TORONTO -- Business and consumers throughout Canada and the U.S. were in danger of suffering significant economic harm after Canada's major freight railroads came to a full stop Thursday because of a contract dispute with their workers.

Canadian government officials convened an emergency meeting to address the rail shutdown. Canadian National and CPKC railroads implemented a lockout of their employees after the 12:01 a.m. EDT deadline on Thursday passed without new agreements with the Teamsters Canada Rail Conference, representing around 10,000 engineers, conductors, and dispatchers.

All rail operations in Canada and all shipments crossing the U.S. border have been suspended, although CPKC and CN trains will continue to operate within the U.S. and Mexico.

Billions of dollars worth of goods are transported monthly between Canada and the U.S. via rail, according to the U.S. Department of Transportation. Numerous businesses across various industries rely on railroads to deliver their raw materials and finished goods, meaning they may face production cuts or even closures without regular rail service.

Both railway companies have proposed ending the work stoppage if the union agrees to binding arbitration. However, union representatives have indicated their ongoing efforts in negotiations.

Business organizations have advocated for government intervention, but Prime Minister Justin Trudeau has refrained from imposing binding arbitration, fearing potential backlash from the Teamsters Canada Rail Conference and other unions.

Canadian Minister of Public Services and Procurement Jean-Yves Duclos has urged both parties to find common ground.

They need to reach a solution swiftly," he stated at a press conference.

Canadian Labor Minister Steven MacKinnon's office has confirmed that he has meetings scheduled throughout the day to address this critical issue.

Business leaders fumed over the lack of government intervention.

“Completely halting the national supply chain will only result in negative consequences,” said John Corey, president of the Freight Management Association of Canada. “This situation is unacceptable. People will lose their jobs, and the economy will suffer significant hardship."

Most businesses will likely have sufficient supplies and storage capacity to handle a short-term disruption. However, ports and rail lines will quickly become overloaded with delayed shipments that Canadian National and CPKC won't be able to transport.

Union Pacific, one of the U.S. railroads that frequently transfers shipments to and from Canadian lines, stated in a statement on Thursday that the rail stoppage "will result in the inability to move thousands of rail cars daily across the border."

“This will impact everything from grain and fertilizer during the crucial summer season, as well as lumber for constructing homes,” the company said.

Over 30,000 commuters in Vancouver, Toronto, and Montreal were the first to experience the effects of the lockouts. They were forced to find alternative means of transportation on Thursday morning because their commuter trains were unable to operate due to the CPKC shutdown.

CN had been engaged in negotiations with the Teamsters for nine months, while CPKC had been attempting to reach an agreement for a year, according to the unions.

Two years ago, the U.S. faced a similar widespread shutdown of rail services due to a labor dispute. However, the government intervened, forcing the union to accept a contract despite their concerns about demanding work schedules and the lack of paid sick leave.

Canada's railroads have experienced temporary shutdowns in the past during contract negotiations — most recently, CPKC was offline for a couple of days in March 2022 — but it's uncommon for both railroads to cease operations simultaneously. The impact on businesses will be amplified due to the simultaneous stoppage of both CN and CPKC.

Both railroads had been gradually phasing out operations since last week in anticipation of the contract deadline. Shipments of hazardous chemicals and perishable goods were the first to be halted to prevent them from being stranded on the tracks.

The negotiations have hit a snag over issues related to how rail workers are scheduled and concerns about regulations designed to prevent fatigue and ensure adequate rest for train crews. Both railroads have suggested moving away from the current system, which compensates workers based on the distance traveled, to an hourly system that they say would provide more predictable time off.

The railroads stated that their contract proposals include salary increases in line with recent agreements in the industry. Engineers earn approximately $150,000 per year at Canadian National, while conductors earn $120,000. CPKC asserts that its wages are comparable.

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Funk reported from Omaha, Nebraska.