(Recasts with lockout)

By David Ljunggren

OTTAWA, Aug 22 (Reuters) - Canada's two main freight

rail companies locked out around 10,000 of their Canadian

unionized workers early on Thursday, starting an unprecedented

simultaneous work stoppage that will grind almost all railway

freight movement in the country to a halt.

HOW INTEGRATED ARE THE RAIL NETWORKS ACROSS NORTH AMERICA?

Canadian National Railway Co ( CNI ) and Canadian Pacific

Kansas City ( CP ) have said their rail networks south of the

border will continue to operate, but industry groups fear that a

work stoppage would have far-reaching effects on the movement of

goods and commodities across North America.

CN and CPKC's coast-to-coast rail networks in Canada connect

south of the border and serve as important supply chain links to

trade corridors and ports across North America.

The networks intersect with those of U.S. rail operators

such as BNSF Railway, Union Pacific ( UNP ), Norfolk

Southern ( NSC ) and CSX, facilitating the movement of

billions of dollars' worth of goods and commodities through

ports and warehouses across the continent.

CN's network stretches south to New Orleans. CPKC's network

links to the U.S. ports of Corpus Christi, New Orleans and

Gulfport, and it extends further south to the ports of Tampico

and Lázaro Cárdenas on the east and west coasts of Mexico.

HOW WOULD A CANADIAN RAIL STOPPAGE AFFECT THE UNITED STATES?

Around a third of the traffic moved by the two Canadian rail

companies crosses the border with the United States.

Many U.S. companies and producers, especially those in the

Midwest, use Canadian ports for imports and exports, as Montreal

can be faster for shipments to and from Europe, while Vancouver

can be faster for ocean service to and from Asia.

Union Pacific ( UNP ), the No. 2 U.S. railroad operator, has warned

that a simultaneous stoppage would have devastating consequences

for the U.S. and Canadian economies.

Ratings agency Moody's said the stoppage could cost over

C$341 million ($251.14 million) per day.

Dozens of groups representing miners, farmers, exporters,

and fertilizer producers, among others, have warned that their

sectors face crippling supply-chain delays, increased costs,

cash-flow constraints and potential shutdowns in a protracted

stoppage.

HOW WOULD THE U.S. AND CANADIAN FARM SECTORS BE AFFECTED?

A stoppage would hit the movement of everything from wheat

to ethanol, potash fertilizer and meat.

In particular, it would crimp shipments of U.S. spring wheat

from Minnesota, North Dakota and South Dakota to the Pacific

Northwest for export. A stoppage would also hit Canadian potash

and grain exports.

The U.S. exported $28.3 billion of agricultural products to

Canada in 2023, making it the third-largest destination for U.S.

agricultural exports behind China and Mexico. The U.S. imported

$40.1 billion of Canadian agricultural products last year,

making Canada the second-largest source of U.S. agricultural

imports.

Ethanol, potash, corn, cereals, food grains, cooking oils,

and meat are among the agricultural products traded between the

two nations.

WILL TRADE WITH MEXICO BE AFFECTED TOO?

Mexico is Canada's third-largest single-country merchandise

trading partner behind the U.S. and China, while Canada was

Mexico's fourth-largest merchandise trading partner in 2023.

Mexico exports trucks, cars and vehicle parts to Canada,

along with mangoes and avocados. Canada exports wheat, meat,

aluminum, cars and parts to Mexico.

Two-way trade between the two countries, much of which moves

via the rails, was nearly C$55 billion in 2023.

CAN THE TRUCKING INDUSTRY STEP INTO THE BREACH?

Truckers say they are facing a surge in demand and that road

freight rates are rising for shippers in Canada. However,

industry insiders say that while the trucking sector can handle

some of the demand, it cannot replace rail distribution. In some

cases, the industry does not have the equipment, nor the

capacity, to handle bulk commodity cargoes such as potash, food

grains, or coal.

($1 = 1.3578 Canadian dollars)