Dude, where's my car or combine? Rail lockout to impact auto, farm equipment consumers

Some North Americans in line for new vehicles or agricultural equipment, like combines, could be out of luck until Canada's current rail dispute is over.

The lead economist with the Canadian Automobile Dealers Association says inventory issues are just a matter of time for some dealerships.

"Some will have inventory, but depending on how long this issue is going on for, some that do not for specific models will result in a frustration from the consumer and ability to do business with them," said Charles Bernard.

And that can eventually lead to dealers charging more, he added.

"Over time, if there's less supply than the actual demand, you start seeing the prices go up as we saw during the COVID crisis. That's why we were hoping for a quick resolution."

In a first for Canada, its two largest railways idled at the same time overnight after months of negotiations.

Canadian Pacific Kansas City Ltd. (CPKC) and Canadian National Railway Co. (CN) locked out thousands of workers when talks couldn't bring about a new deal before midnight.

Bernard said thatwith both railways offline, there are no realistic alternatives for car dealers to get new products on showroom floors, parking lots and in front of buyers.

"It's pretty tough."

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Vehicles constructed within the North American integrated market are centred on the railway system, he said.

"That's why it's a major, major issue when these companies do the allocation of where the products are going to go."

According to Bernard, the longer Canada remains not an option for the reallocation of vehicles waiting for a home,the better the chance they end up elsewhere also needing the supply.

"The longer the issue remains, the quicker it would become a major problem from the servicing and repair parts."

International farmmachinery delays

The rail lockout will also impact the movement of farm machinery like combines and implements and it's not just the Canadian agricultural sector that will feel it.

Brian McGuire is president and CEO of the Associated Equipment Distributors in the U.S.

The international trade association represents manufacturers and distributors of construction, agriculture, mining and forestry equipment.

When he found out about the railway shutdown,he said, he gasped after realizing it was both railways idling at the same time.

"That puts a new spin on this," said McGuire. "The reason it's shipping on rails is because it doesn't fit on over-the-road trucks, whether it's the weight, restrictions or size of what's coming."

According to McGuire, aside from combines and implements used in the field, other common products moved by rail include manure spreaders and crop dyers, and that includes products to and from Canada.

"We are connected as two countries by rail, with a lot of freight moving from Mexico through the U.S. and on to Canada," he said.

"Certainly cross-border [products] will pile up of stuff going to Canada and items coming back from Canada to the U.S., so there will be an impact on the U.S. side."

McGuire saidthere's a "definite impact" within the ag-specific industry as most parts and equipment in its entirety getshipped by rail container.

"Most of the heavy equipment is going to come in, either through the port, and then require shipment by rail to its final destination before it's transferred to truck. Or coming in by rail across across the border."

McGuire saidit's not effective from a cost perspective to move equipment by truck to farmers and agriculture producers.

"The ag equipment industry, that's a little soft as it is already, certainly another burden ... is not what we need at this juncture."