Canadian Pacific Railway and union agree to arbitration and end work stoppage

Trains on the railroad were moving freight Tuesday afternoon, a spokesman for Canadian Pacific said.

Details of the agreement were not disclosed. Binding arbitration typically allows employers and union representatives to submit their contract claims to an independent arbitrator, who can then rule on terms such as pay increases and benefits. In some cases, certain contract terms may be subject to a vote by union members.

The work stoppage at Canadian Pacific threatened to exacerbate delays that are squeezing supplies and raising prices for commodities — including potash fertilizer ahead of the spring planting season. Canada is a major producer of potash, and the railroad transports most of the goods to ships destined for foreign buyers. Global potash shipments have declined since producers in Russia and Belarus all but stopped exporting the commodity following the Russian invasion of Ukraine.

The railroad also ships large quantities of Canadian oil, manufactured goods and wheat to the United States and other countries. Canadian cattle farmers rely on the Calgary, Alberta-based railroad to transport cattle feed from US suppliers as a drought in western Canada last year reduced domestic supplies.

A number of companies, customers and politicians have publicly called on the Canadian government to introduce a return to work bill that would force striking workers to return to work.

Canadian Labor Secretary Seamus O’Regan said he traveled to Calgary on Saturday, where he spent much of his time urging union officials to reach an agreement. Representatives from Canadian Pacific and the union discussed possible terms for binding arbitration on Sunday afternoon, people familiar with the matter said.

Canadian Pacific is the sixth largest rail freight company in North America, transporting goods across Canada and south to the central US states.

write to Jacquie McNish at Jacquie.McNish@wsj.com