TORONTO– The Canadian mediator tasked with settling a complicated railroad labor dispute to protect the North American economy has ordered workers at the country’s two largest railroad companies to return to their jobs so that both can resume operations.

Saturday’s order means Canadian National can continue train service, which it resumed Friday morning, just over a day after workers were locked out. Canadian Pacific Kansas City, however, likely won’t be able to resume service until 12:01 a.m. Monday, when workers were ordered to return.

Railroads play a critical role in the economy: CPKC and CN deliver over $1 billion Canadian ($730 million) worth of shipments daily and transport billions of dollars worth of goods between the U.S. and Canada each month. Although both companies’ trains continued to run in the U.S. and Mexico, the lockouts caused significant disruption. Several smaller branch line freight railroads that handle local deliveries continued to operate in Canada, but were unable to transfer shipments to any of the major railroads during their shutdown.

The Teamsters union, which represents the workers, said it would comply with the Canada Industrial Relations Board’s order and send its members back to work, but would also take legal action against the arbitration award.

“This decision by the CIRB sets a dangerous precedent. It sends a message to Canadian business that all it takes is for large companies to shut down operations for a few hours and inflict short-term economic losses, and the federal government will step in and break up a union,” said Paul Boucher, president of the Teamsters Canada Rail Conference, which represents more than 9,000 train drivers, conductors and dispatchers on both railroads.

“The rights of Canadian workers are significantly limited today,” Boucher added.

Labor Minister Steven MacKinnon ordered an end to the lockout just 16 hours after it began because government officials could not bear to watch the economic disaster if the railways remained closed.

MacKinnon acknowledged the board’s decision in a post on social media platform X, saying he expected the railroad and its employees to resume operations as soon as possible.

Businesses across Canada and the United States said they would quickly find themselves in a crisis without rail service, as they rely on freight railroads to deliver their raw materials and finished products. Without regular deliveries, many companies may have to limit production or even close.

Canadian National trains were running again on Friday morning, but the union threatened to strike there starting Monday morning. Saturday’s order nullifies that strike threat. CPKC workers have been on strike since the lockout began early Thursday, and the railroad’s trains are at a standstill.

“While CN is disappointed that an agreement could not be reached at the negotiating table, the company is pleased that this order effectively ends the unpredictability that has negatively impacted supply chains for months,” the railroad said in a statement. “CN remains focused on safely returning the movement of goods as efficiently as possible.”

CPKC officially ended its lockout following Saturday’s decision and ordered workers to return to the day shift on Sunday. However, union spokesman Christopher Monette said the striking workers will not return to CPKC until Monday, the deadline set out in the order.

CPKC said it wanted to “get the Canadian economy back on track as quickly as possible and avoid further disruptions to supply chains.”

The railway companies said it could take several weeks for the situation to fully recover, as they began gradually shutting down their networks more than a week ago, leaving deliveries stuck on customers’ loading docks and in ports across the country.

The previous contract, which expired at the end of last year, will remain in force for the duration of the arbitration process. The board has instructed the unions not to further disrupt operations during the process.

Negotiations at CPKC and CN failed due to problems related to the allocation of workers and contractual arrangements to prevent fatigue. Both railway companies had proposed changing the compensation system from paying workers according to the kilometers they traveled to paying them according to the hours they worked.

The rail company said the move would make it easier to provide scheduled vacation time, but the union opposed the measure, fearing the changes would undermine important protections against fatigue and endanger workplace safety.

Canadian National and CPKC have said they offered pay increases in line with other recent agreements in the rail industry. CN said its train drivers earn about C$150,000 a year, while its conductors earn C$121,000. CPKC said its salaries were comparable.

There was also a dispute at CN over efforts to expand its system of temporarily transferring workers to other regions when there is a shortage of staff. The union did not want CN to have the power to disrupt families, but the railroad said the system was voluntary and already in use in some places.

While Canadian railroads struggled to reach an agreement with their union, major U.S. railroads reached a series of deals in recent days.

CSX announced the first contracts on Wednesday – months before the current contract expires and before the start of the traditional national bargaining process that typically drags on for years – and announced seven more contracts on Friday. In total, the new contracts affect more than half of the railroad’s workforce. Norfolk Southern and BNSF followed suit, each announcing four contracts with some of their 13 unions on Friday.

The agreements will help the U.S. railroad industry avoid difficult labor disputes of the kind that pushed it to the brink of a strike two years ago before Congress and President Joe Biden intervened to push through a collective bargaining agreement.