The federal government has urged Canadian National Railway Co. and the Teamsters Canada Rail Conference to continue negotiating as the roughly 3,200 conductors, trainpersons and yard workers went on strike.

Labour Minister Patty Hajdu said Tuesday the government is concerned about the impact of a work stoppage on Canadians, but remains hopeful the two sides will reach an agreement.

The rail workers walked off the job after failing to reach a deal by a midnight deadline.

Union spokesperson Christopher Monette said they were still in talks with CN in hopes of reaching a negotiated settlement and ending the dispute as soon as possible.

The union has said passenger rail services in the country's three biggest cities would not be affected by the strike.

CN workers walk a picket line in Brampton, Ont., after going on strike shortly after midnight. (Meagan Fitzpatrick/CBC)

It represents workers at commuter rail services including GO Transit in Toronto and Exo in Montreal, where passengers would remain unaffected.

The workers, who have been without a contract since July 23, say they're concerned about long hours, fatigue and what they consider dangerous working conditions.

"We have members out there who are operating trains when they should in fact be resting," Monette told CBC News after the strike began.

The dispute comes as CN confirmed Friday that it was cutting jobs across the railway as it deals with a weakening North American economy that has eroded demand.

"We are disappointed that the TCRC has initiated strike action which will result in a significant disruption to service," Janet Drysdale, CN's vice president of financial planning, said at the Scotiabank Transportation and Industrials Conference on Tuesday.

"We apologize to our customers, but we do appreciate their understanding that safety is always our first priority. Negotiations are expected to continue later today, under the watchful eye of federal mediators."

Industries react

CN currently handles more than half of all Canadian chemicals production. It is the only railway to service the three major petrochemical centres in North America, which includes the Alberta's Heartland, the U.S. Gulf Coast and southwestern Ontario.

The Canadian Association of Petroleum Producers said in a statement it is concerned about the strike and "any developments that can negatively impact on the availability of rail capacity, particularly in light of the current shortage of available pipeline capacity relative to oil production in western Canada."

The association said it will be monitoring the potential impact the strike will have on the industry's competitiveness.

Chemistry Industry Association of Canada (CIAC) urged the Canadian government, CN, and Teamsters to work together to prevent serious damage the strike could have on the Canadian economy.

"Fully $38 million worth of industrial chemical products rely on CN's network to get to their destinations every single day, and … the economic impact of the work stoppage is $1 million per day per facility that is shutdown," Bob Masterson, chief executive officer of CIAC, said in a statement.

Mining said to be 52.3% of revenue

The Mining Association of Canada (MAC) also expressed "serious concern" regarding the strike and how it will affect the mining sector.

According to the association, the mining industry accounted for 52.3 per cent of rail freight revenue in 2018.

Teamsters Canada union workers picket outside the headquarters of Canadian National Railway (CN Rail) after both parties failed to resolve contract issues, in Montreal, Que., on Nov. 19, 2019. ( Christinne Muschi/Reuters)

"In the minerals and metals sector, experience has demonstrated that a rail stoppage significantly impacts the ability of companies to bring essential inputs to their mines, and the ability to move mineral products and by-products to downstream customers," said Pierre Gratton, chief executive of MAC.

"MAC members have advised that this strike will result in a severe reduction or elimination of railway capacity and will trigger the closure of mines with concurrent layoffs of thousands of employees beginning in a matter of days."

'Arteries' of Canadian economy

Amaury Baudouin, a rail industry analyst at DBRS Morningstar, said the railways are almost like the "arteries" of the Canadian economy for their role in transporting goods and commodities across the country.

He said the Canadian economy won't be severely impacted if the strike lasts just a couple of days.

"If the strike goes on for more than a week then we are starting to see an impact that we could feel in terms of the financial results of CN and in terms of the broader economy," he said.

Baudouin noted that strikes don't happen very often for the two major Canadian railways and, when they do, they usually don't last very long.

"I'm not expecting anything different for this one," he said.

But even a matter of days can have an effect on the wheat industry, according to Hannah Konschuh.

Konschuh, a farmer and the vice-chair of the Alberta Wheat Commission, said wheat farmers don't get paid until the grain is delivered to the grain elevator.

"My delivery points are fairly set so there's only really a small amount of places that I can decide to sell my grain to. If those delivery points happen to be on the CN line I have no other option," Konschuh said. "It stands to have quite a serious effect on farmers."

Once the strike ends, Baudouin said there most likely will be a backlog of goods and it will take CN some time to get back to regular operations.

The last CN strike happened in 2009 when engineers walked off the job after failed contract negotiations.