CP Rail Caught in Crosshairs With New Blockade: Protest Update

(Bloomberg) -- Canadian Pacific Railway Ltd. is the latest victim of rail blockades taking place across the country as protests against the construction of a natural gas pipeline enter a third week.

Demonstrators are now obstructing CP’s tracks near Kamloops, in British Columbia’s interior. “CP has been impacted by the blockades and continues to monitor the situation closely, in close collaboration with key stakeholders,” spokesperson Salem Woodrow said by email Thursday afternoon.

Environmental and indigenous-rights activists have obstructed rail lines in several provinces, protesting the construction of TC Energy Corp.’s planned C$6.6 billion ($5 billion) Coastal GasLink project. The pipeline is meant to ship natural gas to an LNG export facility under construction on the coast of British Columbia that is backed by Royal Dutch Shell Plc, PetroChina Co. and three other partners.

The longevity of protests along CP’s railways will be key.

While Canadian National Railway Co. has been successful with obtaining injunctions to dismantle smaller blockades, it still had to cancel 400 trains last week and shut down its eastern Canada operations. CN said it will have to temporarily lay off about 450 workers.

CN won court orders to break up protests at rail lines outside Montreal in Quebec and near the Alberta capital of Edmonton, according to reports from the Canadian Broadcasting Corp.

Trudeau Minister Sees Progress (12:55 p.m. Toronto)

Prime Minister Justin Trudeau’s public safety chief said police are withdrawing from the First Nation protest site at heart of demonstrations that have paralyzed Canada’s railways.

Royal Canadian Mounted Police “have agreed to continue to serve the area but by locating their people in a nearby town,” Public Safety Minister Bill Blair told reporters Thursday morning on his way into a cabinet meeting in Ottawa. The RCMP’s presence on Wet’suwet’en territory in northern British Columbia has been a key point of contention in the dispute.

Blair said he believes “the condition that the people said was the reason for the barricades has now been met.” He added: “I think now the circumstances are such that those barricades should come down.”

The Wet’suwet’en hereditary chiefs -- some of whom are meeting Thursday with allied Mohawk leaders in Quebec and Ontario to map out a common strategy -- have yet to respond to the move by police. But the government describes it as an olive branch and is hopeful it will be accepted.

“The step that was made by the B.C. RCMP was significant,” Indigenous Services Minister Marc Miller said after the cabinet meeting.

Quebec Fears Propane Shortage (9:27 a.m. Toronto)

Rail blockades are beginning to pressure supplies of some commodities across Canada. Quebec is rationing propane with about a week of inventories. Stockpiles, which usually last for two to three weeks, are being rationed with schools and hospitals getting first priority, according to Claude Potvin, press secretary for the minister of energy and natural resources.

Shipments of agricultural products are also being disrupted, hurting business for exporters. “As this thing persists, it’s going to have more and more of an impact on the Canadian economy and companies that use the rail system to conduct business,” Nutrien Ltd. Chief Executive Officer Chuck Magro said Wednesday in a phone interview.

Pressure is rising on the Trudeau government to resolve the crisis, though the prime minister has asked for patience.

“If the government is not going to uphold the rule of law in the country, who is? If the government is not going to assert the national interests on major projects for the country, who is?” Derek Burney, a former Canadian ambassador to the U.S., said in a BNN Bloomberg television interview Thursday morning. “I am just exasperated by the inaction.”

Economic Toll Mounts Amid Railway Layoffs

Economists are starting see a drag on growth as a result of the dispute, comparing it to last fall’s work stoppage at CN Rail.

“The impact will be larger than the CN strike in November, and reinforces our expectation that economic growth will remain below potential through the first half of 2020 -- averaging a bit over 1% in the three quarters through 2Q 2020,” Andrew Husby of Bloomberg Economics said by email Thursday. “It plays into a larger theme of supply chain bottlenecks being a key recurring weak point in an already-mild Canadian growth trend.”

Capital Economics analyst Stephen Brown reduced his first-quarter GDP forecast to 1.5% from 1.8%, agreeing the hit from the latest disruption “is likely to be more significant” than the CN strike. “We are penciling in a hit to GDP of 0.25% from the blockades in February,” Brown said in a note to investors Wednesday.

Via Rail Canada Inc., the nation’s main intercity passenger carrier, said Wednesday it would temporarily suspend work for close to 1,000 employees.

“This situation is unacceptable in the fact that it is hitting Canadians so hard, facing layoffs and shortages,” Trudeau said Wednesday. “That is why we are doing everything we can to resolve this peacefully. We will exhaust every effort to resolve this peacefully.”

--With assistance from Stephen Wicary and Jen Skerritt.

To contact the reporters on this story: Divya Balji in Toronto at dbalji1@bloomberg.net;Robert Tuttle in Calgary at rtuttle@bloomberg.net

To contact the editors responsible for this story: Derek Decloet at ddecloet@bloomberg.net, Chris Fournier

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