May 23, 2012 / 3:34 PM / 5 years ago

CP Rail strike seen delaying Canada grain shipments

2 Min Read

WINNIPEG, Manitoba (Reuters) - A strike at Canadian Pacific Railway Ltd (CP.TO), the country's No. 2 railroad, will delay at least 162,000 metric tons (178,574 tons) of grain sold to Canadian Wheat Board buyers, a senior CWB official said on Wednesday.

The CWB, which is Western Canada's monopoly marketer of wheat and barley until August 1, roughly splits its grain-shipping business between Canadian Pacific and the larger Canadian National Railway Co (CNR.TO).

The CWB will now try to divert as much grain as possible to CN during the CP Rail strike, said Ward Weisensel, the Wheat Board's chief operating officer. But it expects to incur penalties for failing to deliver grain on time to vessels waiting in ports.

Canadian Labor Minister Lisa Raitt said on Wednesday that the government would introduce back-to-work legislation as early as Monday if the strike persists.

"It's going to put half your whole program basically a week behind, perhaps more, depending on how quickly the railway can begin to catch up on the backlog that will be there," Weisensel said in an interview with Reuters.

"We're one of many shippers facing the same issues here. We need to resolve the issue immediately and get the railway back and moving again."

The strike by 4,800 engineers, conductors and traffic controllers at CP Rail started early on Wednesday, shutting down all CP freight traffic.

Canadian shippers are highly dependent on the country's two dominant railways to move grain because there is no river freight system in Western Canada, unlike in the United States.

Canada is the biggest exporter of spring wheat, durum, canola and oats, as well as a top producer of the crop nutrient potash, all of which move to export position mainly by rail.

The CWB will give up its grain monopoly at the end of the current crop marketing year and compete in an open market.

Reporting by Rod Nickel in Winnipeg; Editing by Frank McGurty

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