since December 2022.
The gold market is seeing some selling pressure in initial reaction to the latest employment data. August gold futures last traded at $1,993.90 an ounce, down 0.08% on the day.
The report also said that wage growth rose in line with expectations, rising by 11 cents or 0.3% to 33.44 in May.
“Over the past 12 months, average hourly earnings have increased by 4.3 percent,” the report said.
While the gold market is seeing rising selling pressure, the latest employment data is not having much impact on interest rate expectations. According to the CME FedWatch Tool, markets still see a more than 65% chance that the central bank leaves interest rates unchanged when it meets later this month.
However, according to some analysts, the robust employment data indicates that while the central bank could pause, it has not yet finished raising interest rates. Some analysts have that this this longer-term shift in rate expectations could weigh on gold.
More than one-quarter of Air Canada flights experienced delays on Friday as the airline worked to return service to normal following a technical malfunction the previous day.
Air Canada had warned travellers early Friday morning they should be prepared for further flight disruptions. In its daily travel outlook, the carrier said that while its IT system was stable, flights may be affected at nine of Canada’s busiest airports, including Toronto’s Pearson, Montreal, Vancouver and Calgary.
Thursday’s outage led to more than 500 flights — over three quarters of its trips — to be delayed or cancelled on the day, creating what the airline said were “rollover effects” just prior to the weekend.
A total of 144 Air Canada flights, or 27 per cent of the airline’s scheduled load, had been delayed Friday as of around 4:30 p.m. EDT, along with 33 cancellations, according to tracking service FlightAware.com.
An additional 56 flights with Air Canada Rouge saw delays, one-third of its daily load, plus 23 cancellations.
“Air Canada has stabilized its communicator system and it is functioning normally. However, due to the effects of Thursday’s IT issues on our schedule, some flights may be delayed this morning as we reposition aircraft and crew,” it said in an emailed statement.
“Customers are advised to check the status of their flight before going to the airport. Our flexible travel policy remains in effect for customers to change their travel plans at no charge.”
The airline did not clarify when it expected its flight schedule to fully return to normal.
Thursday’s disruption, sourced to the system used by the airline to communicate with aircraft and monitor their performance, came one week after Air Canada grounded its planes for about an hour when the same system experienced a separate issue.
That day, 241 Air Canada flights — 46 per cent of its trips — were delayed, according to FlightAware. Another 19 flights were also cancelled.
Air Canada said it has been in the process of upgrading the communicator system.
This report by The Canadian Press was first published June 2, 2023.
Companies in this story: (TSX:AC)
Sammy Hudes, The Canadian Press
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