UPDATE 6-Canada's biggest rail strike in a decade ends; backlogs could nag shippers

(New throughout, adds industry reaction)

By Allison Lampert and Rod Nickel

MONTREAL/WINNIPEG, Nov 26 (Reuters) - Canada's longest railroad strike in a decade ended on Tuesday as Canadian National Railway Co, the country's biggest railroad, reached a tentative agreement with workers, but shippers warned it could take weeks before service bounces back to normal.

Industry groups celebrated the end of the eight-day strike, which had cost them sales and raised their expenses. News of the deal, which must still be ratified by union members, sent CN shares up by as much as 2%.

Thousands of unionized workers began heading back to their jobs, CN said, with operations expected to be in full swing on Wednesday. Union members should vote on the deal within eight weeks.

Canada relies on CN and Canadian Pacific Railway to move crops, oil, potash, coal and manufactured goods to ports and the United States.

Details of the agreement were not available but some 3,200 striking conductors and yard workers had been demanding improved working conditions, including rest breaks.

Prime Minister Justin Trudeau acknowledged CN and union officials in a tweet on Tuesday. "Thanks to the workers, industry and all Canadians for their patience during these negotiations," he said.

Trudeau's minority government had faced pressure from industry and farmers to intervene in the strike. Teamsters Canada President Francois Laporte praised the government for allowing the workers to reach a negotiated settlement with CN.

"Previous governments routinely violated workers' right to strike when it came to the rail industry," he said. "This government remained calm and focused on helping parties reach an agreement, and it worked."

J.J. Ruest, chief executive of Montreal-based CN, thanked customers for their patience.

About half of Canada's exports move by rail, according to industry data, and the strike would likely cost the Canadian economy less than C$1 billion ($750 million) and cut fourth-quarter growth by about 0.1 percentage point, Brian DePratto, a senior economist at TD, said.


The Canadian Propane Association warned severe shortages of the fuel in several eastern Canadian provinces could last weeks. "We are not saying that it's the end of the crisis. We need to get the inventory back up," said association President Nathalie St-Pierre, adding at this point "there's no inventory."

Bob Masterson, chief executive of the Chemistry Industry Association of Canada, said some plants had slowed production during the strike. He said that based on past rail disruptions, CN is likely to start moving critical commodities first, such as propane for farms and homes and chlorine for drinking water, leaving other shippers to wait days or weeks for service.


Brendan Marshall, vice president of economic and northern affairs at the Mining Association of Canada, said miners were facing hefty costs due to lost sales and plant disruptions and that it could take a week for every day of disrupted service to restore normal operations.

"Now we can hope that things can get back to normal in quick fashion. It’s cost a lot of money to farmers already,” said Markus Haerle, chairman of the Grain Farmers of Ontario.

Wet conditions have stalled the harvest across much of Canada, including much of Haerle's corn crop near St. Isidore, Ontario. Those crops must be dried before they can be sold, but the rail strike held up deliveries of propane, forcing farmers to use costlier alternatives.

($1 = 1.3301 Canadian dollars) (Reporting by Allison Lampert in Montreal and Rod Nickel in Winnipeg. Additional reporting by Kelsey Johnson in Ottawa, writing by Steve Scherer, editing by Louise Heavens, Steve Orlofsky and David Gregorio)

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