North American industry groups and shipping companies are facing the prospect of significant disruption as the two major Canadian railways, Canadian National Railway (TSX:CNR) and Canadian Pacific (NYSE:CP), Kansas City, may simultaneously halt operations.

This situation, which could lead to billions of dollars in economic damage, has raised widespread concern due to Canada’s heavy reliance on rail transport for a variety of goods including grains, automobiles, and coal.

Greg Northey, vice president of public affairs at Pulse Canada, described the potential stoppage as a "disaster," emphasizing the severity of the impact it could have on cargo movement.

The stalemate in negotiations between the rail companies and the truck drivers' union has led to mutual accusations of bad faith.

The rail operators have indicated that they will start laying off workers on August 22 if a labor agreement is not reached, while the union has announced its readiness to strike on the same date.

Industry groups are also urging the Liberal government, led by Prime Minister Justin Trudeau and Labor Minister Steven MacKinnon, to intervene and prevent the work stoppage. The importance of railways in transporting goods worth approximately CAD 380 billion (USD 277 billion) annually is evident, and the Canadian Business Council has highlighted the potential impact on millions of Canadian jobs, calling the disruption catastrophic.

The looming stoppage also threatens to affect shipping traffic in the United States due to the close economic ties between Canada and the United States. Canada exports nearly 75% of its goods to the U.S., and the rail networks of CN and CPCKC are linked to many major U.S. rail and shipping hubs.

CN has already announced a ban on new bookings for hazardous materials or security-sensitive shipments or refrigerated containers coming from Canada starting today, Thursday, along with all multimodal transport from several U.S. hubs starting tomorrow, Friday.