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
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
