By Monique Mulima, Bloomberg

The two largest Canadian railroad companies are set to shut down operations Thursday if no agreement is reached with their union workers, as industries brace for billions of dollars in losses.

Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. issued lockout notices to a union representing more than 9,000 employees at both companies, essentially starting a countdown for a nationwide work stoppage unless parties reach a last-minute deal.

A strike would affect movement of products including wheat, chemicals and fertilizers throughout Canada and the U.S. The two rail operators already started a phased shutdown of the network last week.

“The economic harm will extend well beyond the C$1 billion ($732 million) of goods that are transported by rail each day,” Goldy Hyder, chief executive officer of the Business Council of Canada, said in an email.

“It will lead to billions more in lost revenue from goods that won’t be sold, lost wages of workers who won’t be able to do their jobs and the potential for lost contracts from international shippers and consumers.”

Fertilizer maker Nutrien Ltd. said it relies on rail service to move its products for farmers and has started proactive measures like pre-positioning stock.

“We are concerned that labor action could impact the ability to move our products, which consequently may negatively impact farmers and food security around the globe,” a company spokesperson wrote in an email.

Canada is the world’s top potash producer. Contingency planning for a strike is difficult since there are limited other options with 75% of fertilizer moving by rail, said Karen Proud, CEO of Fertilizer Canada.

“There is some ability to move to trucking, but the cost is quite significantly higher and it’s really not something that we can plan for,” she said.

Canadian potash mines may also be impacted because if they can’t free up storage space in advance of a strike, they may have to halt operations during a rail stoppage.

Over 90% of Canadian grain moves by rail, so with both of the two major railways disrupted by the potential strike, there could be a near-total stoppage of grain movement in the country.

“There is no plan B,” said Wade Sobkowich, Western Grain Elevator Association’s executive director. “There’s nothing that compares to rail in terms of moving the volumes of grain that need to move at economical rates.”

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