By Promit Mukherjee

OTTAWA (Reuters) – Canadian Pacific Kansas City said on Saturday it would halt any new rail shipments originating in Canada, and all new U.S. shipments destined for Canada starting on Tuesday if talks with its Canadian labour union fail to progress.

North American industry groups and shippers are bracing for an unprecedented simultaneous stoppage at both of Canada’s main railway companies that could disrupt the movement of commodities such as coal, potash, crude oil and grains, and manufactured goods ranging from cars to chemicals.

The Teamsters union’s talks with Canadian National Railway and CPKC have deadlocked, and the rail companies say they will start locking out workers on Aug. 22 if they cannot reach a labour deal. The union says it is ready to call a strike for that date.

In an update on Saturday, CPKC said it was taking “prudent steps to prepare for a potential rail service interruption next week.” It said bargaining talks are scheduled to continue on Sunday.

Earlier this week, CPKC had already begun to halt any new shipments of hazardous chemicals or dangerous goods.

Separately, CN Rail said on Friday “there has been no meaningful progress at the bargaining table,” and added that it had also begun a phased and progressive shutdown of its network.

CN Rail said this will culminate in a lockout, unless a deal is reached, or binding arbitration is imposed.

Earlier this week, Canada’s Labour Minister Steven MacKinnon rejected an appeal from CN Rail to initiate binding arbitration between the two sides, and called on the company and the unions to negotiate in good faith.

Industry groups warn that a simultaneous work stoppages at both rail companies could inflict billions of dollars’ worth of economic damage.

It could also impact trade with both the U.S. and Mexico. The CN and CPKC networks connect key U.S. rail and shipping hubs such as Chicago, New Orleans, Minneapolis and Memphis. CPKC’s network also extends further south to ports on Mexico’s east and west coasts.

(Reporting by Promit Mukherjee; Editing by Paul Simao)