(Adds comments from grain and forestry industries)
By Rod Nickel and Allison Lampert
WINNIPEG/MONTREAL, May 29 (Reuters) - Canadian rail shippers are urging Ottawa to intervene in a looming strike at Canadian National Railway Co CNR.TO , the country's largest railroad, fearing that a shut-down would immediately damage business.
The union representing CN's 3,000 Canadian conductors has set a strike deadline of Tuesday at 4 a.m. EDT (0800 GMT) after the railroad announced new work rules during negotiations to replace an expired contract. would be the first strike by CN conductors, or train operators, in a decade.
Freight Management Association of Canada wrote to Labour Minister Patty Hajdu on Sunday asking her to impose binding arbitration to resolve the dispute.
A strike would result in missed sales by exporters and commodity shipments arriving late to port, racking up higher costs, said freight association president Bob Ballantyne on Monday. Retail importers would also be affected, along with auto manufacturers who rely on just-in-time parts delivery, he said.
"The impact on many industries can be almost immediate and have quite a devastating effect," Ballantyne said. "If they have to shut down, the impacts of a rail strike are really major for the whole Canadian economy."
Canada exports most of the grain, potash and other commodities that it produces, moving them vast distances to ports via CN or Canadian Pacific Railway Ltd CP.TO .
A strike would leave British Columbia forest products producers few alternatives to ship to the United States and eastern Canada, as the trucking industry is operating near capacity, Susan Yurkovich, CEO of BC Council of Forest Industries.
Chemistry Industry Association of Canada, whose members include Dow Chemical (NYSE:DOW) Co DOW.N and Akzo Nobel Chemicals Ltd AKZO.AS , is also seeking binding arbitration. A strike would cause chemical makers to quickly run out of storage, resulting in production shutdowns, said spokeswoman Erika Adams.
Contingency plans are impractical for grain traders since half of Prairie delivery points are served by CN alone, said Wade Sobkowich, executive director of Western Grain Elevator Association, which represents Cargill Ltd CARGIL.UL , Louis Dreyfus Corp LOUDR.UL and others.
A spokesman for Hajdu would not say whether the government is considering legislation to keep workers on the job, saying that it has faith in the collective bargaining process.
CN spokesman Patrick Waldron said the railway is "cautiously optimistic that a deal will be reached" before the deadline.
He declined to say how the railroad would operate in a strike.
Roland Hackl, lead negotiator for Teamsters Canada Rail Conference, said negotiations would resume Monday afternoon.