(Bloomberg) -- Canadian Pacific Railway Ltd. reached a tentative pact with a crucial union, ending a strike that began late Tuesday and avoiding a snarl of freight traffic that threatened to hobble the economy.
Operations will resume Thursday at 6 a.m. local time across Canada, the Teamsters Canada Rail Conference said in an emailed statement. The agreement covers about 3,000 conductors and locomotive engineers, the union said. Canadian Pacific confirmed the deal.
The accord at Canada’s No. 2 railroad defused the risk of worsening freight congestion in an economy already buffeted by logjams at larger rival Canadian National Railway Co. Teck Resources Ltd., Canada’s biggest diversified miner, and potash producer K+S AG are among the customers of Canadian Pacific, which also carries much of the country’s grain.
“This four-year agreement will create a more stable operating environment for Canadian Pacific, allowing all the parties involved to concentrate on moving freight,” Edward Jones analyst Dan Sherman said in a note to clients. “The quick agreement is particularly positive for Canadian Pacific at this time because it allows CP to participate fully in the current freight upswing.”
The railroad -- with a 12,500-mile (20,000-kilometer) network stretching across Canada and down to Kansas City, Missouri -- is benefiting from rising container traffic and increased demand for commodities such as crude oil. Canadian Pacific’s first-quarter carloads rose 3.8 percent from a year earlier, outstripping the 2.4 percent gain by other North American carriers.
The shares advanced 1.8 percent to a record C$244.41 at the close in Toronto. The Calgary-based railroad has climbed 6.4 percent this year, while the S&P/TSX benchmark index has dropped 1 percent.
A prolonged stoppage threatened to further delay millions of tons of grain that already were sitting in the Prairies after winter bottlenecks, while canola processors faced the prospect of curbed production.
“I’m very happy to see that CP has come to an agreement with their union partners,” Prime Minister Justin Trudeau said at the House of Commons. “When companies treat their workers as partners not opponents, a fair deal for all is possible.” Trudeau earlier said he wouldn’t be as quick as predecessors to order workers back to their jobs, saying the prospect of a such a decree had tilted negotiations in favor of companies.
Canadian Pacific reached a tentative three-year agreement late Tuesday with a smaller union, the International Brotherhood of Electrical Workers.
The country’s last major rail stoppage was in 2007, when Canadian National workers struck for two weeks.
©2018 Bloomberg L.P.