A tentative deal has been reached between railway unions and management, averting a freight railroad strike that had threatened to cripple US supply chains and halt the transportation of key Canadian imports and exports.

The verbal agreement concluded after about 20 hours of talks between unions representing more than 50,000 engineers and conductors and railroads’ labour negotiators. At one point during the negotiations, US President Joe Biden called in personally to talk to the negotiators. He stressed the catastrophic harm that could come to families, businesses and communities in the US if the rail system shut down.

The strike represented a significant threat to Canada’s economy as well, as 70% of Canadian exports are sold to US buyers, and rain is crucial for the supply chain. Rail trade between Canada and the US accounts for 16% of total cross-border trade, according to data from the U.S. Bureau of Transportation Statistics.

BNN Bloomberg reported that a freight rail strike would impact key Canadian industries including agriculture, fertilizer, energy, and manufactured goods.

At the heart of the dispute was staffing shortages and scheduling rules that, according to the unions, had been requiring workers to be “on call” and ready to report to work on short notice as often as seven days a week, facing discipline if they needed time off for medical care.

What happens next?

The threat of a strike is not yet 100% over, as the deal still needs to be ratified by union members before it can go into effect. In the short-term, however, it’s good news for businesses that depend on freight railroads to continue to operate. According to CNN business, about 30% of the freight in the US moves by rail.

In the meantime, the railroad disruptions that had already begun in anticipation of the strike are now being restored. Amtrak, for example, whose system consists of approx. 22,000 miles of freight rail lines outside of the Northeast Corridor, said it was “working to quickly restore” the long-distance trains that had been cancelled.

Freight railroads had already stopped accepting shipments of hazardous and security-related materials a week before the deal, and others had stopped accepting shipments of crops from the agricultural industry.

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