July 24, 2024

CN Rail has blamed a potential strike with Teamsters for a reduced earnings expectations.

Earnings are still expected to grow 5-8%, but less than the 10% that it forecast in April.

CN says the reason is that shippers are avoiding Canada if they can because of the threat of strike by the union.

• C$4.33 billion ($3.14 billion) in revenue missing the average analyst estimate.
• Adjusted earnings per share of C$1.84 also missed expectations.

While it is fine to blame the theoretical strike for a slowdown in revenue, there is little proof it is all because of fear of shippers. A slowdown in the economy on both sides of the boarder are likely the main cause for the small reduction in revenue growth.

Teamsters renewed their strike mandate on June 29 for CN and CPKC. Workers voted 98.6% to reauthorize a strike, with an 89.5% turnout.

The companies are balancing lost revenue with costs of the new collective agreement after years of growth driven almost entirely through cuts to their labour force known as precision railroading.

The Teamsters are facing demands from the company for continued increases in the working day, cuts to work team sizes, and undermining safety provisions. The demands are generally considered a continuation of precision railroading through squeezing more productivity out of labour and increasing the risk profile.

The companies have run out of room to squeeze productivity out of their workers without increasing risk to the public and workers. The program is being allowed by the federal government which continues the pattern of self-regulation in the rail industry.